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The Qinghai community development project
Introduction
Throughout the past twenty years, as a consequence of a gradual shift towards
a more open, market economy, China has sustained a remarkable average annual
growth rate of about 9%. The acceptance of market forces and the opening up
of the country to foreign trade and investment has propelled China into the
ranks of the top ten exporters in the world. This has dramatically improved
the standard of living for many Chinese people. International trade has proved
to be the engine of economic growth for a nation that was one of the poorest
in the world fifty years ago. However, much of this economic boom has been centred
on the coastal towns and cities. Foreign investment has largely been attracted
to large urban areas such as Shanghai, Guangdong, the Red River delta near Hong
Kong and the Fujian province.
However growth has not been evenly distributed. Over 200 million Chinese, many
in remote and resource-poor areas in the western and interior regions, still
live on less than US$1.00 a day, often without access to clean water, arable
land, or adequate health and education services. The income gap between rural
China and the coastal regions is increasing and this growing imbalance is causing
concern to the Chinese Government.
In rural China, limited access to infrastructure often means walking long distances to obtain water
China has become an increasingly important trading partner to Australia in
recent years and it is in Australia's interests to see China continue to grow
and prosper. The successful Qinghai Project has demonstrated that rural poverty
can be reduced and that even the most isolated regions can be drawn into China's
booming economy, and thereby, the global economy.
The Qinghai province
In 1992 delegates from the Australian Government's overseas aid program visited
the Qinghai Province, one of China's poorest regions, to identify suitable aid
projects. The climate is harsh with the area prone to natural disasters such
as droughts and frequent hailstorms. Land suitable for agriculture is limited
in both quality and quantity. Literacy levels are low and the health of the
population is relatively poor. The mission team found that much of the population
was trapped in poverty - characterised by subsistence farming, little or no
cash income (with barter as a common means of exchange), no access to credit,
and a reluctance to experiment with new farming methods and crops. Infrastructure
was very limited and the population was isolated from markets and the more prosperous
regions of China.
After examining a range of proposals, it was decided that the aid project would
focus on the three counties of Leda, Pingau and Huangzhong, located on the boundary
of the Tibet-Qinghai Plateau, one of the most disadvantaged parts of the province.
Creating a cash economy
Two major aims were to improve the region's infrastructure and create a cash
economy. Road construction started in the middle of 1995 and eighteen months
later some 71 kilometres of access roads had been completed. The 4,400 households
who participated in the road building activities received an average income
of 463 Renminbi (RMB) ($AUD 96). Australia provided the wages and China the
equipment, materials and building expertise. Drinking water was provided to
38 poor villages with some 5000 households benefiting. Over 12,000 people were
employed on the water project, earning an average income of RMB211 ($AUD 43).
Apart from creating a cash economy, many other benefits were to flow from this
improvement in infrastructure. New roads meant that the region's farmers could
enjoy quicker and easier transport to markets. The result was better market
information and higher prices for their produce. Imports to the isolated area
became cheaper as traders visited more often. Coal and medicine were two products
that fell in price. Families gained better access to school and medical services.
The improved bus service, a consequence of the new road, made the villagers
more mobile increasing their employment opportunities and exposing them to new
ideas and new experiences. The transition from a subsistence economy to a dynamic
market one had begun.
New roads have meant families have gained
better access to schools
Improving infrastructure included increasing access to water. Carrying water
long distances is time-consuming, and affects the health of women who are the
traditional water carriers. Consequently, with greater access to water, women
suffer from fewer health problems as they don't have to carry water over long
distances. Less time spent fetching water also means more time is available
for other (income-generating) activities, such as raising pigs and chickens.
Water for garden plots also means more vegetables can be grown, increasing variety
in household diet and improving villagers' health.
Micro-finance
One of the most innovative aspects of the Qinghai Project was the introduction
of a micro-finance program. Lack of savings systems and access to credit were
identified at the pre-feasibility stage of the project as a constraint on the
improvement of household incomes and living standards. Providing micro-finance
was a logical progression from creating a cash economy amongst a population
with few opportunities to save. It was a fairly new idea in China and a month
long study tour was organised to Bangladesh, Vietnam and the Philippines so
that local officials could explore similar projects at work.
The aid project team was keen to establish savings groups (consisting of 4
- 7 members) in the poorest villages thus enabling the targeted households to
save any spare cash they might generate and lift their income and living standards
through new income-generating activities such as buying animals such as pigs
and sheep to fatten, or trying new crops. The project team was also keen to
make micro-finance accessible to women and minority groups. The original idea
was that borrowing would be linked to a person's capacity to save for six months
prior to receiving a loan. However, this restriction was quickly recognised
as being unrealistic considering the poverty of the region and its cashless
economy; households had little experience of saving money so training was necessary.
Training was also necessary for managing loans for those having to repay the
loan and also the community members managing loan distribution.
By early 1998 over 11,000 households had joined savings and credit groups with
an average loan size of RMB493 ($AUD 101). The application procedures were kept
simple and the loans were non-directive. The only conditions were that people
should borrow in groups and repay the loans plus interest. Interest rates were
set high enough for the group to manage loans and cover situations where repayments
were late or defaulted upon. As borrowers improved their ability to manage the
loans and their new business enterprises they become eligible for larger loans
and many are now on to their second or third loans.
Training the trainers
Another important goal of the aid project was to ensure that better government services were provided in the region. Introducing new concepts and management
practices was to be an exciting challenge for the project team. This part of the aid project started with funding to build three multi-purpose community
halls - one in each township. Being able to bring people together under one roof for consultation and discussion is taken for granted in developed countries
and, of course, is not always necessary given the wide range and sophistication of other methods of communication. A training the trainers approach was adopted
and focused on two broad areas - agriculture extension and economic activities. The trainers learnt a whole range of new techniques such as trend and change
analysis, mapping, matrix scoring and wealth ranking. The economic and credit trainers also gained skills in basic economic analysis and constructing budgets.
Improving communication and consultation skills was an important feature of the training program.
A range of training manuals and flip charts were designed to reflect local conditions (such as housing and clothing) to be used in the village halls. Presenters
were given advice on how to engage an audience, prompt discussion and generate new ideas.
Farmers responded well to the teaching sessions and became more responsive
to the idea of trying out new crops and farming techniques. Participation in
farming experiments was purely voluntary and occurred on the farmers' own land.
Australian canola seed proved to be a popular new crop with potential to raise
farmers' incomes.
Evaluation
There is no doubt that the Qinghai Community Development project has been successful and clearly demonstrating that it is possible to draw even the most isolated
and poverty stricken areas of the world into the global economy with a relatively modest injection of funds. Ready access to new information, new ideas and new
thinking, as well as the ability to improve the mobility of economic resources are essential for success in the global economy. This aid project helped break
down some of the barriers restricting the region's development.
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