CHINA – WAITING FOR MICRO MIRACLES

July 1998

DUR 13.41

Shepherd with sheep, landscape/scenery, villagers faces

Poor people’s faces

MAP: show CHINA and highlight QINGHAI PROVINCE and BANYALONG VILLAGE in Pingan County.

Farming, work around village

Walking to Poor Family’s house

Feeding mules

Village poverty shots

Tim and Jane walking

Ausaid Roadshow – Travelling along Australian Road

Ms Qiao in her home with poor woman – Qiao takes out ledger

Ms Qiao sitting on tractor

Tractor comes to a halt, Ms Qiao jumps down, people look on

She walks in through door

Signing/chopping etc. in bank

Accountant doing his calculations with abacus

Two shot: Ausaid official Alastair in his office in Beijing

Poor family doing chores

Handover Ceremony

Back to beautiful fields with whistling shepherd

FX whistling

In China’s far Western mountains live those who have yet to be touched by the economic miracle.

Despite twenty years of rapid growth, these people have slipped through the crack.

Pause

China believes this image doesn’t fit with a rapidly developing nation, so it’s set an ambitious target to break the cycle of poverty.

Banyalong village was a collective farm under Mao Zedong in the 1970’s. But when collectivization ended, the village never made the transformation to a market-oriented farming community.

Pause

Visiting the home of Sang Ji Ying and her husband is like going back in time. Their home is falling down, and in the countryside, there’s no such thing as a pension.

Last year, Madam Sang started feeling numbness in her mouth and hands.

She can no longer work in the fields; that’s left to her remaining unmarried daughter.

Sang Ji Ying and her husband are both in their mid fifties but life has never been harder.

(Sang Ji Ying)

My husband is getting old and older, he cannot work anymore, he just does light work. I have two children who are still at school. I am sick and have to take medicine, so my life, naturally, is difficult.

And it’s made no easier by the natural conditions; unfertile soil that’s covered in frost for up to 7 months of the year. Everything grown here is consumed by the village.

There is no surplus for any sort of investment in future wealth creation.

This, according to aid consultant Tim Zachernuk is at the heart of rural poverty, in villages like Banyalong.

(Tim Zachernuk)

If people had a choice, they wouldn’t be living in places like this, it’s not a viable agricultural economy. But because of the population pressures, people are forced to live in places like this.

FX travelling

Australia has helped to build roads and water supplies in the region, a portion of the 53 million aid dollars given to China each year. It’s the traditional aid route.

But the Australian Government, through its aid agency AusAID is among those developing an innovative departure, considered the latest anti-poverty antidote – micro-credit, developed by the Grameen Bank in Bangladesh.

Australia’s Ambassador to China Ric Smith is introduced to the local credit intermediary. She describes how small loans are made directly to individuals who must rely on their personal enterprise to generate the repayments.

The loans are small, in the order of 80 dollars a year, at 12% interest, repayable monthly.

Another feature of the scheme is that the loans don’t require collateral.

(Tim Zachernuk)

Micro-credit is one way of providing people with an opportunity to improve themselves, but not an answer to everything!

The micro-credit project covers more than ten thousand households in total.

But in villages like Banyalong where there’s virtually no cash economy, the agricultural base is so narrow that the scheme has a long way to go.

The best way to solve them is to diversify the opportunities for people. People from a village like this, if their children can get an education, and get a change to work or in industry or in the cities. People will never get wealthy or solve their poverty problems if they have to rely on agriculture.

Nearly all the villagers have used their loans to buy animals. They are seen as a quick fix with little view to the long-term future.

Pause

Sang Jiying has come to make her interest payment.

Her friend Madam Qiao is Banyalong’s credit intermediary in the Australian-designed aid scheme. Madam Qiao’s job is to collect the monthly interest payments from the villagers… for each loan she collects, she earns a small commission.

(Ms Qiao)

What about your team, did they return the principal for the first loan?

Sang: Yes

Qiao: Alright then, five kuai please.

Madam Sang’s interest amounts to one dollar a month, on a principle of eighty dollars. While it doesn’t sound like very much, it’s money she doesn’t have.

Harvest time is still a few months away, and Madam Sang’s family doesn’t have any other regular income. She pays the interest by borrowing money from her relatives.

Sang: Well, I want to make a second loan, but I can’t afford to pay the interest.

Qiao: You can’t afford it? So you mean, if you are asked to pay the interest every month, you’ll be unable to pay it?

Sang: That’s right.

Pause – Tractor FX

Only once a month Madam Qiao hitches a ride from the village to the township, a trip that takes nearly an hour.

Her destination is the local branch of the Agricultural Bank of China, which administers the loan scheme.

Pause –

Lately, the monthly ritual hasn’t been as profitable for Ms Qiao.

Pause

Many of her fellow villagers have already paid back their first loan, but most of them still haven’t committed to a second.

Mr Wang: How is the second loan going?

Ms Qiao: No-one wants to take a second loan.

Wang: Why?

Ms Qiao: the interest is too high and the pay-back period too short, so we’re unwilling to take them.

Pause

The scheme is working well in other counties where conditions are better, but in Banyalong’s poor agrarian economy every cent counts.

And because the scheme is supposed to be self-sustaining with the small monthly repayments, financing the next round of loans, this spells trouble for the future.

Pause

(Madam Qiao)

They didn’t want to take second loans, because they have to pay the monthly interest immediately and some of them weren’t even able to afford paying the electricity, so they didn’t have any money to take the loan, because they have to pay the interest at the end of each month.

But because this is an officially designated Poverty County, the Local Government decided, the Australian loans from Ausaid, weren’t quite enough to lift the village out of poverty in the shortest possible time.

The reason why there were so few takers, just 6 months after Ausaid began its micro-credit scheme, local officials began their own plan, offering villagers larger amounts for less interest. It isn’t hard to see which loans the villagers’ prefer.

(Village Accountant)

The Australian loans were suitable at the time because we couldn’t make loans for fertilizer. But later on, the County Government made the decision that we would move out of poverty at the end of 1998 and they granted loans.

Presently, the villagers will go for the County Aid, because the amount is large, the returning time is long and the interest is low.

Yan Zhang Wang is the village accountant and one of Banyalong’s most influential people.

Pause

Under his guidance, nearly every household has now taken out the County Aid loans. The villagers are convinced these larger loans of 400 dollars, will help them out of poverty sooner.

If we can build new houses, buy new furniture, colour TV sets and tractors. If so, you could say, we have become rich.

Reverse: How long do you think it will be until the Government doesn’t have to help you any more?

With help from the government, we can become rich within four or five years.

If leaving poverty behind means money to buy colour televisions, Mr Yan, like many of the villagers has a starry-eyed view of what the loans should accomplish.

For places like Banyalong, credit needs to be channeled into longer-term investments.

The County’s Aid program appears to amount to hand-outs, they are a quick-fix and not headed towards sustainable wealth-creation.

But the Australian Aid Agency, Ausaid, defends the Chinese government’s attempts to help individual households.

(Alastair Mackenzie)

Ausaid would never be concerned about resources flowing to poor people. There are many different ways of doing micro-finance, the Chinese government has taken up micro-finance over the last couple of years and is finding it a really useful means of addressing poverty problems in this county.

While the village is presently awash with cash and animals… little though is given to anything other than the present.

The local bureaucracy believes the faster more money is given to villagers, the better off they will be.

(Yan Xiao, Poverty Alleviation Official)

Reverse: why did you introduce the county loans to the peasants when they already had Australian loans?

I think it will help them to eliminate poverty faster. Since we have already invested the money we will definitely see results. We have already distributed so much money to them, every family must eliminate poverty. We think Banyalong village is making rapid progress.

Pause

Sang Ji Ying needs help to pay medical expenses, before she buys any more livestock. As she becomes more and more unwell, she gets further and further into debt.

Pause

She bought two sheep with her Aussie loan, and a mule using County Aid.

As yet, she’s no better off.

I borrowed from my relatives and paid back the loan, because I don’t have the money, I borrowed the interest every month. I’ve already paid back the loan now.

Reverse: why did you borrow 2,000 Renminbi from the County government?

I know I have to pay the County Government’s loan in the end, but I can still think of a way to repay it.

After 5 years time, my child will grow up, he can go out to work and we can repay it.

Champagne poured

Chinese apple champagne in the County Government headquarters, to celebrate the handover of the project to Chinese management… Australian funds will ensure years of operation before the credit-scheme can be pronounced suitable.

Whistling

Ending poverty in places where the economic miracle never arrived, is a political priority for China –

But there’s no celebration yet for the villagers Banyalong.

Once the national deadline is over, or the Australian loans disappear, what will the villagers do then….

Small pause

Micro-credit might be the latest attempt to eradicate Banyalong’s desperation. It could also be its ruin. (end)