In industrial provinces like Zhejiang, Guangdong and Fujian declining exports have led to many plant closures, throwing out of work millions of migrants who now have no other choice but to return to the native village they had left years before in search of a better future.
In many rural areas however unemployment remains high and government social services like health care are non existent.
For this reason the authorities “are now doing everything they can to forestall a social collapse by providing livelihoods for this rapidly growing demographic group,” independent Beijing-based economist Mao Yushi said.
At the end of 2006 the mainland had about 130 million migrant workers. Although nobody knows how many have lost their job so far, they are by far the group most affected by unemployment.
In Hunan province alone reports indicate that more than a million workers have already left for home with another 2.8 million set to follow next year.
The new subsidies scheme includes training for jobs in other sectors of the economy as well as micro-credit assistance for start-ups in rural areas.
In recent weeks Beijing has also provided subsidies to white good (appliances) manufacturers to promote their products in villages and small towns rather than big cities so as to boost consumption.
However, experts point out that agriculture in China is increasingly mechanised and cannot provide new jobs for millions of migrants.
Moreover, many who return will find that much of the land they might need has been seized by corrupt local authorities for a pittance.
Indeed overall the aid package will offer 75 yuan (just over US$ 2) per person to the country’s 700 million rural residents.
For economist Mao, a “real solution would be to build a social welfare and services industry.”