VIII. Increased Financial Burdens

Our investigation shows that currently the financing risks of the comfortable housing loans have already been passed onto the vast population of farmers and herders.

—Conclusions of a Chinese academic study, 2008

Nowadays there is no single household that does not have loans to repay.

—Interview with Tsering Tsomo, TAR, 2006

Most official reports about the Comfortable Housing campaign stress the amount of subsidies and preferential bank loans that recipients get, while effectively obscuring the important fact that households must shoulder a large share of the costs themselves.

The local government and the local branches of the Agricultural Bank of China (ABoC) jointly determine eligibility for set levels of preferential interest free bank loans. These creditworthiness assessments (zixin pingding) are sometimes presented as mandatory by local officials. Each household receives a credit ranking based on an asset survey, house inventory, estimate of earning capacity, and the amount of collateral it can put forward. The standards are:

• “Gold” or “excellent” (youxiu) for the wealthiest households;
• “Silver” or “fair” (jiaohao) for those in the middle;
• “Bronze” or “average” (yiban) for the poorest.[192]

Each household then receives a bank passbook indicating the category to which they belong and is credited with the corresponding loan, which were in the amounts of 30,000, 20,000, and 10,000 yuan for each level in recent years, according to national statistics, though the amounts varied locally.[193]

There is also a substantial amount of private lending largely independent of government control as households look for ways of financing the expenses associated with rehousing or relocation.

In its 2009 “Report on the Economic and Social Development of Tibet,” the government does not mention the share that households themselves contribute, only that:

By the end of 2008, the region had invested more than seven billion Yuan to help 200,000 families, or about one million farmers and herdsmen, to build new houses.[194]

Many Tibetans interviewed for this report described the heavy financial burden placed on their households by the Comfortable Housing program, including having to contribute a large share of the construction costs, often tens of thousands of yuan. This is a considerable sum for households in which an average individual earns a little over 4,000 yuan per year.

In addition, Human Rights Watch found compelling evidence in official policy documents and Chinese language academic studies that individual households have been the primary financial contributors to costs incurred in demolishing and rebuilding their houses. These contributions, referred to by the vague phrase “self-raised funds” (zichou zijin), can represent up to three-quarters of the total cost of these operations. For example, an article published by the State Council Development Research Center reports that for every yuan in governmental subsidies, households had to contribute 4.5 yuan themselves:

Under the strong impulse of the state financial subsidies policy, farmers and herders leaped enthusiastically to build new houses. By the end of 2008, a total of 11.6 billion Yuan had already been invested, of which 2.1 billion were government’s financial subsidies, representing 18.4% of the total, while the farmers’ and herders’ “self-raised funds” totaled 9.5 billion, or 81.6% of the total. In total [up to the end of 2008] 172,000 farmers and herders had happily moved to new houses. In other words, in the comfortable housing campaign, the government gives one Yuan as subsidy and can “get” [qiaodong] farmers and herders to invest 4.5 Yuan.[195]

In other words, while state media emphasizes its aggregate contribution to these policies, its own statistics demonstrate that in some cases up to four-fifths of the cost for each new house is borne by the household itself.

Official government statistics show that on average households contribute about 60 percent of reconstruction costs. A study in the TAR showed, for instance, that the share of the average household contribution ranged from 37 percent in Naqu (Tib. Nagchu) prefecture to 78 percent in Linzhi (Tib, Nyingtri) autonomous prefecture (See table “Self-Raised Funds”).[196]

In 2006, the last year for which aggregate figures for the TAR are available, the proportion of “self-raised funds” amounted to at least 60 percent, or 2.3 billion yuan (approximately $410 million), of the total out of a total of 3.9 billion yuan ($ 590 million) advertised as “Comfortable Housing campaign investments for building a New Socialist Countryside.”

In Naqu prefecture, in the northern part of the TAR, the share of household self-raised funds increased from 37 percent to 44 percent from 2006-2009.[197] In Namling (Tib. Namring), in Shigatse prefecture, 77 percent of “funds invested” were self-raised in the campaign’s first year.[198] Similar figures are reported in Linzhi Prefecture (75 percent)[199] but significantly lower for Maizhokungar (Tib Medrogungkar) county (24 percent).[200] In the district of Lhasa, an internal government report by the Comfortable Housing project bureau dated December 2010 indicates that “self-raised funds” represented 74.8 percent of the total cost, or 200 million out of a total of 268 million yuan spent to rebuild the houses of 3,344 households between 2006 and 2009. This suggests an average cost of 80,000 yuan per new house.[201] In Hongyuan County, Aba prefecture in Sichuan, “self-raised funds” represented 70 percent of the cost of the new houses.[202]

Official sources reflect that encouraging or mobilizing Tibetan farmers to invest their own financial resources into the demolition and rebuilding of their houses was a major aspect of the work of cadres at the local level:

Inciting the masses of farmers and herders to become the main source of investment” was among the main tasks achieved by Linzhi prefecture, along with “mobilizing the enthusiasm of the masses to participate on their own initiative to the Comfortable housing campaign.[203]

Similarly, the Tibet Daily reported in November 2009 that throughout the TAR “the authorities had each year arranged fixed investments […] but also encouraged self-raising funds and other methods of raising funds by farmers, thereby fully progressing towards the construction of New Socialist villages.”[204]

A review of the available Chinese scholarship on the housing campaign in Tibetan areas seems to indicate that the issue of the real share of the financial contribution of households to the campaign is rarely discussed, perhaps because it would contrast too greatly with the official portrayal of the policy. Yet when state media occasionally mention the financial contribution made by a newly settled household, the percentages are markedly below the range reported as the usual costs. For example, a Xinhua article published in 2007 cited the case of “Drolkar, a resident of the Yamda Village near Lhasa, capital of the Tibet Autonomous Region.” He reported having “only spent 18,000 yuan ($2,647) on the construction of [his] new house, and the rest, totaling more than 40,000 [($6520.60)] yuan, were all granted by the government.”[205]

House Construction and Renovation Costs Borne by Individual Households (Unit: 100 million yuan) [206]

Bank loans distributed to households are important in financing the Comfortable Housing campaign. Farmers or herders often rely mainly on bank loans, especially through the Tibet branch of the Agricultural Bank of China, to renovate or rebuild their homes.[207]

Local cadres, whose performance is evaluated in part on implementing the Comfortable Housing campaign and who stand to profit from it, have a vested interest in ensuring that as many households as possible register with the loan scheme. Also, once a household has been awarded a “preferential loan,” it has to proceed to reconstruction or move to a newly built house. From the perspective of local officials, having households agree to loans first is often the easiest way of ensuring compliance with a move later, as they had “agreed” by contracting the loan.

According to statistics from the Agricultural Bank, “of the 410,000 rural households in Tibet, 370,000 have received the Certificate of Loans for Farmers and Herdsmen." This constitutes 90 percent of all households.[208]

But the campaign, some interviewees told Human Rights Watch, has also indebted some low-income members of the Tibetan population, whose ability to repay the loans was uncertain from the beginning. One interviewee recounted:

People were forced to construct new houses along the road by getting low interest loans even though they didn’t have money. The inability to repay the loans has driven some households into increased financial difficulties.[209]

Some respondents told Human Rights Watch this indebtedness had led to severe hardship for some newly relocated households. A man from Kongbo (Ch. Gongbu) recounted that in his community:

Those who moved could not repay their loans and have become very poor nowadays. Even though they have a new house, there is nothing in it.[210]

The government denies that relocated households face difficulties repaying their loans. Instead, it stresses that “the demand for loans continues to grow as people tap new opportunities or renovate their homes.”[211] According to an interview with the governor of the Tibet Branch of the Agricultural Bank of China, Mima Wangdui:

Many people don’t have a lot of real estate to mortgage, but the Tibetans have a tradition of keeping their word, they have good credit. So we have a special version of credit cards for Tibet, people can get their loans easily. And bad loans are limited to less than one percent.[212]

But other Chinese sources show a different reality. A detailed survey by Chinese scholars pointed out as early as 2008 that the program was leading some Tibetan households to unsustainable levels of indebtedness:

Our investigation shows that currently the financing risks of the Comfortable Housing loans have already been passed on to the vast population of farmers and herders. When the bank demands repayment, part of the masses do not have the capacity to make the repayments, while a small minority could but does not wish to repay. This situation will probably lead these loans to be written off by the banks as bad loans, and the government will have to foot the bill.[213]

Since the government publishes very few detailed statistics about loans made as part of this campaign, it is difficult to know what proportion of the Tibetan rural population has been affected by over-indebtedness.

Some experts believe that the authorities will not press for the repayment of some or many of these loans and will ultimately write them off.

Asset Transfers as “Self-Financing”

Since the financial assets of rural Tibetans are often insufficient to meet the cost of the relocation or rehousing, even after state subsidies and loans, local officials require households to meet the shortfall by selling part or all of their livestock, making farmers cede or “exchange” farmland, pressuring them to borrow money from relatives, forcing them to dispatch family members to work as migrant workers, engaging in collecting medical herbs, or working as laborers on the reconstruction program itself.[214]

A frequent and widespread complaint is that local officials used the campaign to repossess land from Tibetan households. Farmers who could not come up with the required investment to build a new house were made to sell or cede part of their land, sometimes at rates far below their real value.[215] The proceeds of such transactions were often registered as “self-raised funds” in official documents.

In cases where villagers or pastoralists were relocated away from their original settlements, households often received a smaller piece of farmland than they originally possessed. The difference in value was used to contribute to the cost of building the new house.

In cases where villagers did not have to be relocated, local officials often arbitrarily reduced land holdings, or converted land use rights to generate revenue. Under China’s weak land rights regime, officials have enormous discretion over managing “collective land,” which technically belongs to the collective, and turning it into state land or private land has been a major source of revenue for officials across the country.