Chinese Research Perspectives on Society, Volume 1 [1 ed.] 9789004246249, 9789004246232

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Chinese Research Perspectives on Society, Volume 1

Chinese Research Perspectives: Society International Advisory Board

Yanjie Bian, University of Minnesota Nan Lin, Duke University Xueguang Zhou, Stanford University

VOLUME 1

Beijing 2013

The titles published in this series are listed at brill.com/crso

Chinese Research Perspectives on Society, Volume 1 Chief Editors

Lu Xueyi and Li Peilin

Deputy Chief Editors

Chen Guangjin, Li Wei, Xu Xinxin

Leiden • boston 2013

This publication has been typeset in the multilingual “Brill” typeface. With over 5,100 characters covering Latin, IPA, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities. For more information, please see www.brill.com/brill-typeface. ISSN 2212-747X ISBN 978-90-04-24623-2 (hardback) ISBN 978-90-04-24624-9 (e-book) Copyright 2013 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Global Oriental, Hotei Publishing, IDC Publishers and Martinus Nijhoff Publishers. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill NV provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, MA 01923, USA. Fees are subject to change. This book is printed on acid-free paper.

Contents Chapter One New Stage of China’s Social Construction: Analysis and Forecast of China’s Social Development from 2010 to 2011 by the Task Group for “Analysis and Forecast on the Social Situation,” Chinese Academy of Social Sciences ..........  Li Peilin, Chen Guangjin, Li Wei, and Tian Feng

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Part One

About development Chapter Two China’s Urban and Rural Resident Income and Consumption in 2010 .................................................................................  Lü Qingzhe

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Chapter Three China’s Current Employment and Industrial Policy, 2011 .....................................................................................................  Mo Rong and Luo Chuanyin

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Chapter Four China’s Income Distribution and Development .....  Yang Yiyong and Chi Zhenhe

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Chapter Five Progress in China’s Construction of a Social Insurance System in 2011 ..........................................................................  Wang Fayun and Li Yu

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Chapter Six China’s Educational Developments and Reform in 2010 .............................................................................................................  Yang Dongping

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Chapter Seven A Critical Phase in China’s New Health-Care Reform ................................................................................... 103  Gu Xin

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contents Part Two

About Investigation Chapter Eight Employment of Post-1980s College Graduates Based on an Investigation of Graduates from Six 985 Project Universities ............................................................................ 123  Li Chunling and Lü Peng Chapter Nine Parents’ Occupational Expectations of Primary and Junior High School Students and Influencing Factors ........... 139  Deng Dasheng, He Guangxi, and Zhao Yandong Part Three

About Subjects Chapter Ten Design of the Current Social Construction Framework in China .................................................................................. 157  Li Peilin and Chen Guangjin Chapter Eleven Problems in the Urban and Rural Social Assistance System and Countermeasures in 2010 ............................ 187  Tang Jun and Xiu Hongfang Chapter Twelve Combat Corruption, Uphold Integrity, and Improve People’s Livelihood ..................................................................................... 199  Wen Shengtang Part Four

About Social Strata Chapter Thirteen The Status of Chinese Workers in 2010: Share the Fruits of Economic Development and Collective Labor Rights .................................................................................................. 217  Qiao Jian



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Chapter Fourteen The Current Rural Situation and Farmers in China ......................................................................................................... 239  Fan Ping Appendix Statistical Overview of China’s Social Development (2010) ................ 255  Zhang Liping Index .................................................................................................................... 273

Chapter One

New Stage of China’s Social Construction: Analysis and Forecast of China’s Social Development from 2010 to 2011 by the Task Group for “Analysis and Forecast on the Social Situation,” Chinese Academy of Social Sciences Li Peilin, Chen Guangjin, Li Wei, and Tian Feng The last year for China to implement the “Eleventh Five-Year Plan” (十一五 Shiyiwu) was 2010. This plan is part of comprehensively constructing an affluent society; during the period covered by this plan, China’s national economy and society experienced many serious challenges, including overcoming the adverse effects of the financial crisis and the Wenchuan and Yushu earthquakes, in order to maintain stable macroeconomic policy and continue to grow. In 2010, the Chinese economy obviously improved, social construction quickened, and the World Expo and the Asian Games were successfully held. By the end of 2010, China’s economy was expected to surpass Japan’s to become the second biggest in the world. However, national income per capita will still be low, therefore, improvement to people’s livelihood still has a long way to go. The Fifth Plenary Session of the Seventeenth Central Committee of the Chinese Communist Party (CCP), held in October 2010, approved the proposals of the “Twelfth FiveYear Plan” (十二五 Shierwu), which lays out China’s development road map for the next five years. The year 2010 linked the past and the future, a hopeful year when China could greet the arrival of the next five-year plan with a new attitude. The theme of China’s development is comprehensively transforming the way of development, improving and safeguarding the livelihood of the people, and realizing an affluent society. I. Summary of Social Construction During “the Eleventh Five-Year Plan” and Forecast of the “Twelfth Five-Year Plan” The last year of the Eleventh Five-Year Plan for the national economy and social development was 2010. In comparing development over the past five years with all the “five-year plans” before this one, it is observed

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that the period of the “Eleventh Five-Year Plan” had many adjustments in economic and social development strategy and development methods. Since 2006, in a strategic adjustment, “Resolution on Major Issues Concerning Building a Socialist Harmonious Society” (关于构建社会主义和 谐社会若干重大问题的决议 guanyu goujian shehui zhuyi hexie shehui ruogan zhongda wenti de jueyi) made at the Sixth Plenary Session of the Sixteenth CCP Central Committee was regarded as the symbol, a comprehensive summary of a new era of profound transformation in China’s economic system, profound changes in social structure, profound adjustments in benefit patterns, and profound changes in ideological concepts as well as various contradictions and problems faced. In 2007, the Seventeenth CCP Congress was held successfully, the political report comprehensively elaborated on socialist theory with Chinese characteristics and regarded the scientific development concept based on humanism as the basic guiding ideology to lead economic and social development in the new era. It officially proposed the strategy of social construction and gave it priority in political construction, economic development, and cultural reconstruction to form a new development strategy called “Four in One” (四位一体 Siweiyiti) and asked the people to unceasingly advance political democracy, national rule of law, transformation of economic development methods, and construction of a harmonious society. Afterward, ecological building was also promoted to a strategic position, and five big development strategies in the new era were constituted. In October 2010, the Fifth Plenary Session of Seventeenth CCP Central Committee considered and approved “Proposals of the Central Committee of the CCP on Formulating the Twelfth Five-Year Plan for National Economic and Social Development” (中共中央关于制定国民经济和社 会发展第十二个五年规划的建议 zhonggong zhongyang guanyu zhiding guomin jingji he shehui fazhan dishier ge wunian guihua de jianyi) (“Proposals” (建议 jianyi)). “Proposals” stressed three aspects, namely, transforming the method of economic development, paying greater attention to safeguarding and improving the livelihood of the people, and advancing reform of various domains. “Proposals” emphasized the essential requirement of insisting on rational development, namely, insisting on scientific progress, paying attention to humanism, paying attention to comprehensively coordinated sustainable development, paying attention to overall planning, and paying greater attention to safeguarding and improving the livelihood of the people, and promoting social justice and fairness.



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A. Keeping Quick Stable Economic Growth During the “Eleventh Five-Year Plan” Using fixed prices, from 2005 to 2009, GDP grew 54.5 percent and on average grew 11.5 percent a year; GDP per capita grew 50.7 percent and on average grew 10.8 percent a year. The economic structure underwent adjustments. From 2005 to 2009, the value-added proportion of the primary sector of industry dropped from 12.1 percent to 10.3 percent, that of the secondary sector fell from 47.4 percent to 46.3 percent, and that of tertiary sector [services] increased from 40.5 percent to 43.4 percent, which symbolized that China’s industrialization had entered the intermediate stage. It is worth mentioning that, under a situation that included a massive snow storm, earthquakes, and flooding and drought, agricultural production was still good the total output of grain had steady growth for many years, and in which the national food security was safeguarded. Generally speaking, the Chinese economy has entered a new growth stage. B. Social Legislative Made Remarkable Progress During the “Eleventh Five-Year Plan” Social legislation and the construction of related systems made remarkable progress. The “Labor Contract Law” (劳动合同法 laodong hetong fa) promulgated in 2007 provided the legal safeguards for adjusting the laborcapital relationship. Although it belongs to the category of economic rules and regulations, the “Property Law” (物权法 wuquan fa), promulgated in 2007,gave private property official legal status, which was also a step forward for the rights of Chinese citizens. In September 2009, “Opinions of the Central Committee of the CCP and the State Council on Deepening the Medicine and Health System Reform” (中共中央国务院关于深化 医药卫生体制改革的意见 zhonggong zhongyang guowuyuan guanyu shenhua yiyao weisheng tizhi gaige de yijian) was publicly announced. It emphasized the public welfare of medicine and health and indicated the policy direction for solving the problem of difficulties in seeing a doctor. In July 2010, the “National Medium- and Long-Term Program on Education Reform and Development Plan (2010–2020)” (国家中长期教育改革和 发展规划纲要 (2010–2020) guojia zhongchangqi jiaoyu gaige he fazhan guihua gangyao) was issued to become the programmatic document for guiding education development in the next ten years. In October 2010, the “Social Insurance Law” (社会保险法 shehui baoxianfa) was promulgated, and this was the first time the country’s highest legislature issued a law

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regarding the social security system, which laid the legal basis for national overall planning of social security. C. Distinct Improvement of Urban and Rural Residents’ Living Standard During the “Eleventh Five-Year Plan” New systems and policies were unceasingly created to help rationalize income distribution and deal with income distribution disparities. To increase farmers’ income, ten subsidy policies directed at peasant households were successively released. For this purpose, the government invested billions of renminbi every year, which improved agricultural production and operations in peasant households and increased the peasant household’s agricultural income. To deal with the issue of having the proportion of wages in GDP somewhat low and continuously falling, the country unceasingly raised minimum wage standards, carried out collective wage negotiations, and addressed wages in arrears. To reduce the differential between urban and rural consumption due to their income disparity, a series of preferential measures was carried out, such as bringing home appliances to the countryside, automobiles to the countryside, and building materials to the countryside, and the country provided large subsidies. During the period of the Tenth Five-Year Plan, the disposable income per urban resident on average grew 9.6 percent a year, and the net income per rural resident on average grew 5.3 percent a year; during the “Eleventh Five-Year Plan,” these two targets increased to 10.2 percent and 8.3 percent respectively. D. Construction of Social Security System Covering Urban and Rural Areas Quickly Advanced During the “Eleventh Five-Year Plan” After the goal of establishing and completing the social system covering urban and rural areas was proposed in 2006, related work quickly advanced. The urban minimum social security system was completed and offered complete coverage, and the rural minimum social security system was established and generally achieved inclusive social security system coverage, in which a minimum social security level for urban and rural residents’ was continuously promoted. The new rural cooperative medical system was continuously advanced. By 2009, comprehensive coverage was basically achieved, which realized the goal set in “Decisions of the Central Committee of the CCP and the State Council on Further Strengthening Rural Health Work” (中共中央国务院关于 进一步加强农村卫生工作的决定 zhonggong zhongyang guowuyuan



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guanyu jinyibu jiaqiang nongcun weisheng gongzuo de jueding), which stipulated that comprehensive coverage would be achieved by 2010. The coverage of the main social insurance system, such as urban basic endowment insurance, basic medical insurance, unemployment insurance, workers’ compensation insurance, maternity insurance, and so on, was continuously enhanced, and most coverage obviously increased for the insured population. At the end of the “Tenth Five-Year Plan,” the population covered by unemployment insurance, basic medical insurance for urban employees, workers’ compensation insurance, and maternity insurance increased to 2.39 million, 71.589 million, 41.277 million, and 24.069 million people respectively compared with that of the “Ninth Five-Year Plan.” In 2009, the population covered by unemployment insurance, basic medical insurance for urban employees, workers’ compensation insurance, and maternity insurance increased to 20.678 million, 63.888 million, 64.175 million, and 54.672 million people, respectively, compared with that at the end of the “Tenth Five-Year Plan.” In 2010, the new rural endowment insurance covered nearly 30 percent of rural counties. Moreover, during the “Eleventh Five-Year Plan,” providing social insurance for peasant laborers was a concern for the entire society and was taken seriously by the government, and it started to be integrated with the urban social insurance system. In order to solve the problem of peasant laborers’ enthusiasm for insurance, a system of transfer and connection of social insurance was established. In terms of education, in light of the problem in which children from mid- to low-income families have difficulty getting an education under the former education structure, a series of measures was taken to promote education equality, and miscellaneous and school fees during compulsory education were abolished. During these early stages, in order to assist impoverished students, an assistance system and policy system was established, particularly the national stipend system. E. Social Organization and Civil Consciousness Increased During the “Eleventh Five-Year Plan” In 2009, nongovernmental social organizations registered in departments of civil affairs reached more than 431,000, an increase of more than 111,000 from that in 2005, a 34.8 percent increase; among them, social groups increased nearly 68,000, a 39.5 percent increase; nongovernmental nonenterprise units increased approximately 43,000, a 29 percent increase; foundations increased by 868, a 89 percent increase. Meanwhile, civil

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consciousness in the entire society also showed remarkable growth. The Wenchuan earthquake and Beijing Olympic Games in 2008 played tremendous roles in stimulating a volunteer spirit among citizens; the number of volunteers increased, and donations also obviously increased. China also provided greater support to the development of nongovernmental organizations and volunteers. “Decisions on Major Issues Concerning Building Socialist Harmonious Society” (关于构建社会主义和谐社会若干重大 问题的决定 guanyu goujian shehui zhuyi hexie shehui ruogan zhongda wenti de jueding) at the Sixth Plenary Session of the Sixteenth CCP Central Committee, the political report to the Seventeenth CCP Congress as well as the report to the Fifth Plenary Session of the Seventeenth CCP Central Committee all stressed the need to reform the social management system, to develop social organizations, and to construct large social work talent teams, which would play a positive role in the growth of Chinese citizens and society. It is observed that economic and social development during Eleventh Five-Year Plan faced many social contradictions and challenges. Urban and rural income disparities, regional income disparities as well as income disparities between social classes continued to widen. Labor disputes became more numerous, including various large-scale events. The social security situation was quite serious. Mining accidents and food and drug safety problems occurred frequently, and environment disasters increased, with more evident damage. These problems must be carefully considered in policy strategies. The period of the Eleventh Five-Year Plan will end soon, and the Twelfth Five-Year Plan will begin. Improving the livelihood of the people will be the starting point and foothold of all kinds of work during the Twelfth Five-Year Plan. In looking at the past and with hope for the future, we believe that the period of the Twelfth Five-Year Plan will be five years in which the party and the government’s work will be further readjusted, social construction will be comprehensively advanced, and people’s livelihood will be noticeably improved; it will also be five years in which various social contradictions and conflicts will be gradually settled and society will become more harmonious and stable. II. General Situation of Social Construction in 2010 In 2010 the Chinese economy took initiatives to dig itself out and move toward recovery, which greatly contributed to world economic growth.



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During this period of economic recovery, the speed of urbanization increased, people’s livelihood improved, and consumption swiftly grew. A. Economic Growth with Steady Steps, and Development Transformation Increases The Chinese economy maintained growth at about 10 percent. It is estimated that annual GDP will top RMB 37 trillion, and average GDP per person will reach about US $4,000. With contributions from investment, consumption, and exports, the three big drivers of economic growth, government investment in economic growth was reduced, consumer demand remained stable, and exports were restored. In 2010 the grain harvest was abundant, with total output of about 1.08 trillion jin, representing a production increase for seven continuous years. In the first three quarters, the output of pork, beef, mutton, and poultry reached 54.39 million tons, an increase of 2.6 percent over the previous year. In 2010 the economic growth rate could be described as a situation of “first high and then low.” On the one hand, this was because of a gradual fade-out of financial expansion and a loose monetary policy; on the other hand, because the readjustment of the economic structure was strengthened in 2010, a series of regulations to control the real estate bubble was released, and various measures were taken in the interests of energy conservation and emissions reduction as outlined in the Eleventh Five-Year Plan. Moderate economic growth was not only an inevitable requirement to transform economic development and upgrade industries but also the result of efforts by the Chinese government to strengthen macroeconomic regulation and guide economic direction. Generally speaking, by the beginning of 2010, three big goals of the macroeconomic policy determined at the Central Economic Work Conference, namely, maintaining steady rapid economic development, readjusting the economic structure, mitigating the property bubble and managing the anticipated inflation, were smoothly realized. However, the mission of expanding domestic demand and enhancing the function of domestic demand’s driving economic growth was still arduous. B. Urban and Rural Residents’ Living Standard Unceasingly Increased, but Vigilance against Price Inflation is Needed In 2010, urban and rural residents’ incomes continued to increase, and it was hoped that the increase in rural residents’ incomes would be more rapid than that of urban residents. In the first three quarters, average

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d­ isposable income per urban resident reached RMB 14,334 after deducting the price factor and actually grew 7.5 percent; average cash income per rural resident reached RMB 4,869 after deducting the price factor and actually grew 9.7 percent. The anticipated growth in average annual net income per farmer surpassed 8 percent, and it was hoped that it would surpass the rate of growth in average disposable income per urban resident. Consumption maintained swift growth. In the first three quarters, the total volume of retail sales of consumer goods reached RMB 11.1 trillion, growth of 18.3 percent over that of the previous year. The growth rate of hot consumer goods, such as automobiles, furniture, and home appliances remained at a high level and, by the end of September 2010, grew 34.9 percent, 38.4 percent, and 28.1 percent respectively over that in 2009. But because of national regulation of real estate, the growth rate of housing and building materials fell in 2009. Six ministries and commissions, including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the National Development and Reform Commission jointly issued the “Notice on Launching and Driving Pilot Work of Building Materials to the Countryside” (关于开展推动建材下乡试点 的通知 gunyu kaizhan tuidong jiancai xiaxiang shidian de tongzhi) and expected that it would further drive the market for rural consumers in goods such as automobiles and home appliances to the countryside. The consumer prices trended upward, and price inflation was high. Because of the anticipated influence of future farm price inflation caused by extreme weather and serious disasters, in May the consumer price index (CPI) rose 3 percent over the previous year; from July to October, the consumer price index rose 3.3 percent, 3.5 percent, 3.6 percent, and 4.4 percent, respectively, over that of the previous year, rising month by month. In the first three quarters, the overall increase in the consumer price index was 2.9 percent, but food prices increased 6.1 percent, which had a serious impact on living standards, especially for those in the low-income group. It is estimated that annual increase in the consumer price index will surpass the target of 3 percent; therefore price inflation will be high. C. Urbanization Quickened, and Urban and Rural Integration Quickly Advanced Along with changes in lifestyle and the rise of land price, urbanization became the new power to impel fast economic and social development after industrialization and became important in advancing industrialization, accelerating the development of the tertiary sector, creating



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e­ mployment, and expanding domestic demand. Breaking with the urban and rural dualistic structure to realize urban and rural integrated development has become the goal of development in various areas. China has begun an era of swift urbanization; its level of urbanization rose from 42.99 percent in 2005 to 46.59 percent in 2009 and on average increased by 0.9 percent a year. In 2010, China’s urbanization level reached nearly 48 percent and will surpass through the critical 50 percent point during the Twelfth Five-Year Plan. In some developed areas, the population concentrated in urban areas, rural residents migrated to cities, farmers’ lifestyles changed, the urban and rural social management system was unified, and they all became new targets for development. But in the urbanization process, the problem in which “land urbanization” occurred more quickly than “population urbanization” became prominent, under the stimulation which the land increment became a main source of the local financial revenue, there was an upsurge in “land replacement.” D. Employment Situation Improved, but Pressure of Employment and Structural Contradictions also Existed In general the employment situation improved in 2010, compared with 2008 and 2009. From January to October, a total of 10.2 million urbanites newly obtained employment; 4.5 million laid-off workers obtained reemployment; 1.29 million people who had difficulty gaining employment obtained employment. By the end of the third quarter, the registered urban unemployment rate was 4.1 percent, and rural people who looked for work increased by 6.7 percent over the previous year. In the southeast coastal area, where manufacturing is concentrated, the structural “difficulty in worker recruitment” arose once again, which, on the one hand, reflected profound changes in the labor market’s supplydemand relationship and, on the other hand, reflected that labor quality did not correspond with the industrial structural readjustment demands. Facing the serious situation in which college graduates had difficulty in obtaining employment, six ministries and commissions, including the Ministry of Human Resources and Social Security and the Ministry of Education, jointly issued the “Notice on Implementing ‘Advancement Action for Employment of 2010 Graduates’ to Vigorously Promote Graduates’ Employment” (关于实施 2010 年高校毕业生就业推进行动大力促 进高校毕业生就业的通知 guanyu shishi 2010 nian gaoxiao biyesheng jiuye tuijin xingdong dali cujin gaoxiao biyesheng jiuye de tongzhi), by

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July 1, 2010, the employment rate of general college graduates was 72.2 percent, a 4.2 percent increase over the previous year; 4,556,000 people obtained employment, an increase of 400,000 people over the previous year. However, the employment outlook was still negative, and pressures of employment and structural contradictions also existed. The 6.3 million college graduates, along with the 6 million high school graduates who were not seeking higher education and the massive number of urban laidoff workers and demobilized soldiers, in total about 24 million people, needed to obtain employment during the year. E. Guaranteeing People’s Livelihood Increase, and the Social Security System Covering Urban and Rural Areas Was Completed Pilot work on the new rural endowment insurance was steadily advanced. This is another big project with historic importance in rural areas because the new rural cooperative medical system basically covers all rural areas, and it will gradually end the historical trend in which a farmer’s retirement depends on his family. By the end of September 2010, in total 508 counties and 4 municipalities carried out experiments involving 67.19 million insured people, in which 18.278 million people received basic pensions, totaling RMB 11.80 billion. In the fourth quarter, pilot programs for the new rural social insurance increased by 330 counties, thus counties experimenting with the new rural social insurance reached 838, nearly 30 percent of the 2,800 administrative counties. The coverage of each social insurance program continued to expand. By the end of September 2010, the population of those receiving basic retirement, basic medical, unemployment, workman’s compensation, and maternity leave was 250.25 million, 420.72 million, 131.47 million, 158.71 million, and 119.73 million people, respectively, which was an increase by 14.75 million, 19.25 million, 4.31 million, 9.75 million, and 10.97 million, respectively, over that at the end of the previous year. The level of socialization of enterprise endowment insurance gradually increased. Retirees at the community management level reached 40.91 million, which comprised 75.6 percent of all enterprise retirees, an increase of 0.4 percent over that of the previous year. In addition, by the end of September 2010, in total 2.11 million people received unemployment compensation, a decrease of 240,000 people over that at the end of the previous year. The unemployment insurance fund disbursed RMB 24.19 billion, an increase of RMB 2.28 billion over that of the previous year, a 10.4 percent increase.



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F. The Programmatic Document on Education Reform Was Promulgated, and Equalization of Basic Public Education Was Gradually Realized In 2010, a huge step for the process of education development and reform was when the CCP Central Committee and the State Council promulgated “National Medium- and Long-Term Program on Education Reform and Development Plan (2010–2020)” (国家中长期教育改革和发展规 划纲要 (2010–2020) guojia zhongchangqi jiaoyu gaige he fazhan guihua gangyao) (“Plan Program” (规划纲要) guihua gangyao) in July. This was China’s first program on education reform and development in the twenty-first century and was a milestone in China’s history of education reform. “Plan Program” explicitly proposed that education be a priority in development, and the proportion of national financial educational appropriations must reach 4 percent of GDP in 2012; equality must be regarded as the country’s basic education policy to safeguard citizens’ right to an education according to the law. Enrolled students in compulsory education reached 160 million, the majority of which lived in rural areas and central and western regions. As a basic collective service, education must be considered in the public welfare and generalized preferences, and equalization of basic public education should be pursued. G. Real Estate Regulation Policies Appeared, and Housing Prices Were Promising Meeting the demand for housing while controlling cost of housing, especially for the middle-and low-income young people, was a key point in improving and safeguarding people’s livelihood. In the past two years, the excessively high housing prices and the sharp increase has made it increasingly difficult for ordinary people to solve their housing problem, which has caused universal dissatisfaction, and housing prices has become a focus of media and public commentary. Since the beginning of 2010, to contain the sharp increase in housing prices, the central government formulated a series of regulations. In January, the State Council General Office issued the “Notice on Promoting Steady Healthy Development of the Real Estate Market” (关于促进房地产市场平稳健康发展 的通知 guanyu cujin fangdichan shichang pingwen jiankang fazhan de tongzhi) (“National Eleven Articles” (国十一条) guo shiyi tiao) for the purpose of increasing the supply of housing and ordinary commercial real estate, reasonably guiding housing consumption, and suppressing speculation in housing prices; in February, the China Banking ­Regulatory

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Commission issued the “Notice on Issues Concerning the Strengthening of Supervision of Real Estate Trust Business at Trust Companies” (关于加强信托公司房地产信托业务监管有关问题的通知 guanyu jiaqiang xintuo gongsi fangdichan xintuo yewu jianguan youguan wenti de tongzhi), which strengthened supervision of market risk; in April, the Ministry of Housing and Urban-Rural Development issued the “Notice on Issues Concerning the Further Strengthening of Supervision of the Real Estate Market and the Consummating Advance Sale System in Commercial Housing” (关于进一步加强房地产市场监管完善商 品住房预售制有关问题的通知 guanyu jinyibu jiaqiang fangdichan shichang jianguan wanshan shangpin zhufang yushouzhi youguan wenti de tongzhi), the State Council released the “Differentiated Housing Credit Policy” (差别化住房信贷政策 chabiehua zhufang xindai zhengce) and the “Notice of the State Council on Firmly Containing Sharp Increases in Housing Prices in Certain Cities” (国务院关于坚决遏制部分城市 房价过快上涨的通知 guowuyuan guanyu jianjue ezhi bufen chengshi fangjia guokuai shangzhang de tongzhi) and explicitly proposed that temporary measures be taken according to the actual situation to restrict the quantity of housing purchases within a certain period; afterward, the Ministry of Housing and Urban-Rural Development issued the “Notice on Issues Concerning the Strengthening of Affordable Housing Management” (关于加强经济适用住房管理有关问题的通知 guanyu jiaqiang jingjishiyong zhufang guanli youguan wenti de tongzhi) and the “Notice on Issues Concerning the Strengthening of Low-Rent Housing Management” (关于加强廉租住房管理有关问题的通知 guanyu jia­ qiang lianzu zhufang guanli youguan wenti de tongzhi), which normalized verification access and strengthened transaction management; after May, the People’s Bank of China increased the reserve rate against deposits several times that year; at the end of September, the central bank and the China Banking Regulatory Commission jointly released five measures (the “New National Five Articles”), which increased the implementation strength of policy measures on macroeconomic regulations and control of the real estate market, consummated the differentiated housing credit policy, increased the housing supply, quickened the pilot reform work of increasing property tax, in order to consolidate regulation of the real estate market. It can be said that in 2010, there was a high degree of real estate regulation. After a series of regulations on real estate was released, in firsttier cities, the real estate market contracted and prices decreased, and



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housing prices were clearly stabilized. According to data from monitoring of seventy large or medium-size cities distributed by the National ­Development and Reform Commission, by September 2010, housing prices there increased 9.1 percent over the previous year, 0.5 percent monthly. However, the pressure of increasing housing prices was still severe. In some cities, the price of newly built private housing still reflected a sharp increase in price, and more powerful measures need to be taken to strictly prevent a real estate bubble. III. Main Contradictions and Challenges in Social Construction in 2010 In 2010, during a period of rapid economic and social development, China also faced various challenges and social problems. Problems of income distribution, labor relations, commodity prices, housing prices, and so on were especially prominent. A. New Growth Stage of Economic Movement and Transformation of the Development Model In 2010 Chinese economic development was relatively steady. The impact of the international financial crisis exposed the latent danger in which ­China’s economic growth depended excessively on exports and investments. From 1980 to 2008, average world foreign trade dependency increased from 34.87 percent to 53.3 percent; at same time, China’s foreign trade dependency increased from 12.5 percent to 59.2 percent, especially from 2001 to 2008. After China’s entry to the World Trade Organization, China’s foreign trade increase per year was 11.1 percent higher than that of the world trade, in which the foreign trade dependency rate increased 20.7 percent. After the impact of the crisis spread from the financial sector to the general economy, the traditional economic growth pattern in the past was seriously restricted, and the problems which the economic quantum was big, but the economic structure and economic efficiency were low, as well as the domestic economy was difficult to drive were exposed. Excessive dependence on exports also intensified the contradictions and friction between China and other countries. Therefore, promoting industrial structural reform and upgrades, driving economic growth through enhancing individual consumption, and readjusting the position of the Chinese economy in the world economic industrial pattern are key for China in transforming its economic development.

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B. Labor Relation Conflicts Appeared in Some Areas, with a Focus on Migrant Workers In 2010, along with changes in supply-demand relations in the primary labor market, as well as an increase in migrant workers’ awareness of their rights, in some areas in the concentrated industries, labor relations were tense, and conflicts arose in labor relations. In the first half of the year, in the Pearl River Delta region, some collective strikes due to wage issues increased at the Nanhai Honda Factory, and other factories experienced a “butterfly effect,” which affected other coastal areas. Foxconn employee suicides shocked the entire country. From January 23 to May 26, 2010, within four months, in Shenzhen, Foxconn, a Taiwan-funded company, migrant workers jumped from an upper story, resulting in the death of ten people and serious injury of several others. These events reflected the increase in migrant workers’ awareness of rights protection and their hope for harmonious labor relations. Maintaining common laborers’ rights and interests and paying attention to workers’ psychological health must be insured by the system. The Chinese government is acutely aware of the problems of migrant workers. In 2010, Central Document No. 1, “Opinions of the Central Committee of the CCP and the State Council on Enlarging the Strength of Overall Planning of Urban and Rural Development to Further Consolidate the Foundation of Agriculture and Rural Development” for the first time used the concept of migrant workers in central official documents. The term “migrant worker” means a peasant laborer of “post-1980s generation” (a peasant laborer born in or after the 1980s), who number an estimated 100 million. Compared to the older generation of peasant laborers, migrant workers are more eager to migrate to the city, hoping to change their status from farmer to urban resident. The change in peasant laborers’ urban residency has become the key in solving the semi-urbanization problem. In the process of economic and social development and of positive safe urbanization, promoting urban and rural integration and gradually resolving peasant laborers’ urban residency in cities are needed to reduce urban and rural disparities and to realize social equality and are intrinsic requirements for Chinese economic growth and domestic demand expansion. C. Income Distribution Reform Was Difficult; the “Trap of Being a Medium-Income Country” Must Be Avoided In recent years, society’s attention to income distribution reform increased significantly. Although China has taken a series of measures aimed at



new stage of china’s social construction

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reversing income disparities between urban and rural areas, regions, industries, and members of different social classes, the continued increase in income disparities have not been reversed, and income distribution patterns need to be sorted out. Income distribution reform encountered all sorts of obstacles because of vested interests. In 1979 to 2007, from reform and opening to right before the financial crisis, GDP grew an average 9.8 percent a year, GDP per capita grew an average 8.6 percent a year, disposable income per urban resident grew an average 7.2 percent a year, and net income per rural resident grew an average 7.1 percent a year. In certain years, the proportion of consumer income in the national income fell, the growth of worker incomes was excessively slow in relation to that of capital revenue. Especially in the presence of an unreasonable income distribution, unlawful factors caused strong resentment among society, which was a problem on which the entire society needs to focus. The oversize gap between the rich and poor, and the Gini coefficient, which exceeds normal levels, all intensify social contradictions that affect social harmony and stability. In 2010 it was estimated that China’s average GDP per capita would surpass US $4,000, which would mark its entrance into the ranks of mediumincome countries. But experiences in international development by some low-income countries show that after they reach the level of medium income, excessive income differentials lead to weak growth in domestic demand, slow advancement of urbanization, stagnation in reform and upgrading of economic and industrial structures, and lagging social progress, and they remain in this medium-income sector for a long time which makes it difficult for them to develop. China must avoid falling into such a “medium-income trap.” D. An Upsurge of “Land Urbanization” Reappeared; Damage to Farmer’s Benefits Should Be Prevented Since the beginning of the twenty-first century, urbanization has quickened an inevitable result of economic and social development. In this process, China also faces many serious challenges. Among them, the biggest challenge is occupying large portions of agricultural land and the problem of forced and violent relocation of residents continues to occur in various areas. Statistics indicated that from 2006 to 2008, in the face of popular demands for compensation for seizures of cultivated land, the net reduction of cultivated land reached 124.8 million acres, and on average cultivated land decreased by nearly 42 million acres annually, which was respectively nearly 12 million acres and 19 million acres more than total

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(113 million acres) and the annual average (22.6 million acres) reductions under the Tenth Five-Year Plan. Since 2009, occupation of rural land went even farther, and a new upsurge of rural land occupation occurred in 2010. This differed from occupations in the past in that this upsurge aimed to expand urban construction through “replacement” of rural people’s residences. Since 2010, more than twenty provinces have released various plans and policies to abolish and merge villages. Farmers were usually asked to move to a city and move into apartments and received urban residency and social security. Thereby social contradictions and conflicts arose and widespread negative events broke out frequently, which has had adverse effect on social harmony and stability. In reality, the main factor restricting Chinese urbanization is not land but, rather, that construction of too many towns is unreasonable. According to research, at present, the proportion of urban industrial land occupancy is only 0.23, which is vastly lower than the international average. It is observed that the upsurge in “land urbanization” reflected strong stimulation in land financing more than real demand for in urban and rural development, urban and rural integration, and new rural reconstruction. We must prevent “urban and rural integration” from making “urban and rural areas the same” and farmers’ interests from being harmed during “land urbanization.” E. Semi-urbanization Problem Was Prominent, and Villages in Some Areas Withered China’s urbanization advancement quickened, but with it came a series of new problems. At present, the urbanization level, approximately 48 percent, is calculated according to the urban permanent population, which includes peasant laborers with a rural household registration who live in the city for more than half a year; in reality, peasant laborers only work in the city but do not have urban resident’s treatment in terms of welfare, collective services, and social security, so they are only “semi-urbanized.” If peasant laborers are to become “urban residents,” great efforts are needed. At present, China’s urbanization largely falls behind industrialization, and population urbanization falls behind land urbanization. Until 2010, the proportion of agricultural value-added was only approximately 10 percent of GDP; the proportion of agricultural labors among all jobholders was 38 percent, but farmers who lived in the villages also made up 52 percent, in which the data for peasant laborers who lived in the city for more than half a year was counted as part of the urban permanent population.



new stage of china’s social construction

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In some areas, villages began to empty out. First, they lacked industry, along with upgrades in industrial structure and a rising labor cost; the rural industries became increasingly less competitive, and emerging industries gradually concentrate in large and medium-size cities and industrial parks as well as new technical development zones. Second, the young people left. At first they left home to look for work, and then the large urban and rural disparities made them not want to return to the village to live, so rural areas became home only to old people, and farming became old people’s work. Third, houses became empty. In some developed areas, in the past housing reconstruction was rapid, but now no one wants to rebuild and renovate old houses, most wealthy villagers have purchased houses in the city and have gone there to live, so one-third of the houses in some villages stand idle, resulting in stagnant villages. Lastly, village cadres also left. A position as a village cadre is not a kind of vocation but, rather, a part-time job. Many village cadres focused not on their work for the village but on their own business. Fewer township cadres lived in the villages and towns because their children went to school in the city and members of their family went to work in the city. The empty industries, the empty houses, lack of young people, and lack of cadres caused some villages to wither. IV. Expectations for Social Development in 2011 and Countermeasure Proposals The year 2011 will be the first in the Twelfth Five-Year Plan and is also the beginning of a new round of reform. Economic restructuring that focuses on transformation of economic development methods, social reform that focuses on transformation of social management methods, and administrative system reform that focuses on transformation of government functions will all enter a stage of increasing technical difficulty. A. Quickening Economic Development, and Impelling Energy Conservation and Reduction of Emissions across the Country The huge impact of the international financial crisis caused deep changes in international economic patterns, and the main developed economies are quickening their readjustment to keep up with the new round of growth. China’s traditional export-oriented growth pattern contains enormous risk in the environment of economic globalization, but an investment-driven growth pattern to deal with the financial crisis is also difficult to maintain

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for a prolonged period. By safeguarding and improving people’s livelihood and increasing consumer income, domestic consumption is promoted to gradually substitute for exports and investment, so economic growth can be driven more harmoniously, which is a long-term strategy. Considering the increase in labor prices and land prices and the restraints of the environment, economic growth based on cheap labor is difficult to sustain. Therefore, it is important to actively cultivate supporting industries, and industries and brands that have independent innovation and intellectual rights should be cultivated to promote industrialization of technical innovation and thus to drive the upgrading and reform of industry and to promote the international standing of “made in China.” Global sustainable development also sets higher requirements for future reductions in the emissions of greenhouse gases, and this will inevitably put more pressure on developing countries. For China, which is in the process of industrialization, it must quicken the readjustment of its industrial structure and eliminate underdeveloped production capacity to address this reduction in emissions. Compared with the situation in 2005, the central enterprises’ total energy consumption (comparable price) of RMB 10,000 in output value fell 15.1 percent in 2009; the sulfur dioxide discharge was reduced 36.8 percent, and the chemical oxygen demand was reduced 33.04 percent. But overall, in the first four years of the Eleventh Five-Year Plan, energy conservation and emissions reduction were behind schedule, especially in some small and medium-size enterprises that lacked a technical innovation ability and ability to improve its manufacturing techniques. Therefore, energy conservation and emissions reduction should be integrated with new technology transfer and application to form a reverse mechanism of energy conservation and emissions reduction in enterprise technical innovation and upgrading industry so as to quicken economic development. B. Quickening Income Distribution Reform, and Promoting Social Harmony and Equality The largest problem affecting China’s social development is the increasing income disparity. If consumer income cannot increase quickly, and the proportion of consumer income in national income does not increase greatly, the strategic decision to drive economic development through expansion of domestic demand cannot be implemented. Historical experiences tell us that it is impossible for the market economy to spontaneously readjust and thoroughly settle the problem of an increasing



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gap between rich and poor. Especially in the process of Chinese market reform, marketing power and trade monopoly are quite prominent, and vested interests present a formidable obstacle to the readjustment of income distribution. Therefore, in income distribution reform, it is vital that the department concerned make up its mind to thoroughly readjust and gradually straighten out the benefit distribution pattern. Income distribution reform is not simply taking from the wealthy to aid the needy but allows all workers to share in economic and social development through a readjustment of the current pattern of distribution so as to encourage some people to become rich first and then allow for more broad-based prosperity. The proportion of consumer income in national income must be increased, the proportion of payment for labor in primary distribution must be increased, and the tendency for the income differential to expand between urban and rural areas, different regions, different professions, and members of different social classes must be reversed. A situation in which consumer income grows in line with the national economy, based on social justice and distribution equality, must be created to advance social harmony and social progress. C. Enhancing Control of Price Increases and Guaranteeing Urban and Rural Living Standards Since 2010, the consumer price index (CPI) has continuously risen, so realizing the goals that the central government formulated, to control CPI at 3 percent, faced great uncertainty. Among all consumer goods, agricultural products experienced the clearest price increases. Since 2010, not only did the price of garlic, mungbeans, and peppers increase but so did that of cotton and sugar. The data from the National Bureau of Statistics showed that, from January to September, grain prices increased 12.7 percent over those of the previous year, cotton price increased 32.0 percent, and vegetable prices grew 16.4 percent. The increase in agricultural product prices reflected anticipated inflation by the people and the market. Overall, urban residents have basically achieved a higher standard of living, but low-income families remained at a level of basic survival, so increases in agricultural product prices had a bigger impact on their quality of life. Price increases decreased actual disposable income and thus consumption capacity for low-income families. Powerful regulations should be put in place to deal with inflation in order to safeguard ordinary people’s quality of life.

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D. Keeping Housing Market Regulations and Strengthening Public Housing Construction Since 2010, real estate regulations were publicized; under the regulation of “combined measures,” prices fell and quantity increased in the supply of real estate available for use. But because macroeconomic recovery was not stable, and there was widespread anticipation of inflation and revaluation of the renminbi, there was widespread concern about the persistence of economic resurgence and real estate regulation. The second round of real estate regulation enhanced the relevance and flexibility of regulations, which would be consistent and stable, and made an acrossthe-board ruling with regard to loans on the first house, the proportion of the first payment was raised to 30 percent, loans for a third house were suspended, and some cities limited the number of houses one could buy. In order for the policy on differential housing credits to support reasonable housing consumption by consumers, speculative purchases of houses must be firmly limited, and the real estate bubble must be more firmly held in check. The housing problem is the major problem that affects the livelihood of the people, and the basis for solving this problem is to increase the housing supply, especially for the mid- and low-income groups. When formulating future real estate regulations, positive measures must be taken unceasingly to promote construction starts and sales, to increase the supply of private housing, and to advance public housing construction and transformation of various shantytowns to enhance market supply. At the same time, real estate market supervision should be strengthened to promote steady and healthy development of the real estate market. E. Continuously Focusing on Improving People’s Livelihood and Providing Adequate Public Services At present, China has entered the intermediate and late phase of industrialization, and public demands have advanced from consumption to development. In the new development phase, based on having solved the problem of adequate provision of food and clothing and providing an overall higher standard of living, people’s material and cultural demands will grow significantly. Currently, the problem of people’s livelihood is no longer caused by insufficient economic development but by insufficient basic public services where people’s demands are not met. Therefore, improving people’s livelihood should emphasize strengthening social construction and establishing and providing basic services.



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“­ Proposals of the Central Committee of the CCP on Formulating the Twelfth Five-Year Plan for National Economic and Social Development” (中共中央关于制定国民经济和社会发展第十二个五年规划的建议 zhonggong zhongyang guanyu zhiding guomin jingji he shehui fazhan dishierge wunian guihua de jianyi) considered and approved at the Fifth Plenary Session of the Seventeenth CCP Central Committee has proposed gradually implementing a system of basic public services that is in line with national conditions, is comprehensive, covers urban and rural areas, and is sustainable. It has taken concrete steps in six areas: promoting employment and building harmonious labor relations, adjusting income distribution, putting in place a social security system that cover urban and rural residents, speeding up medical and health-care reform and development, strengthening and innovating social management, and comprehensively completing population work. On October 28, 2010, the “Social Insurance Law” (社会保险法 shehui baoxianfa), which was submitted four times and examined and verified three times, was considered and approved at the Seventeenth Session of the Eleventh Standing Committee of the National People’s Congress. In the upcoming year, 2011, the entire society is expecting a period of economic growth, equality and justice, social harmony, lifestyle security and good environmental conditions, where the people live well and the nation is strong.

Part One

About Development

Chapter two

China’s Urban and Rural Resident Income and Consumption in 2010 Lü Qingzhe I. Urban and Rural Resident Income A. Sustained Growth of Income From January to September 2010, average disposable income per urban resident was RMB 14,334, which was an increase of 10.5 percent over the previous year; after deducting for inflation it actually was an increase of 7.5 percent. In the urban family’s average gross income per person, wage income grew 10.1 percent, transfer payments 12.5 percent; net operating income 9.9 percent, and property income 18.5 percent. Average cash income per rural resident was RMB 4,869, an increase of 13.1 percent, which, after deducting for inflation, actually was an increase of 9.7 percent. Among rural residents, wage income grew 18.7 percent, family operating income 8.7 percent, property income 19.4 percent, and transfer income 17.2 percent. B. Changes in the Structure of Urban and Rural Resident Income While urban and rural resident incomes grew, so did the structure of income structure. Data in 2009 showed that the proportion of wage income continued to shrink and the proportion of transfer payments increased. In 2009, wage income as a share of gross income was 65.7 percent, a decline of 0.5 percent over that of 2008. The proportion of transfer payments was 23.9 percent, an increase of 0.9 percent over that in 2008. The proportion of net operating income in recent years continued to grow, increasing from about 4 percent at the beginning of the century to 8.5 percent in 2008. This proportion fell to 8.1 percent in 2009, and the proportion of property income was 2.3 percent for three straight years (see Table 2.1). In 2009, rural residents’ cash income reached RMB 6,270.2, an increase of 1.6-fold from RMB 2,381.6 in 2000, and the proportion of cash income rose to 88.1 percent, an increase of 12.4 percentage points, from 75.7 percent

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lü qingzhe Table 2.1. Changes in the Structure of Urban Residents’ Income (%)

Income source

2000

2001

2002

2003

2004

2005

2006

2007

Wages and 71.2 ­salaries Net operating 3.9 income Property income 2.0 Transfer ­payments 22.9

69.9

70.2

70.7

70.6

68.9

68.9

68.7

66.2

65.7

4.0

4.1

4.5

4.9

6.0

6.4

6.3

8.5

8.1

1.9 23.6

1.2 24.5

1.5 23.3

1.6 22.9

1.7 23.4

1.9 22.8

2.3 22.7

2.3 23.0

2.3 23.9

Total

100

100

100

100

100

100

100

100

2008 2009

100

100

Table 2.2. Changes in the Structure of Rural Residents’ Income (%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net income 100 100 100 100 100 100 100 100 100 100 Wage income 31.2 32.6 33.9 35.0 34.0 36.1 38.3 38.6 38.9 40.0 Family operating 63.3 61.7 60.0 58.8 59.5 56.7 53.8 53.0 51.2 49.0 income Property income 2.0 2.0 2.0 2.5 2.6 2.7 2.8 3.1 3.1 3.2 Transfer payments 3.5 3.7 4.0 3.7 3.9 4.5 5.0 5.4 6.8 7.7

in 2000. In recent years, the structure of rural residents’ income changed, the proportion of family operating income dropped, and the proportion of wage, transfer, and property income increased in varying degrees (see Table 2.2). In 2009, the proportion of family operating income was 49 percent, the proportion of family operating income in rural resident income continued to drop, having reached a high of 75.8 percent in 1990, then falling to 60 percent in 2002, and falling below 50 percent for the first time in 2009. Wage income became the most important source of increased income for farmers. The average wage income per rural resident was RMB 2,061.3, which was 2.9 times that in 2000. From 2000 to 2008, the proportion of wage income rose from 31.2 percent to 38.9 percent, and this proportion reached 40.0 percent in 2009. Moreover, in 2009 the proportion of transfer payments in the income structure rose from 6.8 percent to 7.7 percent. II. Further Enhancement of Urban and Rural Consumption Levels Urban and rural consumption expenditures continued to increase. From January to September 2010, the average consumption expenditure per urban resident was RMB 9,941.6, an increase of 9.3 percent over the previous year; after deducting for inflation it actually grew 6.3 percent. The



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average personal consumption cash expenditure per rural resident was RMB 2,713, an increase of 10.6 percent over the previous year; after deducting for inflation, it actually grew 7.3 percent. We divide rural residents’ personal consumption levels in five groups of income (without considering inflation), from 2000 to 2009. Although there were variations, resident consumption levels in the different income groups universally grew quickly as a whole (see Table 2.3), and the average rate of personal consumption growth reached about 10 percent a year. Among them, the low-income group’s average personal consumption expenditure per person was RMB 977 in 2000 and RMB 2,355 by 2009, which is average annual growth of 10.27 percent; the medium-income group’s average personal consumption expenditure per person increased from RMB 1,501 to RMB 3,546, which is average annual growth of 10.02 percent; the high-income group’s average personal consumption expenditure per person increased from RMB 3,086 to RMB 7,486, which is average annual growth of 10.35 percent. We divide urban residents’ consumption levels in five groups of income (without considering inflation), from 2000 to 2009. Although the different income groups’ resident consumption levels had variations, from the low-income household group to the high-income household group, each group’s annual average personal consumption expenditure growth rate gradually increased (see Table 2.4). Among them, average personal consumption expenditure per person in a low-income household was RMB 2,899.1 in 2000 and increased to RMB 5,833.0 by 2009, an average annual increase of 8.08 percent; that of a medium-income household increased from RMB 4,794.6 to RMB 11,309.7, an average annual increase Table 2.3. Personal Consumption Level of Rural Residents’ Household Income in Five Groups (in RMB/person, %) Low-income MediumMediumMedium High-income household low-income income high-income household (20%) household household household (20%) (20%) (20%) (20%) 2000 2003 2005 2007 2009

977 1,065 1,548 1,851 2,355

1,233 1,378 1,913 2,358 2,871

1,501 1,733 2,328 2,938 3,546

1,877 2,189 2,879 3,683 4,592

3,086 3,756 4,593 5,994 7,486

2000–2009, annual average growth (%)

10.27

9.85

10.02

10.45

10.35

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Table 2.4. Personal Consumption Level of Urban Residents’ Household Income in Five Groups (in RMB/person, %) Low-income Medium MediumMedium High-income household low-income income highhousehold (20%) household household income (20%) (20%) (20%) household (20%) 2000 2003 2005 2007 2009

2,899.1 3,066.8 3,708.3 4,840.1 5,833.0

2000–2009, annual average growth (%)

8.08

3,947.9 4,557.8 5,574.3 7,123.7 8,738.8 9.23

4,794.6 5,848.0 7,308.1 9,097.4 11,309.7 10.00

5,894.9 7,547.3 9,410.8 11,570.4 14,964.4

8,135.7 12,066.9 15,575.9 19,300.9 24,043.1

10.91

12.79

of 10.0 percent; and that of a high-income household increased from RMB 8,135.7 to RMB 24,043.1, an average annual increase of 12.79 percent. The consumer market steadily grew, and popular commodities continued to flourish. From January to September 2010, the total volume of retail sales was RMB 11.1 trillion, an increase of 18.3 percent over the previous year. Among them, turnover in urban consumer retail was RMB 9.6 trillion, an increase of 18.7 percent; turnover in rural consumer retail was RMB 1.5 trillion, an increase of 15.8 percent. Classified according to consumption form, catering trade income was RMB 1.3 trillion, an increase of 17.6 percent; commodity retail turnover was RMB 9.8 trillion, an increase of 18.4 percent. Among them, enterprise (unit) retail turnover above quota was RMB 4.1 trillion, an increase of 29.3 percent. The consumption of popular goods grew rapidly: the automobile industry grew 34.9 percent, furniture manufacture 38.4 percent, and home appliances and audio/video equipment industry 28.1 percent. III. Improvement in Urban and Rural Residents’ Quality of Life A. Decline in the Engel Coefficient, Enhancement in the Quality of Foods Consumed In 2010, with regard to food consumption, urban and rural residents continuously experienced progress, from satisfaction of demand for quantity to enhancement of quality, which suggested that the Engel coefficient fell



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slightly. In 2009, average food expenditure per rural resident was RMB 1,636, an increase of RMB 37 over that in 2008; average food expenditure per urban resident was RMB 4,479, an increase of RMB 219 over that in 2008. The Engel coefficient for urban residents declined from 37.9 percent in 2008 to 36.5 percent in 2009; for rural residents it declined from 43.7 percent in 2008 to 41.0 percent in 2009. While expenditures on food grew for both urban and rural residents, nutrition became increasingly important, and meals became more balanced, and the quality continuously improved. With regard to the structure of food consumption, the average grain consumption per rural resident fell from 250.2 kg in 2000 to 189.3 kg in 2009, and the level for urban residents fell from 82.3 kg in 2000 to 81.3 kg in 2009. With regard to edible nutrition, consumption of meat, poultry, eggs, and milk has clearly increased, and nutrition has improved. The average consumption of meat, poultry, and related products per rural resident rose from 18.3 kg in 2000 to 19.6 kg in 2009, and consumption of milk and dairy products rose from 1.1 kg in 2000 to 3.6 kg. Among urban residents, pork consumption increased from 16.7 kg in 2000 to 20.5 kg, and fresh milk consumption increased from 9.9 kg in 2000 to 14.9 kg. B. Increase in Clothing Purchases In recent years, urban and rural residents’ demand for clothing also changed; people paid greater attention to quality. People increasingly took into consideration design and color, brands, fashion, and personal taste, and ready-made clothing also became mainstream. Average clothing spending per rural resident increased from RMB 61.1 in 2002 to RMB 156 in 2009, an increase of 1.55 times. In 2009 average expenditure per urban resident on dresses was RMB 1,284.2, an increase of 1.57 times over that of RMB 500.5 in 2000, when the average expenditure per person on ready-made clothing was RMB 924.0, which accounted for 72 percent of spending on dresses. C. Continuous Improvement in the Ownership of Main Family Consumer Durables Urban and rural residents’ consumer durables were continuously promoted, and ownership of main family durables continuously increased. Compared with 2008, in 2009 ownership of color televisions for every hundred households of urban residents increased from 133 to 135.7, ownership of washers and refrigerators, respectively, increased from 94.7 and 93.6 to

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96.0 and 95.4, ownership of air-conditioners increased from 100 to 106.8, ownership of home computers increased from 59.3 to 65.7, ownership of family cars increased from 8.8 to 10.9, and ownership of mobile phones increased from 172 to 181. Among rural residents, ownership of color televisions for every hundred households increased from 99.2 to 108.9, that of washers and refrigerators increased respectively from 49.1 and 30.2 to 53.1 and 37.1, and ownership of mobile phones increased from 96 to 115.2, but that of landline telephones dropped from 67 to 62.8, ownership of motorcycles increased from 52 to 56.6, and that of home computers increased from 5.4 to 7.5. D. Continuous Improvement in Housing Conditions and the Environment Housing conditions for rural residents and the environment continuously improved. In 2009, average expenditures on housing per rural resident was RMB 805.0, an increase of RMB 126.2 from RMB 678.8 in 2008. Percapita area for housing increased from 32.4m2 in 2008 to 33.6m2 in 2009, an increase of 1.2m2. Of that total, housing of half-timber construction and reinforced concrete structures accounted for 88.1 percent, an increase of 0.8 percent over that of the previous year, 87.3 percent. In addition to an increase in housing area, housing conditions also greatly improved. In 2009 peasant households with flush toilets comprised 19.6 percent, an increase of 2.1 percent over that in 2008; those without flush toilets accounted for 6.5 percent, a decline of 0.9 percent over that in 2008. Peasant households with access to recycled fuel oil, natural gas, electricity, and methane comprised 30 percent, an increase of 1.4 percent over that of 2008; peasant households that drank tap water accounted for 46.0 percent, which increased 2.8 percent from that of 2008, but peasant households without access to clean water, that is, their drinking water came from well water and water from rivers, streams, lakes, ponds, and so on, comprised 23.1 percent, a decline of 1.1 percent over that of 2008; 46.5 percent of peasant households had cement or blacktop outside their house, an increase of 4.1 percent over that of 2008, and 22.2 percent of peasant households had a hard surface, such as stone or flagstone outside their house. In recent years, because a vast number of houses were completed, urban residents’ housing conditions clearly improved. In 2009, average housing area per urban resident reached 31.3m2, an increase of 0.7m2 over that of the previous year. By the end of 2009, 4.4 percent of urban families lived in a detached house, 83.7 percent urban families lived in apartments,



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36.4 percent of urban families lived in three- or four-bedroom apartments, and only 11.9 percent families lived in hutong apartments or one-story houses. Improvement in housing facilities was obvious; in 2009, 98.5 percent of families lived in housing with tap water, 81 percent of families’ houses had a washroom and bathroom, and 63.8 percent of families had air-­conditioning or central heating. The kitchen of the majority of families had ready access to clean fuel for cooking. By the end of 2009, 88 percent of families used pipeline coal gas and liquefied petroleum gas, and only 7.5 percent families still used coal for fuel. E. Quick Renewal of Transportation With rapid economic development and an increase in the pace of life, transport started to occupy an important share of consumer expenditure. In 2009, average transportation spending per urban resident reached RMB 1,040.9, an increase of 2.9 times over that of 2002 and accounted for 8.5 percent of consumer expenditure, an increase of 4.1 percent over that of 2002. Traditional means of transportation have been unable to meet urban residents’ increasingly urgent travel needs, and people pursue more convenient and more rapid transportation methods. Public transportation was no longer the only choice, and family cars, motorcycles, and other kinds of motor vehicles are used by ordinary households. In 2009, for every hundred urban households there were 10.9 family cars, an increase of 11.4 times over that of 2002. With the increasing expansion of rural residents’ contacts with the outside world, modern transportation vehicles rapidly came into use in rural households. In 2009 for every hundred rural households there were 56.6 motorcycles, average spending per person on a vehicle was RMB 121, an increase of RMB 30 over that of the previous year, 33.7 percent. F. Higher Expenditures on Culture and Entertainment Because of the continuous improvement in urban and rural residents’ material living standards, people began to pursue cultural activities and the pursuit of recreational activities increased. Statistics indicated that, in 2009, average spending on educational, cultural, and entertainment activities and services per urban resident was RMB 1,472.8, an increase of 1.2 times over that of 2000, or average annual growth of 9.2 percent; average spending on educational, cultural, and entertainment services per rural resident was RMB 340.6, an increase of 82.4 percent over that of 2000, or average annual growth of 6.9 percent.

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With their increases in income, urban and rural residents paid more attention to their own physical health, and the phenomenon of treating only serious illnesses and not minor illnesses changed. In 2009, rural families’ average health-care spending per person was RMB 287.5, an increase of 2.28 times over that of 2000, or average annual growth of 14.1 percent; urban families’ average health-care spending per person was RMB 856.4, an increase of 1.69 times over that of 2000, or average annual growth of 11.6 percent, of which spending on body-building activities was RMB 15.6, an increase of 14.7 percent over that of the previous year; spending on health apparatus was RMB 17.9, an increase of 17.8 percent from over of the previous year; and spending on health products was RMB 116.0, an increase of 14.8 percent over that of the previous year. IV. Problems in Personal Consumption A. Irrational Income Distribution Patterns With regard to the distribution of national income, the share comprising remuneration for workers and staff fell from 50.7 percent in 2004 to 47.6 percent in 2008. Internationally, the average world proportion of remuneration for workers and staff is between 50 percent and 55 percent; in Japan and South Korea during industrialization, it was also lower than 40 percent in some years, but never had lasting declines; in the UK, the United States, and Germany, during industrialization it was the highest. Moreover, the income distribution between urban and rural areas and between industries and communities was unfair, and the disparity was excessive; the Gini coefficient in 2009 was estimated at 0.46, higher than the 0.4 warning point. These factors are substantial reasons behind lower consumer spending. B. Low Consumption Rate The rate of consumption does not reflect the level of economic development but can only reflect the driving force of consumption in the economy and reflects the distribution of national income. World Bank statistical data show that, at present, the consumption rate in a low-income country is on average 75 percent, in a high-income country is on average 62 percent, in a medium-income country is on average 57.5 percent, and globally is on average 61.5 percent. Although consumption has grown rapidly since the reform and opening up, the rate was actually lower than that of the general



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33

Table 2.5. Consumption as a Share of GDP from 1978 to 2009 (%) Consumption (total) 1978 1979 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009

48.79 49.15 50.76 51.64 48.85 44.88 46.44 38.82 36.94 35.97 35.12 35.11

Of which: Rural resident

Urban resident

30.30 30.61 30.72 30.95 24.20 17.83 15.34 10.35 9.57 9.07 8.73 8.36

18.49 18.54 20.04 20.69 24.64 27.05 31.10 28.47 27.38 26.89 26.39 26.75

economy. Thus, consumption as a share of GDP trended downward. Consumption comprised 48.79 percent in 1978 and about 50 percent in 1980s, but fell year by year after 1990 and dropped to 35.11 percent in 2009, down 13.68 percent over the rate in 1978. In the process, the weight of urban and rural consumption as a share of the total changed; the urban consumption gradually increased, and rural consumption gradually decreased. In 1990, the scale of urban consumption for the first time surpassed that of rural residents to become the majority. Afterward, this tendency continued to strengthen such that in 2009, urban consumption reached 76.2 percent of the total, and rural consumption was only 23.8 percent; and the rural consumption rate fell to historic lows, 8.36 percent. C. Effect of Rapid Increase in Housing Prices on Expenditures In 2009, the urban family’s average total expenditure per person was RMB 17,248, an increase of 17 percent over that of the previous year; and the rate of growth was 9.8 percent higher than that of the previous year, and after deducting for inflation it actually grew 18.1 percent. Among them, average expenditure per person was RMB 12,265, an increase of 9.1 percent over that of the previous year, and after deducting for inflation it actually grew 10.1 percent. But average non-consumption expenditures per person was RMB 4,984, an increase of 42.2 percent over that of the previous year, with a growth rate 49 percent higher than that of the previous year. The

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lü qingzhe

main reason was that the cost of buying and constructing houses quickly rose. In 2009, the average cost per urban resident of buying and constructing houses was RMB 1,507, an increase of 150.1 percent over that of the previous year; it accounted for 30.2 percent of non-consumption expenditure, an increase of 13 percent over that of the previous year. This excessively quick rise in housing prices affected residents’ daily expenditures and also affected the actual result of national policy on expanding domestic demand and stimulating consumption. This was reflected in the national survey of the People’s Bank of China on urban depositors. The survey showed in the third quarter of 2010, anticipated housing prices largely rose, personal savings and consumption demand slightly fell, but residents’ desire to buy a house did not change, and investment demand increased. D. Insufficient Public Services International experience indicates that as economic development proceeds, the proportion of government expenditure on public services— especially for education, medical services, and social security—should increase. In 2008, expenditures on these services accounted for 28.9 percent of total government expenditures, which was nearly 14 percent and 25 percent lower, respectively, than countries with an average GDP of US $3,000 and below and US $3,000–5,000 per capita. This insufficient government supply of services indicated that, when the national income was allocated, and residents obtained extremely little, they had to use their own income to pay for expenses that should be paid by the government, which displaced consumer spending, reduced their anticipated consumption, and caused a higher savings ratio. E. Lagging Development in the Service Sector In addition to the raising of residents’ living standards and the decline in the Engel coefficient, an increase in consumption of goods and services was inevitable, but China’s service sector is not developed yet, especially in finance, education, consulting, medical services, household management, and so on. In 2009, the proportion of value-added of the service sector in GDP was 43.4 percent, but the average world level was 68 percent, in developed countries 72 percent, and in developing countries 52 percent. The insufficient effective supply of services seriously affected improvement in resident consumption and the national level of employment.



china’s urban and rural resident income

35

V. Development Trends and the Primary Mission of Urban and Rural Residents’ Personal Consumption in 2011 The year 2011 is the beginning of the Twelfth Five-Year Plan. Under this Plan, expanding consumer demand will be emphasized to strengthen the promotion of consumption in economic development and to construct the development model that regards consumption as an important driving force behind economic growth, which will undoubtedly propel the Chinese economy to a new realm of development. In 2011, urban and rural resident income will continue its swift growth, consumption patterns will be optimized, and the quality of life will be further improved. A. Steadfast Economic Development Was the Source of Residents’ Consumption Growth Consumption is restricted by income, income originates from total output value, and expanding consumption demand is necessary to maintain rapid macroeconomic growth. Therefore, expanding consumption cannot pay attention to the consumption rate to the exclusion of all else but should first vigorously develop the economy and maintain rapid economic growth. The period of the Twelfth Five-Year Plan is a crucial phase in comprehensively constructing an affluent society, and we must continue to pay special attention to and take advantage of the important strategic opportunity of development, promote long-term economic development, quicken economic structural adjustment, maintain and expand the scale of investment, and increase employment by expanding investment. Only an increase in employment can, in the end, drive the increase in consumption levels by increasing resident income. B. Adjust the Distribution of Income Distribution, Raise the Proportion of Remuneration for Workers and Staff Income is the foundation for consumption and is the most direct and important factor that affects resident consumption. Since the reform and opening up, on average GDP has grown 9.9 percent a year, average disposable income per urban resident on average has grown 7.3 percent a year, average net income per rural resident on average has grown 7.2 percent a year, and economic growth in the majority of years was more rapid than that of resident income. In 2009, remuneration for workers and staff as a

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share of GDP was 46.6 percent, which was also a large increase compared with that in developed countries. Readjusting income distribution should start with readjusting disparities between various parts of the country and between different income groups to fundamentally solve the problem of insufficient resident consumption, to further enhance medium- and low-income groups’ consumption capacity, to transform social and economic development into consumption as soon as possible, and to promote sound interaction between economic growth and improvement in the standard of living. C. Stabilizing Prices and Safeguarding People’s Livelihood Since July 2010, overall price levels have increased month by month, and increases in the prices for daily necessities, with agricultural products leading the way, was rapid. In October, the CPI increased 4.4 percent, of which increases in food prices “contributed” 74 percent. People regarded food as their primary need, and the increase in prices has affected the daily lives of both urban and rural residents, especially those of the mediumand low-income population, and has affected society’s expectations. Analyses on future trends, in which international currency is unchecked and it is difficult for domestic fluctuations to be quickly brought under control, indicate that inflation will remain high. Therefore, the government must take effective measures to control domestic inflation. D. Strengthen the Middle Class, and Promote Upgrades in Patterns of Consumption The middle class is the backbone of consumption, and its influence on consumption and output of the entire society cannot be overestimated. At the same time, strengthening the middle class is also advantageous in reducing income disparity, in optimizing industrial structure to promote coordinated social and economic development, in creating a good social consumption environment, in promoting the establishment of good social values and social norms, and in maintaining social harmony and stability. Therefore, diligently increasing the proportion of the middle class has become a requirement for stable and healthy political, economic, and social development. At present, urban and rural residents are both undergoing transformation and upgrading their consumption patterns; this is not only the process in which a middle class develops but is also one in which the industrial structure is optimized and the national economy reaches a positive cycle and coordinated development. The government should realize



china’s urban and rural resident income

37

the institutionalization and specialization of the employment service system through legislation, which creates a good employment environment for the middle class. At the same time, it should positively guide the entire society to transform the employment mentality, encourage people to find jobs independently or become self-employed, encourage legitimate avenues for becoming rich, and protect lawfully earned income, in order to form a diverse pattern composed of the middle class.

chapter three

China’s Current Employment and Industrial Policy, 2011 Mo Rong and Luo Chuanyin I. Analysis of the Employment Situation in 2010 A. Improvement in the Employment Situation but Pressure Still Existed From January to September 2010, 9.31 million people newly obtained urban employment, achieving 103 percent of the annual goal for 9 million people; 4.4 million laid-off workers found re-employment, achieving 88 percent of the annual goal of 5 million people; 1.26 million people who were having difficulty finding employment obtained employment, achieving 126 percent of the annual goal of 1 million people. At the end of the third quarter, cities as a whole had 9.05 million unemployed, a reduction of 100,000 over the previous year; the urban registered unemployment rate was 4.1 percent, a 2 percent decrease over the previous year. The rural migrant labor force continued to grow. A quick investigation by the Ministry of Human Resources and Social Security of 250 administrative villages in Anhui, Jiangxi, Henan, Hubei, and Sichuan provinces showed that, by the end of September, the out-migrant population was equivalent to 106.7 percent of the peak of out-migrant population in 2009 (at the end of August) and was equivalent to 102.2 percent of out-migrant population at the end of August 2008. From January to September 2010, a total of 12.54 million people participated in vocational training subsidized by the government, in which 2.15 million peasant laborers of enterprises were given on-the-job training, 970,000 staff were trained for difficult enterprises, 890,000 rural lianghou sheng (两后生: graduates from junior and senior high schools who failed to enter a higher school) were trained, 4.71 million rural workers who went to a city to work received skills training, 2.64 million urban unemployed received skills training, 390,000 college graduates seeking jobs received skills training, and 790,000 people obtained entrepreneurial training. In all, 11.16 million people participated in vocational skills testing, and 9.51 million people obtained certificates for occupational ­qualifications,

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adding 1.34 million senior skilled workers, 150,000 technicians, and 40,000 senior technicians to the job market. B. Recruitment Demand and Number of Job-Seekers Increased The vocational supply-demand data on the labor market collected by the monitoring center of the China labor market information network from 109 urban employment services indicated that:1 in the third quarter of 2010, employers recruited approximately 6.68 million people through head-hunters, job seekers in the market totaled approximately 6.77 million, and the ratio2 between job openings and the number of job-seekers was approximately 0.99, an increase of 0.05 over that of the previous year. In the eastern, central, and western regions, the ratio between job vacancies and the number of job-seekers was 1.01, 0.96, and 0.95, respectively. In terms of total supply and demand, for that quarter, the demand population and the number of job-seekers, respectively, fell by 53,000 and 22,000 over those of the previous quarter, declines of 0.8 percent and 0.4 percent, respectively. For that quarter, the demand population and the number of job-seekers increased 1.14 million and 750,000, respectively, over those of the previous year, increases of 21.8 percent and 13.1 percent, respectively. Compared with the same period in 2010, in the eastern, central, and western regions, worker demand increased by 700,000, 386,000 and 54,000, respectively, increases of 22 percent, 32 percent, and 6.5 percent, respectively; in the central and eastern regions, the number of job-seekers increased by 480,000 and 320,000, respectively people, growth of 14.3 percent and 23.5 percent, respectively; in the western regions, the number of job-seekers decreased by 50,000, a 5.4 percent drop. C. Manufacturing Industry Still Dominated in Increasing Employment Compared with the same period in 2010, the demand proportion of secondary industry increased 1.1 percent, and the demand proportion of the service sector declined 0.5 percent (see Figure 3.1).

1 Data from analysis on market supply-demand condition of head-hunters in certain cities in the third quarter of 2010, at the monitoring center of the China labor market information network. 2 The proportion of post vacancy and job seekers = demand population/number of job-seekers, which indicated the post vacancy number corresponded to each job seeker in the labor market.



china’s current employment and industrial policy, 2011 Primary industry 1.6% Tertiary industry (Services) 57.7%

41

Secondary industry 40.7%

Figure 3.1. Demand Population Grouped by Industry

Industrial demand, manufacturing, wholesale and retail trade, and lodging and catering formed the first three big demands. Personnel needs for 82 percent of enterprises were concentrated in manufacturing, wholesale and retail trade, lodging and catering trade, resident and other ­services, leasing, commercial services, and construction; the proportion of personnel needs for these industries were, respectively, 33.9 percent, 16.1 percent, 12.8 percent, 8.8 percent, 5.8 percent, and 4.6 percent. Of these, personnel needs in manufacturing and construction, respectively, comprised 83.4 percent and 11.2 percent of total personnel needs in secondary industry, and the two combined comprised 94.6 percent; personnel needs in wholesale and retail trade, lodging and catering, resident and other service industries, and leasing and commercial services comprised 27.9 percent, 22.2 percent, 15.3 percent, and 10 percent, respectively, of total personnel needs in services, and the four added up to 75.4 percent (see Figure 3.2). Compared with the previous quarter, personnel needs in secondary industry increased by nearly 100,000, an increase of 4.1 percent; of this, personnel needs in manufacturing increased by 102,000, an increase of 5 percent; personnel needs in services decreased by 137,000, a decline of 3.7 percent; personnel needs in wholesale and retail trade, lodging and catering, banking and real estate, respectively, decreased by 63,000, 24,000, 22,000, and 19,000, respective declines of 5.9 percent, 3.0 percent, 19.6 percent, and 10.2 percent; and personnel needs in resident and other services and in leasing and commercial services, respectively, increased by 29,000 and 15,000, increases of 5.6 percent and 4.3 percent, respectively. Compared with the previous year, personnel needs in secondary and tertiary industries, respectively, increased by 520,000 and 640,000, increases of 25.1 percent and 21.1 percent, respectively; of which, personnel needs in manufacturing, wholesale and retail trade, lodging and catering, resident

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international organizations 0.0% public administration and social organizations 0.3% 1.4% culture, sports, and entertainment industry health, social security, and social welfare 0.7% 0.9% education 8.8% resident and other service industries water conservancy environment, and public facility management 0.6% scientific research, technical services, and geological investigation 0.8% 5.8% leasing and commercial services 2.6% realestate 1.5% banking 12.8% lodging and catering 16.1% wholesale and retail trade 2.7% IT, computer services and software industry 2.4% transportation and communication, storage and postal industry 4.6% construction 1.5% production and supply of electrical power, fuel gas, and water manufacturing mining 0.8% agriculture, forestry, animal husbandry, and fishery 1.6%

Figure 3.2. Demand Population Grouped by Industry

and other services, leasing and commercial services, and construction, respectively, increased by 438,000, 200,000, 200,000, 56,000, 34,000, and 47,000, increases of 25.1 percent, 24.1 percent, 32 percent, 11.5 percent, 9.9 percent, and 20.3 percent, respectively. D. Non-State-Owned Enterprises a Major Channel for New Employees In terms of enterprise personnel needs, domestically funded enterprises accounted for 72.9 percent, of which personnel needs in private enterprises, limited liability companies, and joint-stock limited companies was large and comprised 26.2 percent, 24.8 percent, and 9.4 percent, respectively, and the proportion of personnel needs in state-owned and collective enterprises was only 4.3 percent, and 7.1 percent in Hong Kong, Macao, and Taiwanese-invested enterprises, 10.1 percent in foreign-invested enterprises, and 10 percent in individual operations (see Figure 3.3). Compared with the same period in 2010, overall enterprise personnel needs increased by 1.09 million, an increase of 21.4 percent. Of these, personnel needs in domestically funded enterprises increased by 680,000, an increase of 18 percent; in domestically funded enterprises, personnel need in jointly operated enterprises, limited liability companies, and joint-stock limited companies, respectively, grew 61.3 percent, 31.2 percent, 28 percent; that in Hong Kong, Macao, and Taiwanese-invested enterprises and foreign-invested enterprises grew 31.6 percent and 41.5 percent, ­respectively.

33.9%



china’s current employment and industrial policy, 2011

institutions 0.7% organs 0.2%

others 2.6%

enterprises 96.5%

43

individual collective operations enterprises foreign-invested 10.0% 1.7% cooperative enterprises state-owned stock enterprises 10.1% enterprises 2.7% Hong Kong, Macao, and 2.6% jointly operated Taiwanese-invested enterprises enterprises 2.5% 7.1% limited liability other enterprises company 2.9% joint-stock 24.8% private limited company enterprises 9.4% 26.2%

Figure 3.3. Demand Population Grouped by Employers

E. The Unemployed and External Workers Were the Main Job-Seekers3 Among all job-seekers, the unemployed comprised 54.3 percent, of which newly unemployed youth comprised 27.9 percent (of which this year’s college graduates comprised 47.8 percent), those laid off people comprised 14.5 percent, and other unemployed, 11.9 percent; external workers comprised 34.8 percent, of which rural personnel of this city and personnel from other villages and towns, respectively, comprised 12.2 percent and 22.6 percent. Compared with the same period in 2010, job-seekers among unemployed youth increased by 45,000, a 33 percent increase. This year’s college graduates increased by 280,000, an increase of 48.2 percent; laid-off job-seekers decreased by 9,000, a decline of 1 percent; job-seekers among other unemployed increased by 25,000, an increase of 3.7 percent. In terms of external workers, this city’s rural job-seekers declined by 84,000, a reduction of 9.8 percent; job-seekers from other villages and towns increased by nearly 300,000, a 25 percent increase. F. High Demand for Senior Engineers, Senior Technicians, and Technicians Regarding the requirements of need for technical skills, 49.4 percent of total job vacancies had clear requirements for technical skills, mainly concentrated in primary skills, secondary skills, technicians, and engineers— fully 41.5 percent of the staff sought. 3 Unemployed people = newly unemployed youth + laid-off people + other unemployed people.

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In the composition of job-seekers’ technical skills, 48.7 percent had some technical skills, mainly concentrated in primary skills, secondary skills, technicians, and engineer—a total 42.2 percent of job-seekers. With respect to supply-demand conditions, the ratio between job vacancies and job-seekers with various technical skills was higher than 1, and the demand for labor exceeded its supply. The ratio between job vacancies and the number of technician, senior technician, and senior engineer job-seekers was high: respectively, 1.85, 1.84, and 1.75. Compared with the same period in 2010, personnel needs for various technical skills grew: of the need for senior skilled personnel, technicians, senior technicians, engineers, and senior engineers grew 29.8 percent, 32.5 percent, 26.1 percent, 29.5 percent, and 37.5 percent, respectively. II. Industrial Policy on Employment Promotion In order to deal with the impact of the international financial crisis, beginning in the second half of 2008, the Chinese government took a series of measures to stabilize and increase employment, in which an investment plan worth RMB 4 trillion attracted particular attention. In the RMB 4 trillion investment plan, RMB 280 billion was for the public Comfort Housing Project, about RMB 370 billion for rural projects for people’s livelihood and rural infrastructure, RMB 1.8 trillion for railroads, roads, airports, and the urban and rural electrical grid, RMB 40 billion for health, culture, and education, RMB 350 billion for the environment, RMB 160 billion for independent innovation structural readjustment, and RMB 1 trillion for post-disaster rehabilitation and reconstruction of severely affected areas. The industrial policy on employment promotion mainly concentrated on the following aspects. A. Supporting the Development of Strategic Industries and Emerging Industry Groups and Cultivating New Areas of Economic Growth In March 2010, the General Office of the National Development and Reform Commission announced that it was gradually advancing the development of high-tech services and adjusting China’s industrial structure. In July 2010, the Twelfth Five-Year Plan further readjusted the strategic emerging industries, mainly including new energy resources and new energy equipment, an intelligent electrical grid, advanced transportation and communications; next-generation information ­equipment manufacture



china’s current employment and industrial policy, 2011

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and information services; new materials industry in nanometer materials, new structural materials, new functional materials, electronic information materials, bioengineering and related industries in bio-agriculture, biomaterials, biochemistry, biomedicine, and biological energy sources, environmental protection equipment manufacture and environmental protection engineering, and related services, health-care industries in medicine manufacturing and medical services, health care and nursing, finance, insurance, and commercial services, and the cultural and creative industries. B. Cultivating Green Industry as an Important Turning Point to Promote Industrial Transformation and Upgrades At present, various countries are developing emerging green industry in new energy resources, energy conservation, and environmental protection in order to help cultivate new economic growth in the future, which has provided China with an opportunity to bring about an industrial transformation during the Twelfth Five-Year Plan. First, China can develop the emerging green industry in favor of environmental protection and the rise of energy efficiency; second, it can develop new green industry in new energy sources, energy conservation, and environmental protection; third, it can develop the emerging green industry in favor of energy conservation and environmental protection, technological transformation, and upgrades of traditional industry to drive the development of related services. Looking at the leading industry, it can vigorously advance the high technology and new-technology industrialization process, paying special attention to scientific research and development in six domains—electronic information, biotechnology, advanced manufacturing technology, new materials, new energy resources, and environmental protection technology. Meanwhile eliminating low productivity is regarded as the key link in preventing high consumption and high emission industry. C. Adapting the Requirements for Industrialization and Urbanization, and Accelerating the Transformation of the Industrial Structure First, key links of research and development, design, marketing, branding, technical services, and a specialized division of labor, which restrict industrial structural optimization, should be emphatically broken up to promote the development of labor-intensive industry in the direction of high-end industry, and to extend from simple processing and manufacture to design, research and development, and branding and services. The

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­ rocessing trade realizes transformation from a change in direction from p the low-added-value sector to the high-added-value sector and from simple production to comprehensive services and global operations. Second, new patterns in traditional industry were strengthened and promoted, the guiding opinions on promoting industrial structural readjustment of steel, iron, and cement were publicly announced, admittance conditions for ferroalloy and coking industries were formulated and issued, and structural readjustment and elimination of low-productivity/ high-energy consumption and high-emission industries were actively advanced. The policy on promoting the development of renewable energy sources was completed, a batch of large-scale demonstration projects was established, and the energy structure was optimized. Third, the development of the electromechanical industry, high-tech industry, and emerging industries that are technology intensive and knowledge intensive and are high-value-added and highly processed were emphatically supported. The development and domestic production of important equipment for high-speed rail and new ships were actively advanced to promote the scale and level of the equipment manufacturing industry. A batch of major projects in transportation infrastructure was organized to strengthen the construction of a comprehensive transportation network and a batch of significant technical infrastructure was organized to promote independent innovation. Fourth, significant specialized projects for high-tech industrialization in biomedicine and aviation were organized and implemented to support the development of the high-tech industry. A comprehensive work program for energy conservation and emissions reduction was formulated to advance the work of energy conservation and environmental protection. D. Strengthening Institutional Innovations, and Accelerating the Development of Modern Services, Particularly in Finance In order to develop the service sector into a strategic deployment for leading industry of the national economy, the State Council issued “Opinions on Accelerating the Development of the Service Sector” (关于加快发展 服务业的若干意见 guanyu jiakuai fazhan fuwuye de ruogan yijian) and organized and formulated implementation measures to determine policy for supporting essential services and emerging industrial development. A national guiding function for the service industrial development fund should be fully deployed to drive the social fund and to increase investment in the service sector.



china’s current employment and industrial policy, 2011

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First, the requirements for industrial fusion and deepening of labor division should be adjusted, science and technological advancement and technological innovation should be depended upon, innovation should be encouraged, and the overall quality and level of the service sector should be promoted; the manufacturing enterprises’ external professional services should be guided, and specialized service industry development should be promoted. Second, we should eliminate trade monopolies, encourage competition, and introduce a competitive system into the banking, insurance, rail, commercial aviation, postal service, and telecommunication fields. We should establish and complete laws and regulations in favor of social labor division, strengthen the standard services, good faith services and protection of intellectual property, and develop a cultural environment in favor of the division of labor. Third, we should grasp the opportunity in which the service sector is rapidly developing around the world and positively expand services in the outside world safely while preventing the control of China’s essential services by multinational corporations, and continue development of international services such as software, information, financial services, and management consulting. Fourth, along with accelerated urbanization and improvements in production socialization and living standards, we should quickly develop the financial services and the service industry for daily life, and provide management of finance, insurance, design, consulting, electronic commerce, modern logistics, and a supply chain of high-efficiency services in production; to satisfy demands for a higher standard of living, we should develop services in culture, education, health care, tourism, and ­telecommunication. E. Insisting on a Policy That Simultaneously Develops Labor-Intensive and Capital-Intensive Enterprises First, the structure of industrial organization was adjusted to encourage combined reorganization of industrial enterprises in steel and iron, coal, automobile, and so on; guidance and planning to the industrial sector was strengthened; and the industrial support system that forms coordinated development of large, medium-size, and small enterprises was supported. “Opinions on Encouraging, Supporting, and Guiding the Individual ­Operation, Privately Operated and Other Non–Publicly Owned Economic Development” (关于鼓励支持和引导个体私营等非公有制经济发展

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若干意见 guanyu guli zhichi he yindao geti siying deng feigongyouzhi jingji fazhan ruogan yijian) and supporting measures were formulated and issued in order to create a good market environment for the development of non–publicly owned enterprises. The trade monopoly system reform was quickened, and a market competition mechanism was introduced. The “Antimonopoly Law” (反垄断法 fanlongduan fa) should be formulated and released to maintain an effective competitive market order; price reform of petroleum, natural gas, electric power, and coal should be advanced steadily to complete the market economy. Second, individual operations, privately operated and other non– publicly owned economic developments should be positively encouraged, supported, and guided, and services and supervision should be improved to enhance the industrial level and enterprise quality of the non—publicly owned economy. Laws and the policy system for competition should be completed and normalized, local and regional protectionism should be broken up, regional trade monopolies should be broken up and eliminated, competitive industry should be normalized in order to establish fair competition; within monopolistic industry, there needs to be deeper reform, market access should be broadened, market openness enhanced, and reorganization guided to promote the formation of effective market competition. III. Employment Effects of Industrial Policy The industrial policy and investment structure is undergoing changes, which might lead to structural unemployment and industrial policy change might lead to frictional unemployment, which will become the primary cause affecting economic growth employment flexibility in the future. We obtained the data of trade changes in industrial policy using data from city investment in various industries from the National Bureau of Statistics website, obtained data of employment needs of various industries using data from http://chinajob.gov.cn, and analyzed the elasticity coefficient of the policy on various industries to the employment needs of various industries using: elasticity coefficient of employment needs = employment need acceleration/investment acceleration.

Agriculture, forestry, animal ­husbandry and fishery

−0.00619 0 0.001592 0.025688 0.004706 −0.00435 −0.01277 −0.01603 −0.05155 −0.00562

Period

Jan. 2008 Apr. 2008 Jul. 2008 Oct. 2008 Jan. 2009 Apr. 2009 Jul. 2009 Oct. 2009 Jan. 2010 Apr. 2010

(1) Manufacturing

Electric coal gas

Building industry

−0.00316 0.191223 −0.0303 0.085106 0.009202 0.05414 0.010989 0.357143 −0.0024 0.056886 0.006369 −0.06452 0.012698 −0.12418 0.012987 0.023026 −0.00608 −0.02198 0 −0.00299 −0.02459 0.040956 −0.01045 −0.01376 −0.01714 0.093863 −0.01099 −0.00955 0.005495 0.235075 −0.01053 −0.01736 0 0.05814 −0.02062 0.020408 0.026316 0.02008 0 0.009317

Mining industry

−0.11321 −0.03704 0.008264 0 −0.00182 −0.00458 −0.00506 0 −0.00694 −0.01195

0.083333 0.018868 0.089552 −0.0117 −0.04 −0.0068 −0.03347 0.016667 0 −0.01923

−0.06931 −0.04225 −0.01563 0.013699 0.040909 0.02 −0.00209 −0.03046 −0.05775 0.025907

Transportation Information Wholesale and transmission and retail ­communication trade

Table 3.1. Analysis of the Elasticity Coefficient of National Employment Needs from 2008 to 2010

−0.02432 −0.0098 0.064615 0.045902 0.014493 0.002188 −0.02256 −0.03779 −0.03828 0.035242

Lodging and ­catering trade

china’s current employment and industrial policy, 2011 49

0 0 −0.00191 −0.00639 0.000714 0.003695 0 −0.00262 −0.01235 −0.00613

−0.02594 −0.01709 −0.03767 −0.01304 0 0.013072 0.022321 −0.00503 0.024862 0.013514

Banking Real-estate industry

Sources: iTongji.cn and chinajob.gov.cn.

Jan. 2008 Apr. 2008 Jul. 2008 Oct. 2008 Jan. 2009 Apr. 2009 Jul. 2009 Oct. 2009 Jan. 2010 Apr. 2010

Period

(2)

Table 3.1. (cont.)

0.006993 −0.00713 −0.02812 −0.01976 −0.0066 −0.0146 −0.01362 −0.00198 0.008929 −0.00963

Leasing trade

−0.00699 −0.01049 −0.02256 −0.00836 0 0.001294 0 −0.00206 0.010417 0

0.007407 0 0.006042 0.003106 −0.00164 0 −0.00392 −0.00222 −0.00816 −0.00373

Education

0.002985 −0.00649 0.042254 0 −0.02687 0.015873 0.035088 0 −0.00835 −0.00291 0.003632 0 0.023426 0 −0.01133 −0.00806 0.075472 0 −0.07965 0.026667

Scientific Water con- Resident research servancy service and environmental protection −0.00382 0.007092 −0.0034 0.003268 0.001898 0.002805 0.002743 −0.00513 0 −0.01099

−0.00889 0.0131 0.007605 −0.00385 −0.00333 −0.0035 −0.00174 0.00211 0.009901 0.006061

−0.02632 0.04878 −0.00621 0.00431 −0.00173 −0.00191 −0.00272 −0.00683 0 −0.01818

Health Culture and Public security sports administration

50 mo rong and luo chuanyin



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In the analysis, the industries in which the elasticity coefficient of employment needs is higher than 0 were mainly manufacturing, construction, IT, lodging and catering, and resident services, which indicated that China’s promotion plan for ten big industries has played a role in increasing economic development power and employment; industries in which the elasticity coefficient of employment needs is lower than 0 were mainly electrical power and coal gas, transportation, public administration and social organization, health and social security and social welfare industry, cultural, sports, and entertainment industry; the industries in which the elasticity coefficient of employment needs is 0 were mainly the mining industry, banking, education, scientific research, technical service, and geological investigation. From the perspective of increasing employment elasticity, industrial policy should strengthen and promote the raw material industry, and promote the new pattern of traditional industry; it should regard the key links of the industrial chain as the key point to accelerate the development of finance and resident services and should support the development of strategic and emerging industry groups in order to cultivate new economic growth.

chapter four

China’s Income Distribution and Development Yang Yiyong and Chi Zhenhe I. Introduction Production and distribution are two fundamental problems that are linked with human society; therefore we cannot separate distribution from production, and vice versa. Besides influencing production, distribution also heavily influences economic and social development. If income distribution is not equal, members of some social classes will be thrown into poverty, which will cause numerous other social problems. Thus it can be seen that income distribution is an essential problem in the economic and social development of a country. Some research indicates that China’s overall Gini coefficient reached 0.44 in 2004,1 and about 0.48–0.49 in 2007,2 where the two figures have greatly surpassed the warning line of 0.4 recognized internationally. This indicates that China’s income distribution is not equal, and income disparity has become a serious social problem. However, in the 1880s, China’s unequal income distribution was not as severe during that period. Data showed that overall Gini coefficient was only about 0.26 in 1984.3 In the twenty years from 1984 to 2004, China has become a country where income distribution went from relative equality to extreme disparity. Thus it can be seen that unequal income distribution expanded in China quickly. In recent years, some new trends have emerged in economic and social development, and they will

1 Cheng Yonghong, “Evolution of Overall National Gini Coefficient and Urban and Rural Separation Since Reform” (改革以来全国总体基尼系数的演变及其城乡分解 gaige yilai quanguo zongti niji xishu de yanbian jiqi chengxiang fenjie), Social Sciences in China (中国社会科学), no. 4 (2007). 2 Li Shi, “What About Underestimation of Income Differentials?” (如何看待收入差距 低估问题 ruhe kandai shouru chaju digu wenti), seminar on income distribution, Ying Dong Academic Lecture Hall, Beijing Normal University (北京师范大学英东学术讲堂), 2010. 3 Wang Xiaolu and Fan Gang, “Analysis on China’s Income Differential Trend and Influencing Factors” (中国收入差距的走势和影响因素分析 zhonggguo shouru chaju de zoushi he yingxiang yinsu fenxi), Economic Research (经济研究), no. 10 (2005): 24–36.

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certainly have an effect on the unequal income distribution. For example, the financial crisis that erupted in the United States in 2008 has seriously affected China’s exports, and this will certainly influence income distribution because the financial crisis will reduce interregional income inequality as well as that between professions. Meanwhile, a series of policies targeted at unequal income distribution were published in the recent years, and their implementation will inevitably influence income distribution. However, in recent years, there has not been much research on inequality of income distribution, which did not bode well for improving income inequality. In view of this, this chapter studies the current inequality of income using resident income data in the China Statistical Yearbook for several years. Because of the urban and rural dual economic structure in China, this chapter first elaborates present current income differentials and the trend of development from the discrepancies between urban residents’ incomes, between rural residents’ incomes and between urban and rural residents’ incomes, and, then, introduces the policies of the government in 2010 on adjusting income differentials; finally, some policy proposals aimed at reducing income differentials are introduced. II. China’s Current Income Distribution For various reasons, primary data on resident income are not easily attainable, which has greatly limited the studies on resident income distribution. Even if resident survey data can be obtained, the sample is small, and the time frame is not continuous, such as the China Health and Nutrition Survey (CHNS) (中国健康和营养调查 zhongguo jiankang he yingyang diaocha) and Chinese General Social Survey (CGSS) (中国综合社会调查 zhongguo zonghe shehui diaocha). This has also limited the studies on resident income distribution. In view of the above situation, this chapter studies ­China’s urban resident income distribution based on the resident household income distribution data published by the National Bureau of Statistics. Because of China’s urban and rural dual economic structure, the National Bureau of Statistics compiles and publishes data for urban and rural resident household income, respectively; if the national data on resident household income distribution cannot be obtained through it, then overall national income cannot be calculated. This chapter uses the Oshima index to reflect the target of urban resident inequality. The Oshima index is the ratio between the total of the highest twentieth



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percentiles and the lowest twentieth percentiles of resident income in five groups and can also be expressed as the ratio between the average income for the highest twentieth percentile and the lowest twentieth percentile. This chapter uses the Oshima index, rather than the Gini coefficient or the Theil index to measure income inequality mainly for the following reasons: first, if raw data concerning resident income cannot be obtained, the Gini coefficient and the Theil index cannot be directly calculated; second, if the Gini coefficient and the Theil index are calculated using income as grouped in the China Statistical Yearbook, the resident income distribution function needs to be fit according to those groups. There is inevitably error in this process, affecting the accuracy of the Gini coefficient and the Theil index, but the Oshima index is calculated directly according to income groups, which avoids that error. A. Urban Resident Income Distribution Since the reform and opening up, the urban resident income differential has continuously expanded, and the degree of income inequality has gradually increased (see Figure 4.1). Figure 4.1 shows that, from 1985 to 2009, the urban Oshima index increased from 2.33 in 1985 to 5.61 in 2009. This indicated that urban income differentials as a whole were gradually widening. In 2002, the urban Oshima index rose rapidly, from 4.64 in 2001 to 6.33, and surpassed the warning point of 6.0. This indicates that the degree of inequality in urban resident household income achieved a relatively high level. Although in recent years the urban Oshima index has fallen, this value remains around 6.0, which at present reflects that the degree of inequality in urban resident income is still high. Figure 4.1 also shows that, although the degree of inequality of urban resident household income overall increased, the direction and rate of change differs during different periods. For example, beginning in 2007, the urban Oshima index started to fall, which indicates that the urban income differential is narrowing. Changes in urban disparity can be divided into four phases, namely: steady evolution, gradual expansion, rapid expansion, and drop (see Figure 4.1). During the period of steady evolution, 1985 to 1991, the urban Oshima index remained stable, increasing from 2.33 in 1985 to 2.38 in 1991, meaning that urban resident household income disparity was relatively steady. However, beginning in 1992, the urban Oshima index began to trend upward, rising from 2.38 in 1991 to 3.62 in 2000, which indicated that urban resident household income disparity was gradually widening.

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8.00 7.00 6.00 5.00 4.00 3.00 2.00 0.00

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1.00

Oshima Index Source: China Statistical Yearbook (Beijing: China Statistics Press), various years.

Figure 4.1. Urban Oshima Index from 1985 to 2009

Although the urban Oshima index increased during this period, the rate of annual average growth was only 4.77 percent, further supporting the view of only gradual expansion. Beginning in 2001, the urban Oshima index increased sharply: It reached 4.54 in 2001 and 6.33 in 2002, increases of 25.4 percent and 39.4 percent respectively, indicating that urban resident household income disparity was rapidly increasing. In succeeding years, the disparity continued to grow, although the growth rate of the Oshima index slowed. From 2000 to 2005, the urban Oshima index rose from 3.62 to 7.23 (reaching its peak), growing 14.8 percent a year; therefore, this phase is the rapid expansion phase. The fourth phase begins in 2005. In this phase, the urban Oshima index fell from 7.23 in 2005 to 5.61 in 2009. This indicates that urban resident income differentials started to narrow and the income differential expansion tendency was effectively contained. The above analysis shows that, since the mid-1980s, urban resident household income disparities have gradually expanded. From the mid1980s to 1992, when the Fourteenth National Congress of the Chinese Communist Party (CCP) announced the socialist market economic system reform, the urban Oshima index was in a phase of steady evolution, so urban income differentials did not substantively change. After the socialist market economic system reform was carried out beginning in 1992,



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the urban Oshima index started to increase slowly, and urban income ­differential gradually expanded, which indicates that system transformation was one of the reasons for the income differential expansion. Especially after China’s entry to the World Trade Organization at the end of 2001, the urban Oshima index increased dramatically, and urban income differentials expanded rapidly, which indicates that entry to the WTO might have substantial influence on China’s urban income differentials. In recent years, the drop in the urban Oshima index indicates that urban resident household income disparities are decreasing, thus, the widening of urban income differentials has been effectively halted. B. Rural Resident Income Distribution

Oshima index

Income distribution inequality is serious in rural areas. Figure 4.2 shows that the rural Oshima index was 6.88 in 2002, higher than the internationally recognized warning point of 6. The rural Oshima index reached 7.95 in 2009, indicating that rural resident income inequality is high. Thus it can be seen the direction of change in rural resident income inequality differs from that of urban resident income inequality. Figure 4.2 shows that, beginning in 2002, rural resident income differentials demonstrate a trend of gradual expansion. Although the rural Oshima index in 2004 was the same as that in 2002, after 2004, it gradually increased. From 2002 to 2009, the rural Oshima index grew 15.55 percent,

8.00 7.80 7.60 7.40 7.20 7.00 6.80 6.60 6.40 6.20

2002 Rural areas 6.88

2003 7.33

2004 6.88

2005 7.26

2006 7.17

2007 7.27

2008 7.53

2009 7.95

Source: China Statistical Yearbook (Beijing: China Statistics Press), various years.

Figure 4.2. Rural Oshima Index from 2002 to 2009

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approximately 2.1 percent annually. Thus it can be seen that rural income differentials are becoming worse. Overall, rural resident income inequality was larger than urban resident income inequality (see Figure 4.3). Figure 4.3 shows that in 2002 and in 2003, the rural Oshima index was 6.88 and 7.33, respectively, but the urban Oshima index was 6.33 and 6.68, respectively. In 2005, with the expansion in urban resident income differentials, the disparity between rural and urban Oshima indexes declined. For example, in 2005, the rural Oshima index was 7.26, and the urban Oshima index was 7.23. The small distinction between the urban and rural Oshima indexes showed that the degree of rural and urban resident income inequality was similar, and the severity of rural and urban income differential problem was likewise similar. However, starting in 2006, the urban Oshima index fell, but the rural Oshima index continued to increase, widening the difference between the urban and rural indexes. For example, in 2009, the rural Oshima index was 7.95, but the urban Oshima index was only 5.61, thus the difference between them was 2.34. The huge disparity between rural and urban Oshima indexes showed that the degree of rural resident income inequality was much larger than the urban one, which indicated that the rural resident income differential problem was more serious than the urban one. Especially in recent years, the degree of rural resident income inequality

8.00 7.00

Oshima Index

6.00 5.00 4.00 3.00 2.00 1.00 0.00 rural areas urban areas

2002 6.88 6.33

2003 7.33 7.68

2004 6.88 6.99

2005 7.26 7.23

2006 7.17 7.05

2007 7.27 5.51

2008 7.53 5.77

2009 7.95 5.61

Source: China Statistical Yearbook (Beijing: China Statistics Press), various years.

Figure 4.3. Urban and Rural Oshima Indexes from 2002 to 2009



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continued to increase, but decreased in urban areas, which indicated that the policy on adjusting income differential worked in urban areas, but not in rural areas. C. Income Differential between Urban and Rural Areas After separating urban and rural areas, overall income differentials can be divided into urban income differentials, rural income differentials, and the differential between urban and rural incomes. Therefore, in addition to differentials among urban incomes and rural incomes, the differential between urban and rural incomes is also an important factor in overall income gaps in China. Generally speaking, the differentials between urban and rural incomes indicate a rising trend (see Figure 4.4). Figure 4.4 shows that the ratio between average disposable income per urban resident and the average net income per rural resident was 1.86 in 1985, and 3.11 in 2002, but increased to 3.33 in 2009, indicating that the urban and rural income differential increased. However, recently the widening between urban and rural incomes has been effectively halted. From 2002 to 2009, the average growth rate of the ratio between average disposable income per urban resident and the average net income per rural resident was 0.98 percent, but from 1997 to 2003 the growth rate was as high as 4.5 percent. This shows that, beginning in 2002, the rapid expansion tendency of urban and rural income differentials was effectively halted, which indicates that government measures to increase farmers’ income and reduce urban and rural income differentials started to work. Although the rapid expansion tendency of urban and rural income differential has been effectively halted, the system that causes this income gap has not been eradicated, so the urban and rural expansion tendency cannot be radically changed in a short period. Figure 4.4 indicates that, although the average disposable income per urban resident and the average net income per rural resident dropped slightly in some years starting in 2002, the ratio between them still showed an upward trend as a whole. For example, the ratio fell from 3.33 in 2007 to 3.31, but it rose to 3.33 in 2008. In brief, urban resident income differentials have changed from an increasing trend to a decreasing trend; rural resident income differentials continuously show a tendency toward expansion; a rapid upward trend of urban and rural income differentials has been effectively halted, but the system causing the income gap has not been eradicated, therefore these trends are not likely to be radically changed. With regard to urban and rural differences, overall, the expansion in rural resident income

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3.50 3.00 2.50 200 1.50 1.00

0.00

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0.50

Source: China Statistical Yearbook (Beijing: China Statistics Press), various years.

Figure 4.4. Ratio between Urban and Rural Incomes from 1985 to 2009

d­ ifferentials is the major influencing reason for the present widening of income differentials. III. Income Distribution Policy Changes in 2010 and Its Influence on Income Distribution With the continuous increase in the national overall Gini coefficient, the income differential problem becomes increasingly serious, and its adverse effect on economic and social development becomes increasingly clear, attracting the attention of the government, and thus a series of policies to regulate the income distribution was announced to reduce the excessive income differentials. For example, some ministries and commissions, such as the Ministry of Human Resources and Social Security, jointly issued “Guiding Opinions on Further Normalizing the Salary ­Management of ­Persons in Charge of Central Enterprises” (关于进一步规范中央企 业负责人薪酬管理的指导意见 guanyu jinyibu guifan zhongyang qiye fuzeren xinchou guanli de zhidao yijian) in 2009. However, implementation of the policy failed to fundamentally reverse the increasing income inequality tendency. Therefore, in 2010 the government focused on ­reforming the income distribution system in order to restrain the tendency of unceasing expansion in income distribution disparities.



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A. Adjusting Income Distribution Patterns, Increasing the “Two Proportions,” Namely, the Proportion of Resident Income in National Income Distribution and the Proportion of Payment for Labor in Primary Distribution Wen Jiabao pointed out in “Explanations About Formulating Proposals on the Twelfth Five-Year Plan for National Economic and Social Development” (关于制定国民经济和社会发展第十二个五年规划建议的说明 guanyu zhiding guomin jingji he shehui fazhan dishierge wunian guihua jianyi de shuoming) that currently China must solve the problem of excessive income differentials through reform of the income distribution system. Thus it can be seen that reducing income differentials through reform of the income distribution system has become critical in the income distribution problem. The focus of the reform is adjusting the national income distribution pattern, to increase “two proportions,” namely, the proportion of resident income in the national income distribution and the proportion of payment for labor in primary distribution. Wen Jiabao believes that enhancing the two “proportions” is the key to enhancing urban and rural resident incomes, especially low-income levels, as well as establishing a normal growth mechanism and payment security mechanism for enterprise staff wages. At the same time, “Proposals of the Central Committee of the CCP on Formulating the Twelfth Five-Year Plan for National Economic and Social Development” (中共中央关于制定国民经济和社会 发展第十二个五年规划的建议 zhonggong zhongyang guanyu zhiding guomin jingji he shehui fazhan dishierge wunian guihua de jianyi) of the Central Committee of the CCP stated that, under the Twelfth Five-Year Plan, the proportion of resident income in the national income distribution and the proportion of payment for labor in primary distribution must both be increased. This shows that, for a long time to come, adjusting the income distribution pattern and increasing the “two proportions” will be the key to income distribution system reform. B. Normalizing Income Distribution, and Establishing a Fair Income Distribution While adjusting the national income distribution pattern, normalizing the income distribution order is also an important component of income distribution system reform. Wen Jiabao pointed out that the authorities must crack down on illicit income, normalize gray income, and gradually form an open and transparent, fair and reasonable income distribution order.

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The measures on normalizing the income distribution order should mainly include promoting institution wage system reform and controlling commercial bribery. Meanwhile, deepening the wage system reform of monopolies is also an important component in normalizing income distribution. The main measures include breaking up monopolies and completing the dual regulative policy for total wages and wage levels of monopolies. C. Completing the Income Redistribution System The income redistribution system is an important component of the income distribution system and plays an influential role in restraining the expansion of income differentials. Wen Jiabao urged that they play roles as finance and tax regulators; a regulatory role of revenue in income distribution must especially be increased so as to adjust high income effectively. The personal income tax system must be completed, and a personal income tax system that integrates the general and classified personal tax system must be established. Meanwhile, the social security system also plays an influential role in income redistribution, and therefore the government must take seriously the construction of the social security system. Wen Jiabao pointed out that, under the Twelfth Five-Year Plan, China must insist on wide coverage, basic security, and a multilevel, sustainable policy to accelerate the construction of a social security system that covers urban and rural residents. The main measures involved in completing the construction of the social security system include realizing general coverage of the new rural endowment insurance system, requiring reform of the institutional endowment insurance system, and expanding social security coverage. The above analysis indicates that in the near future, reform of income distribution mainly concentrates on the income distribution system reform, and the key to income distribution system reform is to adjust the national income distribution pattern, and to increase the “two proportions,” namely, the proportion of resident income in the national income distribution and the proportion of payment for labor in primary distribution. Meanwhile, normalizing the income distribution order and completing the redistribution system are also important components of the future income distribution system reform. D. Policy Suggestions The above analysis shows that China has promulgated policies on income distribution, which have played a role in suppressing the continuous



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expansion of income differentials. For example, as a result of the implementation of policy on adjusting income distribution, urban resident income differentials have decreased, and the tendency of urban and rural income differentials to grow rapidly also has been effectively halted. But, on the contrary, rural resident income differentials have continued to increase. At present, the expansion of rural resident income differentials has become the primary cause of the increase in overall national income differentials. Therefore, reducing rural resident income differentials through reform of the income distribution system has become the primary way to reduce income distribution disparities. In view of this, we propose the following policy suggestions: (1) Rectifying and Normalizing Income Distribution Currently income distribution disorder is the greatest cause of excessive income distribution disparities, and income distribution disorder is caused by intervention by government administrative power in income distribution. Therefore, we must complete an income distribution system that is consistent with the socialist market economy; continue to promote government institutional reform, streamlining government personnel, reducing the size of the government, and raising government administrative efficiency; and transform the government function to serve the people wholeheartedly. The country should safeguard the public’s interest, which determines the basic nature of national public welfare activities. The fundamental nature of the modern enterprise system is making profit, and thus the basic nature of the country contradicts that of enterprises. Therefore, state-owned enterprise reform must be pushed. Public welfare enterprises should be unceasingly managed by national owners, and nonpublic welfare state-owned enterprise should gradually be managed by social capital. (2) Accelerating New Rural Reconstruction, and Promoting Steady Improvement of Living Standards for Farmers Rural resident income differentials and urban and rural income differentials are important factors that affect income differentials in general, therefore we must accelerate new rural reconstruction, increase farmers’ income, especially that of the medium- and low-income households, thus reducing rural resident income differentials and urban and rural income differentials. At present, rural jobholders generally have a low literacy level and are elderly, and the majority are female. Therefore, how to increase the agricultural jobholders’ income level has become an urgent problem

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that needs to be solved. Meanwhile, we must accelerate the construction of a rural social security system, in particular, to improve the rural minimum social security system so that the livelihoods of vulnerable groups can be safeguarded. (3) Establishing a Fair and Reasonable Relationship between Labor and Capital to Create an Environment That Will Increase the Proportion of Payment for Labor in Primary Distribution Only through the establishment of trade unions that can really represent workers’ interests can workers’ vulnerable status relative to capital be fundamentally changed, and the conditions for enterprise staff ’s normal wage growth mechanism be created. An effective system for negotiating wages should be established so that individual worker’s vulnerable status relative to capital can be reversed, and a reasonable and fair payment mechanism can be achieved.

chapter five

Progress in China’s Construction of a Social Insurance System in 2011 Wang Fayun and Li Yu I. Difficulties in Construction of a Basic Social Security System The construction of the basic social security system with more than thirty years of exploration, started with the gradual establishment of basic insurance items, and social security coverage, government responsibility for social security, and transfer of social security have finally formed a more systematic basic institutional framework. A. Explorations on China’s Social Insurance Programs In 1984, some areas implemented overall social planning of retirement pensions at state-owned enterprises, which initiated social insurance system reform. The reform began with pilot programs and after specifications gradually expanded outward. For instance, pilot programs for medical insurance for urban employees were put in place in the Zhenjiang and Jiujiang regions in 1994, nationwide pilot programs on endowment insurance for enterprise employees that integrates overall social planning with individual accounts in 1995, pilot programs on realizing an urban social security system in Liaoning province in 2000 as well as extended pilot programs in three Northeast provinces, pilot programs on the new rural cooperative medical insurance system in 2003, pilot programs on the rural social endowment insurance system since 2009, and so on. Since Germany established the workers’ compensation insurance in 1884, social insurance has developed for more than 100 years. Different countries have different legislative practices, dictating what social security should cover. The Social Security Law (社会保障法 shehui baozhang fa) of the United States covers only the old-age and disability insurance. Germany and Japan not only have retirement, medical insurance, unemployment, workers’ compensation, and maternity benefits but also nursing insurance. Some countries integrate trade endowment insurance into the category of social security in addition to the general preference for

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retirement insurance. Implementation of the various systems for social security is decided by various countries’ concrete national conditions. In China, social security has meant different things at different times. Labor Insurance Regulations (劳动保险条例 laodong baoxian tiaoli) applied in 1951 included treatment of disease, treatment for injury on job, death benefits, old-age pensions, maternity insurance, and so on. At that time, unemployment insurance did not exist, only unemployment benefits. In 1986, to adapt to the need for transforming the management mechanism of state-owned enterprises and of important labor system reform, the employment insurance system was established, and after 1993, it was renamed unemployment insurance. The Labor Law (劳动法 laodong fa) approved in July 1994, and implemented on January 1, 1995, in principle stipulated that workers are authorized to obtain help and compensation when they are old, sick, injured on the job, unemployed, or pregnant. But in practice, the meaning of social security is a subject of debate. For instance, is it necessary to set up maternity insurance? Some people argue that maternity medical expenses should be covered by medical insurance and advocate canceling maternity insurance; some people contend that the advancement of maternity insurance and medical insurance together has in fact regarded maternity insurance as part of medical insurance. Another example: Is supplemental insurance considered social insurance? One viewpoint argues that the social insurance system is a multilevel, enterprise annuity and supplemental medical insurance is part of social insurance; another argues that enterprise annuity is part of commercial insurance, or at least it should be covered by the commercial insurance company. In recent years, with the accelerated pace of aging, some areas, especially Shanghai, have proposed to explore the establishment of nursing insurance. B. China’s Choice of a Basic Social Security System Since the establishment of social security, the argument about the best system has not ceased. The same holds true in China, the argument over the pattern of endowment insurance and medical insurance system is especially intense. At the beginning of reform, we noted that most mature market economic countries implement a traditional endowment insurance pattern, which features the pay-as-you-go system and overall social planning, and emerging market economic countries, such as those in Southeast Asia and Latin America, mainly use the endowment insurance



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pattern, which features forced savings, individual accumulation, and individual account. Which of the two patterns is better has been discussed intensely in the international social security domain and international laborer domain. After a long period of exploration, China in the end integrates two patterns in its “overall social planning with individual account.” But how is overall social planning integrated with individual accounts? Views still vary widely. After the endowment insurance system for enterprise employees was unified in 1997, the argument focused on how to digest historical debt of endowment insurance and whether to really create individual accounts, which on the surface seemed unrelated to the systemic model. Regarding the basic medical insurance system pattern, public opinions first focus on implementing the insurance pattern or free medical pattern; moreover, whether or not the medical insurance requires individual accounts is also in dispute. Therefore, all need further exploration to be resolved through legislation. C. Explorations on the Coverage of Social Insurance System For many years, coverage of social insurance gave priority to urban professionals; social insurance for urban unemployed residents was quite weak, and social insurance for rural areas and for farmers basically did not exist. With economic reform and diversification of forms of employment, the original social insurance that gave priority to employees of work units is not able meet the needs of the current situation. At the same time, economic and social development and the enhancement of the national financial resources have created the conditions for developing social insurance in rural areas. Social insurance coverage has expanded gradually from urban areas to rural areas, from state-owned enterprises to various kinds of enterprises, and from work-unit employees to other types of employment and urban and rural residents. The Seventeenth National Congress of the Chinese Communist Party (CCP) established the goal of setting up a social security system to cover urban and rural residents, so the work of expanding social security coverage has entered a new development phase. It is estimated that, at the end of this year, the insured population of endowment insurance for urban employees will reach 250 million, the insured population of urban medical insurance will reach 420 million, and the insured population of the new rural cooperative medical system in total will surpass 1.25 billion, thus

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medical insurance has basically achieved complete coverage. Unemployment insurance, workers’ compensation, and maternity insurance also can cover 130 million, 160 million, and 120 million people, respectively, and it is expected that before Spring Festival next year the new rural cooperative medical system will cover over 100 million people. It can be said that the day when there will be full social security coverage is not far away. D. Responsibility to Explore Social Insurance Providing social insurance is a government activity and cannot be exist without government support and investment. In this respect, China had to go through some detours. The social insurance system established at the beginning of the reform was intended to lighten the national burden, which caused some people to narrow-mindedly believe that the reform was to implement individual payment and would increase the individual burden. With the deepening of reform, the government’s responsibility for social security gradually became clear and has adopted a series of supporting policies. The social insurance fund implemented tax reductions and central financing makes up the shortfalls of local endowment insurance funds through transfer payments and has accumulated and invested more than RMB 500 billion over the years to help employees of bankrupt local enterprises participate in medical insurance. But this kind of investment is more random, and there is no explicit regulation to go by. Therefore, for many years, government investment in social insurance did not follow an objective rule of social insurance development, but was institutionalized along with economic and social development. Taking endowment insurance as an example, while implementing the integration of individual accounts with overall social planning, the government did not find feasible means to supply the large number of empty accounts formed because of the advancement of reform. The country only provided fiscal subsidy every year according to the actual payment gap of the same year, therefore endowment insurance payment faced huge risk. These problems without a doubt need to be solved. E. Continuous Exploration on Establishing Transferable a Social Insurance System There is a slogan: Wherever you work, social insurance follows. But, in practice, transfer of social insurance is difficult, and integration of the urban and rural systems is not smooth, which are both real and important



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problems restricting the development of social security. At the end of every year, many peasant laborers cancel insurance in developed Pearl River Delta and Yangzi River Delta areas, causing entrance to social ­security organizations to be blocked. In government reports in recent years, an important task of the government was to solve the difficult problem of transferring social security. At the end of 2009, the government released provisional measures on the transfer of relations of basic endowment insurance for urban enterprise employees, and the Ministry of Human Resources and Social Security and the Ministry of Finance jointly printed and distributed opinions on hospitalization settlement services of basic medical insurance in various regions. At present, the work of transferring endowment insurance is overall relatively steady. By the end of September, a total of 804,000 insured payment certificates were issued, 147,000 person-time times per person handled interprovincial transfers, in which 53,000 people handled inward migration and 94,200 people handled outward migration. Opinions on hospitalization settlement services in various regions has made great progress although it was implemented only in July, in which twentysix provinces printed and distributed measures on transferring medical insurance, eighteen provinces printed and distributed regulations on handling transferring medical insurance, and seventeen provinces started the work of transferring medical insurance. According to preliminary statistics, in the third quarter, nearly 30,000 people in-migrated, and nearly 40,000 people out-migrated. II. China’s Social Insurance Policies and Requirements of Innovative Achievements After the basic social insurance system was established, corresponding system and policy arrangements are needed as implementation safeguards. For more than three decades, while exploring the establishment of a basic social insurance system, China also explored basic system implementation and unceasingly achieved new breakthroughs. A. Established Innovations in Social Insurance Achievements The basic principle for establishing a modern social insurance system is legal requirement, separation of labor and capital responsibilities, government guarantees, a self-organizing system, self-balance, and self-development.

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But in China, unemployed urban residents and farmers belong to a vulnerable social group, and their income level is low; without the government’s encouragement and investment, it is very difficult to quickly establish the work of social insurance for unemployed urban residents and farmers. To establish a medical insurance system for urban residents and the new rural cooperative medical system, China broke through the strict restrictions of social insurance to actively make institutional innovations, guide residents and farmers to participate in experiments ­concerning medical insurance for urban residents and the new rural cooperative medical services, the new rural social endowment insurance through government subsidy, and the central and local governments provide suitable subsidies for the insured personnel. Thus, through government subsidies, the shift from lightening the national burden and strengthening personal liability to government subsidies and insured self-help was achieved. In the history of social security around the world, China is the first to provide subsidies for such a large population and to guide their participation in social security. The traditional view held that people should be coerced to participate in social insurance. But, according to China’s own national conditions, with regard to the policy orientation about residents participating in social insurance, China’s most important policy innovation was to allow people to voluntarily participate in various kinds of insurance, which was a big contribution to international social insurance. B. Innovations and Requirements to Protect the Interests and Rights of Social Insurance With the low overall planning level of social insurance, it is difficult to control variations, which makes equality difficult to maintain. The degree of development and income level between different areas in China have large disparities, plus the finance is divided, and various benefit entanglements cause difficulties in enhancing the overall planning level of social insurance. After great efforts for more than ten years, by the end of 2009, all provincial-level administrative regions formulated the provincial-level overall planning system, but they were not all completely implemented. According to the assessment of the Ministry of Human Resources and Social Security and relevant departments, a total of twenty-five provinciallevel units have achieved a provincial-level overall planning standard at present. Medical, injury on the job, and unemployment insurance are basically coordinated at the county level at present, and the goal established



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the previous year was to achieve municipal-level overall planning in the next two to three years. But the longer it takes to enhance overall planning level, the bigger the disparity becomes, and finally the heavier the gap of overall planning becomes, and the longer time it takes, the more difficult national overall planning will be. “Proposals of the CCP Central Committee on Formulating the Twelfth Five-Year Plan for National Economic and Social Development” (中共中央关于制定国民经济和社会发展第 十二个五年规划的建议 zhonggong zhongyang guanyu zhiding guomin jingji he shehui fazhan di shi’er ge wunian guihua de jianyi) regards realizing national overall planning of basic pension as an important task in the next five years, and therefore we believe that national overall planning of endowment insurance should be completed in the next five years. In 1978, State Council Document No. 104 stated that those with ten years of continuous service were entitled to receive retirement pensions. In 1997 the decision of the State Council on establishing a unified endowment insurance system for enterprise employees lengthened this requirement to fifteen years. This readjustment in fact has had an adverse effect on social security rights and interests of residents with less than fifteen years of job seniority. Certainly, a policy of the lowest payment period for endowment insurance has its objective reasons, but if payment for less than fifteen years of payment is stipulated, the savings amount in an individual account will be provided to the depositor, and this depositor’s endowment insurance relations could be relieved, which seems unfair. Therefore, exploration on breaking through this policy restriction was also an important content of social insurance development in recent years. C. Innovation Demands for Social Insurance Institutions and Measures on Social Insurance Premiums After 1993, according to the principle of separation of government from institutions, various areas set up social insurance institutions; more than 7,000 institutions were set up at the end of the previous year, and there were 140,000 staff. But since then, the legal status of social insurance institutions has not been clear. In terms of social insurance premiums, there is also further need. Since the policy of the “two guarantees” was implemented, in view of the problem of the strictness in social insurance reimbursement work and on leniency in premium work, the State Council released “Interim Regulations on the Collection and Payment of Social Insurance Premiums” (社会保险费

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征缴暂行条例 shehui baoxianfei zhengjiao zanxing tiaoli)1 in 1999 and stipulated penalties for not paying the social insurance premium on time. But, overall, the social insurance premium collection institutions have few means of collecting the money and the difficulty of levying social insurance premiums has not been addressed. How to further innovate relevant policy and solve various problems in social insurance institutions and in social insurance premium collection methods are objective requirements for innovation in social insurance policy. III. Social Insurance Law: The Basic System and Innovations in Related Policies If we count from when the “Labor Insurance Regulations” (劳动保险条例 laodong baoxian tiaoli) were issued in 1951, China’s social insurance has gone through nearly sixty years of development. Since the reform and opening up for thirty year ago, in the process of reforming the labor insurance system and the socialized medical system, some laws, rules, and regulations were successively formulated, but not an overarching law; therefore the stability and enforceability of the social insurance system lacks powerful and reliable legal support. But because this law concerns every citizen’s safeguard of happiness and benefits and is the subject of so many expectations with regard to people’s livelihoods, and relevant parties always have differing views, the introduction of social security is bumpy. After long-term difficult explorations and innovations, the final publication of the social insurance law has laid a solid legal base for finally establishing China’s basic system of social insurance and simultaneously innovating in related policy arrangements. A. Legislative Process of the “Social Insurance Law” As early as 1993, the original Ministry of Labor started to study and draft the “Social Insurance Law (Draft)” and submitted it to the State Council for examination and approval three times. Because the adjustments were contentious, and relevant interested parties were deeply entangled, it was

1 Available at www.lawinfochina.com/NetLaw/display.aspx?db=law&sen=rLdDdW4dr hdDdWEdrhdydW4d/LdFdWEd9DdvdW4d/LdvdWud/hdxdWdd/DdydWud/ ddTdWud9Dd+&Id=5165&/.



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difficult for the “Social Insurance Law” to be implemented, and although it was included in the legislative plan of the Standing Committee of the National People’s Congress (NPC) and in the State Council’s legislation work plan several times, it actually repeatedly “died.” Meanwhile, public opinion on the “Social Insurance Law” was divided. During the “two conferences” in 2003, a total of 254 deputies to the NPC jointly appealed to formulate the “Social Insurance Law” as soon as possible. During the “two conferences” in 2004, more than 500 deputies to the NPC did so, and during the “two conferences” in 2006, a total of 465 deputies to the NPC proposed a similar bill. Due to great efforts by all parties, in 2007, the “Social Insurance Law (Draft)” was submitted to the Standing Committee of the NPC for examination and approval for the first time. In December 2008, the draft was submitted for examination and approval once more, and the Standing Committee of the NPC decided to solicit public opinion on the draft. In December 2009, the draft was submitted for examination and approval for the third time. In October 2010, the draft was submitted for examination and approval for the fourth time and was approved by vote. Hence, after 17 years of difficult explorations, after three rounds of appeal and four rounds of submission for examination and approval, the “Social Insurance Law” was finally approved. The “Social Insurance Law” is the first comprehensive law on social insurance since the founding of new China. It is an important law that has the support of the socialist legal system with Chinese characteristics and is the judicial guarantee of bringing about comprehensive social security. This law involves the five areas of insurance—retirement, medical, unemployment, injury on the job, and maternity—has normalized social insurance relations, has stipulated the rights and obligations of employers and workers, has strengthened government responsibility, has been clear about the responsibility of administrative departments and of the organizations undertaking social insurance, and has determined the legal liability of all parties concerning social insurance; therefore, it is veritable basic law regarding the people’s livelihood. Its introduction, which helps safeguards the people’s livelihood, is the essential starting point and foothold for transforming economic development, which indicates that the construction of China’s modern civil society has taken a big step. Its introduction was a milestone in the history of Chinese social security, brought to an end the disordered phenomenon in social security where there was no uniform law, and manifested the government’s responsibility for social security. Overseas public opinion has also been positive. On October 30, Germany’s “World News” website commented that the

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“Social Insurance Law” was a good running start in the establishment of a social welfare network. B. “Social Insurance Law” Established China’s Basic System of Social Insurance In recent years, based on experiments in various areas, the “Social Insurance Law” has promoted and solidified more mature and feasible methods of work through practice. First, it promoted and solidified the main items of social insurance. This legislation adopted enumeration methods and stipulated that ­Chinese social insurance mainly includes basic endowment insurance, basic medical insurance, workers’ compensation insurance, unemployment insurance, and maternity insurance, which solidified and promoted the main items of social insurance through the law. Second, it promoted and solidified basic system patterns of these five kinds of insurance. This legislation affirmed basic systemic patterns for those five kinds of insurance, stipulated explicitly the overall social planning of basic endowment insurance integration with individual accounts, and denied the policy orientation of free medical services, in which stability of the basic system was legally guaranteed. Third, it promoted and solidified the goal of complete coverage. It complied with the time development requirement for complete coverage of the social insurance system. This legislation has expanded the coverage of retirement and medical insurance to various urban workers and the entire population, and injury on the job, unemployment, and maternity insurance cover all jobholders, which established wide coverage of the social insurance system by law. Fourth, it solidified and promoted the government’s responsibility for social insurance. This legislation divided government responsibility for the social insurance fund into three aspects: the basic retirement insurance premium, for which the staff of state-owned enterprises and institutions must pay before they participate in the basic endowment insurance and for which there are a fixed number of payments by the government; government subsidizes the new rural social insurance and medical insurance for urban residents; when the social insurance fund has insufficient funds, the government subsidizes it. The provisions above first solved the root of historical debt of endowment insurance from the source, clarified the government’s support in providing rural social insurance and social security for residents, and clarified the government’s responsibility for the



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fund. Thus, the steady progress of the social insurance fund had a reliable safeguard. Fifth, it solidified and promoted the requirements on establishing transferable social security. The draft process of the “Social Insurance Law” also seriously considered this problem, the stipulations of the drafts from all three rounds of examination were increasingly concrete, and it stipulated explicitly the basic principle of transfer and connection of social insurance relations, the scope of those connection is not only restricted in the relations of retirement and medical insurance but also expanded to ­unemployment insurance; it required the accumulative total of a fixed number of yearly payments and required that the social insurance administrative departments and the public health administrative departments establish an out-of-area hospitalization expense settlement system in order for insured personnel to enjoy medical insurance treatment. C. “Social Insurance Law” Reflects Policy Innovations The legislation is not only the solidification and promotion process of existing policy provision but also the breakthrough and innovation process to the existing policy provision. The “Social Insurance Law” affirmed the former procedure and integrated the new rural cooperative medical service and the new rural social endowment insurance in basic insurance. At the same time, according to China’s national conditions, the “Social Insurance Law” entrusted the individual with the right of free choice, and it allowed the personnel concerned to voluntarily participate in medical insurance for urban residents, new rural cooperative medical services, or new rural social endowment insurance. It had breakthroughs and innovations in the overall planning level of social insurance. Faced with complicated conflicting interests, legislators did not flinch and promoted social justice from the start, and the law stipulated explicitly that endowment insurance will implement national overall planning gradually and provincial-level overall planning of medical, injury on the job, unemployment, and maternity insurance gradually. Although this is more like a slogan, it without doubt established the goal for the future and provided a legal principle basis for quickening the enhancement of overall planning level in various kinds of social insurance. In safeguarding rights and interests, the “Social Insurance Law” also had many breakthroughs and innovations. In its design, the “Social ­Insurance

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Law” highlighted the protection of rights and regarded safeguarding insured people’s legitimate rights and interests and establishing a service government as the starting point, which had many breakthroughs in its present policies. For instance, this law addressed the problem in which personnel whose premium payment was less than fifteen years could not enjoy a basic pension; it allowed those people whose cumulative total premium payments were less than fifteen years when they reach their legal retirement age to pay premiums for fifteen years, which manifested the original legislative intent of user-friendly operations. In medical insurance and workers’ compensation insurance, the provision that the fund can be paid in advance when a third party does not pay related expenses or the third party cannot be determined, which also broke with existing ­provisions; although this might increase the fund’s burdens, it reflected the spirit of human concern and increased the credibility of social insurance to a certain extent. In terms of establishing responsibility for social insurance institutions, the breakthrough and innovation were that, the “Social Insurance Law” set up a separate chapter, stipulated the core contents of social insurance institutions, clearly defined which institutions are government function departments in which the fund is guaranteed by the treasury, entrusted the institutions with the legal status of a social insurance fund management subject, of an information management subject, and of a social insurance rights and interests management subject, defined the work responsibilities of social insurance, and took charge of social insurance registration, verification of payments, individual rights and interests records, social insurance fund calculation, and social insurance treatment payments, and also gave the institutions the necessary work resources and means of fulfilling its responsibilities, in which the institutions had a full legal basis. More important, while determining the role of the relevant organization’s function, the “Social Insurance Law” put legislative emphasis on the institutions’ service criterion and obligation, which was rare in earlier legislation. For instance, the institutions must provide the related services of social insurance consultation, must directly settle medical expenses with medical institutions and cooperating pharmacies, must pay for social insurance treatments in full, must regularly mail without charge individual rights and interests record bills to the individual, cannot reveal confidential information of employers and individuals, and so on. These provisions are the legal guarantees for insured personnel to enjoy basic social insurance services.



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The breakthroughs and innovations in the social insurance premium collection methods listed in the “Social Insurance Law” entrusted collection organizations with the necessary collection means if employers do not pay or make up the social insurance premium after exceeding the time limit; for instance, it may investigate an employer’s bank account, may transfer, and may even ask the people’s court to take possession of and auction an employer’s property to reimburse payable social insurance premiums, which legally bolstered the force of social insurance premium payments, which was important in strengthening the work of social insurance premium collection. IV. Future Development of Social Insurance System Construction China’s social insurance system is being established and realized, and some systems need to be continuously adjusted according to economic and social development. In fact, the provisions of the “Social Insurance Law” are also quite principled. Compared with people’s expectations, the authorization provisions of the “Social Insurance Law” are still too numerous and are unsatisfactory to a certain extent, and there are many problems yet to be addressed. The problem of the collection system needs to be confronted. At present, social insurance premiums of fifteen provincial capital cities, Beijing and Shanghai, Xinjiang Production and Construction Corps, Dalian, Shenzhen, and Qingdao have social insurance bureaus that are responsible for collection, which comprises 51.3 percent of all levy areas; in Anhui province and two cities directly under state planning, Ningbo and Xiamen, it is levied by the revenue office, which comprises 8.1 percent of all levy areas; in Hebei and Jiangsu etc. fifteen provinces, it is levied by social insurance institutions or by tax authorities, which comprises 40.6 percent of all levy areas. The collection system is not unified, which has reflected all circles’ basic differences with respect to social security development targets. In April, the journal Qiushi (Seek Truth) published the Finance Minister Xie Xuren’s (谢旭人) article “Stably Deepening Finance and Taxation System Reform.” He suggested levying a social security tax, which led to an intense argument among all circles on the expense of taxation with respect to social security in the future. If a social security tax is levied, namely converting social insurance premiums into a tax, the social insurance premium would be levied by tax authorities. But changing premiums into a tax is not compatible with the previously determined

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social ­insurance system. This unified collection system has reflected the social insurance management system. Some people believe that if responsibility for collection, expenditure, and management of social insurance are undertaken by a department, it is easy for corruption to exist, so it must be administered by different departments, each with its own responsibility, and they even proposed respective departmental administrations for tax collection, verification of social security, bank issuance, financial control, and audit supervision. The problem of retirement age needs to be settled. The retirement age is a major policy of social insurance, especially of endowment insurance. Recently, France approved a pension reform bill, in which it raised the retirement age. This event caused a widespread strike in France. ­Facing rapid aging of the population and pressure on fund payment, some Chinese also proposed gradually raising the retirement age. In October, Shanghai released a flexible retirement policy, which has caused a heated discussion. Arguments on “whether or not to defer retirement” occurred repeatedly; some people were happy but others were worried. The various interests’ disputes and viewpoints can be seen if these arguments are clarified. Those who approve of the current retirement policy are mainly first-line workers who place priority on physical labor, some of whom have somewhat low income and unstable work, but they are hopeful of obtaining a stable pension income after retirement. Those who hope to defer retirement are mainly government officials and scientific researchers, including some women who are limited by the “fifty-five-year-old threshold.” Broadly, people who advocated deferring retirement believed that it is advantageous for the full employment of human resources along with the lengthening of life spans and raising of health standards, and urbanization and aging of the population places great pressure on endowment insurance fund payments; many countries with an aging population have generally adopted a method in which retirement age is deferred year by year or disbursement of pensions is flexibly postponed. Those who oppose the deferment argue that deferring the retirement age will hinder young people’s employment opportunities, which will without a doubt create a disaster in the present situation in which China’s labor supply exceeds demand. But the problem is far from simple. Opponents also have great objections. Some people say that even though early retirement will not release jobs for young people, many early retirees still find other employment, so total employment is not fixed; new laborers are not always good substitutes for experienced laborers, because demand for skilled high-quality and experienced workers exceeds supply in the



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labor market, so letting these people defer retirement can make up the gap in the high-end human resources market and can avoid wasting their talents, which is helpful in promoting a highly effective economic and social revolution, thus possibly creating new jobs. Some optimists believe that, along with sustainable and rapid economic development, demand for labor will correspondingly increase, and the increase in demand for high-quality workers will be even more rapid. The retirement age policy and life spans and health status appear to be connected with urbanization, the aging trend, employment, and the social and economic development level; this is a very significant and sensitive social public policy, as it involves insured employees’ vital interests, and policy readjustment needs overall consideration, to be advanced gradually in due course. Perhaps, precisely because of these considerations, the “Social Insurance Law” does not make explicit provisions regarding the retirement age, but the problem cannot be avoided and must be settled one day. The problem of endowment insurance for officials needs to be settled. With regard to five items of social insurance, the endowment insurance system reform lags, measures on endowment insurance for urban residents are not published, and reform of the old-age system for officials has met especially strong resistance. Opinions solicited for the “Social Insurance Law (Draft)” showed support for speeding up reform of endowment insurance for officials. If the old-age system for officials cannot be effectively advanced, it is very difficult to carry out the institution retirement system reform involving 30 million people. The institution pension reform of five provinces and cities pushed by the State Council executive meeting in 2008 has been at a standstill. The “Social Insurance Law” has reserved space for the reform of endowment insurance for officials and is authorized by the State Council to formulate measures on endowment insurance for officials and staff consistent with civil service law. The problem of fund inflation and increases needs to be settled. By the end of this year, the income, expenditure, and surplus of five urban social insurance funds will respectively surpass RMB 1.7 trillion, RMB 1.4 trillion, and RMB 2 trillion; income and expenditure are equivalent to gross income and aggregate expenditure for the fiscal year at the end of the last century and at the beginning of this century, and the cumulative fund total is nearly equal to GDP in the late 1980s and in the early 1990s. Although the scale of the fund, especially its surplus, quickly increases, the pressure of fund inflation and increases is becoming more serious. To strengthen and normalize fund management, the “Social Insurance Law” has stipulated the establishment of a social insurance fund budget

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and certain prohibited items, which has strengthened the social insurance supervisory work. How to launch the investment in the fund and operation of the fund, especially the investment and operation related to an individual account fund of endowment insurance in a way that guarantees fund security, and how to protect against inflation, is a big and difficult problem that must be faced in the future. Despite much disappointment, and many problems still to be solved, the “Social Insurance Law” is still very significant and has provided certain legal safeguards for the development of social insurance in the future. Following the words “the law alone is not enough,” if the “Social Insurance Law” wants to truly play its role, it requires great efforts by the central parties concerned and all levels of authorities and local authorities; supporting rules and regulations must be formulated so that it can be truly feasible, and it requires increases in awareness of the law.

CHAPTER six

China’s Educational Developments and Reform in 2010 Yang Dongping I. Educational Developments in 2009 According to the “2009 National Statistical Gazette on Educational Development” of the Ministry of Education, the basic situation in all levels and all kinds of education is as follows. The proportion of the population covered by nine-year universal compulsory education reached 99.7 percent in 2009; the gross enrollment rate at the stage of middle school was 99 percent, and the enrollment rate of middle school graduates was 85.60 percent, an increase of 2.2 percent over that in 2008. As a result of the reduction in the school-age population, the number of elementary and junior middle schools and the number of students continued to fall. There were 280,200 elementary schools in the country, a reduction of 20,700 over that in 2008; they recruited 16,378,000 students, a reduction of 579,200 over that in 2008; 100,714,700 enrolled students, a reduction of 2,600,400 over that in 2008. There were 56,300 middle schools, in which there were 200 vocational middle schools, a reduction of 1,600 over that in 2008. They recruited 17,884,500 students, a reduction of 711,500 over that in 2008; there was a total of 54,409,400 enrolled students, a reduction of 1,440,300 over that in 2008. Preschool education, the number of kindergartens, and students in kindergartens and the number of kindergarten teachers have all increased. There were 138,200 kindergartens, an increase of 4,500 over that in 2008; students in kindergartens, including preschools, numbered 26,578,100, an increase of 1,828,500 over that in 2008; kindergarten teachers totaled 1,127,800, an increase of 95,800 over that in 2008. The gross enrollment rate in high school was 79.2 percent, an increase of 5.2 percent over that in 2008. There were 29,761 schools offering a high school education, including general high school, adult high school, and secondary vocational school, a reduction of 1,045 over that in 2008; they recruited 16,988,600 students, an increase of 497,400 over that in 2008; in all, there were 46,409,100 students attending school, an increase of 648,400

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over that in 2008. Among them, the attendance at general high schools dropped 0.8 percent, a reduction of 66,700 students compared with in 2008; enrolled students declined 1.7 percent. In secondary vocational education, including general secondary technical school, vocational high school, technical school, and secondary adult technical school, the number of students recruited and the number of enrolled students increased: there were 8,685,200 recruited students, an increase of 564,100 over that in 2008; enrolled students totaled 21,951,600, an increase of 1,080,700 over that in 2008. The recruitment number and number of enrolled students in higher education continued to increase. The overall enrollment in all kinds of higher education reached 29,790,000 people, and the gross enrollment rate in higher education reached 24.2 percent. The number of general colleges and universities totaled 2,305, an increase of 42 over that in 2008, of which undergraduate colleges and universities were 1,090 and higher vocational (technical) colleges were 1,215. Undergraduate and technical schools of general higher education recruited 6,394,900 students, a growth rate of 5.24 percent and an increase of 318,300 over that in 2008; enrolled students were 21,446,600, an increase of 1,236,400 and growth of 6.12 percent over that in 2008. In all, 510,900 graduate students were recruited, an increase of 64,500 and growth of 14.45 percent over that in 2008; of which 61,900 were doctoral students and 449,000 were master’s-degree students. Enrolled graduate students totaled 1,404,900, an increase of 121,900 and growth of 9.50 percent over that in 2008; of which 246,300 were doctoral students and 1,158,600 were master’s-degree students. Enrolled students of various kinds in non-government education reached 30,653,900, an increase of 2,409,900 over that in 2008. Among them, children in non-government kindergartens reached 11,341,700, some 42.7 percent of all children in kindergartens; non-government general elementary school had 5,028,800 enrolled students, which accounted for 5 percent of total enrolled students of elementary schools; non-­government general middle schools totaled 4,331, and enrolled students totaled 4,338,900, which accounted for 7.97 percent of total enrolled students in middle schools; non-government vocational middle schools numbered 4, and enrolled students totaled 1,000; non-government general high schools numbered 2,670, and enrolled students totaled 2,301,300, which accounted



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for 9.5 percent of total enrolled students in general high schools; non-­ government secondary vocational schools numbered 3,198, and enrolled students totaled 3,181,000, which accounted for 14.5 percent of total enrolled students in secondary vocational education. In addition, there were 400,800 students in secondary vocational education with non-academic credentials. There were 658 non-governmental institutions (including 322 independent institutes) and 4,461,400 enrolled students, which accounted for 20.8 percent of enrolled students in general higher education, in which there were 2,524,800 undergraduate students and 1,936,600 junior college students. In addition, there were also the organization departments of nonacademic credential education, including the training class for self-study examination, preparatory students, advanced courses, and training classes. In 2010, general undergraduate and technical colleges and universities proposed to recruit 6,570,000 students (in which general undergraduate course had 3,390,000 people, and higher vocational education had 3,180,000 people), an increase of 3 percent over that in 2009, and had the lowest growth rate since 1997. The schools proposed to recruit 534,000 graduate students (in which there were approximately 62,000 doctoral students and approximately 472,000 master’s-degree students), an increase of 4.5 percent over that in 2009. The number of those registered for the college entrance examination reached 9,570,000, about a reduction of 650,000 over that in 2009. In 2010 the average matriculation rate reached 68.65 percent, an increase of nearly 7 percent over that in 2009. The recruitment plan continued to expand to the central and western regions, and the student recruitment cooperation plan to support the central and western regions expanded over last year. By November 2010, some of the major targets for education development proposed in the Eleventh Five-Year Plan were achieved ahead of schedule, and some will be realized by the end of 2010. The gross enrollment rate in higher education grew from 21 percent in 2005 to 24.2 percent in 2009; the gross enrollment rate in high school grew from 52 percent in 2005 to 79 percent in 2009; the gross enrollment rate at middle schools grew from 95 percent in 2005 to 99 percent in 2009; the net enrollment rate at elementary schools remained above 99 percent. China is changing from “a poor country that runs large education” to “a great nation that runs strong education” and from a country with a large population to a powerful country of human resources.

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II. Implementing the “National Medium- and Long-Term Program in Education Reform and Development Plan (2010–2020)” 国家中长期教 育改革与发展规划纲要 (2010–2020) guojia zhongchangqi jiaoyu gaige yu fazhan guihua gangyao A. Holding the National Educational Work Conference, and Promulgating “National the Medium- and Long-Term Program in the Education Reform and Development Plan (2010–2020)” On July 13, 2010, the national educational work conference was held in Beijing; this was China’s first national education conference in the new century, and the “National Medium- and Long-Term Program in the Education Reform and Development Plan (2010–2020)” was promulgated (hereinafter referred to as “Plan Program” (规划纲要 guihua gangyao)). The “Plan Program” concerned education development over the next ten years; it asked for the promotion of scientific progress in education, proposed the goal of accelerating the transition from being a big nation of education to a powerful nation of education and from a big nation of human resources to a powerful nation of human resources, which is China’s important milestone in educational development. This time the formulation of the “Plan Program” adopted an open policymaking process, which widely solicited people’s opinions and measures, and the formulation process had four phases: investigation, drafting, public opinion solicitation, and consideration and consummation. In the earlier stages, numerous experts and scholars were organized to carry out large-scale investigation and study around eleven significant strategic subjects and thirty-six sub-items. At the same time, the Central Committee entrusted eight democratic parties, four social research institutes, and six educational societies to engage in parallel investigations and studies and entrusted the World Bank and the European Union and China’s sixty education offices and groups stationed abroad to perform investigations and studies; twice solicited public opinion during the formulation process, for the first time in the history of formulating central documents, and is also a prominent innovation of the “Plan Program.” After the first draft of this paper was completed, the “Plan Program” had already solicited public opinion four times, had repeated consultations, and had performed indepth studies. The “Plan Program” will give priority to developing and educating people, innovating, and promoting equality as the work policy, and as the work guide of future education reform and development, and has set a



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strategic target of education reform and development in 2020, namely, to bring about the modernization of education and the basic formation of a learning society and enter the ranks of powerful countries of human resources. Simultaneously it has been subdivided into five specific objectives, namely, realize higher-level universal education, create fair education for all the people, provide a higher-quality education, build a comprehensive system of lifelong education, and consummate a healthy vibrant educational system. The “Plan Program” also provides a positive solution to some difficult problems, such as the fact that the financial educational fund expenditure occupies 4 percent of the gross domestic product (GDP), popularizes preschool education, lightens the schoolwork burden of students at elementary and middle schools, solves the problem on school choice during the stage of compulsory education, safeguards the education of peasant laborers’ children, training of the best innovative talents, reform of college entrance examination, college administration, construction of faculty, and so on, and proposes the mentality and method to solve problems. According to the overall plan, it will be implemented step-by-step, beginning with pilot programs, dynamic adjustments and then deployment of ten major reforms. Prior to this, in June 2010, the “National Medium- and Long-Term Program on Talent Development Plan (2010–2020)” (国家中长期人才发 展规划纲要 (2010–2020 年) guojia zhongchangqi rencai fazhan guihua gangyao) was promulgated after authorization from the Central Committee of the Chinese Communist Party (CCP) and the State Council. The guidelines for talent development in the future will be “service development, talent first, based on practicality, innovative mechanisms, high-end leading, and overall development.” It has determined to advance six kinds of talent, namely, construction of the party and government personnel, enterprise management and operation personnel, specialized technical personnel, high-tech personnel, rural practical personnel, and social work personnel. In October 2010, the Fifth Plenary Session of Seventeenth CCP Central Committee proposed that “taking scientific progress as the subject, taking quickening transformation of economic development way as the focus, paying greater attention to people’s livelihood and comprehensively coordinated sustainable development, paying great attention to overall planning and all-round consideration, and paying greater attention on safeguard and improvement of people’s livelihood and the promotion of social justice and equality.” The plenary session considered and approved

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“Proposals of the CCP Central Committee on formulating the Twelfth Five-Year Plan for National Economic and Social Development” (中共 中央关于制定国民经济和社会发展第十二个五年规划的建议 zhonggong zhongyang guanyu zhiding guomin jingji he shehui fazhan dishierge wunian guihua de jianyi) and set the requirements for accelerating educational reform and development, constructing a powerful nation of talents, and carrying out national medium and long-term programs on science and technology, education, and talent. B. Various Areas Implement the “Plan Program” and Organize Pilot Reform After the “Plan Program” was approved, the emphasis on work shifted to implementation. In August 2010, the State Council established the national leading group of educational system reform, and member units included twenty departments, such as the Organization Department of the CCP Central Committee, the Publicity Department of the CCP Central Committee, the Central Staffing Department, the National Development and Reform Commission, the Ministry of Education, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the Ministry of Finance. This group examined and approved the “Division Plan for Educational Plan Program Mission” (教育规划纲要任 务分工方案 jiaoyu guihua gangyao renwu fengong fangan), “Overall Plan for National Pilot Reform of the Education System” (国家教育体制改革 试点总体方案 guojia jiaoyu tizhi gaige shidian zongti fangan), and organized and declared the national pilot reform of education throughout the country. At present, they are formulating the sub-plan and programs of various domains to carry out the reform task proposed in the “Plan Program.” In November, according to the opinions of the “Plan Program,” as an important measure to have a democratic decision-making process, the National Consulting Committee for Educational Reform was established. One after another, Shanghai, Jiangsu Province, Qinghai Province, Guangdong Province, Henan Province, and Shandong Province held an education work conference and discussed and approved their own province’s education plan program. Shanghai’s education plan program proposed regarding “lifelong development for each student” as the core idea for the next ten years and established the general goals: by 2020, take the lead in achieving modernization in education, form a new educational system for lifelong learning, form the new education pattern to stimulate student’s development potential,



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form a multidimensional new education pattern, form the new educational system of balanced and coordinated sustainable development, and cause education development and human resources development level to enter into the top world ranks. Shanghai took the lead in establishing an education decision-making consultative committee composed of forty-five committee members from various domains to make decisions on significant education policies. Shanghai identified eleven key tasks in education reform and development, prominently stressed the educational system reform and institutional innovations, and focuses on reform explorations in the following seven aspects. First, explore a new system and new mechanism of public administration of education, and promote public administration of education; in particular, transform the government function and mode of administration, optimize resource allocation to basic public services in education, promote balanced development in compulsory education, and drive expansion and sharing of quality resources. Second, explore the reform of talent training and recruitment and implement all-around development of education comprehensively. Third, explore the mechanism and ways of education support industrial restructure to enhance education serviceability. Fourth, explore the pattern of expanding education to promote education internationalization. Fifth, explore anew mechanism to achieve a system of lifelong education. Sixth, explore a strategic support platform of future-oriented education development that serves the whole country, and faces the world, and enhance the service function to serve the national education reform and policy-making. Seventh, explore and establish the new mechanism for regional cooperation development of education to strengthen Shanghai’s function of education service. The Guangdong Provincial Education Work Committee and Provincial Education Department issued the “Overall Plan of Guangdong Province for General Pilot Reform of Education” (广东省教育综合改革试点 总体方案 guangdongsheng jiaoyu zonghe gaige shidian zongti fangan) on August 31, 2010, and it is determined to launch comprehensive pilot reform in education step-by-step throughout the province, and stresses omni-directional reform in school administration, management, training, and safeguard mechanisms. Guangdong Province’s General Pilot Reform of Education is being carried out in three steps. The first step (2010–2012) is the starting test and puts emphasis on breakthrough. It chooses some areas and schools to carry out pilot work on key projects, overcomes obstacles, and consummates related special operational policy measures. The second step (2013–2015) is expanded scope, and advancement with

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steady steps. Based on the preliminary pilot work, the experiment scope will be expanded, and comprehensive reform of education will have its initial effect. The third step (2016–2020) is promotion throughout the entire province, and deepening reform, and comprehensively advancing education reform work, and fully realizing the educational goal highlighting the demonstration effect of the national pilot area of comprehensive education reform. Guangdong Province will put forth efforts to do the following within the province: establish a modern university with Chinese characteristics, push for university management reform, and implement professionalization reforms within the universities. In regards to the reform of the student recruitment system, with a foundation in the high school examination, a classified test, comprehensive assessment, and recruitment system will gradually be formed. They will also explore the establishment of selfenrollment, recommendation recruitment, designated area recruitment, and exceptional admissions enrollment. Top universities will utilize a unified exam, joint exam, and single-school exam to explore a new pattern of innovative talent selection and training; general undergraduate schools will enroll outstanding students in the national unified exam according to the high school work-level test and overall quality appraisal; they will promote the self-enrollment form of high vocational schools, registration and enrollment will gradually be realized according to the student’s test scores at the high school stage; and higher education for adults will gradually change from recruitment of unified entrance exams to registration and enrollment. III. Educational Reform and Development Progress A. National Policies on Education (1) Establishing and Achieving a National Subsidization System In 2010, three policies on subsidizing students from families with difficulties were released. First, starting in the fall quarter of 2010, the national subsidization system for general high school students from families with difficulties was established; the average subsidy standard for national stipends is RMB 1,500 every year for each student; approximately 20 percent of total enrolled students of total general high schools are covered by this subsidy, and funds are jointly paid out of central and local finances. Second, starting in the fall quarter of 2010, school expenses for Grade I,



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II, and III enrolled students who have full-time official student status in vocational secondary schools and are from urban families with difficulties (excluding students who are art and performance majors) would be exempted. Third, starting in the fall term of 2010, the stipend subsidization standard for general colleges and universities will be raised, and average subsidy standard will be raised every year for every student from RMB 2,000 to RMB 3,000, so that this policy will benefit more than 4,300,000 college students from families with difficulties. (2) Ministry of Education Proposed to Realize Balance of Compulsory Education by 2020 In January 2010, the Ministry of Education printed and distributed “Opinions on Implementing Scientific Development Concept to Further Advance Balanced Development of Compulsory Education” (关于贯彻落实科学 发展观进一步推进义务教育均衡发展的意见 guanyu guanche luoshi kexue fazhanguan jinyibu tuijin yiwu jiaoyu junheng fazhan de yijian) and proposed to make every effort to realize by 2012 a preliminary balance in compulsory education in the region and to realize a basic balance in compulsory education in the region by 2020. In November, the Ministry of Education issued “Guiding Opinions on Rectifying Indiscriminate Charges for School Selection at the Compulsory Education Stage” (关于治理义务 教育阶段择校乱收费问题的指导意见 guanyu zhili yiwu jiaoyu jieduan zexiao luanshoufei wenti de zhidao yijian) and set ten requirements for educational administration departments’ responsible in various areas for normalizing recruitment and enrollment and realizing the recruitment and enrollment policy. It also gives a timetable: “strives after three to five years of efforts no longer to have arbitrary charges during the stage of compulsory education.” (3) Adjusting Structure of Graduates, Increasing Proportion of Specialized Master’s Degrees The Ministry of Education adjusted the structure of graduate student recruitment, to expand the proportion of applied specialized-degree graduate students, and to develop full-time postgraduate education in specialized master’s degrees to change the pattern in which graduate programs give priority to academics. In 2010, recruitment of full-time specialized-degree graduate students was expanded, the additional plan and recruitment plan together arranged to recruit 119,000 students, twenty-five percent of overall graduate student recruitment. And specialized master’s

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degrees and traditional academic master’s degrees were to have separate recruitment for the first time, and the graduate student recruitment policy was adjusted. In September 2010, the Ministry of Education stated that in 2011 the number of specialized master’s degrees would be increased from the current 19, the scope and scale of graduate student recruitment of specialized degree would be unceasingly expanded, and the academic graduate student recruitment scale was adjusted five percent in principle for specialized degrees in 2010. (4) Reform of Ideology and Political Theory Curriculum for Graduate Students In the second half of 2010, the Ministry of Education began a new round of reforms in the ideology and political theory curriculum at some colleges, mainly for master’s degree and doctoral students. Reform content was to rename the compulsory “Scientific Socialist Theory and Practices” for graduate students to “Studies on Socialist Theory and Practices with Chinese Characteristic,” and “Dialectics of Nature” and “Marxism and Methodology of Social Sciences” were made elective courses. Doctoral students’ ideology and political theory curriculum, the liberal arts’ “Marxism and Contemporary Mental Climate,” and the science department’s “Modern Technological Revolution and Marxism” were renamed “China’s Marxism and Contemporary Mental Climate,” and “Selected Classic Works of Marxism” was made an elective course. Pilot colleges’ class hour of ideology and political theory curriculum will be reduced. Moreover, without official teaching materials and outline, various schools will voluntarily explore a teaching plan to submit to the Ministry of Education. For many years, the colleges and universities’ public political teachings were always disputed and were thought to have a bad effect and to occupy massive amounts of students’ time and energy and seriously affected students’ study of specialized curriculum. Some people believed that this reform demonstrates the positive intentions of “political structural reform.” (5) Traditional Culture and Education Enters Schools In September 2010, the Applied Linguistics Management Division of the Ministry of Education issued the “Notice on Determining Some Areas and Schools to Launch the Pilot Work of ‘China Reading Aloud: Classics Reading Aloud Action’ ” (关于确定部分地区和学校开展”中华诵•经 典诵读行动”试点工作的通知 guanyu queding bufen diqu he xuexiao kaizhan ‘zhonghuasong- jingdian songdu xingdong’ shidian gongzuo de



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tongzhi) and identified several hundred elementary and middle schools and 11 colleges and universities in 15 provinces (region and city) that will participate in this experiment. The “Notice” (通知 tongzhi) requested that “experimental areas and schools earnestly study and comprehend the strategic subject of the ‘National Medium and Long-Term Program for Education Reform and Development Plan’ (国家中长期教育事业改 革和发展规划纲要 guojia zhongchangqi jiaoyu shiye gaige he fazhan guihua gangyao) and the spirit of central leaders concerned on important written comments . . . and earnestly implement the strategic subject of ‘strengthening Chinese nation’s outstanding cultural tradition of education and teaching and make reading aloud an important platform to strengthen young people’s patriotic education, enhance the national history and culture inheritance, and build the Chinese nation’s common spiritual home.” For a long period, although it was given a name, traditional cultural education was spread only outside the system and failed to enter the schools and classrooms. This move is seen as an important signal shaping the new country. (6) Improve the Quality of Higher Education, Launch the “Excellent Engineer Education and Training Plan” In July 2010, the Ministry of Education officially initiated the “Excellent Engineer Education and Training Plan” (卓越工程师教育培养计划 zhuoyue gongchengshi jiaoyu peiyang jihua) (hereinafter referred to as the “Excellent Plan” (卓越计划) zhuoyue jihua) and authorized 61 universities, such as Tsinghua University, as the first batch of universities. The “Excellent Plan” is an important plan for strengthening the training of engineering personnel and serving the strategy in which the country insists on a new industrialization development road, constructing a new country and a powerful nation of talent. The characteristics of the “Excellent Plan” include in-depth training for industrial enterprises, having schools train engineering talents according to the general standard and the commercial standard, and strengthening and training students’ in engineering and innovation. The Ministry of Education is taking measures in five areas to advance implementation of this plan. First, it establishes a new mechanism in which colleges, universities, and industrial enterprises jointly train talent. Second, it regards strengthening engineering and innovation as the priority of reform. Third, it reforms and realizes the engineering teacher engagement and assessment system. Fourth, it opens engineering education to the outside world. Fifth, educational circles and industry will jointly formulate training standards.

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B. Progress of Local Education System Innovation Local governments and education department shave developed a series of education reforms independently around the formulation of the national and local “Education Plan Program” (教育规划纲要 jiaoyu guihua gangyao), which has demonstrated the potential and feasibility of local educational system innovation and has provided experiences and cases for integral education reform. Shanghai strengthened the government’s collective services function and created a preschool education pattern in which the government takes the lead and all other circles participate. In 2009, 79.10 percent of all children attended public kindergartens. With regard to education for migrant children, by the beginning of the fall term in 2010, more than 400,000 peasant laborers’ children who lived with their parent(s) in Shanghai took advantage of free compulsory education in government schools or in nongovernment elementary schools entrusted by the government; over 300,000 children studied in government schools, more than 70 percent of the total. Shaoxing, Zhejiang Province initiated a pattern in which local people run the schools and the government provides a subsidy in urban areas and advocated the management of kindergartens in rural areas, which effectively settled the problem of preschool education through cooperation between the government and the people. The Chongqing municipal government reformed its public finance policy and guaranteed priority development of education, and its educational financing fund comprised 4.1 percent of GDP. The Hubei Provincial Education Department advanced the balanced development of compulsory education through innovation of its local education system, encouraged various prefectural cities to solve the problems according to their own circumstances, and established an incentive mechanism to promote innovations in reform of the education system. Hunan and Anhui provincial party committee organization departments included education investments into the performance evaluation of county and municipal-level leaders. The Guangdong Provincial Government Education Supervision Office issued the “Responsibility Inspection Results of Basic Education Work of Guangdong Province on Party and Government Leading Cadres at the Prefectural-level Cities and above in 2007 and 2008” (广东省 2007, 2008 年度地市以上市党政领导干部 基础教育工作责任考核结果 guangdongsheng 2007, 2008 niandu dishi yishang shi dangzheng lingdao ganbu jichu jiayu gongzuo zeren kaohe jieguo), and ensured the fulfillment of basic education work ­responsibility



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by party and government “chief leaders” of 21 prefectural cities in the entire province for the first time, and stipulated explicitly that unqualified cadres cannot be promoted. Shandong Province established educational administration accountability and stipulated that counties (cities, regions) that seriously breached school management regulations have their titles revoked and an investigation be initiated to find the responsible person in charge of the education administrative department. The Hebei Provincial Education Department transformed the function of implementing mandatory administration and established new non-governmental education administration mechanism, and the provincial non-governmental education association replaced it to implement administrative law enforcement, such as annual inspection to subordinate nongovernmental schools and issuance of annual school-management permits; assessment of quality of subordinate schools and the quality of education and teaching; verification and recording of general regulations on student recruitment and advertisement of nongovernmental schools; assessment before authorizing provincial-level nongovernmental schools; assessment and argumentation before examination and approval for setting up nonacademic credentials, non-government-run colleges and secondary specialized schools of medicine, and so on. This is the first of its kind in the country. In promoting the balanced development of compulsory education, various regions have also taken measures and have made progress. In its reform of entrance examinations for senior high school in 2010, Inner Mongolia implemented the measure on distributing 50 percent of the recruitment target for high-quality high schools in every junior middle school; Hebei Province raised the recruitment target distributed to provincial-level government campus high schools to 80 percent. The Jiangsu Provincial Education Department wrote a law to promote balanced education and requested that more than 15 percent of teachers in model areas rotate schools every year to promote teacher mobility. Pinggu District of Beijing reformed admissions test for high schools, and high schools no longer collected expenses for school selection. Various areas have had balanced development of compulsory education, good academic achievement, and light student burdens, such as Zhaoyuan County in Shandong, Minle County in Gansu, and Miyun and Fangshan Counties in Beijing Municipality. And Panjin, in Liaoning, has become a city without school selection.

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Guangdong Province has engaged in reform and opening up of higher education; it positively explored new ways of running schools of higher education and advanced modern university system construction. The Southern University of Science and Technology started non-administration reforms. Shenzhen University started thorough personnel system and administration reform. Dongguan University of Technology cooperated with many well-known overseas colleges and universities, such as McMaster University. United International College (UIC), founded jointly by Beijing Normal University, Zhuhai branch, and Hong Kong Baptist University, has provided a useful place for exploring an innovation and training model. IV. Annual Hot Topics of Education In 2010, the educational field also had unexpected new problems in addition to those long-standing difficult problems, which has highlighted the deterioration of education ecology as well as the complexity and pressure of solving the problems in education. A. High Frequency of Campus Security Incidents In the beginning of 2010, throughout the country there were various incidents of campus security accidents and some children died. On March 23, there was a murder at Fujian Nanping Experimental Elementary School. Thirteen pupils were cut and injured, of which eight children died. No more than two months later, students were injured in six cases in various areas, which shocked the entire country. Campus security was increased throughout the country, and the State Council, the Ministry of Education, and the Ministry of Public Security took a series of measures to strengthen campus security, including implementation of a “campus security project.” Schools installed camera-monitoring devices, enforced closed management, and provided security personnel to guard the gates of schools. After the Nanping case occurred, Beijing promptly stopped seven cases targeted at elementary and middle schools and kindergartens and captured ten suspects. On May 14, 2010, Premier Wen Jiabao said that not only must public security measures must be strengthened but the underlying causes must be resolved, including handling some social contradictions, settling disputes, and strengthening the basic-unit’s mediation function, and a harmonious safe environment not only for children, but for everyone, must be created.



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B. Shortage of Preschool Education Is a Serious Problem With the peak in kindergarten enrollment because of “golden-pig babies” (babies born in Chinese pig year), large and medium-sized cities generally presented a phenomenon in which it was difficult or expensive to go to kindergarten, which has become a serious social problem that affects people’s livelihoods. High-quality government kindergartens are increasingly rare, and some parents endure many hardships, such as standing in line all night to register their children, “competition” for payment, and back-door dealings. This was caused mainly because of the government’s long-term neglect of preschool education and even withdrawal of collective services in this domain. In Beijing, for example, the entire city has 1,266 registered kindergartens (in which there are 330 government kindergartens and 936 private kindergartens), and 1,298 kindergartens without registration. Statistics indicated that, in 1996, there were 3,056 kindergartens in Beijing, and in fifteen years the number fell in half. Government investment in preschool education is also seriously insufficient. Government finance invest­ment in preschool education by Anhui Province in 2008 was RMB 120 million, but investment in general high school or similar noncompulsory education was RMB 2.8 billion. In November 2010, Premier Wen Jiabao presided over the State Council executive meeting, and the meeting studied in particular policy measures on the current preschool education development. The meeting proposed five measures, including expanding the resources of preschool education; strengthening the training of teachers; expanding preschool education investment; strengthening instruction in kindergarten nursing and education work; implementing laws and regulations; and normalizing preschool education management. The Beijing Education Committee indicated that, in the next five years, Beijing would invest RMB 5 billion to build 300 new kindergartens and to expand 300 kindergartens in order to address the problem of kindergartens being difficult to enter. C. Chaotic College Entrance Examination Test Marks In the season of college entrance examinations in 2010, the disordered phenomenon of awarding marks in college entrance examination once again was the focus. The main problem is that there were many items to award marks for, and the policy on awarding marks for college entrance examinations was becoming a channel for corrupt people. Statistics indicated that 33,700 students were awarded marks in Chongqing (in which

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­ inority examinees awarded marks were more than 13,000), which m accounted for approximately 17.19 percent of total examinees. In Beijing, more than 10,000 students were awarded marks for the college entrance examination, which accounted for 13.3 percent of total examinees. According to China Youth Daily reporters’ statistics, we discovered that awarding marks for college entrance examinations presented the characteristic of “three concentrations,” namely; it was concentrated in developed areas or urban centers and was concentrated in sports as well as in some middle schools and individual projects. In Guangdong Province, a total of 4,169 people were awarded marks, of which 987 people were awarded marks in sports, which accounted for 23.6 percent of the total; among the 987 people awarded marks in sports, 472 examinees were from Guangzhou, almost half, but the total candidates from Guangzhou were only one-tenth. At present, there are only fourteen kinds of awarding marks in the provisions of the Ministry of Education, but various provinces, cities, and autonomous regions actually have nearly 200 kinds, which showed that awarding marks for college entrance examinations is becoming a corrupt channel that destroys education equality and encourages power-money transactions. A special public opinion poll of the Social Survey Center of China Youth Daily (3,602 participants) showed that 77.2 percent of respondents approved of college entrance examinations’ returning to luo-kao (裸考, namely, fair exams without awarding marks), and 77.9 percent of respondents thought that student recruitment for college entrance examinations should have two sessions.1 The government has realized the severity of this problem, and the “National Medium- and Long-Term Program on an Education Reform and Development Plan” (国家中长期教育改 革与发展规划纲要 guoji zhongchangqi jiaoyu gaige yu fazhan guihua gangyao) proposed to gradually “normalize and straighten out items of awarding marks for college entrance examinations.” In fact, starting in 2008, Shandong Province gradually cancelled some awarding marks for college entrance examinations in the province, and at present all awarding marks have been completely cancelled. The plan’s program on education, which Beijing was formulating, proposed experi1 Huang Chong (黄冲) and Ma Mingjie (马明洁), “77.9 Percent of Those Surveyed Thought the Student Recruitment Method of College Entrance Examinations Needs to Be Voted on at ‘Two Conferences,’ ” China Youth Daily, March 2, 2010.



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menting with registration socialization for college entrance examinations. Hunan Province’s registration for college entrance examinations in 2010 accepted on-line registration and implemented registration socialization. D. University Academia Deterioration The news about the deterioration in university academia continues. In March 2010, Nanjing University Professor Wang Binbin exposed Tsinghua University Professor Wang Hui’s “The Resistance to Desperation” as a suspected case of plagiarism, and because of media report, it rapidly became a serious public event. At the beginning of July, netizen published the article “Zhu Xueqin: Another ‘Wang Hui’ in Academic Circles?” to criticize Shanghai University Professor Zhu Xueqin’s (朱学勤) Ph.D. dissertation “Downfall of the Moral Republic,” which similarly was suspected of being plagiarized, and Zhu Xueqin requested on his own initiative immediately starting an academic investigation of him. Professor Xiao Chuanguo (肖传国), the head of the Urological Surgical Department, attached to Xiehe Hospital, Tongji Medical College, Huazhong University of Science, and a 973 Project chief scientist, hired a thug to beat Fang Zhouzi (方舟子) and Caijing (Finance) magazine editor Fang Xuanchang (方玄昌) in retaliation for their “crackdown on counterfeiting offenses” and questioning of Xiao’s surgeries. This case was solved; Xiao Chuanguo was judged to have committed a crime by stirring up fights and causing trouble and was condemned to detention for five and a half months; he compensated Fang Zhouzi RMB 500 for loss of working time and Fang Xuanchang RMB 2,174.54 for medical and health expenses. In the American magazine Science published on September 3, 2010, Shi Yigong (施一公), the School of Life Sciences, Tsinghua University professor and dean, and Rao Yi (饶毅), School of Life Sciences, Peking Uni­ver­si­ty professor and dean, co-authored an article regarding their profound dismay about China’s current scientific research fund allocation system and scientific research culture. They thought that although China’s research funds continuously increased by 20 percent in recent years, this growth was not as rapid as that in science and research, and the present scientific research fund allocation system and various hidden rules have to a certain extent hindered the development of innovation in China. They appealed for the construction of a healthy scientific research culture and asked for research funds to be allocated based on academic merit, rather than on personal relationships.

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With the announcement of the “Plan Program,” the future mission and goal of educational reform were determined. Because of the reduction in the school-age population, the increase in national financial resources, and the large increase in educational investment, internal and external educational environments have had distinct improvements. For example, because of the reduction of candidates, in 2010 the average enrollment rate in national college entrance examinations exceeded 69 percent, an increase of 7 percent over the rate in 2009. Not only in various big cities but also in densely populated provinces such as Shandong, the average enrollment rate in college entrance examinations exceeded 80 percent. Theoretically, we can completely raise education using exams based on scores, tests, and enrollment quotas and in the long run pursue good and ideal education. It is precisely in this sense that education in China is at a historical turning point and on the eve of a big transformation. Meanwhile, the reality of education and the questions that remain are still serious, such as whether increasingly fierce competition for school selection or university academia, as well as the college entrance examination system and preschool education, are becoming worse and are not being effectively addressed. Thus educational reform urgently needs a breakthrough. A. Correctly Understand and Handle the Relationship among Development, Reform, and Opening Up As in reform of other social domains, educational reform is moving into deep waters, and its real obstacles are not concepts and ideas but established patterns of interests and vested interests. Therefore, the material educational reform that regards systemic reform as the core needs to be diligently advanced. On this issue, the mind needs to be further emancipated, and the relationship among development, reform, and opening up should be handled effectively. In the “Plan Program,” the reform of talent training patterns is emphasized, which is certainty important; but we should see that the educational pattern of a single talent-training pattern and a lack of creativity and diversity is mainly fettered by the educational administration system at high levels; only through educational system reform can the government authority over schools and principals ensure that educators are running schools and restore the vigor of schools and thus improve the quality of



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education and talent. The education field should insist on systemic reform first and seize an opportunity to force material educational reform, which prioritizes systemic transformation. Educational reform needs to understand and handle the relationship among development, reform, and opening up. Development cannot replace reform, but reform can largely promote development. Among the three, opening up is weakest. We should profit from the experiences of economic restructuring to promote reform through opening up and introduce a variety of levels, types of foreign education, and cooperative education, which have a very influential role in breaking up the single management system and in changing the traditional education and teaching mentality. Guangdong Province’s mentality in this aspect is worth encouraging and using for reference. B. Solving the Education Problem through Systemic and Bureaucratic Innovation The university academia and the administration and official positions are harming China’s education and scientific research, a view that has become the consensus. How to govern abuses official bureaucrats is currently being discussed. The severity of the event in which Xiao Chuanguo hired thugs to kill others demonstrates the deterioration of academia. Reconstruction of the tradition of learning is a heavy responsibility. The “Guiding Opinion” (指导意见 zhidao yijian) issued by the Ministry of Education to govern indiscriminate charges for school selection at the compulsory education stage asked various areas to vigorously solve this problem within three to five years, which was the first time that the Ministry of Education set out a timetable for reining in indiscriminate charges for school selection, but generally the public was not optimistic. The public has lost confidence in this working pattern, which depends on documents, meetings, and statements, and how to enhance the credibility of the Ministry of Education and to inspire the public’s confidence in educational reform has become a problem. Obviously, the key is for all levels of government to take practical action to break up a few special interests and administration according to the law. Solving the problem of kindergarten highlights the importance that the government places on reform. The shortage of preschool education was directly influenced by the ideological trend of “education industrialization” and “preschool education marketability” in the 1990s. The “Notice of the Council General Office on Retransmitting Guiding Opinions of the

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Ministry of Education (Unit) Concerning Preschool Education Reform and Development” (国务院办公厅转发教育部等部门(单位)关于幼 儿教育改革与发展指导意见的通知 guowuyuan bangongting zhuanfa jiaoyubu deng bumen (danwei) guanyu youer jiaoyu gaige yu fazhan zhidao yijian de tongzhi) (Guo Ban Fa [2003] No. 13) in 2003 proposed that the goal of preschool education reform and development in the next five years is to “form a development pattern that regards government kindergartens as the backbone and model, and nongovernment kindergartens as the subject, and integrate government and nongovernment, and regular and non-regular education.” Hereafter, various areas pushed preschool education into the market, which reduced the number of government kindergartens. But, in the situation on which preschool education is currently focused, some areas also used the traditional practice and undertook the whole thing. In fact, the government’s appropriate positioning is neither to shirk responsibility nor undertake the whole thing, but to improve collective services, and to establish the simultaneous development of government and nongovernment education and state-owned and private cooperation through “leading” the use of all kinds of policy tools, such as finance, which meets the public demands. This “sudden” preschool education crisis has provided a turning point for many local governments to reform their governing method. C. Promote Local Innovation in the Education System With regard to education development in the recent years, innovations in local education have shown obvious vigor. A main practice of the “Plan Program” is also to help local governments to develop pilot reforms and to advance innovation in the local education system. In December, the appraisal of the “second national prize for local educational system innovation,” initiated and organized by nongovernmental organizations, the Twenty-first Century Education Research Academy, the Narada Foundation, and the New Education Institute, commended twenty cases of innovation by local governments. The significance of innovation in local education from top to bottom is shown first by implementing the national policy and adjusting measures to local conditions and subdivides and rectifying them so that they can become feasible measures; second, by exploring difficult problems that are not yet solved and seeking the answer, which has provided experiences and cases of integral education transformation. The practices of local education innovation help us profoundly understand effective education transformation.



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In educational system innovation practices in various areas, one important direction is strengthening administrative supervision, developing from education supervision to political supervision, and auditing and keeping the principal local person in charge accountable. Shandong, Guangdong, Hunan, and Anhui have tried it and have made tangible progress. Comparatively speaking, the examples of institutional innovation in various areas are still thin and weak in administration system reform and the reforms of the separation of government and school and of administration and non-administration are also weak, which indicates the difficulty of this reform. The present educational reform is still, to a certain extent, self-reform. The public appealed intensely and “expects the National People’s Congress to lead the educational reform” and to increase the power of educational reform. Like the formulation of the “Plan Program” with respect to the central government, its implementation similarly needs authority higher than the education departments, therefore the National People’s Congress, as the organ of supreme power leading educational reform, safeguarding the balance of authority, and safeguarding education rights, should lead the reform. D. Thoughts about “Chinese Pattern” In October 2010, the subject of nine top Chinese universities’ association was the Chinese pattern of world-level first-class university construction. Some principals spoke and believed that the Chinese higher education was at the state of learning from, imitating, and pursuing the West for a long time, and said that “if we do not get rid of this rule of external values . . . it is difficult for us to change our attached and subordinated status to stand front and center in the world knowledge system”; Chinese universities should be “independent in standard from the West, should be universities that insist on and manifest the characteristic of China’s national culture, and not simply a parrot of world first-class universities.”2 From this perspective, is their justification in “constructing a world first-class university”? This kind of paradox has highlighted the importance and practical significance of discussing the proposition of the “Chinese pattern.” After thirty years of reform and opening up, China’s social development is at a new historical starting point and must clearly understand the circumstances and general situation to be correctly positioned for future 2 Li Bin (李斌) and Zhou Kai (周凯), “Chinese Pattern Can Interpret Dream of World First-Class University,” China Youth Daily, October 14, 2010.

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development of education. We should be wary of overconfidence and narrow nationalism in rejecting learning from the West and opposing integration into mainstream civilization, and we should insist on the correct direction of reform and opening up. At the same time, we should stress China’s practical situation and oppose the foreign-style stereotyped writing and the foreign dogmatism that engages in indiscriminate imitation of foreign ways, which has strong practical significance and pertinence.

CHAPTER seven

A Critical Phase in China’s New Health-Care Reform Gu Xin According to “Opinions of the Central Committee of the Chinese Communist Party (CCP) and the State Council on Deepening Reform of the Medical and Health-Care System”1 (中共中央国务院关于深化医药卫 生体制改革意见 zhonggong zhongyang guowuyuan guanyu shenhua yiyao weisheng tizhi gaige yijian) (referred to below as “New Medical Reform Plan” (新医改方案 xin yigai fangan)) and the “Plan on Recent Priorities in Carrying out Reform of the Health-Care System (2009–2011)”2 (医药卫生体制改革近期重点实施方案 (2009–2011 年) yiyao weisheng tizhi gaige jinqi zhongdian shishi fangan) (referred to below as “Implementation Plan” (实施方案 shishi fangan)), by the end of October 2010, the three-year implementation plan for new medical reform arrived at a midterm appraisal stage.3 So, how is the reform going? First, how the policy of new medical reform will be carried out is actually decided to a great extent in the local implementation plan issued by various provincial governments. With the development of new medical reform, various provinces, autonomous regions, and municipalities as well as some main cities released a new local medical reform plan one after another based on their own practical situation according to the spirit of the “New Medical Reform Plan” and the “Implementation Plan.” By ­October

1 See “Opinions of the CCP Central Committee and the State Council on Deepening the Reform of the Medical and Health Care System,” at www.lawinfochina.com/NetLaw/ display.aspx?db=law&sen=rLdDdW4drhdDdWEdrLdTdW4d9ddvdWcd9DdxdWhdrhdwd Wud/ddwdWnd/hdFdWud/ddTdWud9Dd+&Id=7416&/. 2 See “Notice of the State Council on Issuing the Plan on Recent Priorities in Carrying out the Reform of the Health-Care System (2009–2011),” at www.lawinfochina.com/ NetLaw/display.aspx?db=law&sen=rLdDdW4drhdDdWEdrLdTdW4d9ddvdWLd9DdxdWh drhdGdWud/DdGdW4d/hdydWud/ddTdWud9Dd+&Id=7414&SearchKeyword=医药卫生 体制改革近期重点实施方案&SearchCKeyword=医药卫生体制改革近期重点实施 方案&/. 3 See Gu Xin (顾昕), “China’s Reform of Health-Care System Starts Officially,” in Social Development Yearbook: Analysis and Forecast of China’ Social Situation in 2010, ed. Ru Xin (汝信), Lu Xueyi (陆学艺), and Li Peilin (李培林) (Beijing: Social Sciences Academy Press, 2009), pp. 73–74.

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2010, there existed thirty provincial-level “New Medical Reform Plans” or “Implementation Plans,” and only Shanghai’s new medical reform plan was not yet issued. Because of different economic development levels, and medical and health development conditions, provincial-level new medical reform plans have some local characteristics two in particular: First, most provinces elaborated on the construction of the basic medical security system, but content on other aspects is simple and relatively minimal; second, compared with the central version, many provinces’ new medical reform plans have highly similar concrete expressions and language style in many aspects, however, they all lack targeted measures. The appearance of the first characteristics of local new medical reform plans was tied up with characteristic of the central version. It is observed that, in the framework of the basic medical security system, in order to promote the construction of the basic medical insurance system, the central “New Medical Reform Plan” and “Implementation Plan” gave relatively clear and explicit descriptions. Under this guidance, the local new medical reform plans will likewise provide fuller elaborations on these aspects. However, even in the construction of a basic medical security system, many provinces also merely subdivided the national policy objectives slightly, and a few provinces gave specific measures guaranteeing that the policy objectives can be realized according to their respective situations, which was a common fault of all provincial medical reform plans. For example, on the problem of medical insurance coverage expansion, various provinces were satisfied with giving the percentage of insured that was equal to or greater than the national objective (90 percent). Some provinces even proposed the objective of 95 percent medical insurance coverage for urban employees and medical insurance for urban residents for whom was very difficult to expand coverage and proposed the objective of nearly 100 percent coverage for the new rural cooperative medical system, but did not actually point out the difficulties and countermeasures of medical insurance coverage expansion considering the practical situation of the respective province. Moreover, with regard to the fund-raising level for medical insurance, many provinces were not willing to determine the government subsidy level and the individual payment level and only copied the figures in the central “New Medical Reform Plan” or gave some general formulas. With respect to the medical insurance payment reform as the core of medical insurance reform and even of entire reform of health-care system, many provinces’ medical reform plans were not treated seriously, and rudimental pilot plans were not even drawn up.



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The second characteristic in local medical reform plans was more obvious in areas outside medical insurance, especially in reform and development of the health-care system. Whether the implementation of a basic drug system, the achievement of a basic-unit medical and health-care organization and public hospital reform, or the development of privately operated medical institutions, various areas either imitated and copied the principle of the national “New Medical Reform Plan” or basically repeated old measures, which were implemented for many years in the past without good results. In the construction of a basic drug system, various provinces’ new medical reform plans basically copied the central “New Medical Reform Plan” and did not adequately express concrete implementation measures. In specific practices, various areas’ response regarding the implementation of a basic drug system was difficult. In achieving the basic-unit medical and health service system, whether involving nationalization or multiplication of community medical and health service organizations, its basic medical service compensation mechanism, or the establishment of a firstaid system and referral system, various provinces’ new medical reform plans did not give substantial advancement measures. In public hospital reform, various provinces’ new medical reform plans lacked substantial details, and that of some provinces were no better than medical reform plans proposed many years ago on this point. At the same time, the overwhelming majority of provinces addressed the issue of medical service system multiplication, but with regard to accumulating private capital (namely “social capital”) to establish the medical institution, they did not give explicit ideas that conform to the local situation and did not point out the factors in which various areas blocked private capital from being used for medical service, much less giving targeted governing measures. It cannot be denied, in the reform and development of medical and health service systems, the central “New Medical Reform Plan” and “Implementation Plan” in fact contain two different ideas: one is to strength administrative control; the other is to strengthen government procurement of services in a market-oriented way. Because China is vast in territory, various areas’ economic and social development vary widely, especially in terms of collective services market growth and the extent of social capital , the coexistence of an administrative orientation and market orientation in the central “New Medical Reform Plan” and “Implementation Plan” perhaps is normal and even necessary. Precisely as a result of this point, the central government hoped that various areas positively

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explore and propose measures through careful, practical, and feasible reform measures based on the practical situations of various areas. As for the two mentalities in the medical and health service system reform, various areas may completely determine the applicable scope of its two reform mentalities; for example, positively explore market-oriented reform in the developed areas (small and medium-size cities) and guarantee that people can also enjoy basic health services through administration means in underdeveloped areas (especially mountainous areas, remote areas, and other low-density population areas). It is a pity that, in various provinces’ new medical reform plans, we do not see boldness, courage, and effort in active exploration. Nevertheless, many areas have carried out some new explorations in different aspects. This paper makes a preliminary appraisal of the implementation of the new medical reform policy aimed at the construction of the basic medical security system, public hospital reform, and drug policy transformation. I. Comprehensive Medical Insurance Begins a New Development Phase The first task of the medical reform, namely “accelerating construction of a basic medical security system,” has seen steady progress. In the future, medical insurance reform and development will be gradually shifted from expanding coverage to raising the medical security level and improvement of medical security services. A. Universal Health Insurance The central “Implementation Plan” stipulated that, by 2011, the basic medical security system would comprehensively cover urban and rural residents; specifically the insured rate of medical insurance for urban employees, the medical insurance for urban residents, and the new rural cooperative medical system would increase to above 90 percent. Table 7.1 shows that, by the end of 2009, the basic medical security system covered 1.23 billion people, in which population coverage surpassed 90 percent for the first time. This was a historical step forward. Considering that some people in China still enjoy free medical services, and some people have purchased commercial medical insurance, these two groups add up to about 10 percent of the population. Therefore, the time has come for universal medical insurance for everyone.



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Table 7.1. Coverage of the Basic Medical Security System (2004–2009) (in hundred million people and percentage) Medical Medical New rural Total insured Total Coverage insurance insurance cooperative population population for urban for urban medical employees residents system 2004 2005 2006 2007 2008 2009

1.2 1.4 1.6 1.8 2.0 2.2

0.4 1.2 1.8

0.8 1.8 4.1 7.3 8.2 8.3

2.0 3.2 5.7 9.5 11.3 12.3

13.0 13.1 13.1 13.2 13.3 13.3

15.7% 24.2% 43.2% 71.8% 85.3% 92.4%

Sources: China Health Statistical Yearbook (Beijing: Peking Union Medical College Press, 2009), pp. 347–348; 2010, pp. 349–350 and 355.

Certainly, there are differences in the development of medical insurance in urban and rural areas. The total insured population covered by medical insurance among urban employees and urban residents reached 400 million in 2009, but total urban residents were 620 million in 2009, therefore the coverage was only 64.6 percent. The insured population of the new rural cooperative medical system reached 830 million in 2009, which surpassed that for rural residents (710 million) the same year and coverage reached 94.7 percent of the population in the rural household register (880 million) the same year.4 In the next two to three years, extending the coverage of medical insurance will be a challenge mainly in urban areas. B. Enhancing the Level of Protection With the expansion of coverage as well as the increase in government subsidies for medical insurance for urban residents and the new rural cooperative medical system, the fund-raising level for the basic medical security system has largely increased. The next step is to figure out how to fully spend the medical insurance fund on the insured person who is ill. Overall, the level of security in the basic medical system is not high and this is specifically evident in the fact that the proportion of the sum payable by the medical insurance fund in medical institution business

4 For data on the urban and rural population, see Ministry of Health of the People’s Republic of China, China Health Statistical Yearbook (Beijing: Peking Union Medical College Press, 2010), p. 355.

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income is still not high and was less than 40 percent in 2009. This proportion must increase to at least 70 percent, and the basic medical security system can only play a role in sharing the expenses and risks of third-party purchases.5 Whether the protection level of medical insurance is high is ultimately decided by its fund-raising level, but at the present stage, the surplus level of medical insurance fund is also decisive. Table 7.2 shows that three public medical insurance funds have a surplus, and the surplus of the funds of the medical insurance for urban employees and the medical insurance for urban residents are relatively high. If the surplus in the medical insurance fund is excessively high, the insured are unable to enjoy suitable medical security. This is disadvantageous not only to the achievement of a medical security system but also in promoting the formation of a domestic demand-led economic development model. The social medical insurance fund belongs to the people and should be used by the people. In view of this question, the “New Medical Reform Plan” proposed the following: actively explore a reasonable surplus level and appropriately readjust the surplus rate.6 In 2009, various local governments’ medical insurance administration sections started to change from the former idea, which pursued a high surplus rate for the fund, and explored measures to expand the security level to the insured; for example, it increased the service items paid for by medical insurance and the variety of drugs, advanced the overall plan for outpatient service, revised the scope of usage of individual accounts, all of which decreased the surplus in the medical insurance fund, which was manifested in the decline in the number of payable months by the surplus that had accumulated. The implementation of these reform measures will hopefully raise the payment level of basic medical security system in a short time and ultimately benefit the people insured. C. Medical Insurance Payment Reform Begins In the era of universal medical insurance, the payment of medical insurance agencies to the medical institution, called “provider payments” in

5 For detailed discussions, see Gu Xin, New Explorations on Medical Insurance for All the People (Beijing: Social Sciences Academy Press, 2010), pp. 60–63. 6 For detailed discussions, see Gu Xin “Studies on the Surplus of China’s Urban and Rural Public Medical Insurance Funds,” Academic Journal Graduate School Chinese Academy of Social Sciences, no. 5 (2010): 53–61.



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Table 7.2. Cumulative Surplus Rate in the Basic Medical Insurance Fund 2004–2009 (in hundred million RMB, percentage) Medical insurance for urban employees

Medical insurance for urban residents

New rural cooperative medical system

Cumulative Cumulative Number Cumulative Cumulative Number Cumulative Cumulative Number surplus surplus rate of surplus surplus rate of surplus surplus rate of payable payable payable months months months 2004 2005 2006 2007 2008 2009

957.9 1278.1 1752.4 2440.8 3303.6 2882.0

84.0% 90.9% 100.3% 110.2% 114.5% 78.5%

13.3 14.2 16.5 18.8 19.6 12.4

36.1 128.1 220.7

84.0% 82.7% 87.7%

31.2 23.5 15.8

17.8 38.5 76.0 131.9 198.9 220.3

40.3% 46.7% 36.0% 31.2% 25.4% 23.3%

8.1 7.5 5.9 4.6 3.6 2.9

Note: Cumulative surplus rate, namely the ratio between the cumulative surplus and income during the same year; number of payable months calculated by disbursement level for the same year as the base number. Source: China Health Statistical Yearbook (Beijing: Peking Union Medical College Press, 2010), p. 350.

international literature, will become an important source of medical institution income, but the provider payment pattern choice will have a profound impact on the behavior of medical institutions. Whether the medical institution provides medical service in a high performance-toprice ratio for the insured, one of the crucial factors lies in which combination of provider payment patterns the medical insurance organization chooses. In fact, for the leading system, the combination of multiple provider payment patterns the traditional fee-for-service is difficult to replace within medical insurance reform.7 In 2010, the Ministry of Human Resources and Social Security, which is in charge of urban medical insurance, started to regard the medical insurance payment reform as one of the key tasks in encouraging various areas to carry on various experiments. According to incomplete statistics, about 86 percent of overall planning areas started to explore various combinations of medical insurance payments. But the difficulty of reforming medical insurance payment cannot be overestimated. A series of new problems during reform appeared, including: (1) conflict between the market-oriented purchasing mechanism and administrative control of drug prices. Because the medical service and the present administrative pricing method for drugs were in accordance with fee-for-service, the 7 See John C. Langenbrunner, Cheryl Cashin, and Sheila O’Dougherty (eds.), Designing and Implementing Health Care Provider Payment Systems: How-To Manuals (Washington, DC: World Bank, 2009).

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manpower cost of medical services cannot be suitably represented in other new medical insurance payment patterns, thereby greatly dampening the enthusiasm of medical institutions; (2) the medical insurance organization tended to have a bureaucratic attitude toward purchasing behavior for medicine services, namely it depended upon various administrative inspections to advance the new payment mechanism, but was extremely weak in service purchase contract management; (3) non-institution of negotiation mechanism: The medical insurance agencies and the medical institution wrangled, and the standard formulation of new medical insurance payments also was not well known and lacked transparency; (4) repeat of former payment methods: although various areas had used many new payment methods, payments-were still settled using fee-forservice, therefore the new payment method returned to its old settlement pattern, and fee-for-service still played the leading role, in which payment reform was not obvious. II. Public Medical Institution Reform Falters Compared with medical insurance reform, the medical service system reform was generally quite slow, and this pattern did not have substantial changes in recent years. In 2010, this pattern seems to have had some turning points. In China, the public medical institution, especially the public hospital, holds the monopoly within the medical service market, and therefore medical system reform places emphasis on public hospital reform. Over the years, the public hospital was in the situation of “administrative commercialization.”8 On the one hand, public hospitals are part of a large administrative-hierarchical system, and most public hospitals are subordinate to the health administrative departments at all levels and are under the control of respective public health administrative departments in strategic decision-making and personnel management. On the other hand, the main income of public hospital comes from “business income,” namely, the sale of medical services and drugs. For many reasons, the rate of increase in public hospital medicine expenses was very high in the past twenty years. According to statistics of the Ministry of Health, average out8 See Gu Xin, “Medical Insurance for All the People Steps Onto the Right Path,” in Social Development Yearbook: Analysis and Forecast of China’s Social Situation in 2008, ed. Ru Xin, Lu Xueyi and Li Peilin (Beijing: Social Sciences Academy Press, 2007), pp. 88–102.

2,549.2 3,339.8 3,700.6 4,029.6 4,902.2 6,090.2 7,457.0

2,468.7 3,223.3 3,556.2 3,992.8 4,785.8 5,895.4 7,114.5

3.2% 3.5% 3.9% 0.9% 2.4% 3.2% 3.2%

1,149.0 1,490.5 1,758.1 1,949.9 2,378.4 2,914.2 3,544.2

1,354.5 1,700.2 2,008.7 2,229.8 2,711.8 3,278.5 3,911.3

–17.9% –14.1% –14.3% –14.4% –14.0% –12.5% –10.4%

Medical Surplus rate expenditures of medical revenue and expenditures 1,107.2 1,347.3 1,591.8 1,664.2 2,023.5 2,564.0 3,136.1

959.9 1,189.7 1,401.9 1,511.1 1,905.9 2,411.3 2,925.4

13.3% 11.7% 11.9% 9.2% 5.8% 6.0% 6.7%

Income Expenditures Surplus rate of from on drugs drug revenue drugs and expenditures

Sources: China Health Statistical Yearbook (Beijing: Peking Union Medical College Press), 2004, p. 85; 2005, p. 100; 2006, p. 102; 2007, p. 100; 2008, p. 93; 2009, p. 93; 2010, p. 94.

2003 2004 2005 2006 2007 2008 2009

Gross Gross Surplus rate Medical revenue expenditures of gross revenue revenue and expenditures

Table 7.3. Public Hospitals’ Revenue and Expenditure (2003–2009) (in hundred million RMB, percentage)

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patient expenses and hospitalization expenses of general hospitals under the medical departments reached RMB 159.5 and RMB 5,951.8, respectively, in 2009, which were 14.6 and 12.6 times the levels in 1990, but urban and rural residents’ incomes in 2009 were only 11.4 times and 7.5 times that in 1990.9 Meanwhile, in public hospitals, the pattern of “medical care services supported by using drugs” did not change. Specifically, medical services have been unable to make ends meet, but sales of drugs have remained in surplus (see Table 7.3). Although it fell in recent years, the surplus in drug sales was still an important safeguard for maintaining normal operations at public hospitals (especially treatment of medical personnel). Obviously, if public hospital reform is not implemented, it is impossible for the entire medical and health system reform to succeed. According to the plan, the supporting implementation document regarding public hospital reform was supposed appear publicly in the second half of 2009. But by the end of the year, the document still had not appeared publicly, so the media began discussing whether public hospital reform was real, but Ministry of Health director Deng Haihua (邓海华) refuted such a view.10 On February 10, 2010, “Guiding Opinions on Pilot Reform of Public Hospitals” (关于公立医院改革试点的指导意见 guanyu gongli yiyuan gaige shidian de zhidao yijian) (Weiyi guan fa (2010) No. 20) (referred to below as “Guiding Opinions” (指导意见 zhidao yijian)) was finally announced. The supporting document finally appeared publicly, which indicated the difficulty of public hospital reform. “Guiding Opinions” has given nine pilot contents on public hospital reform, namely (1) optimize public hospital layout and adjust its function; (2) advance local management of public hospitals, establish specialized agencies responsible for its asset management, financial supervision, and management appointment; (3) explore and establish the public hospital legal person management structure with the council system as the core; (4) reform the public hospital internal operations mechanism, including personnel system reform; (5) reform the public hospital compensation mechanism; (6) strengthen public hospital management; (7) reform the public hospital supervision system; (8) establish a standard training system for house physicians; (9) advance a diversified hospital ­management 9 For primary data, see National Bureau of Statistics, China Health Statistical Yearbook (Beijing: Peking Union Medical College Press, 2010), p. 98; China Statistical Yearbook, (Beijing: China Statistics Press, 2010), p. 342. 10 See the report at www.ce.cn/xwzx/gnsz/zg/201001/12/t20100112_20785141.shtml.



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pattern, namely encourage, support, and guide private investment in medical services. At the same time, the national medical reform office chose sixteen cities as the national pilot cities of public hospital reform, of which six pilot sites are in the eastern region, including Anshan, Shanghai, Zhenjiang, Xiamen, Weifang, and Shenzhen; six are in the central region, including Qitaihe, Wuhu, Ma’anshan, Luoyang, Ezhou, and Zhuzhou; and four are in the western region, including Zunyi, Kunming, Baoji, and Xining. Starting in spring 2010, these sixteen cities started to formulate an implementation plan for public hospital pilot reform. According to the plan, the pilot implementation plan was supposed to be formulated by the middle of the year. But, by the end of October, only eight cities (Zhenjiang, Qitaihe, Ma’anshan, Ezhou, Zhuzhou, Zunyi, Kunming, and Xining) announced a pilot implementation plan, plans of four cities (Anshan, Weifang, Luoyang, and Baoji) were compiled but not announced, and it was unclear whether the other cities had compiled a pilot plan. Establishing a public hospital council system and achieving a legal person management structure are emphasized in public hospital pilot reform. The council is composed of representatives of investors, legal representatives of hospitals, and hospital staff and other representatives. The council takes charge of strategic decision-making, and the president and its management team is responsible for routine management of the hospital. The core of this system transformation lies in who is the public hospital investor representative, as well as in how “government directors” on the council are chosen. Some cities newly organized the public medical institution management committee composed of departments of health, organization, development and reform, finance, and personnel, Commission Office for Public Sector Reform, Department of Labor, Price Control Bureau and State-Owned Assets Administration Bureau as investors. In fact, such organization is equal to various government departments’ joint conference and did not differ greatly from local governments’ existing working conference. Some areas carried out a pattern of “separate management from operation, but new hospital management department is still run by the health administrative department system,” and set up a public medical institution administrative office in the health bureau to be the investor. Certainly, few areas set up a public hospital administration section outside the health bureau to exercise the responsibility of “running the hospital,” but the health bureau exercised responsibility for supervising the hospital.

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Whether construction of a new system can truly resolve the long-standing relations of non-separation between government and institutions, nonseparation between management and operation, non-separation between the public hospital and the health administrative department remains to be seen. In view of the fact that public hospital reform just started, appraisal of its progress and results should be delayed for at least two to three years. Overall, the sluggishness of public hospital reform is due to unclear guiding thought on reform. The essence of public hospital reform is government reform, but not hospital reform. In the “Guiding Opinions” on public hospital reform, many contents involve public hospital management and have nothing to do with government reform. Numerous government reforms concerning public hospital reform are to reform relations between the government and hospitals, including financial relations, personal connections, the admittance of hospital service items, decisionmaking power over control of hospital development and activities, and its core is “non-administrative.”11 III. High Prices at Public Hospitals Corporatization of public hospitals and the corporate governance structure is a long-term task and cannot be accomplished with just a few measures. In public hospitals, some institutional arrangements distorted its actions, of which the most prominent one was the problem of “false high drug prices.” Overall, in the purchase and sale of prescription drugs, public hospitals not only preferred expensive products but also preferred to purchase products from expensive inventory channels even if purchasing products from the same factory, and then sold them again at a high price. The behavior of “buy high, and sell high” was absurd and thus inevitably made people angry. Many people blamed this phenomenon on the marketization of medical services. But, in a normal market, would intentionally “buy high, sell high” really become the ubiquitous business model? On May 16, 2010, the program “The Secret Behind Medicine with Exorbitant Profits” (暴利药价解密 baoli yaojia jiemi) aired on the CCTV finance channel’s column “Weekly Quality Report” (每周质量报道 meizhou zhiliang baodao) and exposed the problem of public hospitals’ “false high drug prices,” especially “buy high, sell high,” creating a public uproar. 11 Gu Xin, “The Essence of Public Hospital Reform Lies in Government Reform,” China Health Insurance, no. 3 (2010): 27–29.



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In Changsha, Hunan, the renowned public hospital Xiangya Hospital Number Two’s doctors recommended using lusunpian (asparagus troche) on a patient, at RMB 213 per package. The patient was not able to afford such an expensive drug, and he looked for a cheaper pharmacy in the city, only to discover that it sold at the same price at all the public hospitals in the city, even though it was available in retail drugstores. What is more astonishing, this patient discovered that ex-factory price of this medicine was merely RMB 15.5, and drug companies there sold it wholesale for RMB 30 per package, but public hospitals put a price on it that was seven times greater. Xiangya Hospital Number Two said it did not breach regulations, because the hospital purchased this drug at RMB 185.22 per package and then increased the price 15 percent according to national regulations; the retail price was RMB 213, which was only this drug’s highest limited price for retail sales as stipulated by the local pricing department.12 Because of this, Xiangya Hospital Number Two and the Hunan parties concerned were criticized all around them. Three days later, the Hunan Province and Changsha City departments for disciplinary inspection and supervision, industry and commerce, health, and public security formed a joint survey group to be stationed in Xiangya Hospital Number Two. Suddenly, at this famous public hospital with a history of more than 100 years, known in the saying “Peking Union Medical College Hospital in north, and Xiangya in south,” everybody was in a state of anxiety. Finally, a deputy director of the Pharmaceutical Branch Office at Xiangya Hospital was investigated because he received rebates of about RMB 40,000.13 However, the fact is that the phenomenon of false high retail prices for drugs at public hospitals was ubiquitous for a long time in the country, not just in Xiangya Hospital Number Two, and not just in Hunan Province. According to CCTV’s report, the guidance price of lusunpian for public bidding or the price of successful bidder in the unified drug public bidding of many areas was RMB 110–190, which was similarly high. Therefore, it is precisely the system abuses in the present medical and health system that caused long-term ubiquity of this phenomenon. If “sky-high-price lusunpian” is seen as merely a breach of regulation and it is sufficient to uncover one or two violators or law-breakers to discover

12 See the video report posted on the CCTV website, http://news.cntv.cn/program/zhiliangbaogao/20100516/100747.shtml. 13 Yang Zhongxu (杨中旭), “ ‘Sky-High-Price Lusun Pian’ Benefit Chain,” Finance, June 21, 2010, pp. 48–52.

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their ­responsibility, then in reality, it means that the drug system in the public hospitals do not have any problems. The government’s drug markup controls immediately caused false high drug prices at public hospitals. Because the government stipulated that the markup percentage of drugs sold in public hospitals can be only 15 percent maximum, the public hospitals favored buying at high prices and selling at high prices in the overwhelming majority of situations. Generally the marketing practice of “buy high, sell high” cannot prevail in a normal market environment. However, the market environment of the public hospital is not exactly normal because public hospitals have a monopoly in the medical services market. The data issued by the authoritative organization showed that, although the market share of retail drugstores in China from drug sales increased from 5.5 percent in 1992 to 24.4 percent in 2008, three-quarters of drug sales occurred at medical institutions.14 Key information provided in the CCTV program also confirmed the root of this problem: The patient can purchase lusunpian only at public hospitals and cannot actually buy it at retail drugstores. Why did public hospitals, known to provide public welfare, have the phenomenon of “false high drug prices” but other types of medical service organizations (e.g., privately operated medical organizations and basicunit medical institutions) did not? Actually, the reason is very simple, namely, the government specially set up controls on drug mark up at public hospitals and stipulated that the markup for drug sales there could not exceed 15 percent. Under this price control, the following circumstances most likely occurred: (1) the public hospital preferred expensive drugs. Some illnesses can be treated using drugs that have a wholesale price of either RMB 10 or RMB 100; the hospital can earn only RMB 1.5 from the former, but RMB 15 from the latter, thus it is normal for the hospital and doctors to prefer buying and selling the latter; (2) public hospitals prefer to purchase expensive drugs. For products from the same pharmaceutical manufacturing enterprise, public hospitals turn a blind eye to low-cost purchase channels and actually purchase medicines from high-cost purchase channels. Lusunpian is a ready-made example. In Changsha, some regular companies sold lusunpian per box at the RMB 30 wholesale price, but all public hospitals in Changsha purchased it from other channels at .

14 “2009 Report on China Health Total Cost Research,” comp. Health Economics Institute, Ministry of Health, December 2009, p. 22.



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the high price of RMB 185.22 per box, and then increased it 15 percent according to national regulations, for a profit of RMB 27.77 per box. If the drug purchaser in charge purchases at the price of RMB 30, the hospital can make a profit of only RMB 4.5 per box, which the public hospital administrator and other doctors do not agree with. What is more important, after having control over drug markup, the government’s administrative measures on governing the public hospital’s false high drug prices, such as an administrative reduction in drug prices, the unified drug bidding, the zero price difference policy on drugs, the policy on rectification of commercial bribery, all fell into chaos, and the distortion phenomenon of public hospitals’ drug sales worsened.15 The facts are very clear; the existing government control rules prevent public hospital medical personnel from making a decent living, so they have no choice but to increase drug prices. Therefore, only earnestly advancing reforms on government price controls will cure the public hospital’s stubborn problem on false high drug prices. However, the present drugs system reform actually attempted to steer clear of this core problem but sought solutions from other avenues, which is naturally a fruitless approach. When the public hospital’s stubborn disease of “false high drug prices” seemed resistant to treatment, the government attempted to alleviate people’s complaint of “false high drug prices” and “false high drug expenses” through the comprehensive implementation of the basic drug system. The central contents of basic drug system are as follows: (1) various areas determine the local “Essential Drug List” according to the central “Essential Drug List,” and generally they include some drugs that are relevant to local usage; (2) it implements provincial-level concentrated purchasing by invitation to bid for essential drugs; (3) it forces public medical institutions to be able to use essential drugs only by winning a bid, but not sell any other drugs; (4) the essential drug sale implements a zero rate, namely the purchase price and retail price all are prices from winning a bid; (5) the government tries to compensate for the 15 percent drug markup for basic-unit medical institutions from other channels, mainly the government finance and medical insurance fund. With regard to the essential drug system, in 2009 the central government had planned to experiment in 30 percent of basic-unit public medical

15 For details, see Gu Xin, “Radically Reform or Try Anything When in a Desperate Situation,” Finance, June 21, 2010, pp. 60–61.

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institutions, and in 2010 it asked various areas to extend the experimental range to 60 percent. In fact, various areas’ implementation progress was quite slow because the design of the essential drug system had many unreasonable parts so it could not provide a good incentive mechanism for the basic-unit public medical institutions, which caused confusion in local governments and medical insurance organizations.16 In addition, forcefully advancing the essential drug system also had a series of new problems. Before carrying out the essential drug system in 2009, the basic-unit public medical institutions’ drug sales were not restrained by the 15 percent drug markup controls, but independently purchased drugs according to market conditions to determine the retail price so long as the drug price did not exceed the highest limited price for retail sale stipulated. Under this system, the cost differential between wholesale and retail was determined completely by the basic-unit medical institutions, and the lower the purchase price is, the higher the profit is. Because the basicunit medical institutions faced competition with retail drug stores and privately operated clinics, it was impossible for the drug retail price to be much higher than that charged by competitors. To obtain higher profits, generally the basic-unit medical institutions did everything possible to find purchase channels with a high performance-to-price ratio and to lower the purchase price as soon as possible. Although the markup percentage exceeded 40 percent, and some drugs even reached about 100 percent, because the purchase price was very low, its retail price was mostly lower than the price of winning a bid given in local government’s concentrated drug bidding for public hospitals and was usually lower than the highest retail price stipulated by the National Development and Reform Commission (or local pricing department). This mechanism gives the basic-unit medical institutions strong power to negotiate with suppliers and to reduce the drug purchase price as much as possible so as to reach a relatively reasonable price through full market competition. Because drugs are purchased from low-cost channels, before implementing the essential drug system, the sales brokerage phenomenon rarely appeared at basic-unit medical institutions, and there are fewer problems of false high drug prices.

16 Zhu Hengpeng (朱恒鹏), “Essential Drug System: Where Is the Road?” Academic Journal Graduate School, Chinese Academy of Social Sciences, no. 5 (2010): 46–52.



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In 2010, the situation changed. Because the essential drug system as designed at present asked various areas to implement the concentrated essential drug bidding at basic-unit medical institutions and to carry out the zero price difference policy, basic-unit medical institutions (especially villages and town health centers) started to consult with medical enterprises about “returns to profit” and “brokerage.” The reason is simple; carrying out the zero price difference policy is equal to implementing the drug markup controls. To obtain more benefits, various areas first tried to leave out many drugs that won a bid at a high price in the unified public bidding link for essential drugs, and simultaneously they did ostensible work in reducing the average price of winning a bid. The basic-unit medical institution can naturally let “high-cost bidding win, and low-cost bidding lose” in actual purchases. Because of the implementation of the zero price difference policy, the basic-unit medical institutions cannot gain “profits” directly from the sale of essential drugs, but they can definitely request “services” and “percentage return,” even blatant “brokerage” from medicine enterprises that provide high-cost bidding. It must be pointed out that, simply strengthening government regulation will not eliminate the problems at basic-unit medical institutions. In fact, public hospitals strive for services and percentage return from medicine enterprises and its doctors receive rebates, all are well-known universal phenomena. This phenomenon has existed for many years, but all levels of governments are without resources, and the medical enterprises are choking with silent fury. Although the government repeatedly released administrative measures to deal with it and pinned its hopes on various inspections, they had virtually no effect. If it cannot manage a limited number of third-level hospitals, how can the government manage the numerous village and town health centers scattered in the rural areas? The basic measure for permanently curing this kind of distortion is to remove firewood from under the pot to eliminate the soil that produces this pattern, namely, the drug markup controls and the zero price difference policy on drugs.

Part Two

ABOUT INVESTIGATION

CHAPTER eight

Employment of Post-1980s College Graduates Based on an Investigation of Graduates from Six 985 Project Universities1 Li Chunling and Lü Peng Since 1999, when the government implemented the university enrollment extension policy, the scale of China’s higher education has rapidly expanded and the number of enrolled students and graduates has grown annually. The number of university graduates in 2010 reached 6.3 million, which was 7.6 times the number in 1998. At the same time, the gross enrollment rate in higher education also increased by approximately 10 percent before the university enrollment extension to 24.2 percent in 2009. The majority of this college student group is “post-1980s,” so they benefited from “university enrollment extension” and are extremely lucky to have the opportunity to go to college; unfortunately they face unprecedented employment pressure and competition. At present, university graduates with difficulty finding employment has become a widespread social problem; employment rates and unemployment rates of university graduates announced by the educational department were doubted by the public, experts’ explanations on the difficulties of university students in gaining employment were not satisfying, and university graduates and their parents complained that government departments were not taking effective policy measures to alleviate university graduates’ employment pressures. At the same time, employed university graduates were also discontent with their present employment conditions and salary levels. 1 On May 4, 1998, former state president Jiang Zemin (江泽民) proposed in his speech on the Celebration of the Hundredth Anniversary of Founding of Peking University that, “to accomplish modernization, China must have certain first-class universities to compete with the world.” Therefore, the Ministry of Education decided to implement a “promotion action plan facing education of the twenty-first century,” to emphatically support some colleges and universities in their efforts to become world first-class universities and highlevel universities, called the “985 Project,” and colleges and universities integrated in this plan were called “985 Project universities.” This chapter is a preliminary part in a major research project of the Chinese Academy of Social Sciences, “The Circumstances and Attitude: Sociological Research on ‘Post-1980s’ Youth.”

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To understand deeply “post-1980s” university graduates’ work status, the Institute of Sociology at the Chinese Academy of Social Sciences implemented an online follow-up survey of graduates’ employment status in the years since the enrollment extension at many universities (i.e., since 2003). The study was conducted by the MyCOS higher education consulting firm. In the first phase, 4,655 graduates of six 985 Project universities from 2003 to 2010 were surveyed. Six universities were selected by region: southeast, south, southwest, northwest, northeast, and central. The subjects were selected by random sampling based on a list of graduates at various schools in previous years, and then the selected subjects were contacted through email, asked to log into the online follow-up system to submit the survey, and finally the survey ended when the response rate of graduates at various schools reached 50 percent. A preliminary analysis of a sample distribution of the raw data indicated that the reply rate of males and graduates of the science departments was clearly higher than that of females and graduates in the liberal arts, and other aspects were close to the overall actual distribution. With regard to the graduates that submitted the survey, males comprised 68.5 percent, and females 31.5 percent; students in science departments made up 75.6 percent and students in the liberal arts 24.4 percent. To enhance the representativeness of the raw data, we gave statistical weight to sex and specialty distribution according to the sex distribution of general university graduates and distribution of specialties announced by the Ministry of Education. I. Demographic Characteristics of “985 Project University” Graduates “985 Project university” graduates in the past eight years stand out with clear characteristics (see Table 8.1). The majority of them were in the “post1980s” group, about half are an only child, and the only-child proportion was obviously higher than the “post-1980s” group as a whole. At the same time, the only-child proportion was higher among younger graduates; the proportion of graduates before 2003 (i.e., graduates who went to colleges before the university enrollment extension) was around 20 percent, the only-child proportion of graduates in 2003 was around 30 percent, and the proportion grew afterward year by year so that the only-child proportion of graduates in 2009 reached 50 percent. Among 985 Project university graduates, the proportion from rural families was clearly lower than the rural population proportion in the “post1980s” group, and this proportion also fluctuated over the years. About



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Table 8.1. Characteristics of 985 Project University Graduates (%) Proportion of Proportion Proportion Proportion Minority Proportion “post-1980s” of only of married from rural proportion of Party children areas members Undergraduates Master’s degree Doctorates

94.7 89.4 51.7

46.6 44.4 29.8

15.4 36.3 60.9

39.8 37.5 47.6

7.1 3.7 4.9

40.8 69.8 72.4

40 percent of graduates before 2003 came from rural areas, the proportion of graduates in 2003 and 2004 from rural families increased (45 percent and 51 percent, respectively), thereafter the proportion started to drop, and the proportion of graduates from 2007 to 2009 from rural families fell to 39 percent to –40 percent. This change may have been influenced by the university enrollment extension policy. In first few years after the university enrollment extension, the opportunity for children from rural families to go to university rose so those families benefited from the policy, but the difficulty that university graduates had in finding jobs afterward caused the children from rural families to lose some of their desire to go to college. Among 985 Project university graduates, the proportion of Communist Party members was high, especially among those in master’s degree and doctoral programs. At the same time, among graduates, the proportion of Party members swiftly grew; among undergraduates, the proportion of Party members among graduates before 2003 was around 30 percent, the proportion in 2003 was 32 percent, growing afterward to point that in 2009 it reached 45 percent. Among graduates of master’s degree and doctoral programs Party membership showed a similar growth trend; before 2003, the proportion for master’s degree graduates was about 30 percent, in 2003 it grew to about 50 percent, and in 2009 it reached 70 percent; and for doctoral graduates it was about 60 percent before 2003 and 75 percent in 2009. II. Employment Rate among Graduates The employment rate of graduates is an extremely controversial topic. Since the first batch of graduates after the enrollment extension in 2003 began employment, graduates have faced increasing difficulty in finding employment. According to the Ministry of Education, the employment rate of graduates within three months after graduation in recent years

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Table 8.2. Employment Rate of Graduates from 2006 to 2009 Six Months after Graduation (%) “211 Project” Non-“211 Project” Higher vocational schools and universities universities colleges 2006 2007 2008 2009

90.2 93.5 90.1 91.2

87.3 90.4 87.3 87.4

80.1 84.1 83.5 85.2

Total

87.5 85.6 86.6

was roughly 70–75 percent, but the media generally thought that the rate was lower than the official data, as did students and parents. Different methods of calculation account for the differences in the estimated employment rate; the official statistics frequently counted graduates who went on to further education (master’s degree, doctorate, or study abroad) as employed, but the media, graduates themselves, and parents consider them unemployed. The employment rate announced by the MyCos higher education consulting firm was frequently quoted by the media, and its statistical method of calculating employment rate excluded graduates who went on to further education, and its employment rate six months after graduation for all previous years is seen in Table 8.2. We used a similar method to estimate the employment rate and unemployment rate of 985 Project university graduates, namely excluding graduates who accepted further education or prepared further studies (reviewing graduate school exams) or prepared to take tests for various qualifications and did not plan to seek employment at that time, and calculated the employment rate and the unemployment rate only for people who needed to obtain employment. Table 8.3 lists six 985 Project university graduates’ work status during the investigation period (April–August 2010). Overall, 985 Project university had an extremely high employment rate, and only a few graduates were unemployed. Comparing Table 8.2 with Table 8.3, the employment rate (92.4%) of 985 Project university undergraduates in 2009 was higher than the average (91.2%) for “211 Project” colleges and universities (“211 Project” colleges and universities include 986 Project colleges and universities), and the employment rate of “211 Project” colleges and universities was higher than that for general colleges and universities (87.4%), with the extension of graduated year, the graduates’ employment rate also gradually increased. 985 Project university graduates of the undergraduate



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Table 8.3. Present Employment Rate and Unemployment Rate of Graduates of 985 Project Universities in All Previous Years (%) Year of graduation

2009 2008 2007 2006 2005 2004 2003

Undergraduates

Master’s degree

Ratio of Present Present Ratio of Present Present employment unemployment those never employment unemployment those never rate (seeking employed rate (have rate (seeking employed rate for a job) steady job) for a job) (have steady job) 92.4 93.0 97.2 98.2 95.1 95.9 97.2

7.6 7.0 2.8 1.8 4.9 4.1 2.8

6.0 4.1 1.5 1.2 0.6 0.0 0.0

90.3 92.1 92.3 96.7 96.0 — —

9.7 7.9 7.7 3.3 4.0 — —

8.1 7.8 6.3 3.4 2.9 — —

Note: The statistical base number is the sum of people who “have steady job” and “seeking for a job.”

course basically obtained employment five years from graduation. However, a few people are still seeking employment at present; they were previously employed and at present are looking for a new job. Compared with graduates of different academic programs, master graduates had an employment rate slightly lower than that for graduates of undergraduate courses; moreover, master’s degree graduates needed a longer time to find employment. This is possibly due to the fact that master’s degree graduates were highly specialized, and they had narrower prospects; at the same time, they have higher demands regarding working conditions and are not willing to accept unsatisfactory jobs. The employment rate of 985 Project university doctoral graduates was higher than that for graduates of undergraduate courses and master’s degrees, and they largely found employment within two years after graduation. When this survey ended (at the end of August 2010), 2010 graduates had not completed the employment process, thus we cannot count their employment rate and unemployment rate. At that time in 2010 among undergraduate graduates who submitted the survey, 84.2 percent had a job, and 15.8 percent were seeking a job; among master’s degree graduates, 87.5 percent had a job, and 12.5 percent were looking for a job. According to a survey by the MyCOS higher education consulting firm on the rate at which graduates signed up over several months, it was higher in 2010 than in 2009. According to the information, we can estimate that the rate in 2010 should be higher than that in 2009.

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The above statistical data showed that whether they attended a 985 Project university or other colleges and universities, university graduates did not face as serious an employment problem as anticipated, although the problem did exist. Compared with the situation in the majority of developed countries, China’s problem of employment for university graduates was not especially grave. In many countries, the development of higher education from one primarily for elites (in which only few people can go to college) to one that is more popular (in which most people can go to college) can lead to an employment problem for university graduates. However, in China this process has had extremely intense impact on university graduates and their parents mainly because the evolution of this process was so compressed; the university enrollment expansion policy inflated China’s higher education scale suddenly within only a few years, doubling the number of university graduates. So that university graduates suddenly went from being “Heaven’s favorite” to being like an “ordinary person,” so quickly that people found it unacceptable. However, in other societies with widespread higher education, the gross enrollment rate at university exceeds 60 percent, and university graduates have only begun to have employment difficulties. When higher education is widely available, the cost of obtaining a university diploma is much lower, and all people who want to go to college can do so; under these conditions, university graduates’ difficulty in finding a job is an understandable phenomenon. However, in China the availability of higher education has not reached the same extent; the gross enrollment rate at university has not yet reached 25 percent, competition for college entrance is still very intense, and the cost of education by students and parents (financial cost, time cost, and level of effort) keeps increasing. The university diploma obtained at such cost will only find a satisfying job with difficulty, which indeed causes people anxiety. Another factor causing employment difficulties is that university graduates and their parents generally lack experience in dealing with labor market competition, especially graduates in the initial few years (2003, 2004, and 2005) after the enrollment expansion, so their being sudden plunged into employment difficulties caught them off guard. They did not have predecessors’ experiences for reference, and the labor market did not supply enough channels and information to help them find a job. In the past two to three years, the problem has been slightly alleviated, so graduates and their parents have had sufficient preparation for employment difficulties, and the labor market, schools, government, and senior fellow students have created more employment channels and information for graduates. However, graduates and their



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parents’ handling of the situation have created another social problem. Some graduates’ parents help their children obtain a job using their authority and social relationships; those who lack authority and relational resources can only use bribes to help their children find a job, which has caused unfair employment opportunity competition and at the same time has intensified the costs and pressures in looking for a job. Although currently university graduates’ unemployment rate in China is not high, without a doubt, the problem of finding sufficient employment for university graduates’ has emerged and will likely continue to develop. Census data from all previous years showed that the non-employment rate of people less than thirty years old who had a university diploma (excluding enrolled students) was only 0.1 percent in 1982; this ratio was 0.8 percent in 1990 and 5.1 percent in 2000; sample survey data of 1 percent of the population showed that this rate rose to 7.6 percent in 2005; and the national sample survey data of the Institute of Sociology at the Chinese Academy of Social Sciences showed that it continued to increase, to 11.2 percent in 2008. This means that thirty years ago, nearly all university graduates had a job, but at present, one-tenth of young people at the university level do not have a job. Certainly, this did not mean that one-tenth of the people are unemployed; the proportion of those people who voluntarily do not obtain employment, such as those who want to be housewives, is also rising, but it is clear that the university graduates’ unemployment phenomenon is growing year by year. III. Graduate Division Phenomenon and Further Education The serious employment situation forces a considerable number of graduates to take certain measures to delay employment, one of which is to go on to further education or to continue the learning process in a disguised form, such as participating in various forms of professional training or preparing tests for qualification authentication, and so on. This has caused many graduates not to enter the labor market for quite a long time after graduation. Table 8.4 shows that among 985 Project university undergraduate graduates in 2009, nearly two-thirds (61.9%) entered the labor market by a year after graduation, of which 56.7 percent had a stable job, 4.7 percent were seeking a job, 0.5 percent were freelance, self-employed, or working for a family business, but a bit more than one-third of graduates (38.1%) did not enter the labor market, and they continued their education; a few

Have a job Don’t have a job Among which: Looking for a job Studies as a graduate student/doctoral student  or study abroad, review for test of graduate  student/doctoral student or prepare for going  abroad Prepare tests for government officials or other  qualifications, participate in professional/  vocational training Freelance/Self-employment/family business Do nothing Have a job Don’t have a job Among which: Looking for a job Studies as a graduate student/doctoral student  or study abroad, review for test of graduate  student/doctoral student or prepare for going  abroad Prepare tests for government officials or other  qualifications, participate in professional/  vocational training Freelance/Self-employment/family business Do nothing

Bachelor

Master

Present state

Academic credentials 72.9 27.1 5.5 17.4

2.8 0.8 0.6 73.5 26.5 6.3 16.7

2.3 0.6 0.6

56.7 43.3 4.7 33.5

4.1 0.5 0.5 68.7 31.3 7.4 19.4

3.5 0.2 0.8

0.6 0.4

1.8

6.2 6.9

0.9 0.5 84.1 15.9

1.3

2.6 4.6

90.1 9.9

0.5 0.1

0.8

3.2 5.5

1.2 0.2 89.9 10.1

2.6

1.6 8.5

85.9 14.1

—

— —

1.5 0.5

2.1

4.2 8.6

83.1 16.9

—

— —

1.9 0.6

2.5

3.9 12.0

79.1 20.9

—

— —

1.1 0.3

1.8

1.8 4.1

90.9 9.1

In 2009 In 2008 In 2007 In 2006 In 2005 In 2004 In 2003

Table 8.4. 985 Project University Graduates’ Employment and Non-employment Status (%)

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people did not do anything. Meanwhile, among master’s degree graduates in 2009, about three-fourths (76.3%) entered the labor market, the other nearly one-fourth (23.7%) pursued further education. New graduates entered the labor market at a lower rate; when this investigation ended (at the end of August 2008), 55 percent of graduates of undergraduate course from six 985 Project universities in 2010 entered the labor market, and the corresponding proportion of master’s degree graduates was about 60 percent. If we look at a longer period after graduation, a higher proportion of graduates gradually entered the labor market. By five years after graduation, about 95 percent of master’s degree graduates had entered the labor market and among graduates of undergraduate course it was about 90 percent. The kind of strategy taken by university graduates when faced with employment pressure led higher education to play the role of employment reservoir; government departments should consider this when formulating related policies and should increase opportunities for higher education in years when employment demand decreases and reduce the quantity of higher education supplied in years of plentiful employment. At the same time, when estimating the quantity of employment demanded by university graduates, the government departments should also observe that some graduates do not obtain employment immediately after graduation but gradually enter the labor market a few years later. However, the proportion of general university graduates for a given year who enter the labor market can be expected to be higher than that of 985 Project university graduates because they have less opportunity to pursue master and doctor courses and study abroad. IV. Monthly Salaries for First Jobs and the Phenomenon of “Diploma Depreciation” Currently university graduates face not only employment pressure but the threat of low wages, causing them to feel that the university diploma for which they worked so hard is increasingly worthless. The book Ant Tribe,2 which aroused widespread media attention, describes “low-income graduates who live together in communities with poor living standards”; this community’s monthly income is “significantly lower than the average 2 Lian Si (廉思), chief editor of Ant Tribe (蚁族) (Guangxi Normal University Press, 2009).

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wages of urban workers” and is “the fourth-weakest social group after the three big weak social groups (peasants, migrant workers, and the unemployed).” This indicates that people with a university diploma are also reduced to low-income earners and even fall into the unemployed and impoverished group. Adding to the blow, the average monthly salary of their first job not only did not increase year by year but even declined when the majority of employed people’s wage income increased, when even peasant laborers’ monthly pay clearly rose. This has caused a discussion on whether the university diploma “depreciates” in society. Table 8.5 lists the average monthly salary of university graduates in recent years six months after graduation, as compiled by the MyCOS higher education consulting firm. Comparing the data of all years listed, despite some fluctuation, graduates’ average monthly salary did not show any clear trend, whether increasing or decreasing. However, because countrywide and urban employed people’s average income grew year by year, university graduates’ initial monthly salary actually dropped by comparison, and the phenomenon of “university diploma depreciation” emerged. Do 985 Project university graduates also face the “university diploma depreciation” of elite colleges and universities? Figure 8.1 compares the monthly salary of first jobs of 985 Project university graduates with the incomes of urban families and employed people. 985 Project university graduates’ monthly salary at their first job is obviously higher than that for graduates of other colleges and universities six months after graduation (see Tables 8.5 and 8.6), and before 2006, it was also obviously higher than the average monthly salary of urban employed people and urban families’ average disposable monthly income per person. But since 2006, the disparity between 985 Project university graduates’ monthly salary at their Table 8.5. Monthly Salary of Graduates from 2006 to 2009 Six Months after Graduation (in RMB) “211 Project” Non-“211 Project” Higher vocational schools universities universities and colleges 2006 2007 2008 2009 2010 (to the end of June)

2,086 2,949 2,549 2,756

1,807 2,282 2,030 2,241 2,314

1,735 1,647 1,890 2,155



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urban family and employed people

6000 5000 4000 3000 2000 1000 0

2003

2004

2005

2006

2007

2008

2009

2010

graduates of undergraduate course graduates of master’s degrees doctoral graduates urban families’ average disposable monthly income per person average monthly salary of urban employed people

Figure 8.1. Comparison of the Monthly Salary of Their First Job of 985 Project University Graduates in All Previous Years and Urban Families’ Average Disposable Monthly Income per Person and Average Monthly Salary of Urban Employed People (in RMB)

first job and the average monthly salary of urban employed people and urban families’ average disposable monthly income per person started to narrow. This is because the latter grew steadily year by year, while the former did not show any obvious signs of growth. The monthly salary for the first jobs of 985 Project university graduates of undergraduate courses grew slightly from 2006 to 2008, but then fell after 2008; 985 Project university doctoral graduates’ monthly salary at their first job did not change greatly from 2005 to 2010; only master-degree graduates’ monthly salary at their first job showed clear growth. These data indicated without a doubt that the diploma of 985 Project universities is also depreciating. The proportional changes in graduates’ monthly salary at their first job and the average monthly salary of employed people at urban units and urban families’ average disposable monthly income per person shown in Figure 8.2 obviously manifested “diploma depreciation.” The monthly salary at their first job of 985 Project university graduates of undergraduate courses in 2005 was 3.32 times that of urban families’ average disposable monthly income per person and 1.92 times that of the average monthly salary of employed people of urban units. But in 2009, the ratio between

134

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

li chunling and lü peng Monthly Salary of First Job of 985 Project University Graduates and Incomes of Urban Family and Employed People

2003

2004

2005

2006

2007

2008

2009

Ratio between monthly salary of ��rst job of graduates of undergraduate course and urban families’ average disposable monthly income per person. Ratio between doctoral graduates’ monthly salary of ��rst job and urban families’ average disposable monthly income per person Ratio between master’s degree graduates’ monthly salary of ��rst job and average monthly salary of urban employed people Ratio between master’s degree graduates’ monthly salary of ��rst job and urban families’ average disposable monthly income per person Ratio between monthly salary of ��rst job of graduates of undergraduate course and average monthly salary of urban employed people Ratio between doctoral graduates’ monthly salary of ��rst job and average monthly salary of urban employed people

Figure 8.2. Ratio between 985 Project University Graduates’ Monthly Salary at Their First Job and Urban Families’ Average Disposable Monthly Income per Person and Average Monthly Salary of urban Employed People

the monthly salary at their first job and urban families’ average disposable monthly income per person fell to 2.06 and was basically the same as the average monthly salary of urban employed people (1.08). In 2005, doctoral graduates’ monthly salary at their first job was 3.66 times that of urban families’ average disposable monthly income per person and 2.11 times that of the average monthly salary of urban employed people. In 2009, the ratio between doctoral graduates’ monthly salary at their first job and urban families’ average disposable monthly income per person fell to 2.21 and was basically the same as the average monthly pay of urban employed people (1.16 times). That is to say, at present, the monthly salary for the first job of graduates of undergraduate courses and doctoral graduates from famous universities (985 Project universities) is roughly



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comparable to urban employed people’s average monthly pay level, and the initial income of graduates of general institutions of higher learning was definitely lower than urban employed people’s average monthly salary. Moreover, compared with other urban personnel, 985 Project university master’s degree graduates’ income superiority held steady, but the degree of this superiority has decreased; thus master’s degree diploma is also depreciating, but the degree of depreciation is small. In 2005, 985 Project university master’s degree graduates’ monthly pay at their first job was 3.85 times that of urban families’ average disposable monthly income per person and 2.22 times that of an average monthly salary of employed people at urban units; in 2009, the ratio between the monthly salary at their first job and urban families’ average disposable monthly income per person fell to 2.91, and the ratio between it and the average monthly salary of employed people at urban units fell to 1.53. V. Anticipated Monthly Salary and Actual Monthly Salary Some government officials and experts argue that with respect to employment difficulties among university graduates, graduates also should take some responsibility because they have excessively high expectations with regard to employment and monthly salary. Some raw data showed that university graduates’ monthly salary requirements are obviously higher than the monthly salary level that they can actually obtain.3 985 Project university graduates have a similar problem, and as elite university ­students, they may have even higher expectations. Table 8.6 listed the monthly salary of first jobs that 985 Project university enrolled students expected and the salary actually obtained by the past three years’ graduates. This data reflected the obvious disparity between graduates’ monthly salary expectations and actual monthly salary. Expectations before graduation regarding the monthly salary of the first job are higher than the actual monthly salary that they can obtain after graduation, regardless of whether they are undergraduate students, master’s degree students, or doctoral students. At present, 985 Project university undergraduate students’ average expectations regarding monthly salary at their first job is RMB 384 higher than the actual monthly salary in 2009, thus their ­possible 3 See Li Chunling (李春玲) and Wang Boqing (王伯庆) “Report on Investigations of Chinese University Students’ Employment and Wage Level,” “In 2009: Analysis and Forecast on China’s Social Development,” (Social Sciences Academy Press, 2009).

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monthly salary is only 88 percent of their expectation. The disparity between master’s degree students’ expectation and actually obtainable monthly salary is somewhat small, RMB 276, thus their actual obtainable monthly salary is 94 percent of the expected salary. Doctoral students have the biggest disparity between expectations and actual monthly salary. 985 Project university enrolled doctoral students’ average expectations regarding monthly salary at their first job was RMB 3,223 higher than the actual monthly salary in 2009, only 50 percent of their expected monthly salary. When this survey ended in August 2010, graduates who had obtained a job reported their monthly salary. Although this cannot represent 985 Project university graduates’ overall monthly pay situation in 2010, master’s degree graduates’ and doctoral graduates’ monthly salaries went up, but that of undergraduate graduates fell slightly The contracted monthly salary of 985 Project undergraduate university graduates in 2010 who took part in the survey was roughly RMB 2,703, master’s degree graduates’ contract monthly salary was roughly RMB 5,120, and doctoral graduates’ contract monthly pay was roughly RMB 3,225. VI. Work-Unit Choice and Actual Employment Distribution The disparity between university graduates’ employment expectations and actual work status is not only in wage income but in their choice of work-unit type. Figure 8.3 shows 985 Project university enrolled students’ expected work-unit type and that of the first job of graduates in 2009. The overwhelming majority of 985 Project university enrolled students expected to obtain a job in state-owned units or foreign-funded enterprises, and few were willing to go to private enterprises, but the proportion of graduates who actually obtained employment in private Table 8.6. 985 Project University Enrolled Students’ Expected Monthly Salary at Their First Job and University Graduates’ Monthly Salary at Their First Job (in RMB) Enrolled students’ University expected monthly graduates’ salary at first job monthly salary at first job in 2009 Undergraduate Master’s Doctorate

3329 4442 6393

2945 4166 3170

University graduates’ monthly salary at first job in 2008

University graduates’ monthly salary at first job in 2007

3116 3963 3306

3126 3622 3185



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enterprises was largely higher than they expected. For 985 Project university enrolled students in undergraduate courses, only 5.64 percent chose private enterprises, but 25.87 percent obtained employment in private enterprises; for enrolled master’s degree students, only 2.16 percent were willing to go to private enterprises, but 17.29 percent worked in private enterprises after graduation. Undergraduate students mostly wanted to go to foreign-funded enterprises (29.19%) as well as government institutions and scientific research institutions (22.64%), but the proportion of undergraduate graduates that obtained employment in these two domains was lower than their expectation (respectively 22.12% and 13.67%). Enrolled master’s degree students mostly hoped to work in scientific research institutions (26.52%) and state-owned enterprises (22.21%), and the actual employment proportion in these two domains was close to their expectations (respectively 25.03% and 21.04%), but the proportion of those who obtained employment in government institutions (13.58%) was lower than their expectation (18.32%). The majority of enrolled doctoral students hoped to work in scientific research institutions (63.39%), and generally 100% 90% 80%

not clear

70%

others

60% 50% 40% 30% 20%

scientific research institutions state-owned enterprises

10%

stu

de

nt

s’

E ex nro pe lle cte d u gr ad d w nd ua or erg tes k-u ra F d of irs un t w nit t uate En yp de or ro e lle r k d m grad -un ua it t as t yp ex te pe r’s e co e o ur f cte de se d w gre es M o rk tu as -u de te ni n ty r’s t t ts pe de yp ’ of gre e fir e g En st ra ro w d l ex led or ua k u te pe d cte oc ni s’ t ts d w or a or l st k-u ud e ty Do pe c nit t nts yp ’ of tor fir al g e st ra wo du rk ate un s’ its

0%

Figure 8.3. 985 Project University Enrolled Students’ Expected Work-Unit Type and Graduates’ Type of First Work Units

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they got their wish, 70.4 percent, but doctoral students who wanted to go to government institutions did not get their wish; although 10.85 percent of enrolled doctoral students wanted to work in government institutions, but only 4.2 percent were ­successful. University graduates’ work-unit choice exceeds actual labor market requirements, which is one of the reasons causing graduates to have difficulty with employment. At present, small and medium private enterprises take in the most labor, but the majority of graduates, especially 985 Project university graduates, are not willing to work in this kind of enterprise, which has caused a contradictory phenomenon; on the hand, small and medium-size enterprise bosses complain that they cannot hire appropriate university graduates, but university graduates complain that they cannot find a satisfactory job. Based on analysis of the above data, we summarize the 985 Project university graduates’ work status as follows: First, for every year’s graduates, only about two-thirds enter the labor market that same year, the other one-third continue their education and enter the labor market after one or more years; second, for graduates who entered the labor market, more than 90 percent find employment in one year, and the proportion without employment is not high; third, like graduates from general institutions of higher learning, 985 Project university graduates have also encountered “diploma depreciation”; fourth, the disparity between graduates’ employment expectations and the actual state of the labor market has aggravated the difficulty for university graduates in obtaining satisfactory work.

CHAPTER nine

Parents’ Occupational Expectations of Primary and Junior High School Students and Influencing Factors Deng Dasheng, He Guangxi, and Zhao Yandong “What should my child do when he/she grows up?” This is a question almost all parents ask, especially in China. Since the implementation of the one-child policy, parents, and even several generations of members in the entire family, have placed their hopes on the only child, thus ­causing this question to become even more prominent. In academic research, this question is called a question of “occupational expectations.” This chapter discusses Chinese parents’ expectations of a child’s future occupation and the factors that influence those expectations, according to a social ­investigation. I. Questions and Data A. Raising the Question Occupational expectations refers to the tendentious attitude of members of different social classes toward being engaged in a specific occupation, and parents’ occupational expectations of children refers to parents’ tendentious attitude toward children being engaged in a specific occupation. Research on this question has vital significance. First, parents’ expectations of children’s occupation reflect the occupation tendency of members of different social classes, which can reflect the values and social psychology of a society. Second, parents’ expectations of children’s occupation are influenced by their own social and economic background, which can indicate the intergenerational inheritance of social stratification. Third, parents’ expectations might have a direct or indirect influence on young children’s occupation consciousness, and thus affect children’s growth and development, therefore analyzing parents’ expectations might predict the next generation of young people’s occupational orientations to a certain extent. For a long time, academics have done massive

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research on people’s occupational expectations or vocational choice,1 but this research is mostly limited to that of job seekers or young students to understand their attitudes toward future occupations. Special studies on parents’ expectations of children’s occupations are actually sparse, and this chapter attempts, using data from primary and junior high school students and parents across the country to answer the following questions: (1) What characterizes Chinese parents’ expectations of their children’s future occupation? (2) What factors influence those expectations, and what explains them? B. Source of Data The data used in this analysis come from the “Sample Survey on National (City) Young People’s Technological Accomplishments” launched in 2009. This project was jointly implemented by the China Institute for Educational Research, the Ministry of Education, and the China Science and Technology Development Strategy Institute at the Ministry of Science and Technology. This investigation sampled students enrolled in primary school grade four and junior-middle school grade two in 286 cities (including municipal districts of municipalities, provincial capital cities, and prefecturelevel cities, excluding counties and county-level cities). According to the number of enrolled students in municipal districts, the investigation used probability proportion sampling (PPS) at different stages, sampled 128 municipal districts, and then sampled all students from a class of primary school grade four and a class of junior-middle school grade two in each district as investigation subjects. Each student was asked to fill in a questionnaire and brought a questionnaire home for his parent to fill in. In all, the sample consisted of 61 primary school classes and 57 junior-middle school classes in 20 provinces and cities, and valid questionnaires were submitted for 6,079 and 6,028 students and parents respectively. II. Parents’ Expectations of Children’s Future Occupation In the questionnaire, the following question was asked of primary and junior high school students’ parents: What occupation do you most want

1 See “Report of Investigation on Doctorate Holders’ Occupational Orientation” of the Task group of Investigation on Doctorate Holders’ Occupational Orientation, [M] (中国 科学技术出版社 China Science and Technology Press, 2009).



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your child to be engaged in after growing up? This was a single-option answer, and 13 answer options were given, and we consolidated some of the results. A. The Overwhelming Majority of Parents Have Started to Consider Their Child’s Future Vocational Choice Only 6.5 percent of parents responded “never consider” or “it does not matter” when asked about their child’s future occupation, and 1.1 percent of parents responded that it “depends on the child’s interest, ability, and development.” Combining the two answers, 7.6 percent of parents did not particularly think about this question, compared with 92.4 percent of parents who started to think about and anticipate their child’s future occupational direction (Figure 9.1). The proportion of primary scholars and middle school students’ parents did not differ greatly: 91.2 percent and 93.4 percent, respectively. This indicated that, in China, where competition is increasingly intense at present, parents have started to engage in advance planning of their child’s future occupational road (or at least consider it), even beginning at primary school. It is noteworthy that the higher the parents’ educational level, the lower the proportion who start considering their child’s future vocational choice. The rate of parents with an undergraduate degree and above who answered, “never consider,” “it does not matter,” or “depend on child’s interest, ability, and development” was as high as 12.6 percent (Table 9.4). This might be because parents with a higher educational level are more liberal and lean toward a more liberal attitude with regard to their child’s future occupation. B. More Professional, High-Prestige, and Stable Occupations Is the Majority of Parents’ Expectation of Child’s Occupation The survey results indicate that parents’ attitude toward their child’s occupation choice concentrated on more professional, high-prestige, and stable occupations, as seen in Figure 9.1. The following conclusions can be drawn from the results shown in Figure 9.1: (1) More professional, high-prestige, and stable occupations are the choice of the majority of parents. The proportion that chose “doctor/ attorney/journalist professionals” is highest, at 25.2 percent; the proportion that chose “scientist/engineer” is similar to that of “teacher,” 14.7 percent; combined, these three options total 54.6 percent. The common

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Doctor/attorney/journalist scientist/engineer teacher government bureaucrat manager/boss soldier/police officer musician/actor/athlete worker/farmer other depends on child’s interest, ability, and development never consider/it does not matter

1.2 2.1 1.1 0

9.6 9.4

3.8

11.6

25.2

14.7 14.7

6.5 5

10

15

20

25

30

Figure 9.1. Parents’ Expectations of Their Child’s Future Occupation (%)

characteristic of these occupations is that they are more professional and require a high educational level. At the same time, these occupations have high social prestige generally and have relatively good income and strong stability.2 (2) Government official, which invokes having great authority and strong stability, is also favored by parents. After more than thirty years of reform, China is gradually becoming more equal, however, it is difficult in the short term to eliminate the disparity between jobs that are “within the system” and “outside the system,” therefore, being a government official is regarded as the most stable and most secure occupation and at the same time infers having authority, which most people favor. The increase in the number of civil service exam takers in recent years reflects this tendency. This survey discovered that 11.6 percent of parents favored “government official” occupation. In addition, “soldier/police officer” is also considered a government official, a choice selected by 9.4 percent. Combined, the rate of the two was 21.0 percent. (3) Occupations with low stability and low social prestige were not taken seriously by parents. In developed countries, business management or engaging in business are generally regarded as promising occupations, and generally only the best students can enter business schools. This survey showed that only 9.6 percent of parents hoped that their child would become a “manager/ boss” in the future. The occupations of “musician/ actor/athlete” typically mean a high income, but in this survey, very few parents (3.8 percent) hoped that their child be engaged in this kind of occupation in the future. Common characteristics of these two kinds of 2 Li Chunling (李春玲), “Social Prestige in Contemporary China: A Survey on Occupational Prestige and Social and Economic Status Index”, Sociological Studies (February 2005).



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occupations are very high income (at least potentially), but low stability and overall low social prestige. The survey showed that most parents did not favor such an occupation. (4) “Worker and farmer” were rejected occupations. The survey showed that only 1.2 percent of parents hoped their child would work as a “worker” or “farmer” in the future. This reflected that the social and economic statuses of these professions are rather negative in China. It is noteworthy that China’s employment data showed that an ex­treme­ly small proportion of the population is engaged in professional technical work and in charge of institutions and enterprises. For example, in 2008, among the occupations of urban people: managers accounted for only 2.1 percent, professionals only 11.2 percent, staff in farming and forestry, animal husbandry, fishery and water conservation industry production, 27.7 percent, trade and service sector workers, 24.8 percent, production and transport equipment operators and related personnel, 19.8 percent, and clerks 8.2 percent.3 However, parents typically have an upward expectation towards their child’s future. Our survey result showed that the overwhelming majority of parents’ expectations to children’s future occupation are concentrated in the few “better occupations.” C. Parents’ Expectations of Boys’ and Girls’ Occupation Clearly Differ Parents have different occupational expectations of boys and girls, which reflects the Chinese public’s attitudes toward dividing occupations by sex. Table 9.1 shows parents’ expectations of children’s future occupations with regard to different sex, and we discover that: (1) Boys have a broader scope of vocational choice compared to girls. Parents’ expectations of a boy’s occupation were evenly distributed, and there were only small differences in the proportions of occupation choice, five classes of occupations were preferred by more than 10 percent of respondents: “scientist/engineer” (20.7%), “doctor/attorney/journalist” (18.5%), “soldier/police officer” (13.5%), “government official” (13.3%), and “manager/boss” (12.3%). But, for girls, parents’ expectations of their occupations were limited to only two classes of occupations chosen more than 10 percent of respondents: “doctor/attorney/journalist” (31.8%) and “teacher” (22.7%). 3 China Population and Employment Statistical Yearbook (Beijing: China Statistics Press, 2009), table 3–21.

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(2) Parents have deep-seated stereotypes of girls’ occupations, and most hoped that they would be engaged instable, knowledge-based occupations, excluding those in science and technology. For example, as many as 31.8 percent of girls’ parents chose “doctor/attorney/journalist,” which was as 1.7 times that of boys’ parents, and the proportion of those who selected “teacher” as the occupation choice was 3.3 times that of boys’ parents. The common characteristic of these two classes of occupations is stability and knowledge-based work. Although “scientist/engineer” also has these characteristics, the stereotype that “girls are not suited to be scientists” obviously mattered; the proportion of girls’ parents who chose this occupation was half that of a boys’ parents. The occupations in which stereotypes also played a role was for “soldier/police officer” and “manager/boss”; the proportion of girls’ parents who chose these was lower than that of a boys’ parents. Gender was also influential in the choice of other occupations, but the difference was not as big. This anticipated gender difference is interesting and might have social consequences. The survey conducted by the Task Group of the China ­Science and Technology Development Strategy Institute on 3,000 doctoral graduates’ occupational orientation in 2007 showed that female doctoral graduates concern about “occupational stability” when choosing their occupation was obviously more than that for male doctoral graduates.4 Table 9.1. Occupational Expectations of Students’ Parents, by Gender of the Student (%) Parents’ expectations of children’s occupation

Male

Professionals: doctor/attorney/journalist Scientist/engineer Teacher Government official Soldier/police officer Manager/boss Popular singer/film star/sports star Worker/farmer Others Depends on child’s interest, ability, and development Never consider/it does not matter Total

18.5 20.7 6.7 13.3 13.5 12.3 3.3 1.6 2.3 1.2 6.7 100.1

Gender Female 31.8 8.9 22.7 9.8 5.5 7.0 4.5 0.8 1.9 1.0 6.1 100.0

4 See “Report of Investigation on Doctorate Holders’ Occupational Orientation” of Task group of Investigation on Doctorate Holders’ Occupational Orientation, (Beijing: China Science and Technology Press, 2009).



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Is this related to the influence of parents’ occupational expectations from infancy to maturity? The formation of a social sex pattern is a long-term and complex process, and many questions are worth exploring further. III. Factors That Influence Parents’ Expectations of Their Child’s Occupation Here we analyze which factors influence parents’ expectations of their child’s occupation. Their expectations are shaped by their own occupational preferences. In addition, their judgment of their child’s ability to engage in a particular occupation is based to a great extent on their child’s academic achievement, and therefore, this section will analyze the influence of children’s academic achievement on parents’ expectations. Among the factors influencing parents’ own occupation preference, in addition to social status (including income, authority, and prestige) of occupations and social mainstream values formed under its influence, the most important influencing factor was the parents’ and family’s social and economic background. Because they have different reference points, families or individuals with different social and economic backgrounds will have different appraisals of same occupation. This section examines the influence of social and economic background factors, such as the family’s occupational background, economic position, and educational level, on a child’s occupational expectations. A. Influence of Children’s Academic Achievement on Parents’ Occupational Expectations Some occupations, such as scientist, engineer, doctor, and other professionals, require higher education levels, and others, such as soldier and police officer, manager and boss, musician, actor, and ordinary worker/ farmer, do not require such a high level of education. We weigh a child’s academic achievement according to his or her relative position his/her class and grade and calculate the expectations of parents accordingly, and the results showed that children’s academic records obviously influenced their parents’ occupational expectations (Table 9.2). From Table 9.2, we discover: (1) For children with “good” or “above-average” academic records, the proportion of parents who expected them to become a “scientist” or “engineer” in the future is obviously higher than for other children.

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This ­indicated that, in their parents’ eyes, these occupations require high academic achievement and are “rigid.” Academic record restrictions limit many parents’ expectations to this “rigid” occupation. (2) For children with a “bad” academic record, the proportion of parents who expected them to become professionals such as a “teacher” or “doctor/attorney/journalist” is obviously lower than that for other children. This indicated that, for many parents, these occupations also have certain academic requirements, but this requirement is not as “rigid,” and even students with an “average” or “below average” academic record can achieve it (parents have a certain anticipation of children’s progress in the future).Only for children with “bad” academic record (parents have low expectations of their future progress) is this possibility low. The anticipation of the “government official” occupation is similar. The better the academic record of the child, the higher proportion of parents who expected their children to engage in this profession, but this difference was not great. This indicated that the occupation of “government official” is somewhat flexible with regard to their children’s academic record in the eyes of many parents. Table 9.2. Relationship Between Children’s Academic Record and Parents’ Expectations (%) Parents’ expectations of children’s occupation Professionals: doctor/  attorney/journalist Scientist/engineer Teacher Government official Soldier/police officer Manager/boss Star singer/film star/  sports star Worker/farmer Others Depends on child’s  interest, ability and  development Never consider/it does  not matter Total

Children’s academic record Good

Above average

Average

Below average

Bad

26.0

26.9

26.7

22.1

15.3

21.7 15.0 12.8 4.5 7.8 2.2

16.8 15.1 12.9 8.0 8.5 2.8

11.8 15.0 10.8 10.0 11.1 4.2

10.4 14.7 9.5 13.9 10.5 5.9

10.6 11.6 8.3 14.6 12.6 6.3

0.7 2.2 1.1

0.6 1.5 0.9

0.6 1.9 1.3

2.0 3.1 1.3

5.3 2.7 1.7

6.0

6.0

6.6

6.7

11.0

100.0

100.0

100.0

100.1

100.0



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(3) For children with “bad” or “below average” academic records, the proportion of parents who expected them to become “soldier/police officer/fire fighter,” “boss/manager,” “musician/actor/athlete,” or “worker/ farmer” in the future was obviously higher than for children with a good academic record. This indicated that, for many parents, these occupations do not require very polished academic record. Among them, “soldier/police officer,” “boss/manager,” and “musician/actor/athlete,” either because of high social prestige or because of high income level, have become better choices for many parents whose child does not have a good academic record; but the occupation of “worker/farmer” was the last-place choice of many parents whose child had a bad academic record. B. Influence of Family Occupational Background on Children’s Occupation Expected by Parents Family occupational background refers to the occupation of family members. The following two attributes of family occupational background might influence family members’ occupational expectation. Family occupational background reflects to a certain extent the family’s social and economic status and at the same time might also influence their value judgment of occupations. We divided children’s family occupational background into five categories: “government official,” “scientist/engineer/specialized technical personnel,” “boss/manager,” “soldier/police officer/fire fighter,” and “worker/ farmer.” Of these, the first four are defined as a family in which one of the parents is engaged in this occupation, but the family of a “worker/farmer” is defined as one in which both parents are employed as a “worker/ farmer.”5 Children’s occupations expected in these categories of families are shown in Table 9.3. Results in Table 9.3 shows that family occupational background influences occupational expectations in two ways. (1) The occupational expectations of families of various occupational backgrounds demonstrate the preferences or “inheritance” of the parents’ occupation. For example, the proportion of families with “scientist/engineer/specialized technical personnel” background that expected their

5 This family classification does not satisfy the principle of being mutually exclusive and completely classified; the goal is only to select families of certain occupational ­backgrounds so as to analyze the influence of this occupational background on parents’ occupational expectation.

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children to become a “scientist/engineer” in the future was 21.4 percent, higher than families with other occupational backgrounds; the proportion of families with “government official” background that expected their children to become a “government official” in the future was 15.6 percent, which was less than for families of “soldier/police officer/fireman” (17.1%), but more than for families of other occupations; the proportion of families with “soldier/police officer/fire fighter” background that expected their children to become a “soldier/police officer/fire fighter” in the future was 13.5 percent, more than for other families.6 A similar tendency was also evident in families with an occupational background as a “boss/ manager” or “worker/farmer,” among whom the proportion that expected Table 9.3. Relationship between Students’ Family Occupational Background and Parents’ Expectations (%) Family background Parents’ expectations of children’s occupation Professionals doctor/  attorney/journalist Scientist/engineer Teacher Government official Soldier/police officer Manager/boss Musician/actor/athlete Worker/farmer Others Depends on child’s  interest, ability and  development Never consider/it does  not matter Total

Scientist/engineer/ Government Soldier/ Manager/ Worker/ specialized technical official police boss farmer personnel officer/fire fighter 28.1

35.1

26.1

27.9

22.4

21.4 12.2 11.1 4.8 7.1 1.8 0.9 3.2 1.8

15.1 10.7 15.6 4.4 5.2 3.3 0.0 2.5 1.4

15.3 9.9 17.1 13.5 0.9 1.8 0.0 1.8 0.0

15.3 9.0 11.7 7.6 11.4 3.0 0.2 2.8 2.8

14.9 19.2 10.3 11.0 10.2 3.4 2.1 1.7 0.2

7.6

6.8

13.5

8.3

4.7

100.0

100.1

99.9

100.0

100.1

6 Considering that the occupation of “soldier/police officer/fire fighter” is somewhat close to that of “government official,” this proportion also indicates “inheritance” to a certain extent.



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their ­children to be engaged in their parents’ occupation in the future was higher than for other families. This indicated that parents’ occupational expectation of their children tends to indicate an “intergenerational inheritance”; many parents hope that their child will be engaged in an occupation similar to their own in the future. (2) Families with a background as a “worker/farmer,” which have relatively low social and economic status, also have low occupational expectations of their children. For example, the proportion of these families that regard “teacher” and “soldier/police officer” as the expected occupation was obviously higher than for other families, but the proportion that regards “doctor/attorney/journalist,” “scientist/engineer,” and “government official” as the expected occupation was actually obviously lower than for other families. This is possibly because families of different occupational backgrounds have a different “reference system” with regard to occupational expectations. As for families of a “worker/farmer,” “teacher,” and “soldier/police officer” are regarded as attractive occupations because of their high income and social prestige (relatively speaking) and stable work. However, these two groups of occupations is weaker are less attractive for other families that have occupations of higher social and economic status. In addition, the proportion of “worker/farmer” families that expected their children to become a “manager/boss” in the future was 10.2 percent, slightly less than for families of a “manager/boss” but more than for other families. This is possibly because becoming a “manager/boss” is relatively attractive for those with a “worker/farmer” background, but less so for families whose occupational background has a higher social and economic status, probably driven by the fact that it has a greater possibility of allowing someone to “become rich.” C. Influence of Family Economic Level on Children’s Occupation Expected by Parents Through a survey of the family’s economic level, we can further confirm whether the family’s economic status can influence parents’ occupational expectations of their children. We took a survey of the monthly income of interviewee families, divided into five groups from low to high, and we observed the occupational expectations of children according to the family’s income level. The results are shown in Table 9.4. From the table, we can see that families with a relatively low family income level also have low occupational expectations of their children.

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Taking the occupations of “teacher” and “soldier/police officer” as examples, the proportion of low-income families that expected children to become engaged in these two occupations is obviously higher than for high-income families, but the proportion that expected their children to become a “doctor/attorney/journalist,” “scientist/engineer,” or “government official” are obviously lower than for high-income families. Moreover, the lower the income levels of families, the higher the proportion that expected their children to become “worker/farmers” in the future. This result is quite consistent with the analysis on family occupational background: “teacher” and “soldier/police officer” are considered ideal occupations for low-income families but not high-income families. This finding creates an interesting picture of occupational hierarchy, in which the occupations of “teacher” or “soldier/police officer” become the occupational expectation boundary point of families of different social class and comprise the midpoint of occupational stratification. For families in the low social stratum, these occupations are attractive because they have high social prestige, stable work, and good income (relatively speaking). However, for families of higher social stratum, these occupations Table 9.4. Relationship between Students’ Family Income Level and Parents’ Expectations (%) Parents’ expectations of children’s occupation Professionals doctor/  attorney/journalist Scientist/engineer Teacher Government official Soldier/police officer Manager/boss Musician/actor/athlete Worker/farmer Others Depends on child’s interest,  ability, and development Never consider/it does not  matter Total

Family income level Lowest

Below average

Average

Above average

Highest

19.7

24.7

23.1

28.9

29.2

12.7 19.1 9.8 12.0 10.2 5.9 2.7 2.3 0.3

15.3 16.3 11.8 9.8 9.4 3.3 1.3 1.6 0.7

17.5 20.3 11.3 8.1 8.1 2.8 0.9 1.0 0.9

15.1 13.2 11.3 8.4 10.2 3.3 0.7 1.8 1.3

14.9 9.7 14.3 7.0 8.9 2.9 0.5 2.6 2.1

5.3

5.8

6.0

5.9

7.9

100.0

100.0

100.0

100.1

100.0



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r­ epresent laborious work with relatively low income and therefore are not attractive. D. Influence of Parents’ Education Level on Children’s Expected Occupation Parents’ educational level affects not only their family’s social and economic status but also the parents’ social cognition level and values orientation. Therefore, parents of different educational levels have different occupational expectations of their children. We calculated the relationship between the educational level of the child’s father or mother (depending on the interviewee or questionnaire) and his/her occupational expectations of their child. Results are shown in Table 9.5. From the above table, we can see that the close relationship between the educational level and occupational expectations is even closer than for family occupational background and family income level, and the educational level and the choice of occupation indicates a clearly linear relationship. (1) The higher the educational level, the greater the expectation is for the child to become a “doctor/attorney/journalist” or “scientist/engineer,” which require professional technical knowledge. For parents who have earned an undergraduate degree and above, more than half chose these occupations, likely because they have a strong preference and value orientation toward higher, specialized occupations. (2) The higher the educational level, the less likely the parents are to want their child to work as a “teacher,” “soldier/police officer,” “manager/ boss,” “musician/actor/athlete,” or “worker/farmer.” This is likely because parents with higher educational levels do not view “teacher” and “soldier/ police officer” as attractive prospects and consider the overall social prestige of being a “manager/boss” or “musician/actor/athlete” still somewhat low although they have high income. IV. Summary From the above studies, we can draw the following overall conclusions: (1) The overwhelming majority of parents began to form expectations about their child’s future when the child was very young, which likely reflects the increasingly intense competition in Chinese society. It is a pity that we did not have international data for comparison. If a similar

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Table 9.5. Relationship between Parents’ Educational Level and Occupational Expectations of Their Children (%) Parents’ educational level Parents’ expectations of children’s occupation Professionals doctor/  attorney/journalist Scientist/engineer Teacher Government official Soldier/police officer Manager/boss Musician/actor/athlete Worker/farmer Others Depends on child’s  interest, ability, and  development Never consider/it does  not matter Total

Primary school and below

Junior high school

Senior high school

Junior college

Undergraduate and above

16.1

22.4

29.0

30.6

33.9

12.1 18.3 11.0 11.2 15.8 5.7 2.5 1.9

14.7 16.7 10.6 11.1 10.9 4.5 1.3 1.9

13.4 14.7 13.2 9.7 7.2 2.5 0.8 1.8

15.6 11.3 13.8 6.9 6.6 2.7 0.2 2.9

19.3 8.4 11.1 5.3 5.3 0.9 0.2 2.9

0.0

0.5

1.4

2.4

2.4

5.4

5.4

6.3

7.1

10.2

100.0

100.0

100.0

100.1

99.9

comparative research can be done in the future, we can develop a clearer perspective on China’s social reality. (2) As our research anticipated, the majority of parents generally favor more specialized and stable occupations with high social prestige, such as “specialized technical personnel,” “scientist,” “engineer,” “teacher,” and “government official.” It is noteworthy that these occupations in reality account for only a small proportion in the distribution of occupations, and there is large disparity between the “ideal” and “reality.” How to guide parents to establish more rational and practical occupational expectations requires the joint efforts of the entire society. (3) While parents their child to have an occupation greater than their own, their occupational expectations of their children also indicate an “intergenerational inheritance” to a certain extent. That is, many people believe that their child should follow their parent’s occupation. At the same time, parents’ occupational expectations are also influenced by their own social stratum; those who come from a low social stratum have lower expectations of their children’s future. This tendency might act to further



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strengthen existing social stratification and enables its continuation in the future. (4) Parents’ occupational expectations of boys and girls presented clear differences, and their occupational expectations of girls were concentrated in occupations with high stability. This expectation reflected popular stereotypes regarding differing occupational expectations according to sex, which reflects actual patterns of social sexual divisions to a certain extent. This stereotype and thought pattern may affect the next generation of young people’s study decisions (such as occupational choices in the sciences or liberal arts) and actual occupational choices, which might further duplicate and solidify existing patterns of social sexual divisions, therefore it is worthy of further research.

Part Three

ABOUT SUBJECTS

chapter ten

Design of the Current Social Construction Framework in China Li Peilin and Chen Guangjin After the international financial crisis, although the economic situation was uncertain in some ways, China’s reform and development have actually begun a new stage of growth. Quickening the social construction process, finding new sources of power for sustainable, healthy development of the national economy, and establishing a widespread social basis for social harmony and stability and national long-term peace and good government—all are part of the important mission faced at this new stage of growth. I. Main Fields of Social Construction Social construction involves various aspects of social development, but in every phase of social construction work must determine the key tasks according to actual need. Looking at the macro dimension, currently the most important field of social construction consists of three aspects, namely, people’s basic livelihood, social security, and social management patterns; together they form a relatively complete system. A. Construction of People’s Basic Livelihood The basic livelihood of the people is the main livelihood of the people, which directly concerns people’s survival and development. As for intrinsic logic of people’s survival and development, the basic livelihood of the people should include several related mutually supporting important domains such as employment, income distribution, housing and social security, education, and medical care and health care. (1) About employment. The problem of employment in China mainly includes employment of new urban laborers, transfer of surplus rural laborers and re-employment of unemployed laborers, promotion of labor quality, employment structural readjustment and upgrades, and

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e­ stablishment of a unified national labor market. At present, the problem of employment focuses three aspects. First, it is critical to solve the problem of having sufficient employment. In recent years, China has made huge efforts in labor employment, but the problem of unemployment for the economically active population is still quite serious. Therefore, properly solving the problem of unemployment is the first step in employment work. Second, labor training and enhancing labor quality should be regarded as important tasks. From the perspective of educational level, the quality of Chinese workers is continuously improving; as seen in the experiences of other countries, when a country’s economic development reaches the medium-level stage, national education should move from promoting attendance in junior middle school to that of senior high school and simultaneously promote higher education. At the same time, we must vigorously develop labor training and improve the quality of workers. Third, the population movement management system must be further reformed. We should eliminate various institutions from the period of the planned economy that restrict the normal movement of workers as well as infringe upon the basic social rights of migrant workers in order to achieve a unified national labor market. (2) About income distribution. Currently, the focus of the problem of income distribution is excessive disparity, and in recent years, China has tried different things to reduce income differentials, including urban and rural poverty alleviation, vigorously implementing development in western China, raising the minimum wage several times, cancelling the agricultural taxes and fees, enhancing the starting point of taxation for personal income tax, and enlarging the amount of transfer payments to peasant households and urban and rural impoverished inhabitants. However, these measures did not work very well in reducing income inequality, and the tendency toward an expansion of inequality was not radically reversed. Studies indicate that the problem of an unequal primary distribution becomes increasingly serious. Reconsidering the process in which income inequality is continuing to worsen, and comparing international experiences in some countries where the degree of income distribution inequality is relatively low, readjusting the income distribution requires three important mechanisms. The first is the economic mechanism, namely, economic growth and readjustment of the economic structure; growth in the national economy increases the “pie” to be distributed, readjustment of the structure of the economy changes the structure of employment and occupations, expands the middle class, reduces the share of income from property in the national income, which is helpful



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in reducing income disparities. The second is the national redistribution mechanism, mainly including finance, tax revenue, welfare, and various transfer payments. Many countries’ experiences indicated that a good national redistribution mechanism had an obvious impact on reducing income differentials. The third is the social mechanism, most importantly the decision in which relevant interest and social groups collectively participate in income distribution, including development of trade unions as well as the establishment and effective operation of a collective bargaining on wages. Therefore, at present, the important task for social construction in adjusting income distribution and reducing income differentials is to establish the above three mechanisms and enable them to play a truly effective role. (3) About housing and social security. The housing problem has become a social problem that will cause significant problems in the near future. On the surface, the excessively high housing prices prevent those who want to purchase a house from being able to do so, but the substantive problem is the lack of a reasonable plan and management for public housing and a marketable supply of housing. Therefore the direction of real estate policy reform learned from this absence to urge healthy development of the real estate industry. In addition to addressing the problem of public housing construction and supply, China’s social security should also reach full coverage and equally touch upon a variety of projects. It should be noted that the present social security system also has an income distribution reversion adjustment effect when transfer payments are made. In view of this point, the next step of the social security system and system construction is: first, it must unceasingly expand coverage; second, it must unceasingly raise the security level according to the level of economic development; third, it must gradually construct a relatively unified national urban and rural security system; fourth, it must enhance the equality of social security provision to solve the reversion adjustment problem in the present social security system. (4) About education and medical care and health. In modern society, the development of education and medical and healthcare has strong benefits, such as public goods or quasi-public goods that improve the national quality, enhance the country’s innovation ability and promote the country’s soft power, and is the foundation of economic and social modernization. In the various social services, the pattern of social construction should be different. The development of education and public health concerns a society’s opportunity structure and needs to take equality into account more seriously. The reform of medical and health care has made great

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progress through widespread discussions and research for several years, evident in “Opinions of the Central Committee of the Chinese Communist Party [CCP] and the State Council on Deepening Reform of the HealthCare System” (中共中央国务院关于深化医药卫生体制改革的意见 zhonggong zhongyang guowuyuan guanyu shenhua yiyao weisheng tizhi gaige de yijian) promulgated in April 2009. By contrast, the educational system reform still has far to go. The “National Medium- and Long-Term Program on the Educational Reform and Development Plan (2010– 2020)” (国家中长期教育改革和发展规划纲要 (2010–2020 年) guojia zhongchangqi jiaoyu gaige he fazhan guihua gangyao) has designed a scientific plan and deployment for educational development in the next ten years, which is a crucial phase for achieving a shift in China’s construction of being a big country of human resources to a powerful country of human resources. B. Public Security Construction Good social order and safeguarding public security are basic social conditions for economic and social development. Currently, China is in a period of rapid economic development and at the same time of frequent social conflict and an increasing number of social risks that can lead to public security problems and affect social order. Currently, social problems that affect public security and social stability can be divided in thoroughly three classes. The first class is various criminal offenses. Since the reform and opening up, the incidence of various criminal offenses has remained at a relatively high level. Statistics indicated that from 1978 to 2008, criminal cases for first offenders in courts nationwide increased from 17,000 to 768,000, an average annual growth rate of 8.59 percent, and criminal cases for first offenders increased from 1.53 to 5.78 for every ten thousand people. Since 1997, this class of cases showed a continuous growth trend for eleven years. The second class is various man-made production and life-endangering disasters. In recent years, various serious production safety accidents, food and drug quality accidents as well as environmental pollution accidents continued to occur, which have led to huge losses of life and property and widespread losses in social confidence. The security problem caused by environmental pollution also plays an important role; moreover, after increasing for twenty to thirty years, in the past two years this kind of disaster has become more frequent. The third class is conflicts between various benefits that are deeply embedded in the social structure during the transition period, which are prominently shown in conflicts



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between employer and employee, and incidence of complaint letters and visits and widespread accidents have also increased. The first class of regular public security problems can be controlled through an increase in public security strength, but for the latter two classes of problems and contradictions, we need more measures that can lead to a permanent cure. These problems and contradictions occur because there is disparity between what the people actual want and the norm during a period of social transformation. Therefore, to fundamentally change the serious situation in public security and social stability, China must rectify these deep problems. Increasingly severe conflicts between employer and employee and contradictions between cadres and the masses especially need to be rectified. C. Social Management Pattern Construction In the past thirty years, China has been devoted to reform of the planned economy and construction of a socialist market economy, and precisely this transformation provided the foundation for rapid and steady economic development. Now, developing social construction, transforming the traditional social management system, and building a new social management pattern will provide new foundation for economic and social development. Modern social management is an interactive process, which regards government intervention and coordination as the factor, basic-unit community autonomy as the foundation, and non-profit social organization as an intermediary that mobilizes the public’s widespread participation. During the period of the traditional planned economy, the fundamental method of social management was the responsibility of the government, and the government implemented overall control over society by a system of units, and social movement was a component of government movement. This is one kind of management pattern in which administration admitted the community. With the deepening of reform and the establishment of a market economy, the social organization system profoundly changed; the traditional administrative unit system gradually disintegrated, the country to a certain extent lost the organizational foundation for relying on the original unit commitment to social functions, and simultaneously stressed that the existing unit stripped the original commitment to social functions, the socialization of social function (as well as marketization to a degree). But, in reality the social management system reform has obviously lagged behind and was still accustomed to carrying out social

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management by non-administrative means, and it is manifested that the management to the basic-unit autonomous organizations of community also had characteristics of deep administrative intervention. On the one hand, the country diligently transferred the function of organizing social life when it reformed the system of economic management; on the other hand, society cannot be effectively developed and organized by extending traditional social management patterns, which made it difficult to transfer this function. Currently, a series of problems that have appeared in social development advancement are mostly related to this contradiction. An important way to solve this contradiction is to build a modern social management pattern and to realize the goal of establishing and consummating “the social management pattern in which the Party committee leads, the government takes charge, society cooperates, and the public participates” proposed at the Fourth Plenary Session of Sixteenth CCP Central Committee. But to build a modern social management pattern, the following problems must be resolved. First, we must understand the goal of modern social management pattern construction. Generally speaking, modern social management is not only the process in which the government provides collective services to society and in which related social affairs are legally normalized but also the process of self-service, standardization and adjustments based on laws and morals. These two processes complement each other; both are indispensable and are not interchangeable. Thus, modern social management pattern construction has two foundations: namely, on the one hand, government’s social management ability and effect must be continuously improved; on the other hand, self-development of the social function must be quickened, self-regulation of the social function must be enhanced, and the scope of self-regulation of the social function must be expanded. In view of the present situation in which the growth and development of Chinese society obviously lag behind, the establishment and realization of the second goal appear especially important. Second, the government’s social management system should be reformed and completed. The main object of modern government social management is the public social affairs that individuals, the family, basicunit autonomous communities, and non-profit social organizations cannot handle. These social affairs involve the public interest of society as a whole and must be handled by the state; the main areas of modern government’s social management include guaranteeing citizen’s rights, coordinating social benefits, responding to social demands, normalizing community autonomy, supervising social organizations, providing public security,



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and dealing with social crises; the main purpose is to cultivate a modern social structure, to facilitate equal social relations, to settle social conflicts, to maintain social integration, order, and stability, and thus to build a social basis and environment for economic, social, and natural coordinated development; the main bases are systemic social legislation which normalizes related government actions, safeguards citizen’s rights, promotes social equity, and drives social development; the main means and measures are to adapt the needs of different stages of social development and to continue to innovate in social policy. The four aspects constitute modern government’s basic logic, methods, and patterns in social management and also stipulate the fundamental direction and meaning of reform and realization of a government social management system. Third, self-government and self-management of social functions are developed vigorously. Social autonomy and self-management are large components of the modern social management pattern. Cultivating and developing ability in social autonomy and self-management and continuing to expand the social space of social autonomy and self-management are key links in promoting development of a social management pattern; driving the formation of a pattern of social restructuring, with multi-part participation and multi-center social governance under the background of developing social independence and disintegrating the traditional system is the main way to realize modernization of the social management pattern. In contemporary society, changing the “single” governance structure which regards the government as the only center, establishing a partnership of equal cooperation between government and society, forming the multicenter management structure in which the government and other main bodies of society jointly administer social affairs, and improving the social autonomy and self-service skills have all become the basic trend in social management pattern development. II. Organizational Framework of Social Construction and Social Management Overall, the organizational system of modern society is composed mainly of three large sectors: the first sector is the national organization which regards the government institution as the main body; the second sector is the market economy organization which regards the enterprise as the main body; the third sector is the social organization which regards the nonprofit organization as the main body. In other words, in the ­classification

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of organizations, in addition to “government” and “market” organizations, there are “social” organizations, and in addition to “nonprofit” organizations (government) and profit-making organizations (enterprise) are non-profit social organizations. These three classes of organizations correspond to three basic functional requirements in modern social development; the second sector is the main agent of economic development (but also participates to a certain extent in social construction), the third sector is the main agent of social construction, but the first sector is responsible for regulating and supervising the second and third sectors. If social construction requires joint participation from the state (government), the market (enterprise), and the society (organization), the three big sectors must build a corresponding organizational system, and integrate it into the coordinated social construction organization framework. A. Functions of Three Big Sectors’ Social Construction In the first sector, the government is the source of investment for public resources needed in social construction and has the role of leading, overall planning, and coordination. The government cannot and does not need to undertake all these roles, but its most important responsibility is to fully invest and reasonably allocate public resources, to continue to reform and realize the social management system, to widely mobilize positive participation by all circles, and to gradually ensure that all members of different social classes fairly share in the achievements of social construction. In the second sector, the enterprise fulfills its function as the main body of social construction mainly through undertaking its social responsibilities. The core of enterprise social responsibility has three aspects: community participation, social responsibility in production processes, and social responsibility in relations between labor and capital. Community participation includes participating in general community services, agricultural development, local economic development, community development, cultural and educational training, environmental protection, health, housing, sports, and welfare. Social responsibility for production processes includes environmental protection, sanitation and security, human resources, and enterprise responsibility ethics. Social responsibility in relations between labor and capital includes employee welfare and employee participation, as well as regarding unions as important voices in considering enterprise decisions and in social responsibility practices. Research indicates that fulfillment of enterprise social responsibility and enterprise profit growth are complementary.



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The third sector’s composition varies in different countries. In China, four classes of organizations, basic-unit community resident autonomous organizations, public institutions, public organizations, and non-profit social organizations, comprise the third sector. Thus, the third sector has an important function in China’s social construction work. If the third sector develops well, social construction can achieve twice the result with half the effort. However, compared with the strength of the three big organizations, China’s organizational framework before reform and opening up had the characteristic of “strong government, weak market, and weak society”; after reform and opening up, through vigorous development of the market economy, it has gradually formed the pattern of “strong government, strong market, and weak society.” In this case, to strengthen social construction, China’s social organizational framework needs a reasonable adjustment, whose key lies in developing the third sector, and finally creating a pattern of “strong government, strong market, and strong society.” Based on China’s national conditions, the key to constructing and realizing the third sector organizational system is to develop and realize the basic framework of third sector composed of four classes of social organizations. Therefore, it is necessary here to further discuss their positioning and function with respect to social construction and within the social management organizational framework. B. Realizing Resident Autonomous Organization, and Advancing Basic-Unit Social Self-Management and Services The resident autonomous organization mainly refers to the urban and rural community residents’ basic-unit autonomous organization, called the village committee in rural areas and the residents’ committee in the city. In the past twenty years, Chinese basic-unit autonomous organizations have had profound changes. In rural areas, villages were merged and towns were constructed. In the cities, resident committees were merged with established community communities. As a result, the scale of the region and population of basic-unit autonomous organization has continued to expand. Since the early 1990s, rural resident autonomous organizations have decreased from more than 1 million to more than 600,000, and at the same time, urban resident autonomous organizations also have decreased from more than 100,000 to more than 80,000. In the new social management pattern, the role of community in the basic-unit social management should be paid great attention. The community is the resident autonomous organization, but at the same time

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it also shoulders basic-unit self-management duties. Many “community service centers” shoulder several dozen service functions, including tax revenue, public security, social security, social welfare, social assistance, employment, healthcare, and prevention of epidemics. Some people described this situation as “the society has a thousand lines, and the community is the needle,” and these services in fact also carry a function of community self-management. With society’s development and changes, residents’ demands become increasingly diverse, and the function of the community becomes increasingly broad. The function of the community is becoming more and more important in basic-unit social management. With socialist market economic development, people’s awareness of their own rights and interests has continued to strengthen, and as a result disputes over rights and interests have broken out. To solve these problems, a mechanism must be established within the basic-unit community. Through community life, people gradually realize that citizen awareness not only includes citizen’s rights and interests but also citizen responsibility and it is related not only to the socialist market economy but to socialist civil society. The community has the tendency to become the foundation in the socialist civil society, which has profound significance for future development. C. Accelerating Institutional Reform and Playing the Role of Civic Organization Institutions and civic organizations are discussed together here mainly because they are funded by national finance and supply government public welfare social services. Institutions refer mainly to public education, medical services, news and publications, cultural organizations, and scientific research institutes. They implement the institutional management system, which is different from the government official management system and the enterprise market system for the appointment of posts. At present, there are more than 1.3 million institutions and nearly 30 million people, and its aggregate expenditure disbursements comprise more than 30 percent of government expenditures. It is divided into four types according to financial resources: government-supported institutions, partially government-supported institutions, self-supporting institutions, and enterprise-style management institutions. China is different from other developed countries, and the social functions and public services provided by non-profit social organizations in other countries are mostly undertaken by unique “institutions” in China. The direction of China’s



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institutional reform is to establish a scientific and effective modern institutional system that can adapt to the socialist market economic system and that meets the collective service needs. In this respect, we must study the rules for which the social development domain is different from the market domain and explore various management styles between the government mechanism and the market mechanism. While guaranteeing financing, the pure public welfare sector should also have a “social accounting” system and strict budgetary constraint; the government purchases service sector should guarantee better social service results than a government that undertake and completes market operations; the quasimarket-run sector should have a sound rule to normalize its operating behaviors and development direction. Civic organization mainly refers to the trade union, the Women’s Federation, the Communist Youth League, the Association for Science and Technology, the Federation of Literary and Art Circles, and so on. This class of organization generally has a top-down national organization system, and also refers to the civil servants system in source of financing, and administrative rank and management. Taking into consideration their social structure in China, we should pay great attention to the leading role of civic organizations and the professional society in social management and collective services. These organizations have a complete organizational system from top to bottom, staffed with employees with experience in working with the masses in ideological, political, and social work. They are not only the bridge and link connecting the Party with the people but also play a unique role in reflecting the people’s demands, settling social contradictions, providing consulting services, and participating in social management. D. Vigorously Developing Non-Governmental Nonprofit Social Organizations, Mobilizing Widespread Participation in Social Strength The concept of non-governmental nonprofit social organization was defined in the “Decision on Major Issues Concerning Building a Socialist Harmonious Society” (关于构建社会主义和谐社会若干重大问题的 决定 guanyu goujian shehui zhuyi hexie shehui ruogan zhongda wenti de jueding) made at the Sixth Plenary Session of the Sixteenth CCP Central Committee, and its meaning is basically the same as that of a “nongovernmental organization,” which is managed by the department of civil affairs. Non-governmental organizations include civic organizations, foundations, and non-governmental non-enterprise units. Civic organizations

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include ­various societies, associations, and federations and are mostly government run or partially government run. Foundations refer to charitable organizations. Publicly run, non-enterprise units refers to various nonprofit organizations run by the people, of which more than 60 percent are schools, hospitals, and welfare institutions run by the people. At present, the business scope of more than 400,000 non-governmental organizations registered in the department of civil affairs extends to education, science and technology, culture, health, environmental protection, public welfare, and charity. In social construction, to adapt to the needs of developing the socialist market economy and of the transformation of government functions, the economy, public welfare, rural specialized economic associations, and community non-governmental organizations should be cultivated and developed, and science, education, culture, health, athletics, as well as new organizations that gradually emerge along with the improvement in living standards should be supported and guided. We should allow civic organizations, trade organizations, intermediary organizations, and other social organizations to provide services that reflect public demands. According to the requirement to address the public interest, through the positive cultivation of various social organizations, we must strengthen and improve the management and supervision of various social organizations, complete the social service network, and diligently form a force to provide social management and social services, in which the ever-growing material and cultural demands can continue to be met. In the present and the future, we must regard social organizational services and economic and social development as the core and improve social organizational abilities in order to advance innovation in the management system and establish a non-governmental organization management system with a sound legal system and management practices and a hierarchical management system. At the same time, we must strengthen supervision of social organizations according to the law, form civic organizations with self-developing, self-managing, self-education, and selfrestraining operational mechanisms, strengthen investigations of illegal non-governmental organizations, crack down on cults, mafias, and illegal multilevel marketing organizations, and guarantee the healthy development of social organizations. Currently, the overwhelming majority of non-governmental social organizations is relatively small and weak and lack resources and abilities, which make it difficult for them to play the proper role of a nongovernmental social organization; some organizations do not even have



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behavioral standards and public credibility. As shown by international experience, reorganization of social organizations is the best way to solve these problems, and the main way of doing that is to set up supporting union organizations as a platform for various social organizations to integrate their resources, interact with one another, and promote their public credibility. In many countries and regions, social organizations have a similar union organization basis. For China, one appropriate method might be to set up a union organization by industry, domain, or region and to form an organizational network with organic connections. Setting up a social organization, especially a union organization of non-governmental social organization, is important; first, it is advantageous for related social organizations to realize the importance of sharing resources and working together to build their capacities and to promote standardization of self-management for social organization; second, it can agglomerate the strength of social organizations from this, which can facilitate the coordination of social organizations, especially the relationships between nongovernmental organizations and the country and the market, to impel the growth of civil society; third, it helps save administrative costs because related national supervisory work would not need to deal directly with millions of small organizations but only with these union organizations and also establishes indirect supervision over small-scale organizations through the establishment of standardized institutional management relations with them. III. Resource Safeguard of Social Construction Social construction is a huge systemic project and needs a massive investment of resources. After more than thirty years of development, China has had to meet certain conditions for social construction. At present, the key is reasonable allocation of public resources, effective mobilization of social resources, cultivation and development of human resources, and expansion and realization of system resources. A. Reasonable Allocation of Public Resources The investment of national public resources in social construction is the most important financial support for social construction. We must first understand the nature and significance of increasing national public resource investment in social construction. Social construction investment does not mean pure consumption of public resources. Just like economic

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development investment, social construction investment is function of strong production, namely it drives growth in people’s welfare, promotes equal social opportunity, achieves transformation and optimization of the social structure and positive adjustment in the relations between the interest groups, and thus can continue to cultivate new power source for economic and healthy social development. In other words, social construction supported financially by investment is a public product that serves the entire society and has long-term significance. Moreover, significant adjustment to the national public resource allocation structure is necessary for the transformation of government functions. Objectively speaking, since the reform and opening up, China’s investment in public resources and social development has been constantly increasing. For example, expenditures on social culture and education as a share of total national expenditures rose from 13.1 percent in 1978 to 26.8 percent in 2006. However, in terms of the needs for social construction, the investment of public resources is still insufficient. According to statistics of the Organization for Economic Cooperation and Development (OECD), in 2005, the public finance social net expenditure of twenty-six countries in OECD was on average equal to 25.5 percent of gross national income, of which South Korea’s proportion was the lowest, at 9.5 percent, and France was the highest, at 35.3 percent. In China’s various public expenditures, four items comprised social expenditures, namely education, social security and employment, health care, and urban and rural community business. In 2009, these four added up to RMB 2.7 trillion, which was equal to 7.9 percent of the gross national income during that year. It is evident that there have been huge adjustments in the structure of China’s public resource allocation. To meet the needs of social construction, investment it that burdens the national economy should be avoided, and the share of national income spent on social construction should gradually grow to about 12 percent in the next five years. Therefore, the public fiscal expenditure structure must be further readjusted. In the next five years, we should consider increasing the proportion of social expenditure in public expenditures to about 60 percent (this proportion was 35.6 percent in 2009) and at the same time control the proportion of spending on economic development, administration, and other items to about 10 percent to 15 percent. From an international perspective, such a structure is more conducive for public financial resources. For example, in 2005, in the United States, states and local government spending comprised 8.4 percent, federal government



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spending, 6.5 percent, social expenditures, 58.9 percent, national defense spending, 10.2 percent, and other expenditures, 16.0 percent. The structure of intergovernmental fiscal expenditures is a highly controversial issue; mainly because the central government centralizes too many financial resources, creating an unreasonable intergovernmental expenditure structure. However, statistically, since reform and opening up, the proportion of central fiscal expenditure in gross national spending has shown a downward trend, and by 2009 was only at 20 percent, and local government expenditures comprised 80 percent. If extra budgetary expenditures were also considered, the proportion of local government expenditures would be even larger. In 2009, in terms of national extra budgetary expenditures, the central government only comprised 6.3 percent and local governments, 93.7 percent. China’s problem of the structure of intergovernmental expenditures lies mainly in the irrational structure of spending by tertiary provincial, prefectural and county governments. It is calculated according to the data provided by the statistical yearbooks of sixteen provinces and autonomous regions in 2008 that, in 2007, the provincial (region) governments’ expenditure proportion was on average 25.1 percent, prefectural (city, state, county) governments’ expenditure proportion was on average 24.4 percent, and county (city, area, administrative division of inner Mongolia of China, equivalent to the county) governments’ expenditure proportion was on average 50.5 percent. Two ideas are raised to adjust the structure of intergovernmental expenditures. First, on the premise of maintaining the existing structure of central and local governments’ public expenditures, reduce the expenditure proportion of provincial and prefectural governments, and to increase the proportion of county-level expenditures so as to increase public financing resources for basic units. Second, to reduce the proportion of local government expenditures and increase the proportion of central government expenditures and, at the same time, have the central government directly shoulder more responsibility for supplying collective social services. Currently, in a situation in which the responsibility for supplying collective social services is being transferred to lower levels, the first idea is more practical. However, in the long run, the second idea is more advisable and is more helpful for equalizing the supply of collective services around the country, especially in national overall planning for social security. In fact, in countries with a mature market economy, the proportion of the central government’s expenditures is generally about 60 percent, and at the same time the central government has direct responsibility for broadly

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­ roviding social services, which is also why these countries have a higher p degree of social justice. B. Effective Mobilization of Social Resources Non-public social resources are an important source of financial support for society. Judging from past experience, social resource investment mainly has three origins: first is various organizations’ internal investment in social construction, such as the investment for social construction inside enterprise as the component of social responsibility inside modern enterprises; second is social investment with a focus on establishing various non-governmental non-profit organizations, which can generally be maintained and developed through non-profit paid services; third are the various forms of social donations, including charitable donations. The investment for non-public social construction, in terms of tangible magnitude of value, is impossible to become a country’s main investment for social construction. For example, according to OECD statistics, in 2008, gross non-public social investment in twenty-six member countries comprised 3.8 percent of gross national income, and net investment comprised only 2.9 percent, which was less than the corresponding public social investment. But non-public social investment has a more important social value, namely, it is a measure of widespread social mobilization and participation and can play the role in cohesion, and therefore should be seriously considered. China’s non-public social construction investment is relatively limited. For example, according to statistics, in 2009, China’s charitable donations totaled RMB 50.9 billion, equal to 0.17 percent of GDP that year and 0.75 percent of gross national income. But total charitable donations in the United States for the same period totaled US $300 billion, which comprised about 2 percent of U.S. GDP for that year, equal to 10 percent of gross national income in the United States. Therefore, how to make the reform and innovation in the system and mechanism, to drive enterprise and organizational internal investment in social construction, to develop non-governmental social organizations, to cultivate a culture of charitable donations, to create channels for charitable donations, and thus mobilize social resources for properly investing in social construction are important problems that China has to solve in order to accelerate the process of social construction.



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C. Cultivating and Developing Professional, Social, and Specialized Human Resources Social construction requires huge investment in human resources. Generally, human resources for social construction consist of professional, which refers to various personnel in special domains employed in social construction, and social human resources, that is personnel who participate in social construction through various non-professionalization means (i.e., volunteers). (1) About professionalization. Social construction from professional human resources are mainly from government departments concerned, state-run social service institutions, official social groups and civic organizations, basic-unit community autonomous organizations, and nongovernmental nonprofit social organizations. At present, there are over 40 million full-time staff members at the relevant government institutions, public institutions, allied organizations and intermediary organizations supported by public financing, urban and rural basic-unit community autonomous organizations, and nonprofit non-governmental social organizations, which comprise about 6 percent of all people employed. The scale of China’s professional human resources is considerable. But, in actuality, it is far from sufficient. Taking OECD countries as an example: in 2007, the proportion of workers in 29 member countries employed in education, health care, and social work reached on average of about 23 percent, including employees at for-profit organizations. Even if it is estimated according to the approximately equivalent scales of two sides, the proportion of non-profit education, health-care, and social work employees should be about 12 percent. Thus it is forecast that China’s professional human resources for social construction should be doubled, mainly in social work. At present, the country plans to increase social workers by 3 million, based chiefly on government demand; massive nonprofit non-governmental social organizations also need professional social workers, and their demand is actually greater. (2) About socialization. Social human resources refer to the use of volunteers. In recent years, the social volunteer spirit among Chinese has greatly developed, and the quantity of volunteers grew rapidly. By 2009, registered volunteers totaled 30.47 million. Judging from past experiences, volunteers are a very important social force. Certainly, compared to many countries, the development of the social volunteer spirit is lagging in China, which urgently needs to accelerate cultivation of a spirit of ­volunteering. At the same time, it should be noted that social human resources for

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social construction is not limited to volunteers; social construction is a cause for the entire society, and adjustments in social interest relations, settlement of social conflicts, promotion of people’s livelihood, formation of new social norms, and social supervision of social construction work all required widespread participation by citizens. (3) About specialization. Specialization in social construction human resources refers mainly to specialization in professional social construction skills, especially among social work personnel. Social construction is a new social development strategy, and relevant jobholders need to refresh their ideas and knowledge, improve their skills in order to become professionally qualified for various domains in social construction. To realize specialization in professional social construction skills, on the one hand, they must continually advance the conventional education system; on the other hand, they need to strengthen their relevant training. Nonprofessional social construction participants, including volunteers, also need to accept training in knowledge and ability and must create an environment of positive participation. Nurturing an awareness of modern citizenry, internalizing the standards of civil social behavior, and mastering the knowledge and skill needed for basic participation are essential requirements for properly constructing nonprofessional human resources. We must integrate these areas into the entire modern education system to enhance citizen knowledge, to cultivate citizen awareness, and to mold an identity as citizens through the education system. D. Expanding and Consummating System Resources (1) The basic legal framework of social construction continues to be realized. The constitution and related laws and regulations should be further realized, and the modern system of civil rights should be built to become the foundation and goal of the social construction legal and institutional frameworks and inspection standards. The modern system of civil rights includes mainly three aspects: civil rights, namely citizens’ basic personal rights and property rights; political rights, namely citizens’ equal political participation rights; and social rights, composed of the right to obtain economic welfare and public security as well as enjoy a civilized life that meets general standards. Generally, China’s present constitution and law have provisions on these three groups of citizens’ rights and require further integration, and some laws that involve citizens’ equal rights also require further clarification.



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(2) The social legislation system directly normalizes the practice of social construction. From the viewpoint of legal principle, laws on social construction are in the category of social legislation, including laws on employment and training, combatting poverty, family subsidies and housing, education, medical care and health care, social security, social organizations, philanthropy, and enterprise social responsibility. At present, China’s social legislation needs to solve two main problems. First, the laws in various domains have a low degree of integration, do not achieve essential requirements for equality, and need to straighten out, integrate, and realize the current laws and regulations and policies to promote fairness. Second, only a few domains in social construction are touched upon, such as laws and regulations, rules and plans, even standards being equivalent to polies or plans. Income distribution, professional training, housing, medical care and health care, social organization, and enterprise social responsibility urgently need to be promoted at the level of national legislation. The basic law on social organization in particular must be researched and formulated as soon as possible to provide basic standards, which are advantageous for their healthy development and which can play a role in the registration of social organizations, use of skills, tax payment, and process management. (3) The safeguard system and policy system of social construction need to be established and realized. At this level, the taxation system, investment system, talent system, and information disclosure system are especially important. The core of taxation reform concerning social construction is to provide revenue support for non-governmental social construction participants; for example, institutional and individual charitable contributions and community organizations raise money to give tax breaks and other benefits. The investment system refers mainly to the institutional arrangement in which public resources, especially the state, invest in social construction. The stress of establishing a talent system, on one hand, is to provide the system with the conditions for growth in social construction professional talent, and on the other hand, is to integrate employment, technical titles, and social security for social organization employee, especially for non-governmental social organization staff, into a national unified institutional framework, which guarantees that social organizations can attract and hold on to talent.

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To carry out social construction, it is important to explore social development with Chinese characteristics. One important experience in China’s reform and opening up is “exploring carefully,” paying great attention to basic-unit experiences, and integrating a top-down impetus with experiences from bottom to top. In recent years, various areas carried out reforms and experimentation in social construction in every way and have formed some new experiences and methods, which are worth summarizing. A. Building a Social Construction Organization Framework and Innovating in the Social Organization Management System in Beijing Beijing made various attempts at reform in social construction practice and created a new social construction organization framework and management system for nonprofit social organizations, which are two main methods that are worth paying attention to. In creating a new social construction organization framework, the Beijing Municipal Party Committee and the municipal government established Beijing Municipal Party Committee social work committee in 2007 after authorization by the relevant central department based on summarizing from past experiences and a full investigation; this is the first institution of its kind founded by the local government. It has the same rank as the municipal Party committee organization department, publicity department and united front work department, and at the same time it is also the municipal government’s “social construction office.” This institution’s primary mission is to build a macro management platform, to research and formulate overall planning for capital social construction, to strengthen basic-unit foundation work, to strengthen urban community construction; and positively cultivate various social organizations, to strengthen the construction of the “two new” (i.e., “new economic organization” and “new social organization”) organizations, to strengthen the construction of social workers and social volunteers, and to strengthen the weak links in social construction. In the social organization management system and mechanism innovation, Beijing’s basic policy was “examination, classification standards, government supervision, and support development.” Around this basic policy, Beijing mainly reformed and realized the social organization management system and mechanism in three ways. First, it released the ­“Provisional Measures for Beijing in Building a Municipal-Level ‘Pivot’



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Social ­Organization Work System” (北京市关于构建市级“枢纽型”社 会组织工作体系的暂行办法 beijingshi guanyu goujian shiji ‘shuniuxing’ shehui zuzhi gongzuo tixi de zanxing banfa), demanded “separation of government from society, and separation of management from operation,” and gradually transferred the government department’s jurisdiction over common social organizations to some important social organizations, namely “pivot” social organizations. The more than 100 government departments in Beijing were qualified to be competent units of social organization. According to the reform plan, in addition to a few departments with special functions, starting in 2009, the majority of administrative departments no longer received application for new social organizations, and social organizations they were responsible for were gradually handed over to related municipal-level “pivot” social organization. Next, it reformed the social organization registration system and accelerated social organizational development. The Beijing social construction office and the Beijing bureau of civil affairs started social organizations to create a “one-stop” service center in April 2009 to carry out policy consultation work, business auditing and inspection and registration verification set up by social organizations, to implement the new mechanism comprising a “ ‘one-stop’ center, union examination, twenty-working-day reply,” and especially to help social organizations coordinate and identify competent units. Moreover, in Zhongguancun, the national independent innovation zone carried out pilot work of the department of civil affairs for direct registration. Third, it established and realized a preferential system for reduction in and exemption from taxes to lighten the burden on social organizations. In 2008, a total of 31 nonprofit social organizations in city obtained tax-free status; in 2009, a total of 38 organizations in city obtained tax-free status, and another 113 organizations obtained of the ability to deduct donations for public welfare before tax, so a total of 182 organizations obtained reductions of and exemption from taxes. B. Driving Professionalization of Social Work in Shanghai Social work is an important component of social construction, and professionalization without doubt is an important way in which social work can rapidly develop and effectively play its role. In this respect, Shanghai’s development is a leader. Since 1993, Shanghai’s progress in the professionalization of social work has been remarkable; a large group of professional social workers and other workers in social work improved in some important domains, such

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as social welfare, social assistance, philanthropy, recovery after physical disability, security for those with special needs, community construction, psychological counseling and judicial correction, to help individuals, families, and specific groups in need to solve their problems, which has played an important role in coordinating social relations, solving and preventing social problems, settling social contradictions, and promoting social harmony and progress. In summary, Shanghai’s practices in driving the professionalization of social work development made progress mainly in three ways. First, the system and mechanism of construction concerning social work paid great attention to uniformity and established a standard professional social worker system. Second, construction of social work employees formed a multilevel structure for widespread participation. The first level includes ten thousand people who passed the professional qualification test and have obtained social worker and junior social worker titles; registered social workers number several thousand people, making up the professional team of social worker. The second level includes social workers who have a social work orientation and are heading toward professionalization and specialization; there are approximately 40,000 people in the city, in which about 22,000 people are in the fields of community construction, social welfare, and assistance to the homeless under the civil administration system, more than 1,400 people in the judicial correction field of politics and law, about 8,000 people in the employment service field of the department of labor and social security, more than 6,500 people in the birth control system, more than 1,000 people in Federation for the Handicapped, and more than 200 people in the Women’s Federation system. The third level includes jobholders in social work, the scale is huge, and it is estimated to comprise approximately 500,000 people. Third, the social work organization system construction pays great attention to playing the role of a mass organization, and the essential method is “united leadership of Party committee, government impetus, independent operation of mass organization, and widespread social participation.” C. Constructing www.mxwz.com in Liaoning Province In 2004, the Liaoning Provincial Commission on Discipline Inspection and the Provincial Government Office for Rectification initiated the website www.mxwz.com for people to submit complaints on-line. By two months later, 263 complaints had been submitted, twice that of the entire previous year. The Web site www.mxwz.com accepts on-line complaints and



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transmits these complaints, depending on their classification, to relevant departments and has real-time supervision of the handling process. Everything can be seen online, such as which department the complaints are transmitted to, how long it took for questions to be answered, and the answers. The Web site www.mxwz.com is building a networking project between third-tier government departments of provinces, cities, and counties and the Internet. At present, there are more than 1,500 networking sites. Through the networking sites, direct transmission and direct handling were started, which shows the enthusiasm of the basic-unit networking department. Www.mxwz.com also formulated the five-star evaluation system in problem solving in order to scientifically quantify the effect of the solution and people’s degree of satisfaction to responses to their complaints, which has added pressures to all levels of government departments to positively address complaints. As of April 20, 2009, www.mxwz.com had accepted complaints and reports about the unhealthy tendency of the “weather” issue, after investigation by relevant departments, 422 people were punished using the Party and administrative disciplinary measures, 1,128 people were handled by the organization; illicit funds of RMB 121 million were recovered, and illicit charges of RMB 68.68 million were returned, which reversed unreasonable charges of RMB 220 million at the source. As www.mxwz.com becomes more popular, the quantity of reports and complaints continue to increase, and www.mxwz.com further integrates addresses the complaints into providing collective services, which has opened up a new path that carries out social management and provides collective services using the network platform. At the same time, www .mxwz.com also has provided the conditions for the social participation mechanism, the demand response mechanism, as well as the supervision mechanism of social construction to effectively play the role. D. Experiences in Wenling, Zhejiang on Developing Basic-Unit Consultation Democracy The grassroots democracy begun in Wenling, Zhejiang, in 1999, in a kind of consultative democratic form and mechanism is an experiment in letting ordinary people participate in the local public affairs decision-making process, in which the government is listening to public opinion, which has attracted widespread domestic and international attention. In all the democratic forms of equal consultation activities, equal consultation on enterprise wage decisions and equal consultation involving

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the government budget are the most significant. Wenling has had the most rapid development in the private sector of the economy, and ­labor-intensive enterprises represent a large share of this development, and therefore conflicts between the employer and the employee are widespread. In the first few years of the twenty-first century, these problems were outstanding, and various worker strikes and accidents frequently occurred that generated collective complaint-letters-and-visit incidents, more laborers chose “voting with their feet” and frequently changed jobs, enterprises fell into blind competition with unstable employees, which pushed up labor costs. To solve these problems, based on some enterprises’ experiments, the Wenling municipal government brought the wage democratic consultation mechanism into the various industries to set up owners’ trade associations and workers’ trade unions to form a main body of collective consulting, and then organized labor department experts to measure and calculate labor quotas for various types of work and working procedures to calculate preliminary labor costs. Based on this, the trade associations and trade unions had many rounds of consultations and democratic negotiations to come up with a labor cost that was mutually acceptable by all sides. At the same time, the trade unions and trade associations also agreed to carry on collective consultation on adjusting staff wages (labor cost) annually and guaranteed that staff wages (labor cost) could grow with enterprise growth. The importance of the equal collective wage consultation system effectively diminished the labor-capital dispute, therefore the number of complaint-letter-and-visit incidents caused by labor-capital disputes decreased. The process that brought the consultative democratic mechanism into the village and town budget was an important symbol for the development of the Wenling democratic mechanism, which has formed a unique village and town government budget democratic system there. In July 2005, Xinhe in Wenling examined and approved the town government’s annual budget using a democratic method. In 2006, Xinhe realized this system to form a complete mechanism. The Zeguo democratic mechanism that began in 2008 further increased the degree of democratization, and this town used the mechanism in which representatives of budgetary democracy are selected by random sampling of 120,000 rural residents. The practices for several years indicated that this participatory budgetary democracy was effective and can properly reflect people’s demands; the village and town budgets were more reasonable, and the structure of expenditures improved.



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E. Experiences in Nantong, Jiangsu on Building www.ntwldtj.com.cn With rapid industrialization and urbanization, social contradictions continue to increase, and to adjust development and resolved the contradictions, Nantong, Jiangsu, took the lead in establishing a mechanism for social contradiction mediation in April 2003, and founded a six-level big mediation network covering urban and rural areas. Nantong’s experience places the burden of mediation on the basic unit. Massive investigations and studies showed that 80 percent of social disputes occurred in the basic unit; in the past, county-level mediation comprised a large proportion, and village and town-level mediation a small proportion, illustrated as an inverse pyramid. To fundamentally reverse this structure, village mediation must be strengthened. Beginning in 2007, the Nantong villager committee and residents’ committee carried out a new pattern, called “1122” professional personnel construction—that is, each village was equipped with 1 comprehensive management professional, 1 police officer, 2 professional security guards, and 2 professional mediators. At present, 1,990 villager committees and residents’ committees in the city are equipped with 3,216 professional mediators. These professional mediators mostly are retired judges, public prosecutors, police officers, attorneys, legal workers, and old cadres who have specialized legal knowledge of the jurisdiction. Nantong provides policy support: professional mediators are paid out of finances from the city and town, generally about RMB 5,000 per person per year. The “big mediation” system created in Nantong has effectively avoided the high cost of the complaint-letter-and-visit system and “engaging in lawsuits” to solve problems, and thus created a new mechanism for addressing problems and resolving contradictions in the basic unit. V. Current Work Focus of Social Construction Social construction is a long-term social development strategy, involves many domains, and needs to be implemented in stages. From the government’s perspective, the focus of the task at this stage is, first, to realize the work focus adjustment and to raise the importance of social construction work; second, to build the foundation for smooth implementation of the social construction strategy in construction of the system, organization, and talent; third, to accelerate the pace of innovation and resolve current prominent problems.

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The key to work focus adjustment lies in further transformation of government functions, a shift from focusing solely on economic development to paying equal attention to economic development and social construction, and putting further emphasis on social construction. At the beginning of reform and opening up, the Party’s work focus shifted from “class struggle” to economic development, which has had great achievements, attracting worldwide attention. Today, China needs to readjust the work core once more. Nationally, the central government’s work focus adjustment must take the lead, transform these functions, and shift into being a service government. It must strengthen functional departments concerning social construction, set up a national leadership organization for social construction work to specifically take charge of leading, planning, organizing, coordinating, and implementing the social construction strategy. At the local level, the level of economic and social development in different areas is different, and the process of adjusting the focus of government work will have some gaps. Developed areas should take the first step, realize government function transformation as soon as possible, and prioritize social construction work. In some sense, underdeveloped areas’ economic development work is still the most important, but the following problems must be solved: first, they should put social construction work at the top of the agenda while vigorously developing the economy and consciously promote economic and coordinated social development; second, in the process of developing the economy, they should transform work methods as soon as possible, implement a human-oriented scientific development concept, promote transformation of economic development methods, and avoid economic development measures that violate people’s rights and interests when obtaining economic growth. A. System Construction System construction is an important way to adjust the focus. At present the system construction of social construction has three emphases. First, it should further realize a system of safeguarding citizens’ basic rights, promote equality of all citizens’ rights, and eliminate the inequality between urban and rural residents rights caused by the traditional urban and rural dualistic social structure and related institutional arrangements. It must further establish the authority and power of related laws ­eliminate conflicts between the lower laws and regulations, rules and policies, and the rights of citizens established by higher-level laws; for example, in the



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process of rapid urbanization, the rules and policies concerning landseizures and relocation should fully respect the provisions of the Property Law and Rural Land Law. Second, it should further realize social legislation and build a system of modern social legislation. At present, it should accelerate the advancement of social organization legislation, formulate and promulgate the social organization basic law as soon as possible, cultivate and develop non-governmental organizations according to the requirements of multidimensional development, independence, and complete rule of law, carefully examine certain basic ideas and system provisions of civic organizational management, reform the dual management systems, ease import supervision, and strengthen process management and supervision. Third, it should further establish and realize the system for safeguarding social construction. In social management stratification, it must accelerate reform of the system, make reasonable institutional arrangements for government self-supervision and social management, as well as the relationship between them, promote innovation in government social management, and strengthen social participation, community autonomy, and social management. In resource allocation stratification, it should further promote the legal system of fiscal budget, establish modern public financing, and accelerate the increase in social construction expenditure as a proportion of public spending. It should establish and realize the social resource mobilization system and build an environment that is advantageous for social resource mobilization in terms of donations and tax revenue. Moreover, it is also important to strengthen public financing and revenue in non-governmental social organizations. B. Organization Construction The key construction of social construction organizations is establishing and realizing the organizational framework for social construction, forming an organizational pattern with a division of labor between the three big sectors to divide the work, to gradually drive social construction, and to govern multi-focus pattern transformation, a shift from the central pattern in which the first sector runs the whole show to joint participation of the three big sectors. At present, the key to establishing the social construction organization framework lies in vigorously developing the tertiary sector. It is observed that its four classes of institutions and organizations have room for development. Various institutions should further determine their functional positioning in social construction practices, increase

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service capacity, improve the quality of service, strengthen management, and raise efficiency. Various official and semiofficial allied organizations, trade societies, and other intermediary organizations, on the one hand, must continue to become the bridge between the Party and government, and the people, help in carrying on trade management and intermediate services; on the other hand, it must strengthen the awareness that serves related social groups, improve the level and capacity of services, and some organizations should also speed up reform of the “separation of government from society” and bring about the complete transformation of social organizations. The basic-unit community autonomous organizations should further raise the degree of democratic autonomy, advance participatory community governance, engage in community social service, maintain community members’ legitimate rights and interests, and promote community integration and community order. The construction of nonprofit non-governmental social organization is the most prominent key field in the construction of tertiary-sector organization, and in this respect, it requires a series of systemic reforms and policy innovations to promote its development and to meet the needs of social construction. In 2009, a total of 431,000 non-governmental social organizations were registered with the departments of civil affairs. The density of registered social organizations was 2.94 for every ten thousand people, which was lower than in many countries in the world; for example, France had 110 social organizations for every ten thousand people, Japan, 97, United States, 52, and India, 10.2. The value added created by Chinese nonprofit non-governmental social organizations comprised only 0.15 percent of GDP, but in other countries this proportion totaled on average 4.6 percent. This indicated that the development of Chinese non-governmental organizations is not complete. Certainly, because the present managerial system is not rational, some Chinese non-governmental social organizations registered in industry and commerce administrative departments and some non-governmental social organizations simply did not register, either affiliated to other institutions and organizations or in a gray condition of living “outside the law”; these situations indicate that Chinese society has huge demands regarding the development of non-governmental organizations. If the density of non-governmental social organizations registered in China reaches India’s level, according to the current total population, registered non-governmental organizations might total more than 1.30 million.



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C. Talent Construction The key to talent construction work is increasing social construction pro­fessional employees. At present, the Chinese social construction pro­ fessional personnel is inadequate for meeting the demands of social construction; therefore the central government proposed the training of 3 million social work personnel. Formal schooling and vocational training are the main method for developing this professional talent. At present, there are approximately 200 social work departments and social work specialty universities, 40,000 enrolled students, and about 10,000 graduates per year. According to this scale and speed, it will take about 300 years to complete the task set by the central government. Obviously, further increasing the strength of university social work education development is an urgent task. Certainly, professional talent in social construction work is not equal to social workers, and its construction involves many other professional fields. Therefore, in addition to developing universitylevel social work education, the entire education system needs to make a great effort at transmitting the ideas and knowledge of social construction and cultivating social construction professional abilities, including setting up new curriculums or increasing the knowledge and contents concerning social construction based on the existing related curriculums, and specific measures need to organize scientific research and teaching staffs to conduct widespread investigations and studies. At the same time, vocational training should be vigorously developed to make up for the shortage of regular school education. Social construction work is inevitably based on existing related human resources; therefore related vocational training must be developed vigorously to raise the level of specialization. D. Innovation in the Public Social Policy System Implementation of institutional arrangements concerning social construction to play the related role of operational mechanism also requires a main link that regards innovation in the public social policy system as a joint system and practice. In general, the government’s public policy is divided into political policy, economic policy, social policy, and cultural policy. Of these, social policy includes mainly population and urban and rural management policy, employment and labor relations policy, income distribution policy, policy on social security and social assistance, education and training policy, health-care policy, and environmental protection policy; policy on social donation and charity is part of social policy. Therefore, in social construction practices, China has formed a relatively

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s­ ystemic social policy. But some deep social problems have yet to be solved, such as the problems of urban and rural relations, labor relations, income distribution, and environmental protection. The nature of problems is changing—for example, the population problem is changing from a one of excessive quantity and excessively rapid growth to a one of quality, structure, and aging. To address these problems, on the one hand, the social legislation system should be gradually built and realized based on a long-term plan; on the other hand, based on the practical situation, the policy should be have continuous innovation and the social legislation and institutional arrangements formulated should be put to practice to provide experience in writing future legislation and devising institutional innovation.

CHAPTER eleven

Problems in the Urban and Rural Social Assistance System and Countermeasures in 2010 Tang Jun and Xiu Hongfang I. Implementation and Characteristics of the Urban and Rural Social Assistance System A. Implementation of Urban and Rural Social Assistance in 2010 From the official website of the Ministry of Civil Affairs, we can see that, as of the third quarter of 2010, the latest data of China’s social assistance system implementation is as follows: (1) Urban minimum standard of living: For urban residents, a total 11.31 million households and 22.9 million people obtained a minimum standard of living. The average urban minimum standard of living was RMB 240/person a month, and each person receiving minimum standard of living was subsidized RMB 164 on average a month. Compared with the figures at the end of 2009, the family number and population of urban people receiving a minimum standard of living decreased slightly, but the average minimum standard of living increased each month, and average compensation per person was basically maintained. (2) Rural minimum standard of living: For rural residents, a total 24.5 million households and 50.87 million people obtained a minimum standard of living. The average rural minimum standard of living was RMB 110/person a month and each person was subsidized RMB 62 on average every month. Compared with the figures at the end of 2009, the family number and population of rural people receiving a minimum standard of living increased, and the average minimum standard of living also increased, but average compensation per person every month slightly decreased. (3) Rural five guarantees (五保: [wubao], five guarantees family (the aged, the infirm, old widows, and orphans) taken care of by the people’s communes in five ways (food, clothing, medical care, housing and burial expenses): Families that were entitled to the rural five guarantees included 5.31 million households and 5.54 million people. Of those, the objects

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­ rovided for together were 1.69 million households and 1.74 million peop ple; the objects provided for separately were 3.62 million households and 3.8 million individuals. The expenditure for objects provided for together was on average RMB 190/person a month, and the expenditure level for subjects provided for separately was on average RMB 1,990/person a year. The population entitled to the five guarantees was the same level as that in 2009, but the expenditure level dropped. (4) Medical assistance: in all 1.76 million urban residents and 3.92 million rural residents enjoyed medical assistance. The medical assistance system also subsidized 8.31 million urban poverty-stricken residents to participate in basic medical insurance for urban residents and 25.86 million rural poverty-stricken people to participate in the new rural cooperative medical service. Compared with 2009, the number of urban poverty-stricken residents who enjoyed medical assistance greatly increased, but that of rural poverty-stricken residents greatly decreased, and medical insurance for urban residents and people receiving new rural cooperative medical services were subsidized. B. Characteristics of the Implementation of China’s Social Assistance System In recent years, implementation of China’s social assistance system showed the following characteristics: The number of urban and rural residents with minimum living standards steadily developed, and the growth rate slowed down. If the trajectory is drawn for the past ten years, it is evident that the number of people with urban minimum living standards met from 2001 to 2002 suddenly increased, but basically remained at 22–24 million people after 2003. The number of people with rural minimum living standards met tripled from 2004 to 2007, but the growth rate slowed after 2008 and remained about 40–50 million people. The key to steady development in urban and rural minimum living standards was that the Central Finance Department increased its support. According to figures provided in the “2009 Statistical Bulletin on Civil Affairs Development,” for the urban minimum living standard fund of RMB 48.2 billion in 2009, the central finance subsidy fund was RMB 35.9 billion (including RMB 3.4 billion “one-time cost-of-living allowance during Spring Festival”), and central “subsidy” accounted for 74 percent of total expenditures. In the rural minimum living standard fund of



problems in the urban and rural social assistance system 189

Table 11.1. Changes in People with Urban and Rural Minimum Living Standards Met, 2001–2010 (ten thousand people, %)

Urban area

Population guaranteed Annual growth rate

Rural area

Population guaranteed Annual growth rate

Urban area

Population guaranteed Annual growth rate

Rural area

Population guaranteed Annual growth rate

2001

2002

2003

2004

2005

1171

2065

2247

2205

2234

76.4

8.8

–1.9

1.3

408

367

488

825

33.9

–10.0

32.9

69.1

2006

2007

2008

2009

2010*

2240

2272

2335

2346

2290

0.3

1.4

2.8

0.5

–2.4

1593

3566

4306

4760

5087

93.1

123.9

20.7

10.6

6.9

305

Source: www.mca.gov.cn. * Data for 2010 cover only up to the third quarter.

RMB 34.5 billion in 2009, the central financing subsidy fund was RMB 25.5 billion (including RMB 4 billion “one-time cost-of-living allowance during Spring Festival”), and the central “subsidy” similarly comprised 74 percent of the rural minimum living standard fund. In this sense, the growth of the central “subsidy” is a necessary condition for urban and rural minimum living standard fund to grow. The growth in total expenditures on minimum living standards is due to the increase in that. In 2009, the average urban minimum living standard was RMB 228/person a month, an increase of 11 percent over RMB 205 in 2008. The average actual subsidy per person a month was RMB 165, an increase of 15 percent over RMB 144 at the end of 2008. The average rural minimum living standard was RMB 1,210/person a year, an increase of 22 percent over RMB 988 in 2008. The actual subsidy for each rural recipient of minimum living standards was on average RMB 64 every month, an increase of 28 percent over RMB 50 at the end of 2008.

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Table 11.2. Total Expenditures on Urban and Rural Minimum Living Standard and Central Financing Subsidy (hundred million RMB, %) Urban area Aggregate expenditure of minimum social security standard 2001 2002 2003 2004 2005 2006 2007 2008 2009

42 109 151 173 192 224 275 393 482

Rural area

Aggregate Proportion Central expenditure of subsidy financing of minimum in aggregate subsidy social security expenditure standard 23 46 92 105 112 136 — — 359

55% 42% 61% 61% 58% 61% — — 74%

— — — — — — 109 229 363

Central financing subsidy

Proportion of subsidy in aggregate expenditure

— — — — — — 30 90 255

— — — — — — 28 39 70

Source: www.mca.gov.cn.

Table 11.3. Average Urban Minimum Living Standard in 2009 Location Beijing Tianjin Hebei Shanxi Inner  Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang

Standard

Location

Standard

Location

Standard

410 430 245 213 241

Jiangxi Shandong Henan Anhui Fujian

234 213 194 262 186

Sichuan Guizhou Yunnan Tibet Shaanxi

196 170 199 310 192

272 212 217 425 310 334

Hubei Hunan Guangdong Guangxi Hainan Chongqing

214 195 244 217 243 231

Gansu Qinghai Ningxia Xinjiang Whole country

171 223 204 172

Source: www.mca.gov.cn.

228



problems in the urban and rural social assistance system 191 Table 11.4. Average Rural Minimum Living Standard in 2009

Location

Standard

Location

Standard

Location

Standard

238 267 88 83 121 124 105 96 283 208 213

Jiangxi Shandong Henan Anhui Fujian Hubei Hunan Guangdong Guangxi Hainan Chongqing

90 100 81 96 119 82 73 159 84 160 123

Sichuan Guizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang Whole country

76 75 69 62 72 66 84 62 77

Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang

100.84

Source: www.mca.gov.cn.

II. Problems in the Urban and Rural Social Assistance System With the development of the urban and rural social assistance system, creating a stable system has played an influential role in safeguarding and improving the livelihood of the people and building a socialist harmonious society. But, in the present situation, urban and rural social assistance has experienced many problems. They are mainly in the following aspects. A. Price Increases Affect Poor Families Price increases have an enormous impact on families with minimum living standards. Since 2009, price increases have been one of the biggest social problems, and the consumer price index (CPI) is on everyone’s mind. According to a report of the National Bureau of Statistics, in October 2010, the CPI increased 4.4 percent over the previous year, and the monthly growth rate reached 0.7 percent. Prices for most commodities rose, among which, the highest were food (1.1 percent), clothing (1.0 percent), and housing (0.9 percent). But according to the figures provided by the Ministry of Agriculture, in October 2010, it is estimated that the price of edible agricultural products rose 10 percent over that of the previous year, and the price of grain, meat, eggs, sugar, and fish also increased, of which vegetable prices increased 31 percent, and fruit prices increased 17.7 percent. In a sense, the consumption capacity and even lifestyle of families with minimum living standard is “stipulated” by the government. For example,

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the urban resident’s minimum living standard was “determined according to the expenses of clothing, food, and housing required for maintaining the local urban residents’ basic life, and properly considering expenses of water, electricity, and coal (fuel gas), as well as children’s compulsory education expense.” The rural minimum living standard is “determined according to the expenses of food, clothing, water, and electricity required for maintaining local rural resident’s basic living expenses for a year.” Therefore, at present several commodities that have had large price increases are indispensable daily necessities for families with minimum living standards, whether in urban or rural areas. Another characteristic of the minimum living standard system is that the standard adjustment always lags behind price increases because the government responds after price increases. Therefore, after the price increases, especially the prices of daily necessities, urban and rural families with minimum living standards are always affected first. B. Low Minimum Living Standard Needs Adjustment In addition to price increases, a low minimum living standard is also a problem that has yet to be solved. Comparing the urban and rural minimum living standard with the percentage of urban and rural income per capita, we discover two problems: first, the standard is somewhat low, the highest urban minimum living standard was 21 percent in 2003, and the highest rural minimum living standard was 24 percent in 2009; second, the urban minimum living standard actually fell by 1 percent, 5 percent from 2003 to 2007. Although it stopped declining from 2007 to 2009, it remained at a low level of 16 percent. According to international standards, the social assistance standard in member countries of the European Union is generally 50–60 percent of income per capita, the United States has maintained it at 33 percent for a long period, and China’s urban minimum living standard is only half that of the United States, and one-third that of the EU. The proportion of rural minimum living standard is somewhat high, but compared with the standards of developed countries, it is somewhat low. In brief, readjusting China’s urban and rural minimum living standard is urgent. C. Local Governments Responsible for Funding Is a Paradox Table 11.2 and analysis of it clearly show that subsidies from the central government comprised a large proportion of the urban minimum living standard fund. However, the “Regulations on Minimum Standards



problems in the urban and rural social assistance system 193 Table 11.5. Proportion of Urban Minimum Living Standard in Income per Urban Resident (RMB, %) 2003

2004

2005

2006

2007

2008

2009

Urban income per 706  person Urban minimum 149  social security  standard Proportion of 21  standard in income

785

874

980

1149

1315

1431

152

156

170

182

205

228

19

18

17

16

16

16

345

397

429

70

82

101

20

21

24

Rural income per  person Rural minimum social  security standard Proportion of  standard in income

Source: www.mca.gov.cn and China Statistical Yearbook, (Beijing: China Statistics Press, 2010).

of ­Living for Urban Residents” (城市居民最低生活保障条例 chengshi jumin zuidi shenghuo baozhang tiaoli) has contradictions: “the county level above all levels of local people’ s government departments of civil affairs specifically are in charge of the supervisory work of minimum living standards for urban residents in the relevant administrative division; finance departments manage the urban residents’ minimum living standard fund according to the provisions,” “the fund required for urban residents’ minimum living standards is included in the fiscal budget of the local people’s government and is integrated in the expenditure item of special fund for social relief.” Rural minimum living standards are similar to the urban minimum living standards as was expressed clearly in relevant documents: “establishing the rural minimum living standard system, implementing the local people’s government responsibility system, managed according to place of residence.” “The increase in the rural minimum living standard fund gives priority to place, all levels of local people’s governments must include the rural minimum living standard fund in the fiscal budget, and the provincial-level people’s government must increase its investment.” The view of related laws and regulations is actually paradoxical because the more underdeveloped the area is, the lower it financial revenue, the

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greater the number of those living in poverty. If the local government is responsible for the urban and rural minimum living standard system and its funds raised by the local finance, for many areas, especially poorer areas, it will be “cooking a meal with less rice” or “making bricks without straw.” In fact, the practices of urban and rural minimum living standards have proved that the central government is the main pillar of finance for minimum living standards. This situation, in which laws and regulations are inconsistent with administrative action, needs to be promptly adjusted. D. “That Which Should Be Guaranteed Is Guaranteed” Is Unscientific Until now, “that which should be guaranteed is guaranteed” has been one of the main goals in urban and rural minimum living standards work and has even been one of the most important tasks. But, strictly speaking, such wording is unscientific. Because social assistance is a basic right of a nation’s citizens, this right is realized through universal authorization, but not through universal subsidy. If a family’s income ceases and making a living becomes difficult, they can apply for government assistance. But if they do not apply for various reasons, this is also their right. Generally speaking, considering the time and opportunity cost involved in the application process, families with a family income per capita not much above the minimum living standard might not apply for assistance, which is known as “non-use.” Therefore, the social assistance or minimum living standard system is not a system in which the government holds money and looks for “poor people” everywhere to provide for. In social work, the principle of “helping others, helping themselves” appears to be very important. III. Policy Suggestions on Achieving an Urban and Rural Social Assistance System In view of the problems raised above, in terms of theory and experiences in social policy, several countermeasures and suggestion are proposed. A. Achieve Full Coverage as Soon as Possible The minimum living standards system guarantees a citizen’s basic rights through universal authorization, and proposals in the Twelfth Five-Year Plan once again touched on providing full urban and rural social ­assistance



problems in the urban and rural social assistance system 195

coverage. Therefore, from the operations perspective, two aspects should be considered: First, are certain social groups not yet covered? Second, are some kinds of poverty not yet covered? For the first question, the answer is affirmative, such as seriously disabled groups, seriously ill families, and the unemployed. For the second question, the answer is also affirmative; for example, job-search expenses of families of university graduates in difficulty, unemployed people’s jobsearch expenses, and living expenses of families that suffer from natural and man-made disasters are not covered under corresponding laws and regulations. Full coverage of social assistance can be achieved through the formulation of a social assistance law and social assistance specialization. Of course, the priority is to adjust the minimum living standard. B. Release the “Social Assistance Law” (社会救助法 shehui jiuzhu fa) Although China’s social security system has been established for more than ten years, it was not until 2007, after the Seventeenth Congress of the Chinese Communist Party (CCP), that the overall framework for the social security system became clear—that is, the foundation of social security system is social welfare, social security, and social assistance and stressed basic endowment insurance, basic medical insurance, and urban and rural minimum living standards. Because they are the government’s obligation, they are considered the foundation and focus points. But, in the report of the Seventeenth CCP Congress, elaborations on the social security system, in Chinese society, even in the relevant Chinese government departments, had some contradictions. This difference in understanding, plus underlying interests, made formulation of the “Social Assistance Law” complicated. But the “Social Assistance Law” should be straightened out and adjusted between government and citizen to regulate the rights and obligations. The “Social Assistance Law” should normalize and adjust the legal relationships of the government—that is, the government’s social assistance responsibility to citizens, as well as toward the situation in which citizens are old and ill or lose the ability to work, when they can obtain the right of social assistance from the country and the society. This is stipulated explicitly in the “Constitution” (宪法 xianfa) and is the legislative foundation of the “Social Assistance Law.” But the current relevant laws and regulations and the “Social Assistance Law” that is being formulated always avoids this point. If there is ambiguity in the government’s responsibility and citizen’s rights, the “Social Assistance Law” has no basis.

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“Social assistance” was called “social” because it stressed the citizen’s social rights, and it is a social law from the point of view of legislation. At home, “society” is frequently equated with “non-governmental,” and mutual aid is always integrated in it. At this point, mutual aid should be separated from social assistance and determining social assistance is the obligatory responsibility of the country and the government, but the social action of mutual aid should be adjusted and normalized by “philanthropic law.” C. Specialization of Social Assistance is Imperative Urban and rural social assistance work has entered a period of steady development in recent years, and further completing and normalizing the institutional arrangements of urban and rural minimum living standards and social assistance will be the focus. Among them, an important point is that the urban and rural minimum living standards system and social assistance move toward specialization. The framework of the urban and rural minimum living standards system is supported based on 4 million community cadres of residents’’ committees and villagers’ committees. With unceasing social and economic development and changes, depending only on the community cadres’ “afterhours” social assistance is inadequate. The community cadres’ tend to reach community residents by “zero distance,” but this also possibly causes “leaning on friends and relatives.” At the same time, basic units also spread the story that many community cadres’ life and property were threatened because they insisted on the principle. In a sense, social assistance work is a government service; minimum living standards should be applied to the government agency, but not to autonomous mass organizations. Therefore, as a basic collective service, it should be established as special administrative body at the village, town, and street level; specialized social workers should undertake case management of minimum living standards, and community residents’’ committee plays the role of “synergic investigation.” D. Establish Long-Term Effective Adjustment Mechanism for Minimum Living Standards At present, the Ministry of Civil Affairs and many local offices and bureaus of civil affairs are attempting to establish long-term effective adjustment mechanisms for minimum living standards, and Shanghai, Beijing, and



problems in the urban and rural social assistance system 197

Guangzhou have had successful experiences. But this work should focus on the following problems. The determination of an urban resident’s minimum living standard is ultimately a political decision and is different from the lowest living standard as calculated by the “scientific method” (internationally known as the “poverty line”). The “lowest living demand” (sometimes called “legal poverty line”) calculated by some method is an objective indicator that can be used to adjust the minimum living standard, but is not the only influencing factor. The increase of the minimum living standard not only indicates that the target living standard of minimum living security has been enhanced, but also indicates that the scope of minimum living security has been increased. Originally, average family income surpassed “marginal household” (边缘户 bianyuanhu) of minimum living standards but now has possibly conformed to the standard within the scope of minimum living standards. After raising the minimum living standard, there are many marginal households that are brought into the scope of minimum living standards, and most of them have the ability to work. If this influencing factor is omitted, and “the gold content” of the minimum living standard system continues to increase, the system cannot be implemented. As for the objective of the urban minimum living standard system, it should not only safeguard minimum living standards but also must not become a negative factor that hinders the recipients of minimum living standards from participating in social labor. If minimum living standards are too high, for example, if the minimum wage is multiplied by 2 (for a couple) is smaller than or equal to the minimum living standard multiplied by 3 (three-person family), it means the income from work is less than or equal to the income from minimum living standards and not work, and thus a minimum living standards are inappropriate.

chapter twelve

Combat Corruption, Uphold Integrity, and Improve People’s Livelihood Wen Shengtang I. Strengthen Supervision and Restrictions on the Power of Public Operations A. Construction of an Anti-Corruption Plan On New Year’s Eve in 2010, Hu Jintao presided over the Politburo conference on constructing a clean government and combating corruption, and the conference stressed solutions to prominent problems in combating corruption, strengthening supervision of and restrictions on authorities, and emphatically advancing the anti-corruption system. From January to March, around the period of the Fifth Plenary Session of the Seventeenth Chinese Communist Party (CCP) Central Commission on Discipline Inspection and the State Council, many conferences were held regarding construction of an honest and clean government, noting that the anticorruption situation was still severe, and emphasized strengthening supervision and inspection with regard to the implementation of policy measures by the central government on safeguarding and improving the livelihood of the people and on normalizing and economizing on land usage, etc.; seriously investigating and dealing with cases concerning engineering construction, property development, and land management, in which corruption easily occurs; including housing situations as reported by party members and leading cadres; thoroughly launching the special rectification work on prominent problems in engineering construction. On March 11, at the national “two conferences,” the report of the Supreme People’s Procuratorate proposed investigating and dealing legally with criminal cases of abuse of power, embezzlement and bribery, dereliction of duty and malfeasance that occur among leading organs and leading cadres, cases of commercial bribery and grave public-interest violating crimes, criminal underpinnings of widespread accidents and accidents that result in serious liability, criminal cases in engineering construction, property development, land management, and mineral resource

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d­ evelopment, and criminal cases that act as a “protective umbrella” for the underworld. On September 14, Zhou Yongkang (周永康) presided over the fifteenth plenary session of the Commission on Politics and Law of the CCP and the seventh Special Report Meeting for Judicial System Reform, and heard the report of the Supreme People’s Procuratorate on deepening the people’s supervision system reform. This system was to strengthen supervision over investigating and dealing with crimes of abuse of office, and was tested after the Central Party Committee agreed and reported to the Standing Committee of the National People’s Congress in 2003. In all, 3,137 procuratorates appointed more than 30,000 people’s supervisors in all circles, and they supervised “three classes of cases.” There were 32,304 cases in which suspected offenders refused to accept the decision, proposed dismissing the case, and proposed declining to prosecute, and 1,635 cases in which they did not agree with the procuratorial organizations’ proposed handling decision; the procuratorial organization accepted 899 cases, an acceptance rate of 54 percent. In the “five circumstances,” the people’s supervisors thought that registration was improper and extended custody, and the procuratorial personnel broke the law and gave 1,000 supervisory opinions and gave more than 18,000 opinions and suggestions on other procuratorial work, and the procuratorial organization would give feedback to the people’s supervisors after investigation of each one. The central committee agreed to comprehensively implement this system and asked for a long-acting mechanism of legalization to be created. The Supreme People’s Procuratorate integrated aspects in which there may have been abuse or misused of authority and emphatically supervised seven classes of cases strictly according to the people’s supervisors’ collective appraisal and voting procedure; these cases were ones that either should have been registered and were not or should not have been registered and were; in which extended custody or the suspected offender refused to accept the procuratorial organization’s decision on prolonging extended custody; in which they illegally searched, detained and froze or illegally handled and detained, froze funds and properties; in which it was proposed to decline to prosecute; in which it was proposed to dismiss the case; in which it should have given criminal compensation but did not; in which the procuratorial personnel violated the law and discipline in handling cases, including self-serving misconduct, taking bribes and bending the law, exacting a confession by torture and collecting evidence by violence, and so forth. Henceforth, the legal supervision institution must accept the people’s orderly participation and direct supervision when investigating



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and dealing with corruption cases, which prevents unfair law enforcement and judicial corruption. B. Tangible Progress in Punishing and Preventing Corruption (1) Investigating the Corruption in Economic Activities through Audits In the first three quarters of 2010, auditing offices nationwide audited (investigated) 87,124 units. These audits increased revenue and reduced expenditure RMB 32.03 billion, of which RMB 18.7 billion has been turned over to finance, reduced financial allocations or subsidy by RMB 3.81 billion, and RMB 9.52 billion returned to the original channels of capital; examined and reduced fixed-asset investment projects or settlement volumes of RMB 27.25 billion, and helped audited units and units concerned avoid losing RMB 8.98 billion. In all, 616 cases were transferred to judicial and discipline inspection and supervision organs, involving 1,003 people. In the first three quarters, 18,449 persons were audited. In all, 19 leading cadres were audited and 108 other personnel were transferred to judicial and discipline inspection and supervision organs for auditing. Since April 2009, the Party and government organizations and institutions discovered 24,877 “unit-owned exchequers,” involving RMB 12.242 billion. In all, 842 people were given administrative penalties due to setting up “covert coffers ” (小金库 xiaojinku) and using funds of “covert coffers” 413 people were handled by the organization, 1,035 people were punished through the Party and government discipline, and 322 people were transferred to judicial organs. C. Strengthening System Construction and Rectifying Personnel Corruption While continuing to solve the problem of canvassing and bribery during election, the Central Party Committee increased pressure to attack the problem of buying and selling official titles. On March 7, 2010, the CCP Central Committee General Office printed and distributed “Measures on Accountability Regarding the Selection and Appointment of Party and Government Leaders (Draft)” (党政领导干部选拔任用工作责任追究办法 (试行) dangzheng lingdao ganbu xuanba renyong gongzuo zeren zhuijiu banfa (shixing)), the Organization Department of the CCP Central Committee printed and distributed three draft measures, such as “Measures on the Reporting of Items Concerning the Selection and Appointment of Party and Government Leaders (Draft)” (党政领导干部选拔任用工作 有关事项报告办法 (试行) dangzheng lingdao ganbu xuanba renyong

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gongzuo youguan shixiang baogao banfa (shixing)).1 The four measures combined systems that made up the important action that further rectified the election atmosphere. In October, the Central ­Commission on Discipline Inspection, the Organization Department of the CCP Central Committee and the Ministry of Supervision jointly printed and distributed the “Notice on Severely Renovating Bribery Behaviors in the Selection and Appointment of Party and Government Leaders” (关于严厉整治干部 选拔任用工作中行贿受贿行为的通知 guanyu yanli zhengzhi ganbu xuanba renyong gongzuo zhong xinghui shouhui xingwei de tongzhi) to implement policy on solving the problem of buying and selling official titles. Hereafter the Commission on Discipline Inspection and the Organization Department of the CCP Central Committee jointly distributed “Firmly Stopping Unhealthy Tendencies in the Selection and Appointment of Leaders—Notification on Twelve Typical Cases Concerning Breach of Principle in the Selection and Appointment of Leaders” (坚决 刹住用人上的不正之风—关于 12 起违规违纪用人典型案例的通报 jianjue shazhu yongren shang de buzheng zhi feng—guanyu shi’er qi weigui weiji yongren dianxing anli de tongbao) and demanded resistance to corruption in the selection and appointment of leaders. From 2008 to October 2010, a total of 10,716 cases concerning breach of principle in the selection and appointment of leaders were investigated, and 1,665 persons concerned were handled. D. Carrying Out Anti-Corruption Education and Preventing Corruption in State-Owned Enterprises In recent years, corruption in state-owned enterprises increased greatly, and serious cases of embezzlement and bribery remained at a high level. For example, in recent years, there were twenty-six cases in which stateowned enterprise leaders broke the law, were investigated, and had to face the Hubei Provincial Commission on Discipline Inspection, nine office and bureau-level “chief leaders” and dozens of midlevel cadres were involved, twenty corruption cases and related cases, and a total amount of several million renminbi involved. The Hubei Provincial State-Owned 1 See “Measures of the General Office of the CCP Central Committee on Accountability Regarding the Selection and Appointment of Party and Government Leaders (draft)” (2010) at www.lawinfochina.com/NetLaw/display.aspx?db=law&sen=rLdDdW4drhdDdWfdrhd5 dWndrDdFdWPd9DdydWdd/ddydWudrDdydWfdrDdwdWud/ddTdWud9Dd+&Id=8048& SearchKeyword=党政领导干部选拔任用工作责任追究办法&SearchCKeyword=党政 领导干部选拔任用工作责任追究办法&/.



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Assets Supervision and Administration Commission and enterprises of centralized management by specialized departments discovered 458 cases of law breaking in the past four years, investigated and punished 547 people through Party and administrative disciplinary measures, and thirty-seven people were prosecuted. The Hubei Provincial Commission on Discipline Inspection distributed “Opinions on Launching Honest and Clean StateOwned Enterprise Risk Prevention and Control Work” (国有企业开展 廉洁风险防控工作的意见 guoyou qiye kaizhan lianjie fengxian fangkong gongzuo de yijian) and five supporting systems to construct an anticorruption “firewall,” and to prevent and control the risks for honest and clean state-owned enterprises. From 2008 to September 2010, Shanghai procuratorial organizations investigated and dealt with 848 cases concerning crimes of abuse of office involving 959 people and a total value of RMB 1.349 billion, of which 403 cases and 427 people involved state-owned enterprises, which comprised 47 percent. Especially in major and serious cases, state-owned enterprises comprised 94 percent. Some state-owned enterprises’ management was chaotic, and corruption grew steadily. In the process of investigating and dealing with the collective corruption case at the state-owned enterprise Jilin Provincial Communications Construction Group, Chairman Liu Zhongji (刘忠吉) said, “Corruption is very normal, but no corruption is very rare!” when he admitted his bribes to the public prosecutor. In view of this point, while strengthening central enterprise management, the State-Owned Assets Supervision and Administration Commission asked for the strengthening of anti-corruption education to central enterprise leaders, and the launching of collective integrity dialogue with newly appointed leaders was regarded as an important measure in implementing the responsibility system for the construction of an honest and clean government. In October 2010, the State-Owned Assets Supervision and Administration Commission carried out collective integrity dialogue with 150 newly appointed leaders of central enterprises since 2008. Cases of breaking the law occurred in central enterprises warned central enterprise leaders to use their authority cautiously, and these leaders were asked to study and inculcate the provisions and requirements for honest and clean employment, and cannot abuse their power, and simultaneously must undertake the political liability of combating corruption, pay special attention to enterprises’ anti-corruption construction, and perform anti-corruption work within the scope of their official duties. On November 10, 2010, the State-Owned Assets Supervision and Administration Commission and the Commission on Discipline Inspection held a “Mirror” forum and selected 100 cases of corruption that occurred in

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­ roduction and operations management and covered different levels of p and different posts of cadres and staff in recent years, and used representative cases for self-reflection, which have played a unique role in warning and education with respect to anti-corruption construction. E. Adjusting Organizations in Beijing and Preventing “Network” Corruption As the “bridge” and “link” connecting credit exchanges between Beijing and various areas and promoting resource flows, various areas’ liaison offices in Beijing have played a certain role in promoting economic reform and an active market and promoting economic prosperity. By July 2010, local governments and departments had 971 liaison offices in Beijing. But some liaison offices in Beijing also became a “club” in which local people regularly contacted fellow townsmen, schoolmates, friends, state enterprise businessmen, and so on, in Beijing, which gradually formed a hidden room for back-door dealings and bribery and became a hotbed of corruption. In order to purge local liaison offices in Beijing, which were known as pao bu qian jin ban (跑部钱进办 office of back-door dealings), on January 19, 2010, the State Council General Office printed and distributed “Opinions on Strengthening and Normalizing the Management of Local Governments’ Administrative Bodies in Beijing” (关于加强和规范各地政 府驻北京办事机构管理的意见 guanyu jiaqiang he guifan gedi zhengfu zhu beijing banshi jigou guanli de yijian) and held a State Council meeting on April 1 to engage in supervisory work to clean up and normalize local governments’ liaison offices in Beijing. After three years, the central government purged local liaison offices in Beijing with an iron hand. The State Council stipulated that nearly ten thousand county-level units, related enterprises, and various associations’ liaison offices in Beijing must be closed within six months in addition to the fifty-two remaining liaison offices in Beijing above the vice-provincial level. This task was basically completed by the end of October, in addition to the remaining fifty provincial-level governments (including cities directly under state planning, vice-provincial level cities, and the Xinjiang Production and Construction Corps) and the governments of special economic zones and 296 prefectural governments’ liaison offices in Beijing, the other 625 were closed. On October 27, 2010, the official website of the Beijing Bureau of Human Resources and Social Security issued a notice to restart the work in Beijing, with no more than eight people in a liaison office. In the actual



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i­ nvestigation and selective examination work after the closings, we discovered that some personnel of a few liaison offices in Beijing had not yet left; some liaison offices in Beijing did not close because the relationship between ownership and management of enterprises was complex, especially in real estate; functional transformation of some remaining liaison offices in Beijing did not reach the desired level. To prevent closed liaison offices in Beijing from remaining in a disguised form, the relevant authorities strictly prohibited setting up new liaison offices in Beijing in a disguised form and banned retaining such offices through a name change or station transfer. Second, supervision and inspection were strengthened, in which relevant personnel at liaison offices in Beijing that refused to be closed or that retained them in disguised form in other names would be investigated after verification. At the same time, all circles, media, and people were asked to supervise them and report them promptly to the authorities. Through strengthening the management of liaison offices in Beijing and increasing supervision, liaison offices in Beijing were forced to carry on working but in a cleaner fashion. II. Contain Corruption in Real Estate A. Special Rectification: Centralized Management of Real Estate Corruption In view of the rampant tendency toward corruption in real estate, in recent years, the central government and relevant departments organized a series of special rectifications. (1) Rectifying Land Corruption That Harms People’s Livelihood Corruption in the land and resources domain not only affects protection and reasonable allocation of land and mineral resources and hinders economic and social scientific progress, but also seriously damages people’s benefit, which has touched off massive social contradictions and has seriously affected social harmony and stability. On August 19, 2010, a videoconference on launching corruption rectification work in the land and resource domain was held in Beijing; the Central Committee of the CCP Commission on Discipline Inspection and Supreme People’s Procuratorate deputy chief procurator Qiu Xueqiang (邱学强) attended the meeting and disclosed in his speech that, from January 2009 to July 2010, countrywide procuratorial organizations registered 1,855 cases of misuse of office in the land and resource domain, in which there were 1,609 cases of

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embezzlement and bribery, and 246 cases of malpractice, 1,303 major cases, and serious cases of 178 cadres at the county and office level and above. The characteristic of corruption in this domain is that there are many cases, the amount of money involved is great, there are many corruption cases and interrelated cases, and malfeasance by department leaders is quite prominent, so the departments concerned are taking further actions to rectify this problem. (2) Preventing and Controlling Corruption in the Engineering Construction Domain In July 2009, the central government decided to take two years to carry out a centralized special rectification of prominent problems in the engineering construction domain. In August, the Central Commission on Discipline Inspection took the lead, and the Supreme People’s Procuratorate and the National Development and Reform Commission, and twenty-one departments worked together to establish a leading group for rectifying prominent problems in the engineering construction domain. The leading group formulated and issued the “Special Rectification Work Implementation Plan” (专项治理工作实施方案 zhuanxiang zhili gongzuo shishi fangan) based on deep investigation and study, according to the basic flow of engineering construction, and straightened out eight areas where there was a high frequency of problems in the engineering construction domain divided into thirty-four tasks, and determined the main measure, the accountability unit, and leading department. By the end of April 2010, discipline inspection and supervision departments nationwide accepted a total of 17,269 tips regarding the engineering construction domain, registered 9,188 cases, and closed 8,656 cases; engaged in party disciplinary actions with 5,241 people, of which 57 people were at prefecture (office) level and 611 at county level; 3,058 cases were transferred to judicial organs. On May 20, the central leading group for rectifying prominent problems in the engineering construction domain announced twenty typical cases under investigation at a press conference. Deputy Mayor of Zhengzhou (Henan Province) and Zhengdong New District Management Committee director Wang Qinghai (王庆海) took advantage of his position in land leasing, planning examination and approval, land-seizure and relocation and so forth, and accepted bribes of RMB 19.36 million and HK $200,000. He helped an auto dealership obtain land usage rights in the Zhengdong New District and sought RMB 4 million in profit for his lover; the land that he helped the company obtain was partially changed into commercial housing land, and he accepted a



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­ ayment of RMB 3 million; he helped a real estate company obtain 27 acres p of land and accepted 15 marketable houses (valued at RMB 4.15 million). In November 2009, Wang Qinghai was expelled from the Party, discharged from public employment, and transferred to the judicial organ. Since September 2009, procuratorial organizations nationwide registered to investigate and deal with 8,981 cases and 10,854 people involved in embezzlement, bribery, and malfeasance within the engineering construction domain; funds involved in the cases totaled RMB 1.85 billion. These included 6,343 major cases of embezzlement and bribery and 463 extraordinarily serious cases of malfeasance; 993 people at the county and office level and above were involved in serious cases. These cases involved 3,752 government officials and a number of leading cadres who intervened in the engineering construction using their authority and sought illegal benefits, and several national public servants who sought and accepted bribes and made power-money deals using administrative examination and approval authority, law-enforcement authority, and judicial authority. There were 919 registered cases of abuse of office and malfeasance in engineering construction, which involved a RMB 200 million economic loss for the country; 1,469 cases of bribery crime were registered to be investigate and dealt with, and a group of criminals who engaged in bribery and sought illegal benefits in engineering construction and inveigled and corrupted the national staff were punished according to the law. At the same time, improving the handling of cases, strengthening prevention of crime by abuse of office, and completing the filing inquiries in bribery cases have promoted the long-acting mechanism of preventing corruption in the engineering construction domain. The Ministry of Supervision and the Ministry of Human Resources and Social Security also printed and distributed “Provisions on Breaching Regulations to Interfere with Punishment in the Engineering Construction Domain” (违反规定插手干预工程建设领域行为处分规定 weifan guiding chashou ganyu gongcheng jianshe lingyu xingwei chufen guiding), the applicable subjects were administrative organ officials at the deputy level and above and personnel at deputy level and above or equal to deputy level appointed by administrative organs in the enterprises, institutions, and social groups. It stipulated explicitly that the concrete behaviors that breached regulations to interfere with real estate development and operative activity in “breaching regulation to interfere with punishments in the engineering construction domain” include asking relevant departments to agree with enterprises that are not qualified to work in real estate development or whose qualification ranks are not for

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real estate development; asking relevant departments to issue permits for commercial housing advance sale for developmental projects that do not conform to commercial housing advance sale conditions; for real estate development projects without acceptance or unqualified acceptance, asking relevant departments to allow them putting into service; other acts of breaching regulations to interfere in land use, project establishment, planning, construction, and sales for real estate development. The Provisions listed 9 aspects and 39 concrete actions and corresponding punishments and scope. Where circumstances are relatively serious, the punishment of lowering rank or removal from office is meted out; where circumstances are serious, dismissal from office is imposed. This determined the principle in which “leading cadres must be punished so long as they behave in a manner breaching regulations” in the provision of administrative sanctions based on the interpretations printed and distributed by the Central Commission on Discipline Inspection before this. Even if the officials did not seek and accept bribes, officials would be punished if they brought about large losses for the country and the people’s well-being or serious adverse impacts on their respective area and department. Moreover, the actions that breach regulations to interfere in the engineering construction domain must impose Party disciplinary measures and be addressed by discipline inspection institutions, and the case of a suspected crime would be transferred to a judicial organ to be investigated. (3) Punishing Corruption in Real Estate Development Domain In recent years, law enforcement and discipline, enforcement of administrative laws, and national judicial organs established and realized the functional division cooperation system and achieved a coordinated mechanism of rapid reaction, and fully used information technology and networks to form joint forces to severely punish corruption in real estate development. Although various systems respectively opened a unified information telephone hotline and on-line password reporting system, they established a reporting system offering rewards, earnestly enlarged involvement in the real estate development market, investigated and dealt with severe criminal cases that harmed national housing projects and public housing construction. Meanwhile, in view of the characteristic of corruption in this domain, which was mainly manifested in developers who directly induced government staff to accept bribes, the work of punishing and preventing bribes was strengthened. The Supreme People’s Procuratorate formulated and distributed the “Notice on Further Strengthening the Serious ­Investigation and Dealing with Bribery” (关于进一步加大查办



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严重行贿犯罪力度的通知 guanyu jinyibu jiada chaban yanzhong xing­ hui fanzui lidu de tongzhi) in May 2010, which further expanded investigations of bribery in the real estate domain, established and realized an overall mechanism for investigating and dealing with charges of bribery, and strengthened detection and trial supervision mechanisms for investigating and dealing with and punishing bribery. Based on a summary of external inquiries of bribery filings over four years, the scope of inquiry “blacklist” was expanded to all bribery, the Supreme People’s Procuratorate Bribery Crime Archives Management Center was under preparation, the inquiry system software was completed to enable national networking, which effectively strengthened prevention and control of bribery in the real estate domain. In September 2010, a case in which Guiyang People’s Government of Guizhou Province former assistant mayor Fan Zhongqian (樊中黔) accepted bribes and had large amount of wealth without a clear source was investigated; this case was solved with the cooperation of the discipline inspection and supervision and procuratorial organizations. This corrupt official bribery case involved more than seventy developers and comprised fifteen corruption cases in the Guiyang city land and construction domain, involving eighteen people. Fan Zhongqian took advantage of his position to seek benefits for other people in real estate engineering construction, project procedure examination, project bidding, reduction and exemption of expenses for urban construction and related project fund appropriations, and accepted bribes totaling RMB 10.05 million over a period of time, US $40,000, 8,000 euros, HK $248,000, and 50 gold bars valued at more than RMB 180,000, and a gold version of the Zhouyi 《周易》 ( , a classic book on yin-yang theories) valued at RMB 17,000. A legitimate origin could not be found for his funds of RMB 2.46 million, US $250,000, more than 120,000 euros and more than HK $360,000. “Businessman pays tribute to official, and official seeks profit for businessman” has become a universal “hidden rule” in the real estate industry. Anticorruption institutions launched thorough studies of such cases, focused on this “hidden rule,” and explored a new plan, new way, and new countermeasure to effectively search out and prevent corruption. B. Policy Regulations: Strengthening Regulatory Supervision of the Real Estate Market Regulating and controlling the real estate market in a practical way and effectively restraining the excessively rapid rise in real estate price have become the current significant political issue in Chinese society

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that involves the livelihood of the people and affects stability and harmony. Based on the regulation and control of the excessively rapid rise in real estate prices, in March 2010, Premier Wen Jiabao proposed in the “Government Work Report” (政府工作报告 zhengfu gongzuo baogao) delivered at “the two conferences” unceasingly accelerating the construction of public housing projects, of which 3 million projects were planned for the year, in addition to 2.8 million projects to transform shantytown housing. The State Council held the symposium twice for this reason; the Ministry of Housing and Urban-Rural Development signed the letter of target responsibility on behalf of Housing Project Coordinated Group and various provincial-level governments and together with the Ministry of Supervision supervised and researched the establishment of accountability for inspection. On April 17, the State Council printed and distributed the “Notice on Firmly Containing Excessively Rapid Rises of House Prices in Some Cities” (关于坚决遏制部分城市房价过快上涨的通知 guanyu jianjue ezhi bufen chengshi fangjia guokuai shangzhang de tongzhi) and proposed stricter regulatory measures for establishing the inspection accountability mechanism, suppressing unreasonable housing demand, increasing the effective housing supply, accelerating public housing project construction and strengthening market supervision. To implement the State Council’s requirements, the Ministry of Housing and Urban-Rural Development issued the “Notice on Related Issues Concerning Further Strengthening Real Estate Market Supervision and Realizing the Commercial Housing Advance Sale System” (关于进一步加强房地产市场 监管完善商品住房预售制度有关问题的通知 guanyu jinyibu jiaqiang fangdichan shichang jianguan wanshan shangpin zhufang yushou zhidu youguan wenti de tongzhi). In September, a series of measures, one after another, was released throughout the country on deepening regulations and control, including provisions on tightening bank credit and rigorously investigating land hoarding and building speculation, as well as new policy measures on tax revenue regulation and limiting purchases. The relevant departments also worked together to research and formulate the system for strengthening the management of real estate agents and developing the secondary housing market. Various areas further strengthened market supervision according to the requirements of regulatory policy, seriously investigated illegal activities, strengthened market inspection of the housing market, and legally investigated speculation by agents; strengthened exposure and punishment of real estate development enterprises’ illegal activities with respect to idle land, change of land use and nature, delays in start and completion time, and hoarding and speculation; suspended



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real estate development enterprises that had illegal records for newly purchased land; simultaneously, further strengthened supervision of corruption behind soaring house prices, strictly investigated responsibility and safeguarded the implementation of regulatory measures according to laws and regulations, and enabled regulations and control to restrain excessively rapid rises in house prices through “comprehensive measures.” C. Comprehensive Rectification Strategy: Normalizing the Real Estate Market In recent years, to restrain the excessively rapid rise in housing prices, the government released many emergency regulations. Although sometimes they worked instantly, in general the overall effect of regulations was poor because of policy time lags. Especially the rhythm which the short-term regulation policy was dealt with by the flexible market game and the corrupt means of rising to the occasion quickened increasingly, and thus there were many rounds of regulation results that were embarrassing, which had a bad effect on satisfying people’s psychology anticipated and objective needs. Therefore, deepening the comprehensive reform of the real estate market system and quickening to advance the rule-of-law construction of the real estate market are imminent. (1) Real estate management and housing security concern the national economy and people’s livelihood, therefore legislation must be completed. The current real estate chaos and corruption have not been effectively curbed and are difficult to contain because the present legal system seriously lags and has many flaws in its procedures. For example, it is uncoordinated with related the legal system and standards, conflicting with the related contents in the “Property Law” (物权法 wuguanfa) and inconsistent with certain provisions of the present land policy, which urgently needs to be integrated and straightened out systematically. In addition a unified perfect basic law should be formulated that includes real estate management and housing security and in which the entity is integrated with procedures. In view of the fact that real estate management and housing security are vital to the national economy and people’s livelihood, a law that is approved by the National People’s Congress and whose legal effect is secondary only to the constitution must be formulated to effectively normalize the real estate market. (2) “Law on Real Estate Management and Housing Security” (房地产 管理及住房保障法 fangdichan guanli ji zhufang baozhang fa) should study relevant foreign legislation and urban and rural areas.

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At present, the time is ripe for formulation of a “Law on Real Estate Management and Housing Security,” and we should learn from many foreign legislative techniques and achievements and rich domestic experiences, therefore the law should encompass both Chinese and relevant foreign legislation according to China’s concrete conditions. The following contents should not be neglected: First, urban and rural real estate markets and housing security must be coordinated and normalized. At present, society has entered a period of urbanization, and more than 50 percent of the global population lives in cities. In the next twenty years, in China, several hundred million rural inhabitants will move to the cities; the movement of such a large scale and such a large population is unprecedented. New legislation must be mindful of this Chinese characteristic and must guarantee that farmers’ and other rural populations’ legal human rights, property rights, and democratic rights are protected according to the constitution and relevant laws. In 2010, the CCP Central Committee Document No. 1 stipulated that “rural homesteads and land left over after the village reorganizes are still the farmers’ collective property.” According to the constitution (宪法 xianfa) and the “Land Administration Law” (土地管理法 tudi guanlifa), the villager’s ownership of the respective village’s collective land is equal to the government’s ownership of government property, and no one can take away the farmers’ right to the land, either through forced enclosure, relocation, waste of manpower and money, or harm to farmer’s benefits. Moreover, the rural and urban populations should be treated equally in their right to ownership. Second, local government’s “land financing” should be legally abolished. A large number of cases showed that some local officials regarded development using land as a way to stimulate the economy, as a way to change its appearance, as a display to promote an image and record merits to pursue achievements, but in essence it was to raise land values and increase housing prices, harming the public interest in order to seek individual fame and fortune and actually making official-businessman deals in the name of seeking profit for the people, which resulted in corruption of various kinds. After implementing the tax division system reform in 1990, leasing land became an important source of financial revenue for some local governments. Statistics indicated that, from 1987 to 2002, all levels of local government obtained net land income of more than RMB 1.42 trillion from farmers from nonagricultural construction alone. More than 50 percent of local governments depend on selling land-use rights. At present, the cost of leasing land is very low. Some local officials, in the tract development and city building movement, not only show off



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“achievements” to pave the way for “promotion,” but also enrich local governments to provide sources of funding for massive public consumption, but also obtain an abundance of individual advantages. However, it is precisely “land corruption” that has thrown many farmers into poverty. At present, because of the “rural enclosure movement,” 40 million people have become “landless peasants.”2 If the contradiction between officials and the people created by the land corruption cannot be quickly settled, the construction of a harmonious society will certainly be jeopardized. Third, real estate agents must be strictly normalized and supervised. At present, the real estate agents include some low-quality employees, who mostly participate in hoarding and speculation and have serious internal strife in varying degrees. For example, some of them have issued misleading advertisements, harmed client’s interests, and created an atmosphere of scarce housing resources, and so on, which added fuel to the fire in false high housing prices and thus created many bubbles and crises in the real estate market. Therefore, legislation should stipulate the registered capital for admittance as a real estate agent, work qualifications, size of staff, and so on to strengthen market supervision. Fourth, a system of scientific punishments must be established. The discipline inspection and law enforcement and judicial practices proved that land officials’ corruption was tied up with blindly seeking achievements. Since 2007, Guangdong Provincial discipline inspection and supervision departments investigated twenty-eight chiefs of city-and county-level land and resources bureaus. In the “investigations of the top ten high-risk government posts” released on www.people.com.cn, land and resources bureau chiefs topped the chart. With the added value of land resources, illegal activities in the land and resources departments are a common phenomenon in terms of land examination and approval, transactions, and development. Therefore, the “Law on Real Estate Management and Housing Security” should respectively stipulate legal liability for various illegal acts. Especially with respect to corruption that evades responsibility, the pattern of illegal acts must be enumerated, applicable punishment types should be stipulated correspondingly, and punishments must be determined for key subjects of legal liability concerning responsibility and illegal acts.

2 Shao Daosheng (邵道生), “ ‘Climate of Honest Land Management’ Must Be Implemented” (将”土地廉政之风”进行到底 jiang “tudi lianzheng zhi feng” jinxing daodi), Century Weekly, no. 20 (2006).

Part Four

ABOUT SOCIAL STRATA

chapter thirteen

The Status of Chinese Workers in 2010: Share the Fruits of Economic Development and Collective Labor Rights Qiao Jian I. Present Situation of the Working Class A. Employment Pressure Is Largely Alleviated In 2010, the Chinese economy was recovering strongly. In the first three quarters, the gross domestic product (GDP) was RMB 26.9 trillion, calculated according to the purchasing price parity, grew 10.6 percent over the previous year, and by 2.5 percent over 2009.1 Under the strong economic impetus, employment pressure was largely alleviated, and work status remained stable. From January to September, in the cities there were 9,310,000 newly employed people, which achieved 103 percent of the annual goal of 9 million people; 4.4 million laid-off workers obtained re-employment, which achieved 88 percent of the annual goal of 5 million people; 1.26 million people who had difficulty gaining employment obtained employment, which achieved 126 percent of the annual goal of 1 million people. By the end of the third quarter, there were 9.05 million registered as unemployed in the cities, a decline of 60,000 people over the end of the second quarter and a decline of 100,000 people over the previous year; the urban registered unemployment rate was 4.1 percent, a decline of 0.1 percent over the end of the second quarter and of 0.2 percent over the previous year.2 According to market information that monitors China’s human resources, statistical analysis of the market supply and demand information of public employment service organizations in 109 cities, in the third quarter of 2010 in general the labor supply was still larger than 1 See the press conference of the State Council Information Office introducing economic operations in the first three quarters of 2010, www.xinhuanet.com, October 21, 2010. 2 See the press conference of the Ministry of Human Resources and Social Security in the third quarter of 2010, www.people.com.cn, October 22, 2010.

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demand. Although they were lower than in the previous quarter, personnel demand and the number of job-seekers grew over 2009, of which the demand population and number of job-seekers, respectively, increased 1.14 million and 750,000 people over 2009, and respectively grew 21.8 percent and 13.1 percent, so enterprise demand obviously grew. In different industries, enterprise demand concentrated in manufacturing, wholesale and retail, lodging and catering, resident services and other service industries, leasing and commercial services, and construction. Compared with the second quarter, personnel demand grew in manufacturing, resident services and other service industries, and leasing and commercial services, and it decreased slightly in wholesale and retail and lodging and catering industries; compared with that in 2009, the personnel demand of various industries grew.3 B. Growth of Employee Income, Labor Disputes Decrease In the beginning of 2010, various provinces readjusted the minimum wage, which was frozen in 2009. By the end of September, a total of 30 provinces readjusted the standard. The highest growth rate in the monthly minimum wage was on average 24 percent, and seven provinces experimented with a minimum wage and price linkage mechanism. At present, the highest minimum monthly wage in the thirty-one provinces was on average RMB 870. The government increased the strength of enterprise wage payment security work, distributed the notice on further solving the problem about enterprises’ arrears of peasant laborer wages, and organized a supervision group to go to some areas to supervise whether enterprises paid staff wages or not, and thus payment of peasant laborer wages was basically safeguarded. The All-China Federation of Trade Unions even suggested that the crime of “back pay” be written into criminal law so as to investigate the legal responsibility for back pay.4 In the first three quarters, urban family’s average gross income per person was RMB 15,756. Among them, the wage income grew 10.1 percent. Average cash income per rural resident was RMB 4,869, in which the wage income grew 18.7 percent.5 3 See the analysis on market supply and demand of public employment service organizations in some cities in the third quarter of 2010, www.mohrss.gov.cn, October 20, 2010. 4 Jiang Xuan (江旋), “All-China Federation of Trade Unions Suggested Writing ‘Back Pay Crime’ into the Criminal Law,” National Business Daily, March 10, 2010. 5 The press conference of the State Council Information Office introducing the economic operation in the first three quarters of 2010, www.xinhuanet.com, October 21, 2010.



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Under the background of economic resurgence and improvement in employment, cases of labor disputes that began legal proceedings decreased in number over 2009. In 2009, all levels of labor dispute arbitration institutions registered and accepted a total of 684,400 cases of labor disputes; involved 1,016,900 workers, in which there were 13,800 cases of collective labor disputes; and involved 299,600 workers. In the first three quarters of 2010, all levels of labor dispute arbitration institutions registered and accepted a total of 443,100 cases of labor disputes, a decline of 14.62 percent over the previous year, in which there were 6,000 cases of collective labor disputes.6 In view of the present situation, in which labor dispute cases have a low mediation rate in some areas and involve lawsuits and complaint letters and visits, departments of human resources and social security increased their labor personnel dispute mediation and arbitration work, strengthened the construction of an arbitration institution, and setup a provincial-level labor personnel dispute arbitration committee. They also simultaneously established multilevel mediation organizations, established an attitude of “prevention first,” achieved internal management and work liaison within the mediation committee, which has created conditions for orderly development of labor dispute prevention and mediation work. In addition, the Supreme People’s Court issued “Interpretation (III) of Several Issues on the Application of Law in the Trial of Labor Dispute Cases” (关于审理 劳动争议案件适用法律若干问题的解释 (三) guanyu shenli laodong zhengyi anjian shiyong falǜ ruogan wenti de jieshi) in September 2010, which defined the scope of social insurance disputes and asked the courts to accept disputes initiated by enterprise restructuring, in which the distribution of overtime pay became more scientific and rational.7

6 Combining the statistical data at the press conference of the Ministry of Human Resources and Social Security in the first, second and third quarter 2010, www.people .com.cn. 7 See Interpretation (III) of the Supreme People’s Court of Several Issues on the Application of Law in the Trial of Labor Dispute Cases, at www.lawinfochina.com/NetLaw/ display.aspx?db=law&sen=rLdDdW4drhdDdWfdrhdGdW4d/hd5dWPd9DdydWnd/hdwdWud/Ld6dWfd9dd6dWud/ddTdWud9Dd+&Id=8256&SearchKeyword=关于审理劳动争 议案件适用法律若干问题的解释&SearchCKeyword=关于审理劳动争议案件适用 法律若干问题的解释&/.

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C. Social Security Progress is Smooth, and Legal System is Further Realized Social security benefits from strong economic growth can be ­characterized as follows: first, the general situation of payment of coverage expansion is good. By the end of September 2010, the population with coverage for basic endowment insurance, basic medical, unemployment, injury-on-the-job, and maternity insurance was respectively RMB 250.25 million, RMB 420.72 million, RMB 131.47 million, RMB 158.71 million and RMB 119.73 million, which respectively increased by 14.75 million, 19.25 million, 4.31 million, 9.75 million and 10.97 million people over that at the end of 2009. By the end of September, insured peasant laborers who participated in basic endowment insurance and basic medical, unemployment, and industrial injury insurance numbered, respectively, 30.93 million, 45.73 million, 18.54 million, and 61.31 million, an increase of 4.47 million, 2.38 million, 2.11 million, and 5.44 million people over that at the end of 2009. From January to September, the gross income of the “five social” insurance fund was RMB 1.3 trillion, which increased RMB 194.59 billion from that in 2009, an increase of 17.8 percent; gross expenditure was RMB 1.064 trillion, an increase of RMB 178.87 billion over that in 2009, an increase of 20.2 percent.8 Second, staff ’s various social security treatments were timely paid in full amount. Basic pension paid for enterprise retired personnel was actually RMB 692.38 billion, which increased RMB 110.92 billion from that in 2009, grew 19.1 percent, and raised basic pension for enterprise retirees continuously for six years. Medical industrial injury and maternity insurances paid was RMB 266.43 billion, which increased RMB 58.07 billion in 2009, and grew 27.9 percent. By the end of September, in total 2.11 million people drew from unemployment benefits, which decreased by 240,000 people from that at the end of 2009; unemployment insurance fund disbursed RMB 24.19 billion, which increased RMB 2.28 billion from that in 2009, and grew 10.4 percent. To stabilize employment in 2010 the social security support policy of 五缓四减三补 (wu huan, si jian, san bu) for enterprises was still used.9 8 See the press conference of the Ministry of Human Resources and Social Security in the third quarter of 2010, www.people.com.cn, October 22, 2010. 9 “Postponed payment of five kinds of social insurance premium” refers to enterprises in difficulty that are incapable to pay the social insurance premium temporarily are allowed to postpone the payment of five social insurance premiums in retirement, medical service, unemployment, industrial injury and child-bearing under certain conditions.



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Third, the social insurance legal system has been further realized. The “Social Insurance Law” (社会保险法 shehui baoxian fa) was approved in October 2010. The implementation of transfer and connection of endowment insurance relations were smooth overall and provincial-level overall planning of endowment insurance was continuously consolidated. The transfer and connection and settlement between different cities in medical insurance relations made important progress, and 86.7 percent of overall planning areas may be able to immediately settle the majority of hospitalization expenses. Insured work by retirees from bankrupt state-owned enterprises advanced, and 6.28 million retirees from bankrupt state-owned enterprises that were not originally insured were combined with medical insurance for employees, which overall solved the insurance problem of nearly 2 million retirees from other bankrupt enterprises and staff at difficult enterprises. The work of investigating the situation of “industrial injury of former personnel” comprehensively began, municipal-level overall planning for industrial injury insurance advanced further, and at present, 67 percent of prefectures and cities have realized municipal-level overall planning. The issuance of social security cards was smooth, and 85 million cards were provided by the end of September. In total, 40.91 million enterprise retirees were integrated into community management, which comprised 75.6 percent of all enterprise retirees, an increase of 0.4 percent over the end of 2009. D. Occupational Safety From January to October 2010, countrywide occupational safety accidents and the death toll, respectively, declined 5.18 percent and 9.4 percent. Safety conditions in coal mining and other key industries continuously improved, and the mortality rate in 1 million tons of coal mined, in ten thousand vehicles of road traffic, in accidents of industry and mining per 100,000 jobholders and in accidents per hundred million RMB GDP further reduced, and most local conditions of safety in production was quite stable.

“Reduction of four kinds of social insurance premium rate” refers to reduction of four kinds of social insurance premium rate except endowment insurance at specific stages. “Three subsidies” refers to paying social insurance subsidy and post subsidy using unemployment insurance fund for enterprises in difficulty in stabilizing posts, as well as to give subsidy using special employment fund for enterprises in difficulty to launch on-the-job training for employees.

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Taking the coal mine as an example, from January to October, under the large growth in coal output from the previous year, countrywide coal mines altogether had 1,117 accidents, killing 2,048 people, declines of 16.8 percent and 2.6 percent over the previous year. Serious gas accidents declined by one over the previous year, and number of deaths declined by 99 people, a reduction of 33.3 percent and 53.8 percent, respectively. But major accidents still occurred frequently. From January to June, 45 major accidents occurred, killing more than 10 people, and 764 people were killed or missing, an increase of 12 accidents and 266 people over the previous year, rises of 36.4 percent and 53.4 percent, ­respectively.10 Accidents occurred one after another, which had a negative social impact, including the Xiangtan of Hunan Lisheng coal mine “January 5” underground mining fire, the Inner Mongolian Shenhua Group Luotuo coal mine “March 1” water percolation, the Shanxi Huajin Coking Coal Company Wangjialing “March 28” water percolation, and the Henan Zhongping Energy and Chemical Group Pingyu Coal Electricity Company Number Four Mine “October 16” gas explosion. In occupational diseases, the Ministry of Health disclosed that more than thirty industries suffered from occupational diseases in varying degrees, and it is estimated that 200 million workers suffered from occupational diseases in varying degrees in the labor process, in which China has entered a period of high occupational contradictions.11 Taking the situation in 2009 as an example, occupational disease cases reported increased 31.9 percent over the previous year.12 Therefore, in July 2010, the “Notice by the State Council on Further Strengthening Enterprise Safety in Production” (国务院关于进一步加 强企业安全生产工作的通知 guowuyuan guanyu jinyibu jiaqiang qiye anquan shengchan gongzuo de tongzhi) was issued. It included ten institutional innovations, such as the system for major hidden danger treatment and major accident investigation supervision, a rotating leading cadre on-site leading worker system, an advanced appropriate technical equipment compulsory implementation system, safety in production long-term 10 The State Administration on Work Safety held a press conference on production safety for the first half of the year, online at the website of the State Administration of Work Safety, July 23, 2010. 11  Xie Lunding (谢伦丁), “China Enters a Period of High Frequency of Occupational Illness.” Chen Zhu (陈竺) said that 200 million workers are harmed, www.xinhuanet.com, November 9, 2010. 12 Zheng Li (郑莉) It is measured and calculated that 57,000 miners suffer from pneumoconiosis every year, Worker’s Daily, November 10, 2010.



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investment system, enterprise safety in production credit linkage system, emergency rescue base construction system, on-site emergency evaluation system, high-risk enterprise safety in production standard approval system, system of compensation for dead staff in industrial accidents, and enterprise accountable person occupational qualification veto system. E. Main Characteristics of Migrant Workers13 In recent years, the government and society have increasingly paid greater attention to migrant workers as strikes surged in the summer of 2010. “Migrant workers” refers to members of the agricultural household register population born after the 1980s, that is, above the age of sixteen years old, especially nonagricultural employment in other cities. According to the National Bureau of Statistics, in 2009 there were 230 million peasant laborers, 150 million migrant laborers, of which those from sixteen to thirty years old comprised 61.6 percent.14 It is calculated from this that, in 2009 migrant workers numbered about 89 million, and they comprised over 60 percent of all migrant workers and played an increasingly strong role in economic and social development. On average they are twentythree years old and had their first migrant job right after graduation from junior middle school. Nearly 80 percent of them are unmarried; the level of education and vocational skill training were greater than those of the traditional peasant laborer; the proportion employed increased in manufacturing and services and decreased in construction; their growth experience started to be similar to that of urban contemporaries. Migrant workers are characterized by four main things, namely modern, developmental, dual-nature, and marginal. Modern: The migrant worker is at a new stage of system reform and social transformation, and a gradually materialistic lifestyle causes the level of their needs to shift from survival to development; they increasingly regard going to a city to work as a way of seeking modernity, pay great attention not only to wages and treatments but also their own skill enhancement and rights; expertly using computers and mobile phones enables them to rapidly accept information and knowledge, forming multiple values and new thinking, so that they can become like urbanites.

13 This section is mainly taken from “Task Group of the All-China Federation of Trade Unions: Research Report on the Migrant Worker Problem,” Workers’ Daily, June 21, 2010. 14 National Bureau of Statistics, “2009 Investigative Report on Peasant Laborer Monitoring,” March 19, 2010.

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Developmental: The migrant workers are mostly twenty years old, and their way of thinking is at the stage of unceasing development and change, therefore their ideas on work are also unceasingly developing and changing, and there are still many uncertainties; the overwhelming majority of them are unmarried, or on the verge of marriage, and having children and their children’s education, and so on, are all predictable or unpredictable life experiences and changes; most of them have only been out of school of three to five years, although they are full of enthusiasm and idealism, they are only at the beginning stage of their professional experience, and there are big variables in their career development. Dual-nature: They are in the process of changing from rural resident to urban resident and simultaneously have dual statuses of worker and farmer. In making a living, they live by their work, take seriously labor relations and working conditions, expect equity between work and payment for labor, pay attention to working condition improvements and wage increases, and have obvious worker characteristics; but under the limits of the dual system, their system status is still farmer, and they also maintain the characteristics of farmers. Marginal: The migrant workers live in the city, and their thinking is more sophisticated than that of their parents, their tolerance level is lower than that of their parents, and they are not familiar with agricultural production, so they are in a marginal position in traditional folk society. At the same time, being limited by the urban and rural dual structure and by the level of their own culture and skill, it is difficult for them to obtain stable high-income work in the city and to truly integrate into urban mainstream society, and they are at the urban bottom, therefore, they are marginalized in both urban and rural areas. Migrant workers obviously have a different mentality than traditional peasant laborers. The differences are can be listed as the “six changes”: the motive behind migrant employment has changed from “improving life” to “tasting life, pursuing dream,” and money is one of their goals, but they are more eager for success; the demand to the right to work has changed from purely requesting the realization of the basic right to work to pursuing respectable work and development opportunities; they have changed from being blue-collar workers to white-collar workers, and their work status has changed from half-worker and half-farmer to nonagricultural employment; they regard working in the city as a traveler passing through and they retain their land in the village; their consciousness of rights continues to strengthen, and their voice has changed from passive expression to positive advocacy and collective complaints, they have developed



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stronger consciousness of equality and rights protection; in their pursuit of life, they have changed from neglect to expecting to meet spiritual and emotion life demands. II. Suicides in Enterprises Compel Adjustment in the Low-Cost Economic Growth Pattern The first event in labor relations that occurred in 2010 was the labor protests parked by the suicide of a Foxconn employee and strikes at Honda Auto Parts in Nanhai, Guangdong. A. Foxconn Employee Suicide From January to August 2010, the world’s biggest subcontractor enterprise Foxconn Technology Group had 17 staff suicides one after another. This pitiful case, called “chain jumping” (连环跳 lian huan tiao) bymedia, resulted in the death of thirteen and injury of four others, which received widespread attention. On May 27, the central ministries and commissions joint survey group organized by the Ministry of Human Resources and Social Security, All-China Federation of Trade Unions, and the Ministry of Public Security launched an investigation of Foxconn. In civil society, from media to social groups, from intellectuals to ordinary people—all reflected on the case in their respective ways. This is similar to 1993, when, after the fire disaster at the Factory “November 19,” in Zhili, Shenzhen, society again paid strong attention to a labor case. Although the central government in as early as late May delivered an official keynote, in which it stated that “the enterprise has administrative problems, and migrant workers are emotional fragile, and the coordinated system of labor relations between the government and the trade union is unreasonable,” to the Foxconn event, up to now, the central survey group has not yet published the conclusions of their investigation. According to a university’s investigative report, Foxconn had the following management problems: first, Foxconn’s factories in various areas illegally employed vocational technical school student workers.15 ­Foxconn used the students as cheap labor, using the provision authorizing them

15 In University Foxconn investigation group of Mainland, Taiwan and Hong Kong: “Overall Report of Mainland, Taiwan and Hong Kong Universities on Investigation and Studies to Foxconn”.

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not to sign a labor contract with the student workers and not to pay for their social security and forced student workers to do overtime, which encroached upon the students’ rights. Second, the Foxconn’s most remarkable characteristic of quasi-military management model was “dictatorialmanagement,” as opposed to “human-oriented management,” and its “highly effective” production was at the expense of the workers, which included extremely long working hours and enormous labor intensity; the management principle was “obedience, obedience, passive obedience!,” leading to a situation in which “people are regarded as the machine, life is meaningless.” Third, on the surface, Foxconn provided room and board, services, and entertainment facilities for workers, but actually their down time and living spaces were integrated into the factory management system. To a large extent, workers’ living space was merely just an extension of the workshop. Fourth, in occupational safety, the working conditions in workshops were bad, and the hidden dangers were so numerous that injury on the job occurred frequently. In addition, the problems of false reports of injury on the job and non-standardized injuries were also serious. Fifth, nearly 90 percent of workers said that they did not participate in a trade union, 40 percent workers said that the factory did not have a trade union, and the majority of workers did not understand the role of a trade union. In supervision of the enterprise’s legitimate operations, the trade union played hardly any positive role. In addition, Foxconn declared that it would increase salaries by 30 percent starting in June, and after October ordinary production workers’ basic salary would be raised to RMB 2,000, an increase of 100 percent. But in workers’ real income, the actual salary increase was limited, and uneven, such that declaring a salary increase was likely a public relations strategy by Foxconn to deal with the crisis. Labor psychologists [C.R.] Walker and [R.H.] Guest, in as early as 1952, discovered that production line staff were mostly unsatisfied with repetitive nature of their work. Repetitive work can lead to secretion of too much adrenalin, and the density of potassium ion in the blood may also be enhanced, which is why workers are anxious, depressed, and unhealthy and sometimes collapse.16 This explains some of the psychological reasons people commit suicide, but it is difficult for us to reach a conclusion

16 Michael Argyle, The Social Psychology of Work (Taiwan: Juliu Book Company, 1995), p. 319 (in Chinese).



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that the events at Foxconn were merely accidental; its underlying causes should be found in China’s industrialization and urbanization. B. Nanhai Honda Auto Strike and Its Influence The strike at the Nanhai Honda Auto [Parts Manufacturing Company] was similar to other strikes in China, namely it started because of the workers’ excessively low wage. “Wages are so low, so we do not work!” On the morning of May 17, under two sponsors, more than 300 workers participated in the strike. Dozens of representatives elected by workers made a total of 108 written demands. By May 21, after the capital was dealing with it courteously but without sincerity, all 1,800 workers at the factory joined the strike. On May 22, the company dismissed strike leader and also continued to take photos of some strikers to threaten other strikers. Workers wore their official hats and masks while waiting for punishment. In order to make the strike effective, all the workers congregated at the company’s basketball court and collectively discussed the details of the organization, strategy, and slogans for the strike. Important decisions were communicated through “written notes” that were passed around the workers. Thus, the entire production line at the company stopped, and the other three Honda companies also stopped work completely. At this time, domestic and overseas journalists flocked there; the Nanhai Honda Auto strike event was revealed to the public. On May 24, the company first gave way, but agreed to increase salaries by only RMB 55. This made workers even angrier, and they continued to strike. On May 26, the company gave way a second time and agreed to increase trainees’ wages and cost-of-living allowance by a total of RMB 477 and to increase regular staffs’ salary by RMB 340–355. However, the workers’ common goal was to have salary increases of RMB 800, and the proposal was rejected once more. On May 27, after collective discussions, workers drew up the “Workers’ Requirements” (工人要求 gongren yaoqiu): first, the basic wage had to be increased by RMB 800 and increase annually by at least 15 percent; second, additions had to be made to the subsidy for working age by RMB 100 every year, with 10 years as the maximum; third, workers dismissed because of strikes must be allowed to go back to work, the company had to guarantee not to retaliate against the strikers; fourth, strike wages had to be paid; fifth, the trade union had to be permitted, and the trade union president and related staff had to be elected. On June 3, the strikers’ temporary negotiation delegation published an “Open Letter from the Foshan Honda Striker Negotiation Delegation to All Workers

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and All Circles” (佛山本田罢工工人谈判代表团致全体工人和社会 各界的公开信 foshan bentian bagong gongren tanpan daibiaotuan zhi quanti gongren he shehui gejie de gongkaixin), which included an appeal to staffs, demands of the capital, condemnation of the trade union, and hope for society. Strikers invited labor law scholar Chang Kai (常凯) to be a consultant in workers’ negotiations. On June 4, after six hours of negotiations, the staff representatives, the Honda bosses, and the government finally reached an agreement. Honda confirmed that it would raise regular staff ’s lowest monthly wage from RMB 1,544 to RMB 1,910, an increase of 24 percent. On June 7, Nanhai Honda Auto resumed production. The Nanhai Honda Auto strike initiated a new pattern of worker resistance and led to strikes for higher wages in various areas. From April to June, more than thirty strikes were reported by domestic and overseas media. The strikes with the greatest impact included: April 24, Mt. Wuyi bamboo raft worker strike for having “rebates” (返利款 fan li kuan) for bamboo raft; May 14, Pingmian Textile Group, Pingdingshan, Henan, worker strike and blocking the factory gate; May 28, Lanzhou vinyl on factory worker strike; June 3–10, Japan-invested Shanxi Xiongdi Sewing Machine Company staff strike for higher salaries and better treatment; June 5, Shenzhen Meilu Electron strike of more than 10,000 workers; June 5, Tieshu Group, Suizhou, Hubei, nearly 400 workers surrounded the workshop to protest; June 6–7, Yacheng Electrical Factory, Huizhou, Guangdong, more than 2,000 workers stage a collective strike; June 7, Taiwan Businessman-Invested Simaibo Sports Equipment, Jiujiang, Jiangxi, strike by 7,000 workers; June 9, Taiwan Businessman-Invested Qimei Electron Shanghai Factory, strike by several hundred workers; and June 30, Japan-Invested Zhuhai Sanmei Motor Company, Tianjin, strike by 3,000 workers. For example, in July 2010, the Dalian development zone experienced a strike for the third time since the zone was established. Nearly 70,000 workers from 73 enterprises participated, in which 48 were Japan-invested enterprises. The scale of this strike was big and it lasted a long time, but the main demand was still wages and treatment of workers. The development zone increased wages by about RMB 45 each year, but this increase did not match economic development. Migrant workers were more sensitive to social justice, had strong consciousness of their rights, and were influenced by the Nanhai Honda Auto strike and the Foxconn suicides; workers communicated using mobile phones and social networks, and finally the strike upsurge affected one after another in different enterprises, and the enterprises’ down time went from half a day to fourteen



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days. It can be said that, in the above strikes, the basic-unit trade union chairman did not play a role, and the government’s wage guidance not only lagged but was divorced from reality.17 It is reported that, since 2010, there have been more than 4,000 general collective disputes of between 11 and 49 people, involving 118,000 people; there were 216 major collective disputes of 50 or more people, involving 29,000 workers, and an average 137 people were involved in each case. Major collective dispute cases were generally handled through government mediation. The subject of the collective disputes included payment for labor and overtime, which comprised 64.4 percent; and economic considerations, which comprised 25 percent. Collective disputes mainly affected labor-intensive enterprises such as textiles, electronics, and construction, the community was mainly peasant laborers and female workers, the collective dispute mainly occurred in Guangdong, which comprised 49.1 percent of total cases, involving 60 percent of the population. Because workers thought that collective labor disputes were more convenient and could advocate for their rights and interests, collective disputes increased. Moreover, the organizations for collective disputes grew larger, the time was longer, and they were organized and purposeful. At present, three kinds of enterprises that employ labor find it easy to initiate collective disputes: first, service dispatch; second, state-owned enterprises in which the restructuring is difficult, including monopolistic state-owned enterprises in electrical power and finance; 30,000 labor contracts were terminated under negotiation in 2010, and it is difficult for such a large-scale reduction in staff to proceed without disputes, and the court did not generally accept it, workers were unable to advocate for their rights and interests legally; third, institutions often have disputes regarding the personnel system and merit pay system reform; there are many different demands, and it is difficult to deal with them.18 The strike upsurge in the first month of the summer in 2010 once again caused labor relations and labor problems to become a major social problem to which the government and the entire society paid attention after the “Labor Contract Law” (劳动合同法 laodong hetong fa) was

17 Lan Fang (兰方): “Dalian Strike Upsurge in May Affected 73 enterprises,” www.caing .com, September 19, 2010. 18 Quoted from the Ministry of Human Resources and Social Security Mediation and Arbitration Management Department director-general Song Juan’s (宋娟) subject report at a seminar on “Chinese Collective Labor Dispute and Its Influence on Enterprise Labor Relations,” September 18, 2010.

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­ romulgated in 2007 and it forced us to reconsider the economic growth p pattern behind it. Since reform and opening up, the main feature of Chinese economic growth has been based on the comparative superiority of low-cost labor, which regarded peasant laborers as the means for developing exportoriented industrialization, participating in economic globalization, and forming its own international division. Therefore, economic development usually comes at the expense of worker benefits, and growth in wages lags the rapid economic growth for a long time. Because there are laws but little supervision of them and weak law enforcement, enterprises encroached upon workers’ wage rights and interests sometimes. The wage collective negotiation system was absent and workers’ collective voice was weak, therefore the relationship between fairness and efficiency was always unbalanced. Therefore, at present the high frequency of strikes and worker resistance mainly reflect that the laborer stratum with migrant workers as the main body refused to take “the wage floor” (minimum wage standard) as the realistic standard of payment for labor and demanded to participate in joint wage decision-making. As early as 2004, the southern exportprocessing areas experienced a “labor shortage”—this was actually the way peasant laborers expressed their spontaneous dissatisfaction with the enterprises’ labor cost. They “voted with their feet” in a situation in which supply exceeded demand in the labor market. After experiencing the impact of the financial crisis in 2009, they started to express their demand for benefits through group resistance, a method that has spread widely. Further, it might mean that it is imperative for the government to adjust the low-cost economic growth pattern and industrialization route, which has long been based on squeezing cheap labor. However, from the perspective of the government’s economic and labor policy, adjusting this economic growth pattern is also logical. China declared that it would carry out human-oriented “scientific development,” the purpose of formulating the Twelfth Five-Year Plan was “inclusive growth,” building harmonious labor relations, enabling workers to live a “decent” life, and sharing the achievements of reform and development. Realistically, in a situation in which the international market is still stagnant in the post-crisis period, China cannot base its economic growth on export-oriented industrialization, but must turn to developing domestic consumer demand, in which raising workers’ wages is imperative. But the reality is that the proportion of income from the payment for labor in GDP fell continuously for twenty-two years, declining from 56 percent



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in 1995 to about 41 percent in 2005;19 the government pursued GDP targets excessively and carried out big projects so that public resources rushed to state-owned monopoly enterprises in abundance and allowed it to take monopoly profits from the public, but the small and medium-size enterprises could only obtain limited resources, which had an adverse effect on the realization of benefits for labor and management. All these caused the polarization of income distribution and an unbalanced economic structure, which was deleterious to upgrading and renewing industrial structure, further laid a basis for social conflict and resistance, and damaged public security and social stability. Therefore, whether from the perspective of promoting sustainable healthy economic development or of maintaining workers’ vital interests, the government should give up the low-cost economic growth pattern. Therefore, issuing the “Enterprise Wage Regulations” (企业工资条例 qiye gongzi tiaoli) for enforcement was an important part of normalizing wage distributions, reducing income polarization, and maintaining workers’ wage rights and interests. The “Enterprise Wage Regulations” included how to define the meaning and extension of wages; determine the implementation standard of equal pay for equal work; normalize the payment of overtime wages; strengthen the wage payment security system and fundamentally cease wage arrears; normalize labor quota management, the minimum wage system, the government’s responsibility in the distribution of enterprise wages, the state-owned enterprises’ wage distribution and administrative officers’ salary, and so on, and its core was to regard the collective wage negotiation mechanism as the basic method of enterprise wage distribution. In Guangdong, the attempt to establish this mechanism encountered intense resistance and opposition among employers.20 However, with the global economic downturn, pushing collective wage negotiations without a doubt would shrink the labor market and employment, which would be adverse for maintaining workers’ core

19  Li Jingrui (李静睿), “All-China Federation of Trade Unions Officials Said That the Proportion of Payment for Labor in GDP Dropped Continuously for 22 Years,” Beijing News, May 12, 2010. 20 Because many Hong Kong chambers of commerce worried that the wage standard had to be followed, such that the cost rises, and declared its opposition to the collective wage negotiation and dispute handling in a third draft of the “Regulations of Guangdong Province on Enterprise Democratic Management,” and forced the Guangdong Provincial Standing Committee of the People’s Congress director conference to postpone submission of this draft for consideration at the 21st conference of the Provincial Standing Committee of the People’s Congress held on September 27–29, 2010.

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benefits and social stability; therefore, they were not active in carrying out collective wage negotiation and hoped to find another mechanism for making enterprise wage decisions. The Ministry of Human Resources and Social Security determined to complete the draft work of the “Enterprise Wage Regulations (Draft)” (企业工资条例 (草案) qiye gongzi tiaoli cao’an) at the end of 2010, and the State Council would choose the time for enforcement to begin in 2011. III. Problems of Trade Unions and System Reform As part of carrying out collective wage negotiations, developing the autonomy and independence of trade unions is especially important. But, in the face of numerous conflicts between employers and employees in 2010, enterprise or local trade unions could rarely represent the employees’ benefits and handle employee matters. When enterprises are faced with strikes, the trade union cannot represent the staff in expressing the staffs’ reasonable demands for rights and interests to the enterprise and related parties according to the requirements of the “Trade Union Law” (工会法 gonghui fa). In the Foxconn series of jumps from high rises, the enterprise union did not act throughout as the staffs’ spokesman; in the strikes at Nanhai Honda Auto, the trade union unexpectedly had conflicts with strike workers so workers proposed a reorganization of union demands.21 In routine work, most enterprise unions cooperated more with the enterprise to promote production and operations or organized recreational activities, but did not dare to initiate offering collective negotiation, so a situation developed in which workers either “dared not to discuss” or “could not discuss.” To complete the higher-level tasks given by business owners, many collective contracts were devoid of content, copied verbatim from the law, or even falsified, so that this coordinated mechanism for important labor relations became a mere formality and was unable to achieve the goal of adjusting the income distribution structure and

21 For example, Guangdong Province general trade union chairman Deng Weilong (邓维龙) pointed out that the conflict between the employer and the employee is intensified, and workers’ right cannot be safeguarded, because all are tied up with nominal enterprise union. In worker’s minds, many enterprise unions are simply continuation of boss’ organizations. When conflicts worsen between the employer and the employee, the trade union represents the boss’s benefit (Zhang Xiaolei et al., “The Majority of Enterprise Union Chairman Were Not Democratically Elected,” Yangcheng Evening News, July 3, 2010).



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­ romoting joint building and sharing of staff and enterprise.22 The reap sons are mainly as follows. A. Trade Union Structure from Top to Bottom has Blurred the Nature of Enterprise Unions The “Trade Union Law” stipulates that “the trade union is the mass organization of the working class where staffs unite voluntarily.” But in practice, because it uses mobilization methods of political action and tends to depend on the boss to be set up, the nature of enterprise unions’ organization has been blurred, and it is difficult to work for workers’ benefit. Another consequence brought by this pattern of trade union establishment is that trade union membership has become indifferent, and the majority of enterprise staff does not feel like a member of the trade union, which shows that to a certain extent this kind of enterprise union cannot represent workers’ benefit. B. Enterprise Union Lacks Independence and is Economically Dependent As for organizational independence, trade unions in industrialized market countries generally do not set up trade unions in the workplace but at the industry and trade level. But China mainly establishes trade unions at the enterprise level, considering that, first, “trade union construction promotes party construction” to strengthen social control and the party’s social class infrastructure; second, this is advantageous for outlay collection and payment. Generally speaking, enterprise unions are dependent on the enterprise and lack independence. The Chinese trade union is very strong in this regard. This is manifested that, first, midlevel and high-level administrators hold concurrent posts as trade union chairmen, and even human resource managers hold a post in the union, which will inevitably lead to confusion of roles and responsibilities. Second, trade unions are economically dependent on their employers. Wages, rewards, and subsidies for full-time workers at enterprise unions are paid by their work unit, and social security and welfare are equal to that of enterprise’s staff. This has caused full-time enterprise union cadres not to be independent within the economy and are dependent on its employer.23 22 Li Guosheng (李国生), “ ‘False’ Collective Contract,” China Wealth, no. 8 (2010). 23 Task Group of China Institute of Industrial Relations, “The Problems of Non-Public Ownership Enterprise Existence and the Countermeasure Proposals,” Theoretical Trends, July 20, 2010.

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C. Present Trade Union System Barriers That Restrict Enterprise Unions from Functioning Effectively First, the working pattern of Chinese trade unions has a serious problem, which is that government administration is not separate from social management. The government controls trade union work content and trade union organization, although this is advantageous to achieve the right protection goal, which unifies dual maintenances of overall benefit and concrete benefit, this has caused trade unions to have an obvious affinity for the administration. For instance, the trade union participates in legislative work on the three labor laws: local trade union cadres have the status and treatment of officials; trade union chairmen in some areas are given the deputy post at the same level to hold a post as a Party Standing Committee member and concurrently a post as a local people’s congress director; the increase in income of trade union funds in recent years benefited from intervention of state power through tax collection to a great extent. However, as a result of neglecting the inherent democratization and mass organization of trade unions and members’ status and rights in trade union organization, the trade union organizations are not unified, and basic-unit trade union organizations in particular cannot represent and maintain the rights and interests of employees. Next, paying great attention to the enterprise union but neglecting industrial and trade union development is sacrificing substance for shadows. It is well known that in a market economy, the industrial and trade union can best arouse an awareness of laborer unity, weaken laborer strength, and has the strongest independent trade union organization methods, and the industry-level collective negotiation and tripartite mechanism are also the most appropriate systems for determining labor standards and coordinating labor relations. But for various reasons, nonpublic ownership enterprises led the development of trade unions that paid attention to the enterprise union but neglected the industrial union. Although the “Labor Contract Law” stipulated explicitly that, in the region below the county level, the construction, mining, and catering trade can conclude trade or regional collective contracts. The All-China Federation of Trade Unions also released corresponding guiding opinions, but the key work did not switch to the industrial trade union; the trade union reform still shouldered heavy responsibilities. If the industrial union is not reformed and does not fulfill its functions, the heavy responsibility of protecting trade union rights can only be placed on the enterprise union, even though it is incompetent.



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Third, the legislation cannot completely protect “laborers’ three rights and powers,” namely, the right to form and join in activities of a trade union, collective bargaining power, and collective dispute power, which this is why the collective negotiations and collective contract system became a mere formality in the past ten years. Safeguarding “laborers’ three rights and powers” is the cornerstone of the coordinated system for collective labor relations, which are a group of rights and cannot be separated. However, in reality, the pragmatic approach is to assert the right of trade union unification and establishment from top to bottom to form and join in the activity of a trade union, to repel collective dispute power based on the notion of harmonious labor relations, and to emphatically advance collective negotiations at the enterprise level based on this. Because such a mechanism is lacking, the collective negotiation mechanism did not really play its role in enterprises. In addition, the rights and interests of enterprise union cadres cannot be effectively protected in the laws and regulations and by higher organizations. In July 2010, at the fourth session of the fifteenth Executive Committee Conference of the All-China Federation of Trade Unions, All-China Federation of Trade Unions chairman Wang Zhaoguo (王兆国) proposed a work policy for the future that legally promotes enterprises to universally establish trade union organization and legally promotes enterprises to universally launch collective wage negotiations. These “two universals” can play the role that faces up to the problems of trade unions and impels trade union system reform. First, trade unions should seek their own “resources” and “methods” from their workforce to expand and implement direct elections. In July 2010, the Guangdong provincial government issued a document to “achieve a democratic election system for trade union chairman and trade union committee” and anticipated that the enterprise union can become a workers’ autonomous organization through a true democratic election system. We suggested starting with a revision of the “Trade Union Law,” adding a chapter regarding its rights specifically, and confirming that a member of congress is the authority for trade unions. Second, effective measures should be taken to gradually promote the separation of enterprise unions from enterprises. For example, trade union cadre professionalization should be improved so that it can be integrated with the direct democratic election of enterprise union members and the democratic supervision system to strengthen the intrinsic limitation of members to trade union cadres. In the division of trade union funds,

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retention of a proportion of basic-unit labor unions should be expanded, and experiments in which full-time enterprise union cadres’ wages and welfare are borne by the trade union fund should be launched to deepen the independence of trade unions. Restrictions on the qualifications of trade union chairman candidate in the “Measures for the Election of the Trade Union Chairman of an Enterprise (Draft)” (企业工会主席产 生办法 (试行) qiye gonghui zhuxi chansheng banfa (shixing)) must be fulfilled precisely.24 Third, trade union system reform should be advanced to create conditions for enterprise unions to play their role. With the deepening of the degree of marketability, awareness of workers’ rights and unity are unceasingly promoted, especially migrant workers as the main force of industrial workers. Trade unions should guide workers to effectively protect rights involved in the increasing promotion of workers’ rights and unity, which is also a turning point in trade union reform. For instance, a necessary pressure mechanism should be explored to protect collective bargaining power.25 Moreover, the increasingly vital roles of industrial and trade unions in coordinating labor relations and in determining labor standards should be played, protection of the rights to industrial and enterprise union coordination should be created, and simultaneously the enterprise union staff ’s enthusiasm should be protected. IV. Conclusions After being selected as the Time magazine Person of the Year in 2009, “Chinese workers” as a group was added to a billboard of “Global Business Power 100” selected by the well-known journal of finance and economics Wealth & Wisdom under the American Dow Jones Corporation in 2010. Wealth & Wisdom believed that many Chinese workers obtained what they hoped for in 2010: higher wages and better working conditions.26

24 See Measures for the Election of the Trade Union Chairman of an Enterprise (draft), at http://www.lawinfochina.com/NetLaw/display.aspx?db=law&sen=rLdDdW4drhdDdWfd rhdwdWndrdd5dWLd9DdxdWddrLdxdWudrLdGdWfdrdd5dWud/ddTdWud9Dd +&Id=7027&/. 25 See Wang Xiangqian (王向前), “China’s Strike Legislation Has No Time to Waste,” Labor and Social Security, no. 3 (2010); Chang Kai, “Legal Analysis of the Validity of Strikes,” Strategy & Management, no. 4 (2010). 26 Tan Liya (谭利娅), “ ‘Chinese worker’ as a Group Added to the Billboard of Global Business Power 100,” Yangcheng Evening News, October 28, 2010.



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But this kind of workers’ expectation was obtained through their strikes and resistance. In 2010, a paradox in the status of workers is that high frequency of strikes appeared when labor relations target data was good. Large-scale alleviation of employment pressure increases in wage levels, expansion of social security coverage, reduction in labor disputes, and improvement in occupational safety—none of these could prevent the upsurge in strikes in the summer. How can this unusual phenomenon be explained? In my opinion, it must be linked to the main body of Chinese industrial workers, changes in migrant workers’ demands, awareness of their rights, equality, especially unity, which caused them to not be satisfied with the lowest labor standard guaranteed in the law. Their demands shifted from basic rights to demanding benefits, sharing the fruits of economic growth, and striving for respectable work as the goal, and their demands were achieved mainly through independent collective action. From this perspective, the standard by which to judge the stability of labor relations has greatly changed. China’s labor relations have entered a more complicated and diversified development phase, and innovation of a coordinated mechanism is urgent.

chapter fourteen

The Current Rural Situation and Farmers in China Fan Ping In 2010, agricultural and rural development in China faced various traditional and nontraditional challenges. A series of big events in rural development and changes in the structure of farm groups were intrinsically connected, an increase in the consumer price index (CPI) led by agricultural products attracted the attention of the entire society to issues on agriculture, farmers, and rural areas, and some systems related to basic rural resource allocation and farmer’s vital interests were being adjusted, while others were being realized, and still others lagged in social development and caused social contradictions and conflict. This paper shows the changes and development trends for Chinese farmers based on data from all previous years, especially the classified data of the second national agricultural census plus big events in 2010. I. The Rural Situation Rural development in 2010 continued in the previous pattern, the government paid attention to issues on agriculture, farmer and rural areas, investment in rural infrastructure increased, agricultural modernization accelerated, grain production increased continuously for seven years, and farmers’ incomes increased. Meanwhile, under the pressure of urbanization, land grabs and merging of villages occurred frequently, which became a focus of prominent social contradiction. Strongly impelling the resources factor to dispose in rural areas has become the guideline of overall planning in urban and rural development. In 2010, the Central Committee of the Chinese Communist Party (CCP) Document No. 1 proposed that because Chinese agricultural and rural development faces various traditional and nontraditional challenges, “resources must be allocated to rural areas.” Regarding investment in “agriculture, farmer, and rural areas,” Document No. 1 stressed for the first time that “total quantity should increase and the proportion should be enhanced,” “stabilizing grain output, benefiting people, overall planning,

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strengthening the foundation” should be regarded as central in building along-lasting mechanism in which industrial development promotes agricultural development and urban development drives rural development and in comprehensively promoting agricultural and rural sustainable development. Safeguarding farmers’ productivity and resource rights and interests, safeguarding farmers’ living environment, paying attention to completing corresponding systems, regarding farmers’ benefits as key, and overall urban and rural coordinated development have become the key to rural development and rural harmony. The document also proposed, “to try to solve the problem of the new generation of migrant workers,” and that was the first time the party’s document addressed the “the new generation of migrant workers.” In 2010, the new characteristics of rural development are as follows: A. Annual Increase in Grain Output In 2010, grain production is expected to hit a new record high, and output has been maintained at above 1 trillion jin for the past four consecutive years. Under the adverse conditions in which resource restraint grew, the impact of disasters worsened, comparative benefits shrank, and market restrictions intensified, food production realized “production increases for seven continuous years.” Technological disasters, natural disasters, and science and technology in food production were highlights. The contribution of science and technology to agricultural growth grew from 48 percent at the end of Tenth Five-Year Plan to 51 percent, which surpassed the shares of land, labor, and material investments. Improved variety and advanced appropriate technology played a support role in food production. The coverage of agricultural leading variety and main technical of 800 model counties reached over 95 percent. In developed areas, a modern agricultural technology system has been constructed, and the systemic reform of basic-unit agricultural technology has quickly advanced. Scientific innovation and dissemination of new technology have promoted the technical support ability of food production. B. Increase in Farmers’ Income, Growth in Farmers’ Cash Income, Property Income, and Transfer Income According to the data of the National Bureau of Statistics, in the first three quarters of 2010, the average cash income per rural resident was RMB 4,869, an increase of 13.1 percent, and after adjusting for inflation, actually grew 9.7 percent—of which wage income grew 18.7 percent, family operating



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income grew 8.7 percent, property income grew 19.4 percent, and transfer income grew 17.2 percent. Rural resident incomes grew more quickly than incomes in urban areas. In the first three quarters, after adjusting for inflation, average consumption expenditure grew 6.3 percent per urban resident actually and 7.3 percent per rural resident. It is estimated that, in 2010, growth in farmers’ net income will surpass 8 percent. Income disparity between farmers continuously grew, caused mainly by property income and transfer income. According to investigations in some areas in 2010, in the developed southern Jiangsu and Guangdong area, farmers’ property income comprised one-tenth and one-third, res­ pectively, of gross income, but in the central and western regions, it was relatively low. C. Agricultural Products Drive CPI, and Prices Rose Significantly In 2010, prices for agricultural products obviously presented the characteristics of “a big price increase, many varieties involved, and an increase in transport.” Food and housing prices are people’s firm demand, driven by rising agricultural prices, increasing pressure on urban residents, and the circulation of agricultural products causes widespread concern. Farmers were reluctant to sell their products this year. D. Intensified Competition in Agricultural Employment The intensive agricultural production created employment competition because of competitive benefits, the traditional farm employment method of “father-to-son” succession was challenged, and a group of high-quality producers, operators, and investors entered agricultural production and operations. Large-scale planting formed by accumulation of agricultural land circulation, market direction of organic food prices, environmental protection requirements for circular economy and gas discharge reduction, organizational efficiency of division and cooperation, and the fine standard field management technology, all urged some specialized farmers to systemize their agricultural production. In Suzhou, large operators that contracted several thousand acres of lands by land circulation established farmer’s specialized cooperatives. Before, a farmer planted 30 acres of land but could not manage it, but after large operators took the lead, eight agricultural laborers established the cooperative organization based on a division of labor to plant 240 acres and could handle a situation with ease, and they could also work in factories when it is not harvest season. The cooperative society contacted the large agriculturist families to till

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the land using livestock breeding and domestic animal fertilizer, which reduced level of chemical fertilizer, and each jin of green rice produced could sell for RMB 0.5. This pattern was generalized as “small landlord, big tenant farmer.”1 A farmer’s labor time was fully used, land productive potential was fully exploited, market demand for environmental safety, energy conservation, discharge reduction, and consumer food safety was met, high-quality and preferential prices for agricultural products also guaranteed a farmer’s income, and this cooperative organization also ­easily guaranteed sustainable income for farmers. E. Social Contradictions Initiated by Merging Villages and Increases in Land Seizures Merging villages and land seizures caused widespread rural incidents in 2010 and tended to intensify and expand. First, merging villages and land seizures were swift and violent and involved massive amounts of non­ agricultural farmland. In national urbanization, land used for building was generally scarce, and the red line of 1.8 billion acres of farmland could not be broken through. Under this situation, to pursue financial income from land, under the policy background of experimenting with “linking the fluctuation of urban and rural land used for building” pushed by the Ministry of Land and Resources in 2006, the local government displaced many farmers and urged them to live in multistory buildings, in order to use the land for construction. In the implementation process, forced evictions and demolitions in which local governments acted against public opinion increasingly occurred, and policy was often misinterpreted, which caused adverse consequences when farmers’ land rights and interests were ignored and farmers fell into poverty after living in multistory buildings. In 2010, problems relating to disputes over land seizures and illegal occupation of land belonging to farmers comprised 73 percent of problems brought before departments for petition and appeal: 40 percent of petitions and appeals involved land-seizure disputes and 87 percent of those disputes demanded compensation and replacement. The majority of petitions and appeals were collective. At present, widespread incidents that broke out because of seizures of farmland comprised more than 65 percent of the total, which threatened social stability and healthy economic development. Land disputes have become the most important 1 See Experiments on upgrading version of “Southern Jiangsu pattern,” in CCTV [Finance] program, September 18, 2010.



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problem affecting rural stability.2 Land is a farmer’s safeguard of survival, and merging villages and seizing land involve huge economic interests, which inevitably cause land disputes. Therefore, in November 2010, the State Council executive meeting studied and implemented the pilot work which normalizes treatment of rural land and which links up the variation between using urban and rural land for building, and stressed that rural land treatment must firmly avoid large-scale relocation and construction in violation of farmers’ wishes and cannot force farmers to live in multistory buildings. After investigations and studies on seventy-four administrative ­villages in twenty-two provinces, the “Report on the Research of Problems concerning Rural Rule of Law” (中国农村法治热点问题研究报告 zhongguo nongcun fazhi redian wenti yanjiu baogao) conducted by the Zhicheng Center for Legal Aid and Research for Peasant Laborers in Beijing pointed out that, in recent years, lawsuits initiated by rural homestead shave increased year by year. Because at that time no unified trial standard existed for this kind of case, nor was there judicial guidance in which “the contract for a rural homestead house sale is invalid, and the buyer must return the house to the original seller,” many disputes remained hidden. The compensation for land seizures generally entered a stalemate, and land-seizure compensation and replacement took many different forms, for example, financial compensation and replacement, job selection compensation and replacement, and agricultural production placement. But the collective land development system that established effective farmer participation, fair income sharing, and full safeguards for farmer benefits was also evolving. In the process of urbanization in which large amounts of garbage are generated by the transfer process, because of the influence of money, technology, and benefits, some cities dumped untreated trash in rural fields and ponds, which had a detrimental effect on the rights and interests of the farmers and the environment. F. Contradictions between Cadres and Public in Rural Grassroots Organizations As the rural basic-unit business administrator, “village officials” develop many economic interests that result from holding their position ­numerous. 2 Wen Guanzhong (文贯中), “Revising Relocation Law Promotes the Settlement of ‘Issues on Agriculture, Farmer and Rural Area,’ ” Observations on the Chinese Economy, January 6, 2010.

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Data from the Supreme People’s Procuratorate showed that, in 2008, 4,968 people in rural grassroots organizations, which comprised 42.4 percent of the total, were involved in crimes that took advantage of their position The financial problem concerning “village officials” was mainly manifested in that they directly infringed upon the collective village property and the compensation fund, so the collection of payments was insufficient to make ends meet, withdrew money in violation, and took all kinds of special funds and compensation funds illegally. Conflicts with respect to rural management increased, connected with transfer payments and the allocation of resource in which the country and the society supported rural reconstruction. Since the implementation of overall urban and rural planning, with respect to increases of village-level transfer payments and project special funds, village-level finance should be appropriate to the nature of the property and respectively employ different management patterns. State subsidies allocated to farmers should be paid directly to farmers; for property managed and controlled by village collective, including the part managed by the collective in village affairs, in public works, and in land-seizure compensation and placement, village collective’s operating property, and so on, a standard effective collective property financial management system must be established. The current villager autonomous system is effective in the second kind of management, but lacks standard management measures for the first kind, which has caused confusion in village-level financial controls, and the “village official” is not effectively supervised. As a result, criminal acts occurred during the period that a “village official” held his post that infringed upon the collective village property and compensation rescue funds, the collection of payments was insufficient to make ends meet, they withdrew money in violation and took all kinds of special funds and compensation funds illegally, damaging the benefits of rural collectives and farmers. II. Profound Changes in the Structure of Farmers In 2010, the rural problem showed signs of complications, and a series of events concerning agriculture indicated that changes in the farmer community structure and the evolution of class relations were shaping farmers’ self-awareness and social action. Generally, research defines Chinese farmers according to occupation and status, and the active background of village life as comprising differentiation among farmers is self-evident. But in the social strata structural



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research during the transition, there is a risk in making such an assumption, namely, supposing that other social groups keep pace with the times, but farmers are only a carryover element of the social structure in the natural economy time or in the planned economy before social transformation; it is relatively easy to neglect internal differentiation among farmers. The term “farmer” generally has three meanings: first, status as a farmer, that is, a part of the rural population in national statistical data. Second, occupation as a farmer, that is, a worker who is directly engaged in agricultural production and operation; agricultural labor is their work, and agricultural output is their source of income. Third, the resident population that lives in the villages, as distinguished from migrant workers who migrate to different locations for employment. In general, researchers believed that, since 1949, the changes in the structure of rural communities were divided into four stages, rural land reform, the period of planned economy, the earlier period of reform and opening up (1978 to the mid-1990s), and the later period of reform and opening up (the mid-1990s until now), with each stage forming a unique social structure.3 What is worth noting is that, in the later period of reform and opening up, with the Third Plenary Session of the Sixteenth Central Committee proposing overall urban and rural planning as the turning point, China’s urban and rural relations entered a new stage. The basic feature of this stage is that China completed the transformation of the planned economy to a market economy, began a rapid transformation from an agricultural society to an industrial society and from the village leading society to the city leading society, and regarded overall urban and rural planning symbolic in changing urban and rural dualistic control. Urban and rural interaction is strengthened; the flow of people between urban and rural areas increases, farmer differentiation has exceeded the limitation of the village to unify with urban society and the agricultural modernization. The differentiation between types of farmers has three prominent characteristics. First, some farmers flow to nonagricultural industries, and their employment and income are relatively stable and are integrated in urban social management. Second, changes in types of farmers are manifested not only in the reduction of agricultural producers but also in internal differentiation between peasant farmers. Organizational and operation forms

3 Cui Chuanyi (崔传义), “Special Research Report II: Chinese Farmers’ Past, Present and Future,” at http://wenku.baidu.com/view/cf513800a6c30c2259019e4b.html, 2010.

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of agricultural production have changed from giving priority to traditional peasant household management to cooperation between large-scale agricultural operations and peasant household agricultural operations, and agricultural producers’ transformation from traditional farmers to modern farmers. Third, the different types of farmers are influenced by the urban and rural overall planning, rural resource allocation, and the agricultural production socialization services, which indicate a passive change in occupation. From 2000 to 2009, the Chinese urbanization rate rose from 36.2 percent to 46.59 percent and on average increased approximately 1.2 percent annually. The urban population increased from 460 million to 620 million, and the town and county area increased from 22,400 km2 in 2000 to 36,300 km2 in 2008, an increase of 62 percent in eight years. On the one hand, rapid urbanization massively allowed farmers to work in cities; on the other hand, it also comprehensively absorbed rural resources, which changed the rural social structure and relations between different groups. With the enhancement of agricultural production technology, the rural socialization service system was increasingly realized, national investment in rural infrastructure and farmland infrastructure increased, and the objective of agricultural production evolved from giving priority to contractual management on a household basis to peasant household management and large-scale management cooperation. Now peasant farmers understand the national agricultural policy, have relatively clear occupation positions and specialized consciousness, enthusiasm for planting grain has increased, peasant farmers’ quality has increased, and agricultural production specialization and professionalization have occurred. A group of farmers has transformed into agricultural producers using large-scale land management and at the same time has become specialized in rural crop production techniques and operations. Comparing the data over the years, the scale of professional farmers can be clearly seen. According to data of the Population Department of the National Bureau of Statistics in 1994, at that time, farmers who lived in rural areas and worked with productive land resources numbered 797 million, which comprised 88.4 percent of the total rural population— of which, farmers who were truly engaged in agriculture, forestry, animal husbandry, subsidiary occupations, and fishery numbered 523 million. More than 460 million of them were engaged in agriculture, and the other 60 million were engaged in nonagricultural work. Of those 460 million agricultural workers, 420 million were grain farmers, which comprised 64.98 percent of farmers; 14.69 million were cotton growers, vegetable



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farmers, 6.7 million; tea farmers, fruit farmers, mulberry farmers, 3.16 million; and other agricultural workers, 1.83 million. The special reports of the Central Committee of the Chinese Communist Party (CCP) Policy Research Office and the Ministry of Agriculture on 312 rural fixed observation sites in 1994 indicate that, for the 442.56 million rural labors, the composition of farmers occupations was 63.4 percent agricultural workers, 12.2 percent peasant laborers, 0.9 percent village collective enterprise administrators, 6.5 percent individual or partnership workers and operators, 0.8 percent private enterprise workers, 3 percent employed workers, 0.6 percent rural officials, 1.1 percent education, technical, medical and cultural and art workers, 8.1 percent housework workers, and 3.3 percent other workers. According to two agricultural censuses, the rural population and rural farmers decreased each year but, compared with the industrial structure, the proportion of employed population in agriculture remained large. In 2008, of the 472.7 million total rural employed people, 154.51 million people were in rural enterprises, 27.8 million in private enterprises, 21.67 million were self-employed, and 268.72 million were mainly engaged in agricultural production in rural areas. It is calculated there were 721.35 million traditional farmers and 303.19 million professional farmers, and cultivated area per capita was 2.18 acres. According to second Chinese agricultural census in 2006, the differentiation of the farmer stratum may be understood on that level. A. Scale of Agricultural Production Operators Expanded to 200.16 Million Households4 The number of agricultural production operators grew 3.7 percent over that in the first agricultural census in 1996. Among agricultural production operators, operators who gave priority to farm income comprised 58.4 percent, a decrease of 7.2 percent over that ten years ago. There were 478.52 million rural jobholders, which comprised 90.1 percent of total rural labor—of which 70.8 percent were engaged in agriculture, namely 338,792,200 people; 15.6 percent in industry; 13.6 percent in services.

4 Here Agricultural production operator refers to “registered quantity of agricultural production operators and agricultural jobholders” (integrated volume 2-1-6), which is different from family-run operation agricultural production operators in Table 1 (integrated volume 2-1-11).

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B. After Rural Enterprise Restructuring, Original Village-Run Enterprise Administrators and Rural Collective Enterprise Employee Disintegrate and Are Merged into Private Enterprise Owners and Peasant Laborers With the expansion of market growth and scale of operations, private enterprise owners’ operations exceeded the limitations of the village areas, and private enterprises often did not hire their own village’s inhabitants but external laborers to save expenses, which was advantageous for management. Market economic development also changed the rural customs of social interaction, and the custom in which village community networks helped and exchanged labor was substituted by employment settlement relations. Services of laborers in the village became an important source of income for them and were counted as wages. According to statistics in 2008, a total 27,803,000 people worked in rural private enterprises, of which 4,407,000 were in private enterprisers. There were 21.67 million self-employed laborers. C. Shift from Traditional Peasants to Modern Farmers Traditional peasants depended on family work and traditional experiences to work in farming, which was mainly self-sufficient. Modern farmers are engaged in agricultural operation using large-scale operations, adjust the planting structure according to market demand, and hire agricultural workers. The agricultural production technical structure and capital composition level are high and mainly relate to market agricultural production. On the one hand, as a result of the advance of science and technology in agricultural production, work hours for farmers are shorter than before; on the other hand, rural agents generally presented in agricultural mechanization services, and agricultural cultivation guidance, and agricultural product sales, and the labor process in which only farmers invested in agricultural production and operations was divided, and the labor time was substituted. If you consider the previous agricultural product output value divided by the number of peasant household labor or family population as income per farmer, it is possible to overestimate average income per peasant household and income per capita. The second agricultural census showed 338,792,200 agricultural producers, including those who were engaged in agricultural services and large-scale operations. After the agricultural tax was abolished in 2006, the country gave subsidies for farming, and large-scale agricultural operations could yield a greater income, as farmers started to take land output seriously and considered how to raise agricultural production efficiency and benefit, and



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a batch of large agricultural families who formed large-scale operations appeared. Chinese standards indicated that a farmer would normally contract 15 acres. The operation was called a large agricultural family. After the national policy created large-scale operations, the land was circulated to farming and agricultural companies who then focused on it, the specialized agricultural machinery operator and agricultural agent appeared, the agricultural production and the social service system were established, the rural specialized cooperatives appeared, the country implemented the policy of subsidy for planting crops and of protective price for grain purchase, and agricultural insurance started pilot work. Another program was to guide farmers to adjust planting variety through stable prices anticipated from the terminal sale of agricultural production and to guide farmers gradually to change the traditional custom of planting and management of small-farmer management. The management form in which the peasant household contracted the land did not change, but the rights to oversee planting conditions, field management, and product sales were transferred to the management company through a contract, and the peasant household gained wage income for its work. This kind of production was different from pure peasant household production. The agricultural operation and management modernization enhanced land value, increased farmers’ income, and promoted the scale of land management. The large agricultural operator and agricultural company engaging in large-scale agricultural operations in rural areas occurred more often in the eastern and central areas, which have implemented agricultural production modernization. D. Decline of Rural Cultural and Health Worker Community On the one hand, collective services and cultural services were extended to rural society, which substituted for the traditional functions of rural intellectuals; on the other hand, the rural cultural services function gradually transformed from the general to the specific and also reduced the rural cultural space originally occupied by rural intellectuals. The existing rural primary school citizen-managed teacher system was abolished in the rural education system reform. The village-run clinic was basically made up of qualified family-run households. In 2008, there were 938,311 countrywide rural doctors and health workers, and the medical services and medical expense settlement established by villages and towns public health centers and county-level hospitals were linked. There were 640,975 rural cultural specialized households. The village troupe was setup based

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on the partner management mechanism, and rural weddings and funerals were undertaken by villages and towns and a county-level professional group. Such services are now managed using cash settlement. The marketoriented services relating to cultural life and cultural consumption reduced the need for village intellectuals and changed villagers’ cultural consumption habits and consumption patterns. Rural cultural workers were gradually merged into rural self-employed workers and small businessmen. E. Growth of Rural Self-Employed Workers and Small Businessmen First, the specialized agricultural machinery operators and rural agents promoted and served large-scale agricultural operations. Second, the number of agricultural planters grew and they contracted the land as peasant households, that is, employed workers, to carry on agricultural production according to the standards; the nature of their operations was similar to that of small businessmen, and the method of operations of some large crop planters was similar to that of a private enterprise owner. F. Incisive Contradictions Faced by Rural Administrators The term “rural administrator” mainly refers to rural Party branch and villagers’ committee members. According to the “2009 Statistical Report on the National Development of Civil Affairs” (2009 年度全国民政事业发 展统计报告 2009 niandu quanguo minzheng shiye fazhan tongji baogao) of the Ministry of Civil Affairs, by the end of 2009, China had a total of 599,000 villager committees, 4,805,000 villager groups, and 2,340,000 villager committee members. It is calculated from this that the number of leaders of villager committee members and villager groups surpassed 7 million. The village cadre is the administrator for rural land resources, the implementer of rural development plans, the maintainer of rural social order, the contact person between villagers and grassroots government, and the link between rural operational technology and capital that goes to the countryside and villagers. However, in recent years, the work of rural administrators has become increasingly complex. After 2004, the rural grassroots cadre’s subsidy for loss of working time changed from being paid by “three retained fees and five overall planned fees” (三提五统, san tiwu tong) to being supported by government public finance at the county level and above, which lightened the peasants’ burden. Since the implementation of overall urban and rural planning, the government at the county level and above massively increased investment to rural infrastructural construction and public



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services. The rural administrator is the direct supervisor and responsible person in rural registered permanent residence and village membership management, in which the land-seizure procedure, quantity, order and income distribution, peasant household contracts to cultivate land, and homestead adjustment are tied up with the rural collective property, especially rural land resources. Villagers pay great attention to the importance and income of land resources, in the contradiction between social strata, between cadres and the masses, between villagers and grassroots government formed for the land resources and village-level collective property; its tension and social mobilization have reached an unprecedented level. III. Conclusion and Suggestions In brief, currently Chinese rural economic and social development presents the following tendencies. First, agricultural producer employment is undergoing profound a transformation. With the acceleration of agricultural modernization, agricultural occupation increases, and the traditional peasant is transformed into a modern farmer. Second, advancing the innovation of agricultural management system and enhancing farmers’ organization degree are increasingly important in rural reconstruction and agricultural production in developed regions. Third, in the past, rural labors transferred from agriculture to nonagricultural production; at present, rural laborers also start competing for employment in agriculture. Whether it can adapt the studies and can use modern agricultural production and operation managerial technique and whether it can adapt the market demand to carry on agricultural production are all reasons why there is a growing income disparity among farmers. Fourth, with the largescale operation of modern agricultural production, farmland circulation becomes a significant breach to enhance farmers’ property income. Land income distribution, which regards the land right and interest circulation, forms a social problem in rural areas. Fifth, in the advancement of overall urban and rural planning, resource allocation of rural development and rural construction contents has changed, and China has entered a stage of economic and social overall planning and coordinated development. The rural public administration and villagers’ self-administration need to adapt to this tremendous change, rural collective services and social construction must serve this goal, and strengthen training, post qualification training, government affair disclosure training of new knowledge and new

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skill for rural officials, and improve rural cadres’ quality are important for rural reconstruction and development. In 2011, advancing steady agricultural and rural economic development must focus on the following problems. A. Taking Seriously the Tremendous Changes in Organization Mechanism of Agricultural Production Currently, family agricultural management is shifting toward using advanced techniques and means of production and raising the level of concentration. This will have a profound impact on rural employment and the structure of rural social relations. One is to develop a large-scale operation through land transfer and to raise labor productivity; another is to develop agricultural facilities and to raise the rate of output from the land. Unlike divided management, the specialized large-crop planter has realized the optimal combination of scientific management and production elements and has benefited from this scale. In 2008, there were more than 19 million specialized peasant households, which comprised 7.8 percent of total peasant households; average net income per specialized farmer was RMB 5,085, which was 1.2 times that of the average net income per traditional farmer. From modern agriculture and the largescale operation, it is clear that there are differences between traditional agriculture and modern agriculture and between the traditional peasant and the new modern farmer, and in the condition and environment of production. The reduction of farmers does not inevitably lead to an increase of rural laborers engaged in nonagricultural production and operation. This requires that workers in nonagricultural and agricultural domains improve their professional quality and employment competitive ability. Growth in farmers’ income cannot depend only upon growth in agricultural product output, but also upon growth in the scale of land managed by the peasant household. The growth in the scale of land must depend upon withdrawal of other peasant households from agricultural production; therefore the basic outlet for solving the agriculture problem is urbanization and agricultural modernization. Development concept upgrades from traditional agriculture to modern agriculture, the development method upgrades from big-field agriculture to agricultural facilities, the development strategy upgrades from separate management to organized intensive farming, and the development main body upgrades from traditional peasant to new modern farmer.



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B. Taking Seriously Research on Changes of Rural Labor Transfer Changes in farmer stratification are supposedly the farmer’s individual choice, but in fact it is driven by environmental changes and pressures. In the modernization process, reductions in the rural population and agricultural production are inevitable. Urbanization creates a pull factor for the rural population, and intensive agricultural management creates a push factor for farm laborers. In the 1990s, rural enterprise development attracted rural laborers; since 2006, the push factor of rural agricultural modernization to laborers has been predominant. Under the pull factor, farmers’ occupational mobility was their choice, and they could voluntarily remain in place; under the push factor, villagers’ social mobility is possibly forced and has the double risks from being squeezed out of agricultural production and rural life. C. Paying Attention to the Problem of Unemployed Farmers Who Have Lost Their Land At present, authoritative statistical data has not been issued on the number of landless famers. Some of them migrate to the city and no longer have farmer status; some cannot be covered by the urban social security effectively and do not have any land. They are the focal characters in rural social contradiction and urban and rural social conflicts in recent years. The social contradiction initiated by land seizure intensified, and the real reason was not to speed up urbanization, but the land policy and the land-seizure operation had some big flaws, and in the process of land transformation, income distribution was unfair, and land management rights of the farmers were infringed upon. D. Strengthening Rural Collective Resources and Collective Asset Management Currently, the relationship between rights and interests between peasant household and enterprises is quite clear, but the rights of rural collective assets income and distribution rights need to be further realized. The villager committee mainly exercises land management of rural collective property. The relationship between rights and interests between rural villager status and land contracting has become an important problem in rural social management. Because it is difficult to define land rights, massive conflicts occur between the village management and villagers’ rights and interests. The new characteristic of contradiction between rural strata

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is manifested in land problems; relations between social strata are simplified, and resource conservation awareness is strengthened, and therefore village stakeholders strongly resist having local villagers take up resources and having the city take up rural resources, which has directly influenced rural social integration and social order. The problems regarding rural regions and agriculture ultimately come down to the farmer problem. How small peasant households of separate management and large-scale famers enter modernization and share social development achievements are the fundamental problem that affects China’s social development. China has a large agricultural population, and the contradiction between people and lands is very sharp. To help farmers out of poverty, one international experience is to solve the fragmented economy by instituting large-scale agriculture and industrial production. Helping millions of farmers escape poverty and enter modern development at a low social cost in such a short period means that China should explore the road of unique rural modernization under the condition of overall urban and rural development, and this must take into consideration agricultural modernization and rural development and urbanization and marketability. In world history, agricultural development and accumulation in capitalist society depend upon a middle-class group separated from small producers, and they had the motivation to realize agricultural modernization, which is also a kind of inevitable development in China. With the establishment of a farmland circulation system and relative concentration of farmland, agricultural laborers will gradually become true independent modern agricultural operator, no longer traditional small peasants, and they and medium-size and small owners in the nonagricultural domain as well as other self-employed operators can together become a key part of the middle class.

Appendix

Statistical Overview of China’s Social Development (2010) Zhang Liping I. Total Population and Structural Changes Under the combined action of economic development, social transformation, and the birth control policy, the structure of China’s population has undergone a historic transformation and has developed from condition of a high birthrate, a high death rate, and a low natural growth rate to one of a high birthrate, a low death rate, and a high natural growth rate, and now to that of a low birthrate, a low death rate, and a low natural growth rate. From 1949 to 2009, the population increased from 540 million to more than 1.3 billion, the birth rate fell from 37 percent to 12.14 percent, the death rate fell from 17 percent to 7.06 percent, and the natural growth rate fell from 20.00 percent to 5.08 percent. Chinese urbanization began a period of rapid advancement. In 1949, when New China was founded, the urban population was only 57 million, the proportion of urbanization was 10.6 percent, which was 3 percent lower than the world average level in 1900, and it was generally an agricultural country. From 1949 to 1978, the urbanization proportion gradually increased; it reached 19.7 percent in 1978, but was below 20 percent for a long time. After reform and opening up, the development of industrialization was rapid, which greatly accelerated the progress of urbanization. From 1949 to 1978, the urbanization rate only increased 7 percent more; but from 1978 to 2008, the urbanization rate increased from 19.7 percent to 45.7 percent, an increase of 26 percent over that in 1978. In less than thirty years, the weight of the Chinese population has gone from being young to being middle aged to being elderly. A national 1 percent population sample survey in 2005 showed that the population age 60 years old and above accounted for 12.9 percent of the total population, and those age 65 years old and above accounted for 9.07 percent of the total population. In the next few decades, there will be tremendous changes in the working-age population and the dependency ratio. It is forecast that, beginning

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1949

‒10 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year

Notes: 1. Data before 1981 come from the statistical data of household registration; data for 1982, 1990, and 2000 come from census data; data for 1987, 1995, and 2005 are calculated based on 1 percent of the national population sample survey; data for other years are calculated based on a sample survey of population change; data from 1982 to 1989 were adjusted according to census data for 1990; data for 1990 to 2000 were adjusted according to the census data for 2000. 2. The active army population is counted in the urban population. Sources: National Bureau of Statistics, New China’s Population for 60 Years (Beijing: China Statistics Press, 2009); China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.1. Population Changes from 1949 to 2010

140000

Urban population proportion 60

120000

50

100000 80000 60000 40000 20000 0 1949

Rural population

Proportion

Population (ten thousand people)

Urban population

40 30 20 10

0 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year

Sources: National Bureau of Statistics, New China’s Population for 60 Years (Beijing: China Statistics Press, 2009); China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.2. Changes in Urban and Rural Population from 1949 to 2010



statistical overview of china’s social development (2010) 257 95+ 90 85 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 95+ 90 85 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

Female 1982

Male 1982

1.5

1.0

0.5

0.0

Male 2000

1.5

1.0

0.5

0.5

1.0

1.5

Female 2000

0.0

0.5

1.0

1.5

95+ 90 85 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 95+ 90 85 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

Male 1990

1.5

1.0

0.5

Female 1990

0.0

Male 2005

1.5

1.0

0.5

0.5

1.0

1.5

1.0

1.5

Female 2005

0.0

0.5

Sources: State Council Census Office, Population Statistics Department of the National Bureau of Statistics, Chinese Census Data for 1982 (Beijing: China Statistics Press, 1985); Chinese Census Data for 1990 (Beijing: China Statistics Press, April 1993); Chinese Census Data for 2000 (Beijing: China Statistics Press, September 2002); State Council Leading Group Office of National 1 Percent Population Sample Survey, Department of Population and Employment Statistics of the National Bureau of Statistics, National Data of 1 Percent Population Sample Survey in 2005 (Beijing: China Statistics Press, 2007).

Figure A.3. Population Age Structure for Various Years

in 2017, the working-age population will decline to the point its growth will be negative in about 2018. Meanwhile, the proportion of the aging population will quickly increase, and the dependency ratio and total dependency ratio of the aging population will continue to increase. II. Economic Development China’s economic growth has entered a new period. The total value of the gross domestic product (GDP) was RMB 34.0 trillion in 2009, and by the end of the third quarter in 2010, GDP reached RMB 269 trillion, an increase of 10.6 percent over that in 2009, and it is estimated that total annual GDP will surpass RMB 37 trillion. Since reform and opening up, in GDP growth, final consumption expenditure has gradually reduced as a driving force of economic growth, the contribution rate of capital has increased as a driving role, and the role of cargo and service net exports are in the process of fluctuation. In 2010 the

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Working-age population increase Dependency ratio of aging population Total dependency ratio 0-14-year-old population proportion Aging population proportion

1500

0.7 0.5

1000

0.3

500

0.1

0

‒0.1

–500

Proportion

Proportion (ten thousand people)

258

‒0.3

–1000

‒0.5

–1500 2005

2010

2015

2020

2025

2030

2035

2040

2045

‒0.7 2050 Year

Source: Forecast and analysis on population, Wang Guangzhou (王广州), Report (7) on Chinese Population and Labor Problem (2006) (Beijing: Social Sciences Academic Press, 2006).

Figure A.4. Forecast on Dependency Ratio and Working-Age Population Increase (TFR=1.76)

GDP growth rate

Total growth rate

GDP growth rate

350000

25 15

300000

5

250000 200000

‒5

150000

‒15

100000

GDP total rate

400000

‒25

50000

‒35 0 1952 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 year

Sources: National Bureau of Statistics, China Statistical Yearbook (Beijing: China Statistics Press, 2000), China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.5. Total GDP and Growth Rate from 1952 to 2010



statistical overview of china’s social development (2010) 259

50

80%

40

Contribution rate

100% 60%

30

40%

20

20%

10

0%

0

‒20% ‒40% 1978

‒10% 1984

1989

1994

1999

2004

Driving force ( percent)

Contribution rate of final consumption expenditure Urban population at minimum living standard Rate of cargo and service net export Driving force of final consumption expenditu Driving force of total amount of capital formation Driving force of cargo and service net export

‒20% 2009 Year

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.6. Contribution Rate and Driving Force of Three Big Demands to GDP Growth from 1978 to 2009

leading role of investment and consumption fell, trade exports began to recover growth, the year-on-year increase of the first eight months reached 34.5 percent, its contribution rate to economic growth increased, and the task of expanding domestic demand and enhancing domestic demand to drive economic growth function was still arduous. The total volume of retail sales continued to grow. The year 2010 was the last year of the Eleventh Five-Year Plan, during which it is estimated that the total volume of retail sales would be sixteen times that during the Seventh Five-Year Plan, and would be twice that during the Tenth FiveYear Plan. It grew from RMB 155.86 billion in 1978 to RMB 13.3 trillion in 2009. From January to October 2010, the total volume of retail sales was RMB 12.5 trillion, an increase of 18.3 percent over the previous year. Since the Sixth Five-Year Plan, investment in fixed assets has grown rapidly, of which the investment in fixed assets during the Eighth FiveYear Plan and during the Eleventh Five-Year Plan grew more than three times that of the previous year. The investment in fixed assets had obvious urban and rural differences, a gap that was growing. During the Sixth Five-Year Plan and Seventh Five-Year Plan, the ratio between urban and rural investments in fixed assets was 2.6:1; during the Eighth Five-Year

260

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During Eleventh Five-Year Plan During Tenth Five-Year Plan During Ninth Five-Year Plan During Eighth Five-Year Plan During Seventh Five-Year Plan During Sixth Five-Year Plan 0

100000 200000 300000 400000 500000 600000 700000 Total volume of retail sales

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

180000 160000 140000 120000 100000 80000 60000 40000 20000 0

Total volume of retail sales

Growth from previous year

35

Growth from previous year (%)

Total volume of retail sales (RMB 100 million)

Figure A.7. Total Volume of Retail Sales since the Sixth Five-Year Plan

30 25

20 15

10 5 1978

1985

1990

1995

2000

2005

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.8. Total Volume of Retail Sales, 1978–2010

2010

0



statistical overview of china’s social development (2010) 261

Total investment in ��xed assets (RMB 100 million )

900000 800000 700000 600000 500000 400000 300000 200000 100000 0

Urban area

Rural area

h h h th th th nt nt in lan ixt lan en lan igh lan ve lan ve lan S N T E e e l g P g P g P g P gS rP in ar in ar in ar gE rP rin ear ur -Ye ur -Ye in -Yea rin -Yea ur e-Ye r Du ve-Y u D D D e e v v v D ive Du ive Fi Fi Fi Fi F F

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.9. Urban and Rural Investments in Fixed Assets since the Sixth Five-Year Plan

Plan and Ninth Five-Year Plan, it was more than 3.5 times that, 4.9:1 ­during the Tenth Five-Year Plan, and this disparity grew to 6.7:1 during the “Eleventh Five-Year Plan. In various years, total investment in fixed assets grew overall but fluctuated greatly until the Sixth Five-Year Plan, when it became more stable. From 1982 to 1988 and from 1991 to 1994, as well as since 2004, the annual growth rate was above 20 percent: the growth rate reached 38 percent in 1985, 44.4 percent and 61.8 percent in 1992 and in 1993 respectively, but entered a stage of steady growth after 2004. Through reform and opening up, and sustained economic development, China’s foreign trade not only developed rapidly, but the trade surplus also grew swiftly, which has provided powerful foreign exchange reserve support for national economic development and has strengthened the government’s ability to implement macroeconomic regulation and control. From 1978 to 2008, China’s total volume of foreign trade grew from RMB 35.5 billion to RMB 18.1 trillion; in terms of the difference between imports and exports, China’s trade surplus gradually increased, in 2008, the world financial crisis greatly affected China’s imports and exports, and since 2010 foreign trade has quickly begun to grow again, and the scale of imports and exports has surpassed that in 2008.

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Urban area

300000

Rural area

Growth from previous year

250000 200000 150000 100000 50000 0

70 60 50 40 30 20 10 0 ‒10 ‒20 2010 year

Growth from previous year

Total investment in ��xed assets (RMB 100 million)

262

1981

1985

1990

1995

2000

2005

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.10. Total Urban and Rural Investment in Fixed Assets from 1981 to 2010 RMB 100 million 110000 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 1978 1985

Total exports

1990

Total imports

1995

2000

2005

2010 January–July

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.11. Changes in the Total Volume of Foreign Trade from 1978 to 2010



statistical overview of china’s social development (2010) 263 III. Economic and Social Structure and Work Status

The economic and social structure has witnessed tremendous change. In 2009, the ratio between the urban and rural populations was 46.59 percent: 53.41 percent; in primary, secondary, and tertiary industries, the proportion of employed people respectively was 38 percent, 28 percent, and 34 percent, but the proportion of the three industries in GDP industrial composition was respectively 11 percent, 46 percent, and 43 percent. More than half the rural population in the primary industry nearly reached 40 percent, but only 11 percent in GDP composition. With regard to employed people, the industrial structure is rapidly changing. Since reform and opening up, the number of employed people grew from 400 million to 780 million. In addition, the structure of employment greatly changed such that the proportion of people employed in primary industry fell from 70.6 percent to less than 40 percent, number employed in secondary industry increased from 17.3 percent to nearly 30 percent, and employment in the tertiary sector rose from 12.2 percent to 34 percent. The structure of employment changed from giving priority to agriculture to work in industry.

Structure of Employed People in Three Industries Tertiary industry 34%

GDP composition

Primary industry Primary industry Tertiary industry 38% 11% 43%

Secondary industry 28%

Secondary industry 46%

Urban and Rural Structure of Permanent Population Rural area 47%

Urban area 53%

Source: Statistical yearbooks of the National Bureau of Statistics.

Figure A.12. Composition of Employed People, GDP, and Urban and Rural Population in 2009

264

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90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Proportion in secondary industry Proportion in tertiary industry 80 70 60 50 40 30 20

Composition of employed people

Number of employed people (ten thousand people)

Number of employed people Proportion in primary industry

10 1978

1985

1990

1995

2000

2005

0 2010 Year

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.13. Number and Proportion of Employed People in Industry from 1978 to 2010

The urban registered unemployed population decreased in the late 1970 and steadily increased in mid- and late 1980, the urban registered unemployment rate surpassed 5 percent in the initial stage of reform and opening up, and then fell to 1.8 percent in 1985, and then slightly increased, reaching 3 percent in 1996 and 4 percent in 2002, and then slightly increased. In surveys the same year, the unemployment rate was higher than the registered unemployment rate. In 2010 the overall employment situation improved. By the end of the third quarter, the urban registered unemployment rate was 4.1 percent. IV. Urban and Rural Resident Life Since reform and opening up, income for urban and rural residents has grown steadily, their living standards have noticeably improved, yet at the same time, the urban and rural disparity has expanded. The Engel’s coefficient for urban families fell from 57.5 to 36.5 in 2009; the Engel’s coefficient for rural families fell from 67.7 to 41. But the urban and rural residents’ income differential also gradually increased. From 1978 to 2009, the average disposable income per urban resident grew more than 50 times, and rural family’s average net income per person grew less than 40 times; the ratio of income per urban and rural resident (urban family’s average disposable income per person/average net income per

statistical overview of china’s social development (2010) 265

1000 900 800 700 600 500 400 300 200 100 0

Urban registered unemployed population Urban registered unemployment rate Surveyed unemployment rate

1978

1985

1990

1995

2000

2005

10.5 9.5 8.5 7.5 6.5 5.5 4.5 3.5 2.5 1.5 2010 year

Urban registered unemployment rate

Urban registered unemployed population (ten thousand people)



Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.14. Urban Registered Unemployed Population, Unemployment Rate, and Unemployment Rate According to Survey from 1978–2010

farmer) was 2.57:1 in 1978, and then gradually fell to 1.85:1 in 1985, then this ­disparity expanded, reaching 3.11:1 in 2002, and 3.33:1 in 2009. Urban and rural resident income continued to grow in 2010, and it is hoped that the rate of growth for the income of rural residents will be higher than that of urban residents. In the first three quarters, the average disposable income per urban resident reached RMB 14,334, after deducting for inflation, a rate of 7.5 percent; average cash income per rural resident reached RMB 4,869, after deducting for inflation, a rate of 9.7 percent; it was anticipated that average net income per farmer for the entire year grew more than 8 percent, and it was hoped that this surpassed the growth speed of average disposable income per urban resident. At present, consumer prices have been rising; since 2001, changes in the consumer price index (CPI) showed a wave trend, in which the peak of each wave was higher than that of the previous year, but in 2010, under the influence of anticipated price rises because of extreme weather and serious disasters, in May, the CPI rose more than 3 percent over the previous year; increased 3.3 percent in July, increased 3.5 percent and 3.6 percent in August and September respectively over the previous year, and 4.4 percent in October, which greatly affects the lives of residents, especially those in the low-income group. As seen in the classified index of resident consumption prices in 2010, food and housing prices increased greatly. The increase in food prices was

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20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

Urban family’s average disposable income per person Average net income per rural resident Engel’s coefficient for urban families Engel’s coefficient for rural families

80 70 60 50 40 30 20

Engel’s coefficient

Income (RMB)

266

10 1978

1985

1990

1995

2000

0 2010 Year

2005

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.15. Income and Engel’s Coefficient for Urban and Rural Residents from 1978 to 2010

Nationwide

Urban area

Rural area

110 108 106 104 102 100 98 96

3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 10 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: www.stats.gov.cn/tjsj/.

Figure A.16. Urban and Rural Consumer Price Index in October from 2001 to 2010



statistical overview of china’s social development (2010) 267

the largest, close to 4 percent in January, more than 6 percent in February, about 6 percent from March to June, at its height in July, and 10 percent in October. The changes in the CPI affected consumer confidence, and the consumer confidence index, the consumer anticipation index, and the consumer satisfaction index started to drop after a period of strength from January to June 2010. V. Social Services

Classified index of resident consumption prices (same month previous year)

A wide variety of social organizations were formed at all different levels. By the end of 2009, there were nearly 425,000 registered social organizations. Among them, the number of social groups fell slightly at the end of the twentieth century and at the beginning of the twenty-first century, gradually increased after 2004, and reached 235,000 in 2009. The number of non-government non-enterprise units increased rapidly in recent years; there were fewer than 6,000 in 1999 and 188,000 in 2009; the number of foundations increased from 954 in 2003 to 1843 in 2009. 112 110 108 106 104 102 100 98 96

1

2

3

4

5

6

7

8

9

Food Household equipment and services Entertainment, education, cultural goods, and services Tobacco and alcohol Medical care and individual items Housing Clothing Transportation and communications

10 Month

Source: www.stats.gov.cn/tjsj/.

Figure A.17. Classified Index of Resident Consumption Prices from January to October 2010

268

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110

Consumer confidence index Consumer anticipation index Consumer satisfaction index

115 100 95 90 85 80

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9

2007

20085

year

2009

2010

Source: China Economic Monitoring Center, www.stats.gov.cn/tjsj/.

Figure A.18. Consumer Confidence Index for September from 2007 to 2010

The grass-roots autonomous system was gradually completed. By the end of 2009, there were 597,000 village committees in the country and 85,000 resident committees. Urban and rural community construction made progress in completing the urban and rural community services system and in expanding basic collective service coverage; by the end of 2009, there were 175,000 urban community service facilities, 10,003 community service sites, and 693,000 urban service sites. The social donation network was preliminarily formed. In 2005, RMB 3.1 billion in social donations was accepted, and there were 36,110,000 beneficiaries; they reached RMB 47.93 billion in 2008, and there were 52,030,000 beneficiaries; they totaled RMB 6.65 billion in 2009, and 15,220,000 people profited from it. The assistance system, which regards urban and rural minimum ­living standards as its basis, was increasingly completed. The average urban minimum living standard increased from RMB 156 to RMB 228 for five years, and the average rural standard increased from RMB 76 to RMB 100.8. Those who fell into poverty because of disease, deformity, old age, losing the ability to work, and bad living conditions are emphatically integrated in the scope of minimum living standards. For five years, there were 23 million living below the minimum living standards for the urban population. The rural population at minimum living standards increased ­rapidly in recent years, reaching 8.25 million in 2005, and increased to 47.6 million in 2009.



statistical overview of china’s social development (2010) 269

Unit quantity (ten thousand)

Social group 45 40 35 30 25 20 15 10 5 0

1995

Non-government non-enterprise units

2000

Foundations

2005

2009

Year

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.19. Social Organizations in 1995–2009

Urban community service facilities

Community service centers

Urban service sites

Quantity (ten thousand)

90 80 70 60 50 40 30 20 10 0

2005

2006

2007

2008

2009

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.20. Urban Community Construction from 2005 to 2009

Year

270

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Donations accepted

600

Beneficiaries

6000 Beneficiaries (ten thousand)

Donations accepted (RMB 100 million)

The acceleration of construction of social welfare service facilities improved and enhanced the living standards of the elderly, orphaned and disabled children, and the disabled. The welfare units of adoption increased from 41,000 in 2005, to 44,000 in 2007, and 39,000 at the end of 2009; and hospital beds increased from 1.25 to 2.24 per thousand people.

500

5000

400

4000

300

3000

200

2000

100

1000

0

2005

2006

2007

2008

2009

0 Year

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0

Urban population at minimum living standard Rural population at minimum living standard Average urban minimum living standard Average rural minimum living standard

2005

2006

2007

2008

2009

500 450 400 350 300 250 200 150 100 50 0 Year

Average standard (RMB/per person per month)

Population at minimum living standard (ten thousand people)

Figure A.21. Social Donations in 2005–2009

Source: China Statistical Abstract 2010 (Beijing: China Statistics Press, 2010).

Figure A.22. Minimum Living Standards among Urban and Rural Residents from 2005 to 2009

5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

Institution quantity (ten thousand) Hospital beds for every thousand people Annual growth rate of hospital beds (%)

2005

2006

2007

2008

2009

5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

Annual growth rate of hospital beds

statistical overview of china’s social development (2010) 271

Institution quantity and hospital beds for every thousand people



Year

Source: Office of Planning and Statistics, the Department of Planning and Finance, the Ministry of Civil Affairs. Note: Social service hospital bed per every thousand population refers to number of beds for the elderly, the disabled, orphans, mental patients, and mentally ill adopted per thousand in population.

Figure A.23. Countrywide Social Service Institutions for Adoption, Hospital Beds per Thousand in Population and Institution Quantity from 2005 to 2009

Index affluent society 1 Anhui Province. China 39, 77, 92, 95 Antimonopoly Law 48 average incomes 55, 132 Basic Social Security System 65 Beijing 77, 84, 93, 176, 196 Beijing Olympic Games 6 CCTV 114 China Health and Nutrition Survey 54 Chinese Academy of Social Sciences 124, 129 Chinese Communist Party (CCP) 1 Congress 2, 6, 195 Chinese General Social Survey (CGSS)  54 Chongqing 92, 95, 190 civic organization 166 collective enterprise 42, 247 consumer expenditure 31 consumer satisfaction 267 consumption 4, 26, 45 clothing 20 food 28 housing 11 market 20 patterns of 36 personal 27, 32, 35 CPI 8, 19, 36, 191, 239, 265, 267 crisis 13, 226 financial 1, 44, 54, 261

rate 10 formal (formality) 185, 232, 235 employment rate 9 of general college graduates 10 Engel coefficient 28 enterprises 47 capital-intensive 47 labor-intensive 47 European Union 84, 192 financial crisis 1, 13, 15 foreign trade dependency 13 “Four in One” 2 Foxconn 14 GDP 3, 15, 33, 79 GDP per capita 3 Germany 32, 65, 73 Gini coefficient 15, 32, 53 green industry 45 Guangdong Province, China 86, 88, 94, 96, 99 Guangzhou 96, 197

Dalian 77, 228 development model 35

harmonious society 2, 6, 191, 213 socialist 167, 191 Hong Kong 42, 94, 231 n. 20 household income 54–57 housing 8, 30 condition 30 low rent 12 market 20, 210 price 11, 13, 34 secondary 210 Hu Jintao 199

education 5, 11 compulsory 5 equality 5, 96 internationalization 87 pre-school (preschool) 81 Eleventh Five-Year Plan 1, 18, 83, 259 employee 67 flexible 78 laid off 39 new 42 employment 9, 39, 66 effects 48

income distribution 4, 13, 32, 53 normalize 61, 73 reform 14 rural resident 57 structure 25 urban resident 63 income differential 19, 55–60, 264 income gap 59 industrial transformation 45 industrialization 32, 46 industry policy (industrial policy) 48, 51 of employment effects 48

274

index

on employment promotion 44 reform 44 institutional innovations 46

National People’s Congress (NPC) 73 “New National Five Articles” 12 New Rural Reconstruction 63

Japan 65, 184, 228 Jiangsu Province, China 77, 86, 93, 181, 190, 241

opportunity structure 159

labor contract 226, 229 Labor Contract Law, China 3, 229, 234 labor division 47 Labor Insurance Regulations 66, 72 Latin America 66 lifestyle 8 livelihood 1, 6, 11, 44, 72 basic 157 living expenditure consumption 26, 34 investment 34 living standard 8, 31 Macao 42–43 market 48 competition mechanism 48, 118 environment 48, 116 housing 20, 210 job 40 labor 40, 128, 138 organization 164 marketability 236 market economy 18, 48 socialist 63, 161 marketization 114, 161 middle class 36, 158 migrant 14 migrant workers 14 migration 69 children of  92 external 43 female 229 first generation of 14 new generation of  240 remuneration for 32 second generation of 44 wage of 230 well being of (well-being) 208 Ministry of Human Resources and Social Security 39, 60, 109, 207 Ministry of Finance 69, 86 mobility flux 93, 253 National Bureau of Statistics 54, 191, 223, 240, 246

Pearl River Delta, China 14, 69 People’s Bank of China 12, 34 post-1980s generation 14 poverty 242, 254, 268 price 13, 115, 249 primary labor market 14 property law 3 public housing construction 20 real estate market 11, 20, 209, 211, 213 commercial 11 ordinary 11 recruitment demand 40 by employer 43 by industry 40 regional income 6 rural 58, 212 and urban 58, 212 scientific development concept 2, 89, 182 self-employed 37, 129, 247–248, 250, 254 service industry 47 Shanghai 66, 77–78, 86–87, 92, 97, 104, 113, 177–178, 196, 203 Shenzhen 14, 77, 113, 225 social construction 1–2, 6, 20, 157, 159, 161, 164–165, 168–170, 172–177, 179, 181–185, 251 social insurance 5, 10, 65–68, 70–80, 219–221 Social Insurance Law 3, 21, 72–77, 79–80, 221 social insurance system 5, 65–66, 69, 72, 74, 77–78 social legislation 3 social management 6, 9, 17, 21, 161–168, 179, 183, 234, 245, 253 social mobility 253 social security 34, 69 innovations 70 Social Security Law 65 social stability 160, 231, 242 socialist market economy 63, 168 State Council 46, 95, 103, 160, 199, 204, 210, 222, 232, 243 state-owned enterprises 65, 203, 231 non-state owned 42

Taiwan 14, 228 technicians 40 transportation 31 renewal of 31 Twelfth Five-Year Plan 6, 35, 61, 194 “two conferences” 73 “two guarantees” 71 unemployment 10, 48, 65, 75, 129, 158, 220 unemployment insurance 5 United Kingdom (UK) 32

index

275

United States (US) 32, 54 urbanization 8, 15, 45 semi-urbanization 14 welfare 16 Wen Jiabao 61 Wenchuan earthquake 1, 6 World Bank 32, 84 World Trade Organization (WTO) 13, 57 Yangtze (Yangzi) River Delta 69 Yunnan 190