Social Welfare in Transitional China [1st ed. 2020] 978-981-32-9659-6, 978-981-32-9660-2

Table of contents :
Front Matter ....Pages i-xxi
Front Matter ....Pages 1-1
Introduction (Keqing Han)....Pages 3-16
China’s Social Transition and Social Welfare Reform (Keqing Han)....Pages 17-47
Impact of Economic Globalization on China’s Social Welfare Policy (Keqing Han)....Pages 49-81
Financial Crisis and Institutional Countermeasures Amid China’s Social Welfare Reconstruction (Keqing Han)....Pages 83-104
Social Stratification Objectives of China’s Welfare Construction (Keqing Han)....Pages 105-137
Civil Society and China’s Social Welfare Reform (Keqing Han)....Pages 139-158
Social Quality Theory and Its Enlightenment to China’s Welfare Reform (Keqing Han)....Pages 159-171
“Third Way” Theory and Chinese Way of Welfare Reform (Keqing Han)....Pages 173-184
Front Matter ....Pages 185-185
Development of China’s Elderly Welfare in the Transitional Period (Keqing Han)....Pages 187-219
Development of Welfare for the Chinese Disabled in the Transitional Period (Keqing Han)....Pages 221-253
Changes on Children’s Palace and Fulfillment of Child Welfare in China (Keqing Han)....Pages 255-296
Welfare Reconstruction for the Urban Poor: Taking the Minimum Livelihood Guarantee System as an Example (Keqing Han)....Pages 297-337
Social Mobility and Urban Inclusion of Migrant Workers (Keqing Han)....Pages 339-390
Back Matter ....Pages 391-405

Citation preview

SOCIOLOGY, MEDIA AND JOURNALISM IN CHINA

Keqing Han

Social Welfare in Transitional China

Sociology, Media and Journalism in China

This series provides an interdisciplinary and cutting edge approach to the key areas of media, journalism and communication in China. Offering titles cutting across these areas, Sociology, Journalism and Communication in China addresses the rapid changes affecting how news is disseminated in China, how people communicate in daily life, and how mobile technologies are affecting contemporary human interaction in sociological and commercial settings. This series also examines major sociological trends in China and how these are developing, as well as rapid changes in how communication is affecting and being affected by China’s growing population and internal migration. Providing a vital comparative approach, notably with western nations, this series considers the development of Chinese media, journalistic cultures and histories and sociological development on a global scale. More information about this series at http://www.palgrave.com/gp/series/16016

Keqing Han

Social Welfare in Transitional China

Keqing Han Renmin University of China Beijing, China

Funded by 本书受到“中华社会科学基金 (Chinese Fund for the Humanities and Social Sciences) 资助 Sociology, Media and Journalism in China ISBN 978-981-32-9659-6 ISBN 978-981-32-9660-2  (eBook) https://doi.org/10.1007/978-981-32-9660-2 Jointly published with China Renmin University Press, Beijing, China The print edition is not for sale in China Mainland. Customers from China Mainland please order the print book from: China Renmin University Press. ISBN of the China Mainland edition: 978-730-01-3661-5 Translation from the Chinese language edition: 转型期中国社会福利研究 by Keqing Han, © China Renmin University Press 2011. All Rights Reserved. © China Renmin University Press 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover design by eStudio Calamar This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

This book is dedicated to my mother

Contents

Part I  Central Concepts 1 Introduction 3 1.1 Definitions of Social Welfare and Origins of Welfare States 3 1.1.1 Definitions of Social Welfare 3 1.1.2 Origins of Welfare States 5 1.2 Basic Functions of Social Welfare 6 1.2.1 Economic Functions 7 1.2.2 Political Functions 8 1.2.3 Social Functions 9 1.3 Reforms and Reconstruction of China’s Social Welfare System 10 1.3.1 Reforms of China’s Social Welfare System 10 1.3.2 Reconstruction of China’s Social Welfare System 12 2

China’s Social Transition and Social Welfare Reform 17 2.1 Social Structural Differentiation and Transition Since the 1978 Reform 17 2.1.1 Differentiation of Social System and Structure 17 2.1.2 Impact from Market Transition on Social Structure 19 vii

viii  

CONTENTS

2.2

2.3

2.4

3

Commonly Benefited: Key Principle for China’s Social Transition 2.2.1 Theoretical Bases 2.2.2 Effects of “Commonly Benefited” on Chinese Social Transition 2.2.3 Issues Need to Be Noticed Equality: Core Value of China’s Social Transition 2.3.1 Basic Connotations of Equality 2.3.2 Issue of Equality During the Transitional Period 2.3.3 Discussing the Concept of Equality in the Current Transitional Period 2.3.4 Realization of Equality Changes and Reconstruction of Chinese Welfare System 2.4.1 Changes of Chinese Social Welfare System 2.4.2 Reconstruction of Chinese Social Welfare System

20 22 23 27 29 29 30 33 38 38 38 41

Impact of Economic Globalization on China’s Social Welfare Policy 49 3.1 Economic Globalization: An Increasingly Prominent Reality 49 3.1.1 Globalization and Economic Globalization 50 3.1.2 Impact of Economic Globalization on Wealth and Income Distribution 51 3.2 Impact of Economic Globalization on China’s Income Distribution 56 3.2.1 China’s Foreign Trade and Absorption of Foreign Investment 56 3.2.2 Economic Globalization Uplifting Economic Status of Social Members on the Whole 57 3.3 Economic Globalization and China’s Inequality 63 3.3.1 Economic Globalization: Key Factor Leading to Imbalanced Regional Economic Growth 64 3.3.2 Economic Globalization Expediting Industrial Restructuring 68

CONTENTS  

3.3.3

3.4

4

Economic Globalization Somewhat Widening Urban–Rural Inequality 3.3.4 Economic Globalization Widening the Gap Between Workers’ Income and Occupational Prestige Economic Globalization and Policy Selection for China’s Social Welfare System 3.4.1 Giving Priority to Building a Social Assistance System 3.4.2 Gradually Improving Modern Social Insurance System 3.4.3 Improving Labor Protection Mechanism 3.4.4 Rapidly Building a Social Welfare System in Rural Areas

ix

71 72 75 77 78 78 79

Financial Crisis and Institutional Countermeasures Amid China’s Social Welfare Reconstruction 83 4.1 Impact of Financial Crisis on China’s Economy and Society 83 4.1.1 Impact of the Financial Crisis on China’s Economy 84 4.1.2 Impact of the Financial Crisis on China’s Employment 86 4.2 Impact of Financial Crisis on China’s Social Spending 90 4.2.1 Social Insurance Expenditure 90 4.2.2 Social Assistance Expenditure 90 4.3 China’s Policy Measures in Response to the Financial Crisis 94 4.3.1 Ensuring the Basic Livelihood of Low-Income Earners and Unemployed 94 4.3.2 Flexible Contribution Policies 98 4.3.3 Employment-Supporting Policies 98 4.3.4 Promoting Steady and Rapid Development of Rural Areas and the Western Region 100 4.4 Development and Flexibility Principle of China’s Social Welfare System in Post-crisis Period 101

x 

CONTENTS

5

Social Stratification Objectives of China’s Welfare Construction 105 5.1 Basic Concepts of Social Stratification and Their Relations 105 5.1.1 Social Stratification and Strata 106 5.1.2 Social Mobility and Social Stratification 108 5.1.3 Social Differentiation and Social Stratification 110 5.2 Theoretical Tradition of Social Stratification Study and Its Enlightenment 113 5.2.1 Social Stratification Study in Functional Paradigm 114 5.2.2 Social Stratification Study in Conflict Paradigm 121 5.2.3 Enlightenment of Sociological Theory to Chinese Social Stratification 126 5.3 China’s Current Social Stratum Structure and Future Variation Trend 128 5.3.1 Current Social Stratum Structure 128 5.3.2 Future Variation Trend 129 5.4 Social Stratification Targets of China’s Social Welfare Construction 132 5.4.1 Impact of Social Welfare on Social Stratification 132 5.4.2 Direction of China’s Social Welfare Construction from the Perspective of Social Stratification 134

6

Civil Society and China’s Social Welfare Reform 139 6.1 Evolution and Theoretical Definition of the Concept of “Civil Society” 139 6.1.1 Evolution of the Concept of “Civil Society” 139 6.1.2 Theoretical Definition of Civil Society 140 6.2 Development of China’s Civil Society 143 6.2.1 Development of Civil Society After the Founding of New China 144 6.2.2 Rise of Civil Society Since the Reform and Opening Up 145

CONTENTS  

6.2.3 6.3

6.4

7

Sequential Problems in Civil Society Construction Social Welfare Reform During Civil Society Construction 6.3.1 Simultaneous Construction of Civil Society and Social Welfare System 6.3.2 Feasible Welfare System: Let Government Play a Leading Role and Socialized Services Act as a Supplement Growth of China’s Charitable Organizations 6.4.1 Cultivation and Development of China’s Charitable Organizations 6.4.2 Role of Government in Nurturing Charitable Organizations 6.4.3 Role of Charitable Organizations in Social Welfare

xi

147 148 148 150 151 152 154 155

Social Quality Theory and Its Enlightenment to China’s Welfare Reform 159 7.1 Main Content of Social Quality Theory 159 7.1.1 Concept of Social Quality 159 7.1.2 Constituent Elements of Social Quality 160 7.1.3 Methodology for Social Quality Study 163 7.2 Social Quality Study in the Chinese Context 164 7.2.1 Birth of the Social Quality Concept in China 164 7.2.2 Content of Social Quality Study 165 7.3 Enlightenment of Social Quality Theory to China’s Welfare Reform 166 7.3.1 Economic Development Is the Main Route to Improve Social Quality 168 7.3.2 Political Democracy Is an Important Symbol of Social Quality 168 7.3.3 Cultivation of Civil Society Is an Important Aspect for Improving Social Quality 168 7.3.4 Equal Opportunities Are Indispensable for Social Quality 169 7.4 Conclusion 169

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CONTENTS

8

“Third Way” Theory and Chinese Way of Welfare Reform 173 8.1 “Third Way” Theory for Social Welfare 173 8.1.1 Political Ideal of the Third Way 174 8.1.2 State View of the Third Way 175 8.1.3 Society View of the Third Way 176 8.1.4 Welfare View of the Third Way 176 8.2 “Leftist” and “Rightist” Stages in China’s Social Welfare Construction 179 8.2.1 “Leftist” Welfare in the Era of Planned Economy 179 8.2.2 “Rightist” Welfare in the Early Years of Market Economic Reform 180 8.3 Chinese Way of Welfare Reform 181

Part II  China’s Welfare System 9

Development of China’s Elderly Welfare in the Transitional Period 187 9.1 Main Content of China’s Elderly Welfare 187 9.1.1 Guarantee of Economic Income 189 9.1.2 Elderly Welfare Facilities 190 9.1.3 Medical Care Service 190 9.1.4 Spiritual Consolation and Other Services 191 9.2 Predicament in Front of China’s Elderly Welfare at Present 192 9.2.1 Plight of the Elderly Welfare in Urban Areas 192 9.2.2 Changes in the Rural Elderly Welfare 201 9.3 Role of Land Security in Rural Elderly Welfare 204 9.3.1 Misunderstandings of Land Security 205 9.3.2 Realistic Dangers of Land Security 208 9.4 Discussion on Marketization of Elderly Care Services 209 9.4.1 Three Levels of Marketization of Elderly Care Services 210 9.4.2 Management of Elderly Care Service Market 211

CONTENTS  

xiii

9.4.3 9.5

Problems Worth of Attention for Marketizing Elderly-Care Services 213 Policy Proposals for Improvement of Elderly Welfare 215

10 Development of Welfare for the Chinese Disabled in the Transitional Period 221 10.1 Current Situation of China’s Welfare of the Disabled 221 10.1.1 Disabled Persons and Disabled Groups 221 10.1.2 Main Content of the Welfare for the Disabled 223 10.1.3 Achievements in the Welfare for the Disabled 227 10.2 Problems in Welfare for the Disabled and Countermeasures 228 10.2.1 Employment of the Disabled 230 10.2.2 Education of the Disabled 232 10.2.3 Construction of a Barrier-Free Environment 235 10.3 Development of Chinese Welfare Enterprises 239 10.3.1 Development Course 241 10.3.2 Major Problems 242 10.3.3 Vision of Future Development 249 10.3.4 Development Direction of Welfare for the Disabled in China 250 11 Changes on Children’s Palace and Fulfillment of Child Welfare in China 255 11.1 Issues Worth of Attention and Existing Studies 255 11.1.1 Connotations of Children’s Palace, After-School Education and Child Welfare 256 11.1.2 Literature Research on After-School Education 260 11.1.3 Studies on the Children’s Palace in China 262 11.2 Development Course of China’s Children’s Palace: Case Study of M City Children’s Palace 265 11.2.1 Development of M Children’s Palace in the Era of Planned Economy 266 11.2.2 Development of M Children’s Palace Since the Reform 269 11.2.3 Functional Changes of M Children’s Palace Since the Reform 280

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CONTENTS

11.3 Changes on the Function of Children’s Palace in Delivering Child Welfare 11.3.1 Child Welfare Function of Children’s Palace in the Era of Planned Economy 11.3.2 Difficulties in Front of the Children’s Palace Since the Market-Oriented Reform 11.3.3 Deviation from Child Welfare Since the Market-Oriented Reform 11.3.4 Reasons for Deviation from the Function of Child Welfare 11.4 Development Trend of Children’s Palace and Realization of Child Welfare 11.4.1 Role of Children’s Palace in Child Welfare 11.4.2 Discussions on the Future Prospect of Children’s Palace 11.4.3 Development Direction of China’s Child Welfare

281 282 282 285 286 288 289 290 292

12 Welfare Reconstruction for the Urban Poor: Taking the Minimum Livelihood Guarantee System as an Example 297 12.1 System Background and Research Techniques 297 12.1.1 Introduction to System Background 297 12.1.2 Research Techniques 298 12.2 Main Focuses of Current Studies 299 12.2.1 Standard of Urban Subsistence Allowance 299 12.2.2 Implementation of the Minimum Livelihood Guarantee System 301 12.2.3 Major Problems Existing in the System 302 12.2.4 Countermeasures for Improving the System 304 12.2.5 Future Development Trends of the System 305 12.3 Quantitative Descriptive Results 306 12.3.1 Basic Information of the Respondents 306 12.3.2 Housing Condition of the Respondents 309 12.3.3 Receipt of Subsistence Allowance 312 12.3.4 Recognition and Evaluation of the Minimum Livelihood Guarantee System 317 12.3.5 Brief Conclusion 320

CONTENTS  

12.4 Qualitative Analysis Results 12.4.1 The Chinese Have Not yet Taken the “Subsistence Allowance” as Their Legal Right 12.4.2 Verification Mechanism and Supporting Systems Remain Defective 12.4.3 Unduly Low Standard of Subsistence Allowance 12.4.4 Publicity of Subsistence Security Policy Needs to Be Intensified 12.4.5 Psychology of Subsistence Allowance Recipients Is Worth of Attention 12.4.6 Construction of a Contingent for Grassroots Subsistence Security Work 12.5 Policy Suggestions for Improving the Urban Minimum Livelihood Guarantee System 12.5.1 Standardize the Eligibility Review System with Focus on Household Income Survey 12.5.2 Improve Dynamic Management to Promote Employment 12.5.3 Build a Comprehensive Social Assistance System

xv

321 321 323 327 329 330 332 334 334 335 335

13 Social Mobility and Urban Inclusion of Migrant Workers 339 13.1 Major Problems to Be Examined 339 13.2 Social Mobility of Migrant Workers 344 13.2.1 Mobility Intention 344 13.2.2 Attainment of Social Status in Urban Areas 347 13.2.3 Ways for Migrant Workers to Achieve Upward Mobility 352 13.2.4 Intergenerational Expectation and Future Plans of Migrant Workers 358 13.3 Social Protection of Migrant Workers: A Case Study of Suzhou 361 13.3.1 Research Background and Survey Approaches 361 13.3.2 Analysis Results of the Questionnaire Survey 364 13.3.3 Causes for the Damages to the Rights and Interests of Migrant Workers 377

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CONTENTS

13.4 Social Inclusion of Migrant Workers in Cities 13.4.1 Inevitability for Migrant Workers to Integrate into Cities 13.4.2 Ways for Migrant Workers to Integrate into Cities 13.5 Conclusion 13.5.1 Institutionalization of Migrant Workers’ Social Mobility 13.5.2 Social Mobility of Migrant Workers and Alternative Paths to China’s Urbanization

380 380 383 385 386 386

Postscript 391 References 393

List of Figures

Fig. 3.1 China’s total foreign trade volume in 1978–2001 (Source National Bureau of Statistics [NBS], China Statistical Yearbook 2002, Beijing: China Statistics Press) 56 Fig. 3.2 Ranking of China’s total foreign volume by municipality/ province/region (Source NBS, 2002, China Statistical Yearbook 2002, Beijing: China Statistics Press) 65 Fig. 3.3 Comparison of FDI among China’s three major regions in 2001 (Source NBS, 2002, China Statistical Yearbook 2002, Beijing: China Statistics Press) 66 Fig. 3.4 Distribution of foreign-funded enterprises in China in 2001 (Source NBS, 2002, China Statistical Yearbook 2002, Beijing: China Statistics Press) 69 Fig. 3.5 Changes on China’s industrial structure (Source NBS, 2002, China Statistical Yearbook 2002, Beijing: China Statistics Press) 70 Fig. 3.6 Structure of China’s export commodities in 2001 (Source NBS, 2002, China Statistical Yearbook 2002, Beijing: China Statistics Press) 72 Fig. 4.1 Changes on China’s GDP in 1998–2009 (Source NBS, 2010, China statistical yearbook 2010, Beijing: China Statistics Press, p. 41) 85 Fig. 4.2 Number of China’s foreign-funded enterprises (Source NBS, 2010, China statistical yearbook 2010, Beijing: China Statistics Press, p. 41) 88

xvii

xviii  

LIST OF FIGURES

Fig. 4.3 Number of employees in China’s foreign-funded enterprises (Source NBS, 2010, China statistical yearbook 2010, Beijing: China Statistics Press, p. 41) 89 Fig. 4.4 Revenue, expenditure and balance of China’s social insurance fund (Source NBS, 2010, China statistical yearbook 2010, Beijing: China Statistics Press, p. 41) 91 Fig. 4.5 Revenue, expenditure and balance of China’s unemployment insurance fund (Source NBS, 2010, China statistical yearbook 2010, Beijing: China Statistics Press, p. 41) 92 Fig. 5.1 Chinese social strata (Note The arrows denote that the concerned social stratum can be classified into one of the five social ranks. Source Lu Xueyi, 2002, Research Report on Social Strata of Contemporary China, Beijing: Social Sciences Academic Press, p. 9; Lu Xueyi, 2004, Social Mobility in Contemporary China, Beijing: Social Sciences Academic Press, p. 13) 129 Fig. 11.1 Number of enrolled students and class times in summer in 1996–2001. Note (1) The number of trainees throughout 1995 is also included in the figure for comparison. (2) This figure is plotted in reference to the historical data about M Children’s Palace 272 Fig. 12.1 Gender and age composition of the respondents 307 Fig. 12.2 Start time for the respondents receiving subsistence allowance 312 Fig. 12.3 Amount of monthly subsistence allowance distributed to the respondents 314 Fig. 13.1 Gender composition of the migrant workers in Suzhou 365 Fig. 13.2 Age composition of the migrant workers in Suzhou 365 Fig. 13.3 Registered permanent residence of the migrant workers in Suzhou 366 Fig. 13.4 Educational level of the migrant workers in Suzhou 367 Fig. 13.5 Identity of the migrant workers before working in Suzhou 367 Fig. 13.6 Daily working hours of the migrant workers in Suzhou 369 Fig. 13.7 Housing conditions of the migrant workers in Suzhou 372 Fig. 13.8 Residence of children of the migrant workers in Suzhou 373 Fig. 13.9 Schooling of children of the migrant workers in Suzhou 373 Fig. 13.10 Foremost difficulty for the migrant workers in Suzhou 377 Fig. 13.11 Proportion of migrant workers joining in labor union 379

List of Tables

Table 3.1 China’s paid-in foreign investment (Unit: bln USD) 58 Table 3.2 Per capita total import-export volume, per capita FDI, per capita GDP and workers’ average wage in 31 provinces/municipalities in 1995 and 2001 60 Table 3.3 Regression analysis of the impact of per capita total import-export volume and per capita FDI on per capita GDP and workers’ average wage 62 Table 3.4 Basic information of China’s foreign-funded enterprises in three major regions in 2001 67 Table 3.5 Layout of China’s industrial structure (Unit: %) 69 Table 3.6 Average wage of workers in enterprises of different ownership (Unit: yuan) 73 Table 3.7 Comparing workers’ average wage in enterprises of different ownership in east China in 2001 (Unit: yuan) 73 Table 4.1 Changes on China’s GDP in 1998–2009 84 Table 4.2 Changes on China’s foreign trade value in 1998–2009 85 Table 4.3 Number of urban registered unemployment and URUR in China 86 Table 4.4 China’s foreign investment in 1998–2009 88 Table 4.5 Number of employees in China’s foreign-funded enterprises 89 Table 4.6 Revenue, expenditure and balance of China’s social insurance fund 91 Table 4.7 Revenue, expenditure and balance of China’s unemployment insurance fund 92 Table 4.8 Social assistance expenditure for entire Chinese residents 93 xix

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LIST OF TABLES

Table 4.9 China’s policies in response to the financial crisis 95 Table 10.1 Development of Chinese welfare enterprises 243 Table 10.2 Occupational distribution of the disabled 248 Table 11.1 Admissions directory of M children’s palace in spring of 2010 273 Table 11.2 Major training bases built by M children’s palace since 1997 278 Table 11.3 Institutional restructuring of M children’s palace 279 Table 12.1 Statistics on the family size of the respondents 306 Table 12.2 Statistics on the educational level of the respondents 307 Table 12.3 Statistics on marital status of the respondents 308 Table 12.4 Statistics on the health status of the respondents 308 Table 12.5 Statistics on the working ability of the respondents 309 Table 12.6 Statistics on the employment status of the respondents 310 Table 12.7 Statistics on the housing (construction) area of the respondents 310 Table 12.8 Statistics on housing ownership of the respondents 311 Table 12.9 Statistics on housing types of the respondents 311 Table 12.10 Statistics on housing condition of the respondents 312 Table 12.11 Time for approving the subsistence allowance application 313 Table 12.12 Channels for the respondents to know the Minimum Livelihood Guarantee System 313 Table 12.13 Ways for the respondents to draw the subsistence allowance 315 Table 12.14 Intermission of subsistence allowance 315 Table 12.15 Adjustment to the amount of subsistence allowance 315 Table 12.16 Adjustment to the amount of subsistence allowance 316 Table 12.17 Reasons for adjusting up the amount of subsistence allowance 316 Table 12.18 Reporting of the changes in family income to the relevant department 317 Table 12.19 Receipt of the subsistence allowance in full and on time 317 Table 12.20 Effect of the subsistence allowance in improving life quality 318 Table 12.21 Consistency of the allowance amount with the actual economic state 318 Table 12.22 Satisfaction of the allowance approval process 318 Table 12.23 Whether there are ineligible recipients of subsistence allowance 319 Table 12.24 Whether there are eligible applicants but unable to get the subsistence allowance 320

LIST OF TABLES  

xxi

Table 12.25 Overall evaluation of the Minimum Livelihood Guarantee System 320 Table 13.1 Distribution of migrant workers in Suzhou by sector 364 Table 13.2 Marital status of the migrant workers in Suzhou 365 Table 13.3 Social insurance coverage of the migrant workers in Suzhou 376

PART I

Central Concepts

CHAPTER 1

Introduction

1.1   Definitions of Social Welfare and Origins of Welfare States 1.1.1   Definitions of Social Welfare “Social Welfare” generally refers to a kind of interest distribution mechanism, and a gauge for measuring the level of happiness of all citizens. However, the scholars from different states or regions have varied ­ definitions of social welfare. And the researchers, though coming from the same social background, may interpret this issue from diverse perspectives. According to the US scholar Robert L. Barker, social welfare is “a nation’s system of programs, benefits, and services that help people meet those social, economic, educational, and health needs that are fundamental to the maintenance of society”.1 In the Encyclopedia of Social Work, which was published by the US National Association of Social Workers in 1999, social welfare is explained as “an extensive and inaccurate phase, mostly defined as an ‘organized activity’, ‘government intervention’, policy or project that intends to respond to the social problems that are being aware of or improve the conditions of the disadvantaged groups…However, social welfare may be better understood as an idea about a fair society that creates job opportunities and helps people achieve their life value, provides © China Renmin University Press 2020 K. Han, Social Welfare in Transitional China, Sociology, Media and Journalism in China, https://doi.org/10.1007/978-981-32-9660-2_1

3

4  K. HAN

social members with security to a reasonable degree, keeps them from financial strain and violence, and facilitates the establishment of a fair and personal value-based assessment system; so such society shall be economically productive and stable. Such idea is based on an assumption that human society, through organized governance, is able to produce and provide what social welfare requires and morally obliged to fulfill such idea because it is feasible”.2 The Japanese Social Security Review Conference, which was held in 1950, came up with a report on Suggestions for Japan’s Social Security System which states that “social welfare is an undertaking that is designed to provide necessary guidance on livelihood and reintegration into society, as well as life protection to the handicapped, children and others that are entitled to governmental bailout, so as to enable them to lead a life on their own”. Besides, according to Article 3 in the Law on the Social Undertakings of Japan, “all social welfare activities shall abide by the principles for helping and cultivating the people that have to regain means of subsistence without hurting their will for a self-reliance life”. In other word, social welfare, which involves “all kinds of activities that benefit those in need of assistance and protection”,3 is the same with social welfare undertaking. In 1991, China published the Encyclopedia of China that covers 74 volumes dedicated to separate disciplines. The volume of Sociology defines “social welfare” as “a system that is designed to improve the quality of life of all citizens, particularly those in difficulty. This system shall, by means of allocating funds and rendering services, ensure basic living standard of all social members and upgrade their life as much as possible. Social welfare, in a narrow sense, indicates the services and measures for helping certain social members that lead a difficult life due to old age, sickness or incapacity resulting from physical or psychological defect; in a broad sense, it refers to all types of services and measures for improving both material and spiritual life of all members of society”.4 Overall, social welfare could be defined in both broad sense and narrow sense. From the perspective of objects or beneficiaries, the broad-sense social welfare takes care of all social members, while the narrow-sense social welfare focuses on the impoverished or special groups. With respect to welfare content, the generally defined social welfare contains both financial security and social services, while the narrowly defined social welfare is only about financial security or somewhat social assistance. The social welfare in this book is generally defined, i.e., it is a

1 INTRODUCTION 

5

system designed to satisfy people’s needs and improve their living standard by means of fiscal allocation, physical distribution and social services. Strictly speaking, social insurance is not covered in social welfare, yet a general social welfare is a comprehensive system that embraces social assistance, social insurance and social services. 1.1.2   Origins of Welfare States After the World War II, all industrialized countries, while improving their society security system, began to pay more attention to building a social welfare system. The UK and other western European countries successively declared to develop themselves into a welfare state, and an all-round welfare system that cares about their citizens “from cradle to tomb”. Other countries, though not following the same path, kept enacting legislation on social welfare. Japan, for example, stipulated the famous “six laws on social welfare”,5 which have laid legal basis for building and developing a sound social welfare system in the country. The knowledge of welfare state is usually deemed as stemming from the UK. In 1941, Sir William Beveridge, head of the then Social Insurance and Allied Services Committee, was entrusted by the UK government to draw up a post-war social security plan. At the end of 1942, Sir Beveridge delivered the famous report titled Social Insurance and Allied Services, usually known as the “Beveridge Report”, which sets out to annihilate five evils, i.e., “Want, Disease, Ignorance, Squalor and Idleness”. Sir Beveridge presented 23 reform proposals to fulfill these targets, particularly standardizing social insurance premium and social security administration, and ultimately build a caring-for-all social insurance system.6 The Beveridge Report is of epoch-making significance for creating the basic framework for a post-war welfare state. It reflects on the UK’s previous welfare schemes, and stands firm to the principle that welfare is for common good rather than the interest of certain groups, and the cause of social welfare calls for joint endeavor of both government and individuals. In contrast to the previous efforts, the Beveridge Report is rated as a prime example for the studies on social welfare, since it envisions a complete welfare system, involving both people’s needs in every aspect—its foremost concern—and corresponding measures. Around the end of the World War II, the UK government, on the basis of the Beveridge Report, introduced a series of social welfare laws: Family Allowance Law (1945), National Insurance

6  K. HAN

Law (1946), National Health Service Law (1946), Industrial Injury Law (1946) and National Relief Law (1948). The above five laws are so extensive that they take every aspect of social welfare into account; they are considered as an epitome of the UK’s achievements in social welfare in the past 300 years. These laws entered into effect as of July 5, 1948 when the precedents went invalid automatically, marking that the UK officially turned into a welfare state and opened a new page in its history. Since the 1970s, the UK has been reforming its welfare system, thus altering the continuous growth momentum of the welfare expenditure that had lasted for almost half a century, and generating a “non-welfare” development trend. The reform strictly controlled the UK’s welfare expenditure, e.g., some expenses were frozen, some were deferred, and some welfare products were “privatized” and subject to market operation. Such reform came under heavy criticism. It was even accused of deteriorating social inequality, since the previous policies were caring more about the poor, while the new ones catered to the rich.7 In the world at large, other developed western countries have joined the UK in the rank of welfare states, particularly those in the northwestern Europe like Sweden which are long hailed as “window of the welfare state” for their high-spend and extensive welfare policies. These societies have seen the policies for higher-level and more reasonable welfare treatment become irreversible, despite of some economic and social problems therefrom, because it is human instinct to seek happiness and benefit, and continuous economic growth makes their dream attainable. Therefore, when taking measures to control expansion of welfare expenditure, all governments shall seize the opportunity of development, foster reasonable growth of welfare and mitigate the possible adverse effect, in an aim to build a social welfare system that benefit all citizens.

1.2  Basic Functions of Social Welfare There is no doubt that the establishment and improvement of social welfare system is the prominent feature of the modern market economy, and also important means for a state to intervene with economy and correct market malfunction. Nowadays, social welfare plays an essential role in resolving social problems, safeguarding social stability and improving

1 INTRODUCTION 

7

people’s living standard. To be specific, social welfare could be interpreted through its economic, political and social functions. 1.2.1   Economic Functions First, social welfare is a form of income distribution. By taking part in social income distribution, social welfare is able to ease the negative impact from income disparity and ensure basic livelihood of all citizens. Second, social welfare is of great significance in resource allocation. Through exerting influence on prioritization and input scale of financial appropriation, social welfare will alter velocity of capital accumulation. Last, social welfare has enormous impact upon macroeconomy, which manifests in the following three aspects: (i) The impact on balance between supply and demand. Social welfare is a key factor that affects demand expansion—driving force for economic growth. In order to boost consumption and increase domestic demand, the government shall build a social welfare mechanism that effectively liberates people from worrying about birth, death, illness and old age. On this basis, social supply and demand could be balanced and do good to a virtuous economic cycle. (ii) The impact on production and reproduction of labor force. Social welfare is able to help the laid-off employees amid market competition sustain a basic living standard, and create possible conditions for labor reproduction. Moreover, a standardized social welfare mechanism facilitates rational flow and allocation of labor force. (iii) The impact on employment. Social welfare system is actually a nationwide network, its operation calls for participation and contribution of massive manpower; in other word, there are vast job opportunities in this sector.8 Since its execution of the policies for reform and opening up to the outside world in 1978, the Chinese government has been actively pressing ahead industrialization, which has created enormous demand for building a social welfare system. In the meantime, the economic boom in the past two decades not only built up China’s comprehensive strength, but accumulated substantial funds and materials for carrying out the welfare programs. It is also an urgent task to do so, since multiple social problems have exposed in recent years along with the economic growth, and the solutions lie in welfare treatment. According to Karl Polanyi, an Austro-Hungarian economic sociologist, several necessary conditions for operating a free market cannot be created by the market itself, but supported by other systems; otherwise, a laissez-faire market mechanism

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may end up in self-destruction.9 In short, whether China could continue rapid economic growth or maintain social stability, harmony and healthy development, a national social welfare system has a lot of discretion. 1.2.2   Political Functions First, social welfare is a tool used by the ruling class to maintain political control and social governance. Social welfare is a political phenomenon that is closely bonded with class and the state; it begins to reflect the interest of the ruling class and uphold their authority since the day it was initiated. In class societies, the ruling class, in order to defend their prestige, manages to build economic, political and cultural institutions to manifest their will, and works out and exercises a series of social norms to represent their interest. Social welfare is a key component of the social norms, and plays a role in safeguarding the class rule through regulating social relationships. In addition to being a political instrument, social welfare is also a basic means for governance of society, because any political rule relies on performance of certain public functions. Second, social welfare is the basic means for party activities. Generally, social welfare, which is associated with certain values and ideology, marks the nature of a political party. In modern societies, the construction of a social welfare system not only serves as the foundation for political parties, but concerns their prosperity and decay.10 Among the social welfare theories, the “state-centered perspective” states that the state and bureaucracy are the leading “actors” in working out social welfare programs; the development of social welfare relies on the organizational structure, operational objectives and other factors within the state, which implies that the state can either be a propellant or a stumbling block in developing social welfare. Being an “autonomous actor”, the state is sure to utilize all “financial and bureaucratic resources” to accomplish its operational objectives. Herein, the development of social welfare is considered as a result from the bureaucrats’ ambition to realize their operational objectives and the state’s endeavor to respond to social pressure. Here is a typical example for the “state-centered perspective”, by the end of the 1800s, Otto von Bismarck, the then Chancellor of Germany, vigorously carried out a social insurance plan in order to enhance the survivability of his government and suppress the socialist movement. Besides, in their researches, the American economist Richard Freeman and psychologist J. S. Adams pointed out that

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bureaucratic activities used to playing a decisive role in developing the US social welfare system; and the bureaucrats usually influence the formulation and implementation of social welfare policies from two aspects: First, to help promote the “social insurance movement” and design an operational structure for the social welfare system. Second, to reform the content of this system to make it accord with the social and political climate at that time.11 Currently, China has seen such problems as economic inequality, employment and unemployment become increasingly prominent, which could be effectively resolved by social welfare policies. Therefore, it is incumbent upon the Chinese government to execute the social welfare policies through legislative and administrative means; after all, government action is always the most crucial and effective in China. 1.2.3   Social Functions The experiences of different countries have proved that social welfare is important to guarantee for social stability and development. Social welfare mainly has three social functions: First, to assist the people who encounter risks. In their lifetime, people may face various risks such as disease, old age, injury, disability, unemployment, disaster, no family or no friend, which may deprive them of income source and force them into predicament. In that case, the social welfare system will help them overcome difficulties. Second, social welfare helps create a fair society. Being capable of redistributing national income, social welfare will somewhat divert the wealth toward the low-income earners so as to satisfy their basic life demand, which will then narrow the wealth gap among all social members. Third, social welfare is favorable for social stability and development. By satisfying people’s basic living standard, social welfare alleviates their anxiety over possible risks. Furthermore, a narrowed wealth gap will pave way for creating a fair and reasonable social environment where everyone enjoys benefit from social welfare, holds confidence in their future, lives and works in peace and contentment. Overall, the building of a social welfare mechanism with the government taking a leading role is able to resist against all risks and uncertainties in front of individuals; it is a common development trend for all countries, and an opportunity for China to exhibit its responsibility for its people. In today’s world, social welfare is extensively recognized by the international community for being an institution that benefits citizens. Although different political parties or theorists may have mixed views

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toward the functions and effects of social welfare, it is a fact that social welfare has become a key component of the modern societies, and the foremost security defense system for social development and a benign social order.

1.3  Reforms and Reconstruction of China’s Social Welfare System 1.3.1   Reforms of China’s Social Welfare System Since it was founded in 1949, the People’s Republic of China saw its social welfare system undergo two reforms which involved three crucial development stages. Through the first reform, China gradually built the social insurance, workplace welfare and collective security systems that accorded with the socialist planned economy. Through the second reform that was kicked off after 1978 when China started exercising the policies for reform and opening up to the outside world, the planned economy-based social welfare system was transformed into the one based on market economy. These two rounds of significant reforms could be split into the following three stages: During the first stage (1949–1978), the social welfare system of China was established and tended to be stabilizing. China successively built the Insurance System for Urban Enterprise Workers (1951),12 the State-funded Public Medical System (1952),13 the Corporate Welfare System (1953),14 the Retirement System for the Personnel in Government Departments and Public Institutions (1955),15 and the Five Guarantees Supporting System in Rural Areas (1956)16 and the Cooperative Medical Care System (1962),17 marking that a national welfare system, which was based on an urban–rural dual structure, finally took shape. While China remained in the era of planned economy, its social welfare system featured urban–rural segmentation, i.e., the urban laborers were mainly guaranteed by the national insurance system, with the workplace welfare serving as a supplement, and a minority of impoverished people, like those “sanwu” people,18 could receive social assistance; whereas in the rural areas, there was a three-level collective welfare system, i.e., people’s commune, production brigade and production team. The second stage (1979–1997) witnessed China transit from planned economy to market economy, and start building a new-type social

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welfare system since 1997. The dominant trend during this period was to replace the initial rural land reform with the reform of state-owned and collectively-owned enterprises in the urban areas, and replace planned economy with market economy. As for the reform of social welfare, the Chinese government was helping the economic organizations, government departments and public institutions get rid of the burden from the coverall welfare system—a sign of the planned economy era. In 1993, in its Decisions on Several Matters about Building a Socialist Market Economy, the Central Committee of the CPC explicitly proposed to build a reasonable individual income distribution system and a social security system, i.e., “build a multi-level social security system, provide both urban and rural residents with the social security services that match with China’s situations, sustain economic growth and maintain social stability”, “give priority to improving the corporate elder-care and unemployment insurance system, ease the burdens upon the enterprises by giving full play to social services, support the enterprises to adjust organizational structure, increase economic benefit and enhance competitive edge”.19 During this period that new things kept emerging out of the old, several welfare systems that were left from the planned economy era were collapsing, e.g., their effectiveness was weakening, there was vacuum in certain welfare policies, some welfare schemes were either distorted or incomplete; moreover, welfare housing and state-funded education began to be marketized, commercialized, privatized or industrialized. Later, along with continuous implementation of the reform and opening-up policies, new economic and social problems kept cropping up, which made it an inevitable demand for building an up-to-date social welfare system based on the market economy. In such context, lots of provinces started pilot programs about new pension and medical insurance systems, and created an insurance model that integrated social financing with personal spending. Shanghai and other places, through researches and explorations, put in place a minimum living insurance system that focused on the urban laid-off workers and impoverished groups. During the third stage (1998 to date), the new-type social welfare system was officially established and then constantly improved. This stage took on the following characteristics: (1) The competent departments were reorganized. In 1998, the then Ministry of Labor was renamed as the Ministry of Labor and Social Security, indicating that it would strengthen the administration of social insurance affairs. Later in 2008, the Ministry of Labor and Social Security and the then

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Ministry of Human Resources were incorporated into the Ministry of Human Resources and Social Security. (2) Welfare systems were set up one after another, e.g., the Retirement Pension Insurance System for Urban Employees (1997), the Basic Medical Insurance System for Urban Employees (1998), the Unemployment Insurance System (1999), the Work-Related Injury Insurance System (2004), the Medical Insurance System for Urban Residents (2007), the New-type Rural Cooperative Medical Insurance System (2002), and the New-type Rural Retirement Pension Insurance System (2009). On October 28, 2010, the Social Insurance Law of the People’s Republic of China was enacted, marking that a social welfare system basically took shape in China. In the meantime, the relevant policies for social assistance and services and housing benefit kept coming out, e.g., the Minimum Living Allowance for Urban Residents (1999), the Regulations on Management of Housing Provident Fund (1999), the Law of the People’s Republic of China on Donations for Public Welfare (1999), the Measures for the Administration of Relief for Vagrants and Beggars without Assured Living Sources in Cities (2003), the Regulations on the Work of Providing Five Guarantees (2006), the Rural Minimum Living Allowance System (2007), the Measures for the Guarantee of Low-rent Homes (2007), and the Law of the People’s Republic of China on the Protection of Disabled Persons (2008). (3) The guidance value for China’s social welfare changed fundamentally, i.e., the ideas for fairness and righteousness gradually replaced such old concepts as “efficiency coming first” and “remedy-oriented guarantee”. 1.3.2   Reconstruction of China’s Social Welfare System Since China started reform and opened up to the outside world in 1978, its social welfare system was initially built around the socialist market economy, which contained two connotations as follows: First, the marketization reform was the basis for China’s reconstruction of the social welfare system. Second, the reconstruction of the social welfare system is part of China’s marketization reform, making China’s social welfare system intensely colored by liberalism for a long time.20 According to Gøsta Esping-Andersen, the minimal laissez-faire social policies are innate of liberalism. When the ideal of universalism within liberalism conflicts with the “social dualism” and “social stigma” in reality, the liberalist countries will build a kind of social assistance—a punitive and stigmatized poverty relief—to deal with market failure, and then resort to the means-tested

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relief. In terms of welfare arrangement, the means-tested relief is only a supplement to the liberal social policies, the crucial part shall be individual insurance and the contract that sounds like based on people’s own accord and insurance actuarial.21 Since China embarked on the marketization reform, all of the intrinsic duality, widening wealth gap and social exclusion resulting from the stigma22 conformed to the difficulties in front of the liberal social policies that were described by Andersen. In case the liberal social policies and institutional arrangement stated by Andersen was a universal rule for welfare system, then the priority of China’s social welfare system shall be the same, i.e., to establish and improve the poverty relief and the means-tested social assistance system. With respect to the social assistance policies, the Chinese government successively built the systems for the urban minimum living allowance, helping the vagrants and beggars in cities, providing low-rent homes, medical and educational help to the urban impoverished families; and made adjustments to the competent departments. On July 10, 2008, the Notice of the General Office of the State Council on Issuing the Provisions on the Main Functions, Internal Structure and Staffing of the Ministry of Civil Affairs was issued, marking that China would restructure the internal agencies of the Ministry of Civil Affairs (MOCA), adjust the duties and functions of MOCA to give its full play in social assistance, and rename the then Minimum Living Assurance Department as Social Assistance Department. As for the social insurance policies, the Social Insurance Law of the People’s Republic of China promogulated on October 28, 2010 integrated the insurances separately for the elderly, medical care, workrelated injury, unemployment and childbirth, explicitly stated that the pension insurance shall be gradually unified across the nation, while the other types of insurance shall be unified at the provincial level, the scope of beneficiaries shall cover laborers and citizens, and the responsibilities of government shall be further clarified, marking that the social welfare system with the Chinese characteristics basically took shape since it was initiated in 1978. A basic framework for the rural welfare system was already created. It involves the New-type Rural Pension Insurance System, the Newtype Rural Cooperative Medical Insurance System, the Rural Minimum Living Allowance System and the Rural Five Guarantees System. The policies for safeguarding the rights and interests of the rural migrant workers have been improved, the reform of household registration

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system has been expedited, making the social welfare system that features urban–rural integration already exist in embryo. It should be noted that the reconstruction of China’s social welfare system since 1978 was a kind of welfare reform led by government or driven by policies. From the perspective of structural functionalism, any change on political system is under the impact from changing economic system, the two systems will firstly differentiate from each other, and then gradually become mutually accustomed. To some extent, the reconstruction of China’s welfare system was initially induced by economic reform or changing economic system, but currently it has become an essential part of the national pollical reform or changing political system. At present, the single target for economic growth is being replaced by diversified targets that include political democracy and social construction; consequently, the reconstruction of the welfare system is no longer a supplement to the market economic reform, but tend to have several targets as resolving social problems, mitigating wealth gap and promoting social justice. In short, the reconstruction of the welfare system is not only a part and an extension of the Chinese market economic reform, but a part and an extension of the Chinese social transformation and development in the future.

Notes

1. Barker Robert L., 1991, The social work dictionary (2nd edition), Silver Spring, MD, National Association of Social Workers, p. 221. 2. Shang Xiaoyuan, 2001, Re-recognition of social welfare and society security, Social Sciences in China, Issue 3. 3.  Yasuko Ichibangase, 1998, The fundamental theories of social welfare, Wuhan: Huazhong Normal University Press, p. 26. 4. Editorial Board of Encyclopedia of China, 1991, Encyclopedia of China sociology, Beijing: Encyclopedia of China Publishing House, p. 286. 5. Law on People’s life protection, Law on children’s welfare, Law on welfare of physically handicapped people, Law on welfare of psychologically defective people, Law on welfare of elders, Law on welfare of single-parent families. 6. Beveridge William, 2004, Report on Social insurance and allied services, Beijing: China Labor and Social Security Publishing House, pp. 20–82. 7. Liu Weiwei, 01/08/2016, The social relief system in the UK, http://www. chinasocialpolicy.org/. 8. Lin Jia, 2002, Ideas, practice and innovation of social security law, Beijing: China Renmin University Press, pp. 146–48.

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9. Lv Jiande, 2002, Globalization and social inequality, in Labor and social security in the context of globalization, in Zheng Gongcheng, Zheng Yushuo, ed., Beijing: China Labor and Social Security Publishing House, p. 49. 10. Hua Juxiang, 2002, Social policies and legislations, Beijing: Social Science Academic Press, pp. 41–43. 11. Cai Wenhui, 1999, Social welfare, Taipei: Wu-Nan Book Inc., pp. 131–32. 12. Labor Insurance Regulations of the P. R. C., promulgated by the then Government Administration Council of China on February 26, 1951, marking the establishment of the insurance system for urban enterprise workers in China. 13.  Instruction on the State-funded Medical Care and Prevention to the State Functionaries of the People’s Governments at All Levels, Parties, Groups and Their Subsidiary Public Institutions, promulgated by the then Government Administration Council of China in 1952, marking the establishment of a state-funded public medical system in China. Circular on the Medical Treatment to the Children of the State Functionaries, jointly released by the Ministry of Finance, Ministry of Health and Personnel Department of the State Council in September 1955, stating that the immediate families of the state functionaries may receive half free medical service. 14. Detailed rules for implementation of the labor insurance regulations of the P. R. C. (draft for revision), made public by the then Ministry of Labor in 1953, stipulating that any enterprise that take part in labor insurance shall open a canteen and nursery, etc., and the relevant expenses on premises, facilities and employees shall be borne by the enterprise itself or investor(s) if any. If the parents were unable to pay for the board expenses of the nutritionists or their child, they shall be subsidized with their labor insurance fund. 15.  Interim Measures for Treatment of People’s Retirement in the Government Departments and Public Institutions, Interim Measures for Treatment of People’s Resignation in the Government Departments and Public Institutions, and Interim Rules for Calculating Years of Working for the Retired or Resigned Personnel in the Government Departments and Public Institutions, unveiled by China’s State Council on December 29, 1955. 16.  National agricultural development program 1956–1967, Demonstration charters of advanced agricultural cooperatives, both adopted in 1956, stipulating that all agricultural cooperatives shall take care of the members that are incapacitated, having no family or friend to rely on, by providing them with food, clothes, fuel, child education, and burial after death, which are jointly called the “Five Guarantees”. 17. “sanwu” people: people without identification papers, a normal residence permit, and a source of income. 18. In early 1955, Mishan Township Agricultural Cooperative in Gaoping County of Shanxi Province took the lead in devising a special medicare

16  K. HAN system, i.e., it was based on the “health fee” collected from the members of the agricultural cooperative and the “public welfare fund” borne by the agricultural cooperative; such system was later named as “collective and cooperative medicare system” in the Report on On-site Rural Medical Work delivered by the Ministry of Health and then forwarded by the CPC Central Committee in 1960, since then such system began to take root in China’s rural areas. 19.  Ministry of Human Resources and Social Security and CCCPC Party Literature Research Office, 2002, Selected Documents about China’s Labor and Social Security in the New Era, Beijing: China Labor and Social Security Publishing House, pp. 133, 138. 20. Han Keqing, 2010, The third way and China’s welfare reform, Tianjin Social Sciences, Issue 2; Han Keqing, 2008, Civil society and construction of China’s social welfare system, Tianjin Social Sciences, Issue 1. 21.  Andersen Gøsta Esping, 1990, The three world of welfare capitalism, Bristol: Policy Press, p. 62. 22. Goffman E., ed., 1963, Stigma: Notes on the management of spoiled identity, Englewood Cliffs, NJ, Prentice-Hall, Inc., p. 34, in Li Xianhong, 2009, Concepts of AIDS-induced humiliation and discrimination and research instruments, Advances in Psychological Science, Issue 2. According to E. Goffman, “stigma” is a kind of characteristic or property that makes people feel deeply humiliated. It could be divided into three types: physical defect; stain in one’s character; one’s race or religion is not recognized. The later scholars extended Goffman’s idea, they believe “stigma” is a negative property that could be felt by people; the individuals and groups that have such negative property are rejected, isolated, biased or discriminated, or forced to escape from normal social strata; such escape features self-depreciation.

CHAPTER 2

China’s Social Transition and Social Welfare Reform

2.1  Social Structural Differentiation and Transition Since the 1978 Reform 2.1.1   Differentiation of Social System and Structure It is known that China was ushered into a period of transition since the reform and opening up in 1978, making up of the transition of both economic system and social structure. This transition is usually labeled as the transformation of market system, i.e., transforming from planned economy to market economy. But in fact, this transition has rich connotations as follows: First, gradual separation of economic system from political system. The market-oriented reform of China is led by the state (government), meaning that this reform is a reasonable choice made by the state, and the government is the main driving force for this reform. In other words,

Han Keqing, 1999, Commonly benefited: An important principle for China’s social development, Journal of Literature, History & Philosophy, Issue 6; Han Keqing, 2005, State and market: Dual driving forces for social stratification during economic globalization, Journal of Scientific Socialism, Issue 1; Han Keqing, 2002, Sociological analysis of the idea of equality in present China, Journal of Huaiyin Teachers College (Social Sciences Edition), Issue 1. © China Renmin University Press 2020 K. Han, Social Welfare in Transitional China, Sociology, Media and Journalism in China, https://doi.org/10.1007/978-981-32-9660-2_2

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it is the state that takes charge of nurturing the market. So the state and market are closely linked with each other and inseparable, or it was at least the case in the wake of the 1978 reform. However, after the market becomes increasingly powerful, it no longer needs to be nurtured by the state, but starts self-organization and even stands up to the state as an equal. Second, internal differentiation of economic system. When analyzing an economic system, the AGIL Paradigm1 put forward by T. Parsons et al. yields four interrelated subsystems: Capitalization (A), Production (G), Organization (I) and Resource Input (L).2 Under the impact from the increasingly powerful market force, the Chinese economic system has been subject to sharply internal differentiation in four aspects: investment subjects, production and distribution patterns, resource input models, and category of economic organizations. Under such circumstance, China has seen its industrial structure, business forms and functions initiated in the planned economy period become increasingly heterogeneous. Last, constant changes upon social system. In terms of social structure, Fei Xiaotong characterizes the traditional Chinese society as “earthbound”, holding that the basic structure of the earthbound Chinese society is the so-called “diversity-orderly structure” (in contrast to the “group structure” of the modern western society), and a “network interwoven with personal ties”. An earthbound society, with “extended families” as its core community, is a “rite-ruled society”.3 As a whole, China has all along been highlighting the harmony and unity between the state and society, sometimes the state is even melted into and intermingled with society.4 In the traditional Chinese society under the rule of monarch, there used to be a great unity of politics, economy, society, culture and ethics; it could be said that the state, economy and society were never separated. Since the 1978 reform, the rapidly developing market economy has brought changes on the Chinese property right system and interest structure. Since any change on economy is sure to trigger the changes on other domains, so the relationship among the state, economy and society is in need of adjustment. The reform of the Chinese economic system, with focus placed on diversification of property right and marketization of economic operation, has resulted in social structural differentiation, and directly led to the formation of a relatively autonomous society.5

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Since the reform and opening up, the Chinese totalitarian society has experienced an all-round differentiation, i.e., differentiation of social groups, classes, industries and regions simultaneously. In a very short period, the Chinese totalitarian society was disintegrated and sliced into countless sections or even atoms, which is described as “social fragmentation”.6 As a result of the differentiation, the Chinese society, which used to be highly homogeneous, has become heterogeneous. Of course, differentiation does not mean thorough social disorganization and disorder; instead, it splits a single social status, which bears multiple functions, into varied statues that perform a single function. Although differentiation has hampered social integration and increased social risks, it paved way for building a new social integration mechanism. 2.1.2   Impact from Market Transition on Social Structure The prominent feature of Chinese social transition is no doubt the robust development of market economy. According to the market transition theory, the market-oriented reform denotes the change of the integration principle and power structure of the entire economy, i.e., the right to allocate products and labor is transferred from redistribution system to market, which will weaken power monopoly of redistributors, since the power is delegated to all economic and social domains. Such tendency is sure to exert a significant impact on social equality and stratification structure.7 The emergence of market power has gradually broken the landscape where the state dominates the social structure. One of the key consequences of the marketization reform is the appearance of “free flow of resources” and “free space for activities”, and formation of the four cardinal “social-political” forces: the state, elite from monopoly groups, elite from folk society and social masses.8 During the period of social transition, China has seen its class and stratum structures undergo the following changes: (1) While the 100 million-plus rural laborers are joining the urban work force, the changes on industrial structure have increased the number and influence of the employees involved in modern economy, e.g., the professionals and technicians in emerging industries. In contrast, the size of the employees in traditional industries has been shrinking. (2) As a result of the profound vocational differentiation, the same social class is divided into several strata with different economic status and interests. Besides, the originally

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overlapped stratification criteria—income, status and prestige—become notably separated during the transitional period, i.e., the high-income earners may have inferior status and low prestige, while those with high prestige may occupy inferior status and earn a low income. Such dislocation is able to be corrected through a new round of social integration. (3) Following the changes on the ownership structure since the 1978 reform, a stratum of private owners possessing certain production materials and an occupational stratum accessing to international capital have come into being.9 In terms of the changes on benefit structure, Li Qiang has examined people’s gains and losses since 1978, and then divided the Chinese into four benefit groups: specially benefited group, commonly benefited group, relatively deprived group and vulnerable group.10 According to Sun Liping, the Chinese economic reform in the 1980s had resulted in wealth growth and resource diffusion. At the start, it was the disadvantaged and marginal groups that firstly tasted the fruit of the reform, and the most impoverished saw their income and living standard improved. However, things began to change in late 1980s and early 1990s, the social wealth tended to be amassed by a minority of people, because of ill-regulated market operation, widening income gap, corruption and bribery, and widespread seizure of state-owned assets. Such situation gave rise to two opposite social strata: one is the higher stratum constituted by a small number of rich people, the other is the lower stratum made up of poor farmers, migrant rural workers and urban laid-off workers.11 Given this, the Chinese society is seemingly fractured, what’s worse, it is fractured into more than two parts.12 Apparently, as result of deepening marketization reform and growing market forces, the social differentiation is aggravated, and three social strata have initially taken shape, i.e., the elite that occupy a greater share of social resources, a middle class that keeps expanding, and manual laborers in both urban and rural areas.

2.2   Commonly Benefited: Key Principle for China’s Social Transition The so-called “commonly benefited” denotes that social members are able to constantly receive the benefits from the development of society. But its understanding shall go deeper into four aspects: (1) The prerequisite for “commonly benefited” is economic growth. Only with an

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enormous “cake” of economic achievement, then everyone would have a bigger bite, i.e., more social members could receive tangible benefit. In fact, the impartiality resulting from wealth gap is, to a great extent, attributed to scarcity of material wealth, just as J. Rawls puts it that under moderately poor conditions, when people that are usually indifferent to each other demand for distribution of social benefit but in a conflicting manner, then the context for the issue of justice has emerged.13 (2) The “commonly benefited” principle aims to bring good to the vast majority of people rather than certain interest groups or individuals. With a view to the current situation in China, lots of necessary regulations and rules are not yet put in place in the period of transition, thus resulting in lots of loopholes, such as a small number of people have made great fortune overnight through illegal means. The “commonly benefited” principle is to reduce or even eradicate such distorted phenomena, and enable the majority of citizens to benefit from common prosperity. (3) Objectively, the “commonly benefited” principle calls for building a relatively fair distribution mechanism. Fairness is an internal order of economic activities and social development. The interest distribution based on fairness is to use a kind of “game rule” to restrict and balance redistribution of social wealth so as to safeguard the society from being eroded by unfairness. As for the so-called “relative fairness”, it means that “fairness” is a time-space concept, there is no fairness mechanism that applies to all stages of history or all mankind. With regard to the current situation in China, the government shall utilize the political, legislative, economic and moral means to reconstruct a fair distribution mechanism and promote the idea of fairness. (4) “Commonly benefited” is a process that benefits people progressively. This process manifests the characteristics of the times, and constantly adjusts itself to meet the social development demand and people’s demand in a given historical context. In a word, it is a dynamic process that reflects the themes of the times, and satisfies people’s escalating demand, i.e., from the most basic material needs to high-level spiritual enjoyment. In contrast to developed countries, China pays an even higher attention to “commonly benefited” because of the following reasons: (1) Such concept as “eliminating class difference and equalizing wealth distribution” is deeply ingrained in the mind of the Chinese people. (2) In more than 30 years since the New China was founded in 1949, the Chinese people had been accustomed to equalitarian income distribution. Although such approach was criticized and adjusted after 1978,

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the shadow of its impact lingers on. Such mindset is unreasonable, yet it is an objective existence in China that cannot be avoided. It is neither correct to continue tolerating such mindset nor ignore it, otherwise, a sound social order is sure to be disrupted. A notion needs to be clarified, i.e., what is “benefited”? We believe it should not be simply defined as satisfying people’s material needs, although it is a key component of the “commonly benefited” principle, and also the foundation for benefiting all social members. However, while the social transition is going deeper, especially when there is substantial wealth and the material needs are not as desperate as before, people will turn to pursuing other things. Therefore, being “benefited”, despite of material gains, also means achievement of higher goals, which calls for equally tapping the development potentials of individuals and creating development opportunities for them. 2.2.1   Theoretical Bases The “commonly benefited” principle is built on the following theoretical bases: First, social justice. From the perspective of social justice, everyone deserves to receive what a society gives to its members, regardless of their different contributions, at least human rights and other basic rights for survival and development on an equal footing (on the other hand, different persons make unequal contributions, it is justifiable for them to ask for some non-basic and unequal rights14). Social justice calls for fair distribution of social wealth, and basic rights and development rights for each social member on an equal footing. The “commonly benefited” principle, which embodies the reasonable demand of social justice, is an inevitable choice to ensure everyone of basic rights and development rights. In other word, social justice will be a “dead letter” unless “commonly benefited” is achieved. Second, the people-oriented development concept. The evolvement of the social development concepts shows that free and overall development of human beings is the ultimate goal and destination of social development. Any form of social development, if not putting people at the first place, seems like a tree without roots. In 1995, the World Summit for Social Development held in Copenhagen declared that “social development is central to the needs and aspirations of people throughout the world and to the responsibilities of Governments and all

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sectors of civil society”, “ensuring that human persons are at the center of social development”, and “the ultimate goal of social development is to improve and enhance the quality of life of all people”. As such, the “commonly benefited” principle is consistent with the people-oriented development concept. Third, unity between fairness and efficiency. Fairness and efficiency shall not be simply examined together, but viewed separately: efficiency is more like an economic term, while fairness concerns morality, ethnics and law. With respect to social development, fairness is the goal instead of the means, while efficiency is the means but the goal. Yet these two factors may be unified under the “commonly benefited” principle at certain stage of social development or in the current transitional period of China, because of the following reasons: (1) Improved efficiency reduces unfairness. Samuel P. Huntington has argued that economic growth, in the long run, is able to bring forth a fairer income distribution pattern than conventional society.15 Efficiency lays a solid material foundation for fairness, while improved efficiency is precondition for the ultimate realization of fairness. (2) Fairness improves the level of efficiency. Fairness is primarily reflected in income distribution. A reasonable form of income distribution, i.e., “more work, more pay”, effectively motivates the initiative of laborers and raises economic efficiency. The “commonly benefited” principle unifies fairness and efficiency, it not only highlights fair income distribution, but that everyone is entitled to basic rights for their contribution on an equal footing, and some non-basic rights for their additional contribution, so as to excavate individuals’ development potentials and create a level playing field for them. 2.2.2   Effects of “Commonly Benefited” on Chinese Social Transition The effects of the “commonly benefited” principle on Chinese social transition are shown as follows: First, the “commonly benefited” principle adds a sense of purpose to social transition. Such principle conveys the people-oriented development concept which defines the goal and end result of social transition. Such concept is both reasonable and inevitable: it sums up people’s constant reflections on their own development and on social progress amid the mounting conflicts between environmental pollution, resource waste—resulting from people’s ambition for economic growth—and demand of human beings. This development concept, by affirming that

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the ultimate goal of social development is to improve the living standard of all citizens, explains “why” and “how” puts people at the first place. In short, the “commonly benefited” principle confirms that the ultimate beneficiary of social transition is human beings; in other words, the results of social development are commonly beneficial. Second, the “commonly benefited” principle is a powerful driving force for social transition. “Commonly benefited” is associated with specific time and space, it should be gradually set up and improved while building the socialist market economic system. It is essentially different from the idea of “eliminating class difference and equalizing wealth distribution”, which was shouted by the peasant rebels in China’s feudal past. Such traditional idea sounds like “utopian” to a great extent, because at that time the wellbeing of people was not the goal of social development, and there was nothing related to market economy. Nowadays, the goal of social transition integrates with people’s internal demand; and the “commonly benefited” principle, which meets with the requirements of the market economy, has become the driving force for social transition. By placing people’s demand at the dominant position, this principle defines the ultimate goal of social transition and ensures people to constantly benefit from social achievements; on this basis, it will enhance people’s recognition of social transition, solidify the foundation of the masses for social transition, and make it benefit the public. Third, the “commonly benefited” principle is favorable for social integration and stability. Such principle plays a prominent role of integration during the transitional period. While the social structure and interest pattern are being adjusted owing to social transition, both “core groups” and “marginal groups”,16 under the guidance of the “commonly benefited” principle, will gradually join in the new system that obeys such principle, especially after the fairness mechanism—basis for this principle—becomes the dominant value of the entire society. After the period of transition comes to an end, a relatively stable “commonly benefited” stratum structure will take shape. As long as a majority of social members enter the middle class, the society will become truly stable and maintain prolonged stability. The “commonly benefited” principle performs a positive function for China’s progressive modernization. Such modernization model stresses the basic conditions for modernization, i.e., cultivating the soil for social development by building an efficient social mobility mechanism and social security system, ensuring fair distribution of wealth and adopting a reform strategy of “easy first, hard

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later”. Such model aims at cutting the social cost for China’s modernization as much as possible, removing the resistance during the process, and pressing ahead with the modernization drive smoothly and successfully.17 The “commonly benefited” principle and progressive modernization fit each other, because they have the same starting point, i.e., insisting that social development shall benefit people. Also, they have the same purpose while considering that modernization is the proper meaning of social development. In addition, a restrictive mechanism, which is “commonly benefited” and relatively equitable, is able to safeguard social harmony, since it ensures healthy and steady social development, guards against social disintegration, tensions or formation of privileged strata. Given this, “commonly benefited” shall be considered as the source of social stability, harmony and civilization. Fourth, the “commonly benefited” principle improves the level of rationalization and legislation during social transition. Rationalization means people’s action is based on calculation and measurement of advantages and disadvantages, rather than on passion, impulse or prestige. Essentially speaking, “commonly benefited” is the basic right of citizens, not granted by any individual or organization. “Commonly benefited” is achieved under the principle of rationalization and through open, legitimate and proper means, rather than through blood ties, prestige or covert transaction, so it is especially important in China where the social network is built on interpersonal relations and ethics. As such, “commonly benefited”, which embodies universal rationality, is able to greatly improve the level of social rationalization. In addition, “commonly benefited” expedites differentiation and integration of interest groups, and results in heterogenization of interest subjects. In order to pursue their own interest, these mutually exclusive interest subjects are forced to conclude contracts to form new interest groups or eligible organizations, by this means these heterogeneous interest subjects will form a contract-based interpersonal relation that involves both rights and obligations,18 and such relation will become basis for a society ruled by law. Therefore, “commonly benefited” not only raises the level of rationalization, but creates conditions for rule of law. The “commonly benefited” principle is accompanied by awakening of individuals’ consciousness for rationality and self-interest, and strong appeal for human rights, freedom and equality. Fifth, the “commonly benefited” principle helps improves social quality. In the same era, social quality reflects the goodness of fit between

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the actual situation of social organism and its best demand and optimal demand. In other words, it means whether the actual situation of social organism is in its optimal state at that time. What it highlights is not only the development level of a society, but its completeness or effectiveness, because “effective social development is sure to give full play to people’s initiative, creativity and activity, and call for transformation and reform of the original institutions and social structure that are less effective” (Wang and He 1997).19 Moreover, the development quality of a society shall be examined quantitatively, i.e., how many social members access to the substantial results of social development. A small number of beneficiaries are unable to speak for the overall social quality, only when the demand of massive ordinary people and the internal demand of social organism have reached their optimal state, then the society is proved to be a high-quality one; and only when a majority of people receive increasing benefits, then the social quality is proved to keep improving. With a view to the current situation in China, if the “commonly benefited” principle fails to be conscientiously preserved, then there may be the following adverse consequences: First, there may be seriously uneven wealth distribution, which will then lead to “single-polarization” of social members. China’s polarization is not the usual type which revolves around the middle class (constituted by a majority of social members and relatively stable), but a “unipolar” type, i.e., a small number of interest groups seizing social resources. Under such circumstance, the social interest pattern will evolve into an unreasonable “inverted T shape”, which is sure to deform the social structure, undermine social stability and slow down the process of development. Second, the principle of fairness and social integration may be undermined. The “commonly benefited” principle calls for building a relatively fair social order for redistributing social resources. The disobedience to this principle will break social justice, distort the dominant social order, weaken government capacity, make social members confused about the principal values and code of conduct, destabilize the society, and downgrade social integration. Moreover, the absence of fairness will discourage massive social members to lose passion for work, responsibility and confidence for society, which will then weaken the driving force for social transition and increase possibilities for social upheavals. Last, social members may find their development potentials held back. To what extent the individuals play to their development potentials

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is mainly decided by the satisfaction of their demands. According to the “law of rising demand”, after the people see their basic material demand satisfied, they will turn to pursue spiritual demand. On the contrary, if their basic physiological and living needs are not met, they will lose interest in other aspirations, thus restricting their development potentials. Overall, the “commonly benefited” principle embodies the people-oriented development concept, guarantees steady and continuous social transition, prevents from drastic social upheavals and motivates people to join in social transition. The “commonly benefited” principle is a powerful support to the social transition, since it will greatly build up the internal growth force of China, link people’s direct interest with the process of social transition, bond their own destiny with that of the entire society, and make them believe their daily behavior tendency associated with social transition, which will make China’s social development an irreversible trend.20 It should be noted that the overly utilitarian “commonly benefited”—only caring about material gains—will turn people and society into an appendant to physical wealth, and then cause alienation of both citizens and the entire society. Then how to achieve “commonly benefited”? As previously mentioned, “commonly benefited” is a gradual process. It is split into two stages in China while taking account of the country’s specific timespace conditions: First, give priority to meet people’s basic material and spiritual needs, e.g., raise their basic living standard, build and improve the social welfare system, satisfy the subsistence demand of the poor population, and help individuals accumulate personal wealth. To be specific, the Chinese government shall intensify effort in relieving poverty, improving the urban housing system and the urban–rural medical security system, reducing the rent-seeking conducts in economic field and eliminating corruption. Second, in the long run, while safeguarding people’s basic human right and survival right, provide them with development right and opportunities, so as to realize social justice. 2.2.3   Issues Need to Be Noticed In order to prevent any misunderstanding of the “commonly benefited” principle, we should pay more attention to the following issues: First, “commonly benefited” is not the same with equalitarianism. “Commonly benefited” advocates reasonable distribution, not everyone

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has the same share. It should not be simply regarded as reaping fruit or eating cake. There is a sequence for being “commonly benefited”: firstly “eat the cake” (to soothe beneficiaries), and then learn to “make the cake” (a critical step). According to the “commonly benefited” principle, everyone is entitled to certain non-basic rights in proportion to their contributions, reasonable returns are based on reasonable contribution, i.e., “no pains, no gains”. As such, the “commonly benefited” principle is an organic combination of fairness and efficiency, contribution and demand. In contrast, equalitarianism means everyone has an equal share, which violates the principle of fairness, encourages people’s laziness and makes them least interested in working, and deprives the society of the incentive from competition, and finally holds up the progress of social development. Second, efforts shall be made to maintain a reasonable gap in benefits, which is required by the “commonly benefited” principle. While preventing from over-polarization, efforts shall be made to guarantee benign operation of the social system, which provides individuals with basic conditions for survival and development. While considering the current situation in China, “commonly benefited” does not mean to eradicate wealth gap, but insists that wealth acquisition to be based on fair competition. The key lies in equal development opportunities, and wealth acquisition through legitimate and proper means. Therefore, it is an urgent task for China to build a complete, balanced and fair income distribution mechanism. Third, guard against hyperstimulation and overheated consumption. The “commonly benefited” principle aims to meet people’s basic living demand, instead of taking care of everything. It is different from the “care-for-all welfare policy” that features “high welfare, high tax and high subsidy” in welfare states, and also different from China’s “ironrice-bowl type” subsidy to the urban residents that had been prevailing in several years after 1949. Efforts shall be made to avert from excessive stress of “commonly benefited” for fear of hyperstimulation. Moreover, the government shall guide people’s consuming behavior, make their consumption level and habits match with the level of social development, and prevent people from expecting too much. Otherwise, they will feel deprived whenever their demand is unsatisfied, which will inflict the “commonly benefited” principle.

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2.3  Equality: Core Value of China’s Social Transition Social transition needs guidance of core values; otherwise, it may deviate from the ultimate goal of social development, cause social disorder and ideological and moral chaos. Since the modern times, China has seen several core values come to the fore. For example, the May 4th Movement in 1919 marked that the Chinese intellectuals expected to promote China’s modernization by uprooting the people’s conventional ideologies and cultural ideas. They cast away the traditional Chinese culture, and vigorously publicized the western culture; they expected to build a New China by relying on the core values as “science” and “democracy”. According to King Yeo-Chi, the May 4th Movement was more like the European Enlightenment in terms of its spirits and impact on China’s modernization.21 The Renaissance and Enlightenment movements in Europe advocated liberation of human beings and return to rationality, which were closely linked with such concepts as science, freedom, equality and justice. In our opinion, the mounting social problems such as widening wealth gap in the transitional period have laid both social and ideological foundations for proposition of the value of equality. 2.3.1   Basic Connotations of Equality Equality is not only a principle for social resource distribution, but an important norm for interpersonal contact and social development. Equality has two aspects of connotations, i.e., uniformity and impartiality, as noted by Giovanni Satori, when two or more people/objects in the states that are wholly or partially identical or similar, then they are regarded as equal, while impartiality also requires equality.22 It could be said that equality on one hand upholds uniformity for human beings, and on the other hand endorses the universal value of social ethnics. Wang Haiming holds that equality is a kind of uniformity that relates to interest acquisition among people. He quoted the argument of Rousseau about dividing equality and inequality respectively into natural and social categories: natural equality is only about interests rather than rights; social equality is not only about interests but more about rights. Given this, equality— a moral code about what ought to be—shall be social equality which is in essence equality of rights, rather than natural equality.23

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However, “social equality” does not equate “equality of rights”. In the eyes of the socialists, equality not only concerns rights, but opportunities and status; equal opportunities are precondition, equal rights are focal point, while equal status is representation.24 According to F. A. V. Hayek, the adjective “social” only describes a kind of “status”, it is “equality” in front of law (uniform and non-discriminatory access rules) that is able to represent “impartiality”.25 The above understandings about equality mainly concern individuals, i.e., whether individuals could enjoy the same rights or at least proportional rights. From an overall perspective of social transition, equality concerns the following issues: (1) The establishment and improvement of an impartial mechanism: whether a society provides its members with equal capabilities and opportunities to access to resources? (2) Whether equality could effectively promote social transition? (3) To what extent equality—being an instrument—could be fulfilled? What it stresses is not ought or oughtn’t to achieve equality, but how to do so? In fact, equality is relative and every society is unequal, just like R. Dahl said inequality is everywhere, the natural state of mankind is unequal, rather than the opposite.26 In a sense, we can only look for relative equality, since absolute equality only reflects the social ideal and value pursuit of people. Moreover, equality is not only a relative concept, but a time-space concept, because it has different connotations and extensions in different periods, different societies and different regions. With regard to the current situation in China, equality is continuity of the Chinese people’s values and ideas that are left from thousands of years of history, and also their expectation for the current social transition. 2.3.2   Issue of Equality During the Transitional Period The traditional Chinese society, on the whole, was a unified totalitarian society where the dominant value and ethics stressed hierarchy and obedience, but despised civil rights, although there used to be concurrent peasant riots fighting for “equal status and even distribution of wealth”, revealing the strong resentment of the lower class for hereditary rights and unfair distribution of benefits. The Chinese ethical tradition highlights individual ethics rather than social ethics. In contrast, the western ethics not only cares about moral cultivation of individuals, but the impartiality of the social institutional arrangement.27 To some extent, the equal right

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simply for survival and even distribution of wealth in peasant economy constitute the theme of the Chinese traditional concept of equality. Being a latecomer in modernization and social development, China was determined to get stronger through reform from the outset; the modernization of materials and institutions has remained a dominant theme of China’s social changes since the past century. The founding of New China in 1949 established a modernization-oriented regime, marking a tremendous accomplishment in the country’s modernization drive. However, for a long time since 1949, the “egalitarian” practice of distribution had been dominating every domain of the Chinese society. Such kind of distribution put egalitarianism at the first place, thus stifling individual initiative and social vitality, and encouraging people’s laziness. The 1978 landmark reform broke up the egalitarian distribution and promoted the practice of “decentralization of power and transfer of profits”, which motivated a small number of Chinese people to get rich quickly. Meanwhile, the introduction of market economy increased both social and economic exchanges; in such context, the issue of equality—both a theoretical and pragmatic issue calling for immediate solution—began to draw increasing attention. This subsection will review the major changes on the Chinese society, which provide arguments for discussing the issue of equality. (1) Social development showing pronounced orientation of utilitarianism The economic reform since 1978 has brought unprecedented benefits to the Chinese people. In social life, the interest orientation gradually gained ground, while the traditional ethics and ideologies have weakened, the dominant social values have been gradually yielding to money and interests, quite a number of Chinese even took money worship and quick success as their tenets. The loss of traditional ethics, ideals and beliefs and the domination of money-based value have caused lots of vacuum zones and distorted places in Chinese society. Although there have been disputes on giving priority to “efficiency” or “fairness”, the Chinese usually prefer “efficiency”. As for its target orientation, the Chinese social development has been gradually tainted with utilitarianism. (2) Social differentiation aggravating inequality and heterogeneity China’s reform, to a certain extent, is realized through the processes of “marketization of power” and “privatization of interests”, which are

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interwoven with each other. The reform has led to differentiation of interest subjects. Since the 1978 reform, the Chinese citizens have seen their identity and social status gradually collapse, but gained enhanced autonomy and mobility; they no longer perform single functions but diversified functions, and the social structure has been heterogenized. With altered identity and status, individuals will find their rights and obligations change accordingly. Individuals will lose something old, but regain something new. The reestablishment of identity and status calls for a reasonable income distribution mechanism, so as to ensure a majority of social members “commonly benefited”. (3) Required by social mobility and integration A sound mobility mechanism is an important guarantee for healthy and sustainable social development. For individuals, an easy access to resources (interests, power and status) concerns the vigor and vitality of any society, as well as its long-term security. In ancient China, an “imperial examination system” for selecting talented bureaucrats was practiced, which increased personnel flow in a vertical direction, and provided opportunities for the low-class civilians to gain social prestige and political power. It reflected decentralization of power under the rule of emperor and somewhat restricted hereditary power. Although such mobility mechanism had historical limits and an overly simple flow channel, it was worth approving for solidifying the royal rule and revitalizing the society during thousands of years of long Feudal Times. The Chinese society is now in a transitional period. Such period is in need of a sound mobility mechanism that boosts social integration, healthy and orderly social development, and strengthens social stability. T. Parsons once used five pairs of “pattern variables”28 to explain the value orientation of practitioners in a social system, and concluded that such value norms as achievement orientation and universalism are essential characteristics of a modern society. The concept of equality plays a role of value leverage for building a sound social mobility mechanism. Economically, it is of vital importance to build a fair market competition mechanism. Politically, the concept of equality is an indispensable guideline for selecting and appointing carders and for advancing with the democratic process. In social and cultural fields, the concept of equality helps implement radical reforms, reverse the unhealthy social trends and purify the social organism.

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2.3.3   Discussing the Concept of Equality in the Current Transitional Period As mentioned above, the current transitional period of China is a right time for discussing the concept of equality. With a view to the development of China in the future, it is necessary to elaborate on the following issues about equality: (1) Double choice: value equality and instrument equality Equality is an eternal value of human society. Whenever and wherever, it is impossible for human beings to avoid answering the questions about equality. Max Weber proposed an interpretation of social action that distinguished between four different idealized types of rationality. The first, which he called purposive/instrumental rationality, is related to the expectations about the behavior of other human beings or objects in the environment. These expectations serve as means for a particular actor to attain ends, ends which Weber noted were “rationally pursued and calculated”. The second type, Weber called value/belief-oriented. Here the action is undertaken for what one might call reasons intrinsic to the actor: some ethical, aesthetic, religious or other motive, independent of whether it will lead to success. The third type was affectual, determined by an actor’s specific affect, feeling or emotion—to which Weber himself said that this was a kind of rationality that was on the borderline of what he considered “meaningfully oriented”. The fourth was traditional or conventional, determined by ingrained habituation.29 The above four actions are the “ideal types” conceived by Weber; it is the first type (purposive/instrumental rationality) that features the highest degree of rationality. With Weber’s “rationality” theory, we divide equality into value-oriented type (value equality) and instrument-oriented type (instrument equality): the former embodies a kind of social ideal, it is a topic in ethical studies; the latter that reflects rationality principle and utility value is vigorously advocated by lots of Chinese scholars. Given this, the theoretical preference for instrument equality is closely related to the utilitarian orientation of Chinese social transition. Since the modernization drive was launched, “modernity” has become the core issue of China’s social development. Briefly speaking, “modernity” expresses western “rationality” in a historical form; it enables “rationality”, in different forms, to exist in varied facets of a society.30 Since the Enlightenment Movement, the outlook of Europe and the entire world had altered after going through the Industrial Revolution

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led by “science” and the French Revolution led by “democracy” (civil rights).31 Modernity, with rationality as its kernel, has been challenged by post-modernism emerging in the west since 1960s, is by far an internal driving force for China’s social transition and development while considering its current space-time condition, but it is still in absence. From this perspective and in an analytical framework constituted by value equality and instrument equality, the purposes for discussing the issue of equality in current China are as follows: (i) Equality itself is an integral part of social development, and social development shall all along follow the guidance of equality. The discussion about equality will help us establish a more reasonable philosophy of development. (ii) What China lacks is instrument equality supported by rationality, the discussion about equality will enable us to address lots of social problems in reality. Therefore, the equality in front of us is not just an ideal pursued by mankind, but an indispensable instrument for Chinese development. Moreover, what is worth noting is that instrument equality and value equality are not in a mutually exclusive relationship; they have enriched the connotation of equality. In other words, instrument equality is an extension of value equality, whereas value equality—eternal ideal of human society—could somewhat help achieve instrument equality. (2) Equality of starting point: difference from and continuation of social differentiation Within the analytical framework of “value equality” and “instrument equality”, we can regard equality of starting point as a pursuable value, or a logical premise of a certain “game” rule or environmental factors. Being a pursuable value, equality of starting point stresses the equal rights of individuals to create society and such value ideal as “all men are created equal”, it guarantees people to enjoy basic survival right equally, manifesting the sameness of human beings and their inviolable dignity in taking part in social life. Being a logical premise of a certain “game” rule or environmental factors, equality of starting point stresses equal opportunities to take part in a certain “game” while ignoring the unequal ascriptive rights of individuals. We shall logically affirm that there is a principle above rules, and such principle is equality of starting point. Without equality of starting point, there will be absence of equality of rules, let alone social justice.32 It should be noted that a new starting point is usually an end to the preceding result. While considering time sequence and the differences in social relations and social structure,

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equality of starting point usually comes out when there is inequality of result, while equality of result usually comes into being when there is inequality of starting point and rule. At the start of the 1978 reform, under the impact from the egalitarian income distribution since 1949, the disparity among the Chinese population was not prominent, i.e., the social members had equality of starting point on the whole. The reason why Chinese people are divided into urban and rural residents is attributed to the long-standing urban–rural dual structure. According to Qin Hui, the “justice of freedom” in increment domains and the “justice of starting point” in inventory domains (mainly denoting rural areas) are of great significance for China to make reform achievements; but in the future, the success of China’s reform is mainly decided by promoting “justice of starting point” to other inventory domains (e.g., housing and state-owned enterprises).33 It should be noted that in the process of reform, the equality of starting point at the beginning is gradually replaced by inequality of result caused by social differentiation. Moreover, equality of starting point is segmented by the diversified admission accesses in social environment, thus giving birth to a number of new “starting points”. With respect to social environment, the pursuit of equality of starting point not only manifests in every aspect of social structure, but concerns concrete reform measures, i.e., every step of the reform is associated with equality of starting point. Since the society itself is a stratified system, an all-directional and crosswise “starting point” structure accordingly comes into being. In this way, the equality of a specific starting point is extremely likely to damage the equality of the entire society unless there is an ideal circumstance: every subsystem of the society (politics, economy or culture) or sub-subsystem could maintain orderly development in line with the overall design for social transition. Theoretically, there may be a stepwise system for equality of starting point, i.e., the starting point equality of the sub-subsystem is subject to that of the subsystem, while the starting point equality of the subsystem is then subject to that of the entire society. But in fact, such conception is unlikely to be realized, since the social transition itself is too intricate to be properly balanced and coordinated. Of course, coordinated social development is closely related to equality of starting point. Therefore, the equality of starting point for value could exist, but that for instrument will become increasingly complicated amid social differentiation while the reform keeps pressing ahead.

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(3) Equality of opportunity: principle for building social mobility mechanism Opportunity is a possibility space for social members to achieve development. For different social members, the same opportunity means different development space. J. Rawls stresses “fair equality of opportunity”, implying that equality of opportunity may not be fair. M. J. Adler notes that there may be inequality of condition if there is nothing else but equality of opportunity,34 meaning that equality of opportunity for individuals are confined by lots of innate and acquired conditions. Wu Zhongmin proposes to understand equality of opportunity from two aspects: (i) shared opportunity: every social member deserves similar opportunities for basic development. (ii) differentiated opportunity: the development opportunities for social members are different to varying degrees, rather than identical.35 At the current stage of China, shared opportunity and differentiated opportunity are somewhat separated, not so many people accept differentiated opportunity, but a larger number of people prefer shared opportunity.36 Then how could equality of opportunity be counted as fair? To answer this question, we shall firstly define which kinds of opportunities are vital for most people before attempting to achieve equality. People’s aspiration for equality is closely related to their yearning for income, fame and power, meaning it is of great importance to enable them to access to income, fame and power. As for individuals, while admitting their innate differences, equality of opportunity means whether they have the same opportunities to ascend to higher social strata. In other words, it means whether there is a proper pathway for building a social mobility mechanism, which is the prerequisite for formation of social strata. Undoubtedly, equality of opportunity helps shape a new hierarchical system. Nowadays, it is widely recognized that the foremost or the only legitimate pathway for individuals to gain income, fame and power is to abide by the principle of universality (e.g., education, intelligence and capability). But it will give rise to another problem, i.e., in a society where there is real equality of opportunity, there may be new-type inequality in income and status due to different educational background, intelligence and capability, which will cause the entire society to be subject to “meritocracy” or “almighty rule”, then is it still an eligible society? According to D. Bell, in real society, almighty rule is to replace one set of hierarchical principles with another set of hierarchical principles and replace the principle of hereditary ownership with the principle of

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accomplishment37; a strictly regularized almighty rule is able to create an impartial society, even if it is unequal.38 Such society is similar to the one described by J. Rawls, i.e., in a society with equality of opportunity, the disadvantaged group may drop behind while pursuing power and social status.39 And we believe such kind of society is a fair and reasonable society. Currently, China’s social mobility is at a stage of acceleration. A proper social mobility mechanism concerns appropriateness of Chinese social structure, social stratification and social order and effectiveness of social control means. Overall, it is associated with healthy and orderly development of the entire Chinese society. The establishment of the principle of opportunity equality and permeation of this principle into all aspects of society provides support for building a reasonable social mobility mechanism, and sustains healthy and orderly development of the Chinese society. (4) Result equality: a realistic appeal for social welfare reconstruction Although equality has diverse forms and operation rules, result equality has all along been the fundamental criterion for measuring degree of equality. In case of an unequal result, people tend to claim there is violation of the principle of fairness, despite of equal starting points, opportunities and rules. Therefore, equality of result is the bottom line of fairness. But there are two issues in need of our attention: (i) We shall never ignore real fairness while seeking for result equality. Owing to continuation of hereditary power based on reproduction of human beings, and different individual endowment and intelligence within the same generation, no matter how hard we stress the righteousness of equality, unequal results seem unavoidable. (ii) If we overemphasize equality of opportunities and rules, but ignore such realistic problems as polarization that arises from unequal results, there may be unbalanced social structure and chaos, which will ultimately induce partial or overall turmoil of the entire human society or even warfare. To this end, J. Rawls has come up with the “principle of compensation”, meaning that a society shall care more about those less talented or born with an inferior social status, in order to treat everyone equally and provide them with genuinely equal opportunities.40 With regard to social order or social integration, each state is making its utmost to erase polarization, so as to prevent from social unrest and maintain social stability; the major policy measure to do

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so is to establish a sophisticated social welfare system which secures the basic livelihood of individuals—a kind of result equality or the minimum requirement of equality. Human society is full of diversity with the desire and demand of human beings constantly increasing. Equality is a pluralistic system with equality of result as its cornerstone; on this basis, it is possible to have equality of opportunities and rules which are discriminating or proportionate. In other words, we shall keep defending social order and stability, only by this way can we achieve equality to the utmost extent. 2.3.4   Realization of Equality While discussing the issue of equality, there is a question should not be ignored: who would supervise the rule-makers of equality? Such question diverts our attention to another relevant issue—political democracy. Moreover, equality itself is a system rather than a pure idea. According to Sartori, certain types of equality are incompatible or even repellent; equality is in essence an issue about building an offset system for one unequal result to offset another.41 In a word, the crucial means to achieve equality is to coordinate the dynamic changes of equality issues and rebalance their relationships. It could be asserted that idealized equality is never attainable. Inequality is precondition for realizing equality. Equality and inequality constitute a continuum, each of them holds one side of the continuum and never converging. What we can do is to define a coordination point between them so as to satisfy most people’s ideal pursuit for value equality, activate social vitality and guarantee orderly social transition and healthy social development.

2.4   Changes and Reconstruction of Chinese Welfare System 2.4.1   Changes of Chinese Social Welfare System Since 1949 the social welfare system of China has undergone two stages of institutional change and three phases of notable development. At the first stage, China gradually built a national insurance system, work unit welfare system and collective security system which adapted to the

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socialist planned economy. At the second stage (after the 1978 reform), the welfare system gradually transformed from the one suited to planned economy to the one catering to market economy. During these two stages, the development of Chinese social welfare system could be split into three phases: First phase (1949–1978): It was a period when the welfare system under the planned economy was initiated and gradually developed into an urban–rural divided welfare system. China successively built the labor insurance system for urban employees (1951),42 public medical care system (1952),43 corporate welfare system (1953),44 retirement system for functionaries with government departments and public institutions (1955),45 rural five-guarantee system (1956)46 and cooperative medical care system (1962).47 The Chinese social welfare system under the planned economy was an urban–rural divided welfare system: in urban areas, the welfare system was mainly based on labor insurance and partially on work unit welfare, and supplemented by social assistance for a small number of poor population (e.g., the urban “sanwu” people); in rural areas, there was a collective welfare system constituted by people’s commune, production brigade and production team. Second phase (1979–1997): It was a period when the Chinese planned economy was transforming into market economy, and the newtype social welfare system was initiated. This period witnessed rural land reform, reform of urban state-owned and collectively owned enterprises, and overall replacement of planned economy with market economy and the latter even become a dominant trend of reform and development. In the domain of social welfare, the foremost task was to get rid of the all-inclusive welfare burden on economic entities and on government departments and public institutions. In 1993, the Decision of the Central Committee of the CPC on Several Issues Concerning Building the Socialist Market Economy explicitly proposed to build a reasonable individual income distribution system and a social security system: “build a multi-level social security system, provide urban-rural residents with social security services that accord with the national situations and favor for economic growth and social stability”; “give priority to improving the enterprise endowment insurance system and unemployment insurance system, enhance social service functions so as to relieve enterprises of financial burdens and motivate them to start organizational restructuring, increase economic efficiency and build up competitiveness”.48 In this process of replacing the old with the new, several social welfare

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systems established in the era of planned economy were exposed to such challenges as gradual collapse of institutional basis, weakening effectiveness, policy vacuum or even institutional distortion or defectiveness in some domains. Welfare housing and public-funded education were on the way to be marketized, commercialized, privatized and industrialized. Afterwards, while the reform and opening up was deepening, new economic problems and social contradictions came out one after another, making it an inevitable choice to build a social welfare system suited to the socialist market economy, which is also required for maintaining economic growth. In this context, the state carried out pilot reforms of endowment, medical care and other social insurance systems in many places, and initially established a social insurance model by combining social pooling and individual contribution. Shanghai and other cities implemented the Minimum Livelihood Guarantee System for the urban laid-off workers and impoverished residents. Third phase (1998 to date): It was a period when the new-type social welfare system was established and improved. This phase has three outstanding features: (1) The management system has undergone rounds of adjustment. In 1998, the former Ministry of Labor and Personnel was renamed as the Ministry of Labor and Social Security, marking that China began to reinforce the management functions of social insurance affairs from structure setting. In 2008, the Ministry of Labor and Social Security and the Ministry of Personnel were merged to become the current Ministry of Human Resources and Social Security. (2) Welfare policies were introduced one after another: (i) Various social insurance systems were established and improved, e.g., endowment insurance system for urban employees (1997), basic medical insurance system for urban employees (1998), unemployment insurance system (1999), work-related injury insurance system (2004), medical insurance system for urban residents (2007), new-type rural cooperative medical care system (2002) and new-type rural endowment insurance system (2009). On October 28, 2010, the Social Insurance Law of the People’s Republic of China was promulgated, marking that the Chinese social insurance system was generally finalized. (ii) The policies for social assistance, social services and housing welfare were also unveiled in this period, e.g., the Regulations on the Subsistence Security for Urban Residents (1999), the Regulations on Management of Housing Provident Fund (1999), the Law on Donation for Public Welfare (1999), the Measures for the Relief and Administration of Vagrants and Beggars

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Who Have No Means of Livelihood in Cities (2003), the Regulations for Rural Five-Guarantee Work (2006), rural Minimum Livelihood Guarantee System (2007), the Measures for the Guarantee of Low-rent Homes (2007), the Law on the Protection of the Disabled (2008) and the Interim Measures for Social Assistance (2014). (3) The value orientation of social welfare has changed fundamentally, such institutional ideas as “fairness” and “justice” gradually replaced the concepts of “efficiency comes first” and “remedial measures are more important than prevention”. 2.4.2   Reconstruction of Chinese Social Welfare System Since the reform and opening up, Chinese social welfare system was initially built around the socialist market economy, which has two aspects of meanings: (1) The market-oriented reform is the basic condition for rebuilding Chinese social welfare system. (2) Reconstruction of Chinese social welfare system is part of the marketization reform. Because of the market-oriented reform, the construction of Chinese social welfare system will be labeled as strongly liberalized for a long time.49 As described by Gøsta Esping-Andersen, the minimized laissez-faire social policy is an inherent meaning of liberalism. When the ideal of universalism, which stems from liberalism, conflicts with the realistic “social dualism” and “social stigma” that are brought about by liberalism, a liberal state usually handles market failure with a kind of punitive and stigmatized poverty relief, and then gradually resort to the modernized household survey-based social assistance. In terms of welfare delivery, household survey-based social assistance is only a “stopgap” of the liberal social policy, the truly important things shall be the individual insurance and the contract that is seemingly concluded on basis of voluntariness and actuarial studies.50 Since the marketization reform, Chinese society has encountered several predicaments like urban–rural division, widening wealth gap and social exclusion generated by “stigma”,51 all of which conform to Andersen’s opinions. If the liberal social policy and its institutional arrangement are a common law for welfare system, according to Andersen, then the foremost welfare arrangement in current China is poverty relief, construction and improvement of the household survey-based social assistance. With regard to social assistance, the Chinese government successively established the systems for allocating subsistence allowance for poor urban residents, providing aid to urban vagrants and beggars,

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giving urban poor families access to low-rent housing, and delivering medical and educational assistance. The management system was adjusted accordingly. On July 10, 2008, the General Office of the State Council issued the Notice on Issuing the Provisions for the Main Functions, Internal Structure and Staffing of the Ministry of Civil Affairs, which states to reform the internal structure and staffing of the Ministry of Civil Affairs, adjust its responsibilities and obligations, strengthen its function of social assistance and reset its internal offices (the Subsistence Security Department was renamed to Social Assistance Department). With regard to social insurance, China promulgated the Social Insurance Law on October 28, 2010. Based on further integration of endowment insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance, this law explicitly states to unify the endowment insurance at the national level, and unify other items of insurance at the provincial level, gradually extend the scope of beneficiaries to all laborers and all citizens, and further clarifies the accountability of government, marking that a social insurance system with the Chinese characteristics that was initiated in 1978 is generally finalized. With regard to construction of a rural welfare system, China has been dedicated to building a fundamental framework that is constituted by new-type endowment system, new-type cooperative medical insurance system, Minimum Livelihood Guarantee System and five-guarantee system. Moreover, the social policies for safeguarding interests and rights of migrant rural workers are constantly improved, and the reform of the household registration system has been rapidly pressed ahead. Overall, an urban–rural social welfare system has initially taken shape. It should be noted that the reconstruction of Chinese social welfare system since 1978 is led by the government. From the perspective of structural functionalism, the changes on the political system are always affected by the economic system, and both of them usually go through a process from differentiation to accommodation. In a sense, reconstruction of Chinese social welfare was initially induced by economic reform or changes on the economic system, but at present Chinese social welfare is a key component of the political reform or changes on the political system. As for the current operational target of the Chinese political system, the single target for economic growth is being replaced or has been replaced by the pluralistic targets for political democracy and social construction.52

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Notes



1. Translator’s note: The heuristic scheme that T. Parsons used to analyze systems and subsystems is called the “AGIL Paradigm”. The pure AGIL model for all living systems: (A) Adaptation. (G) Goal Attainment. (I) Integration. (L) Latency (pattern maintenance). 2. Parsons T., Smelser N., 1956, Economy and society, London: Routledge, p. 44. 3.  Fei Xiaotong, 1998, Earthbound China, reproductive system, Peking University Press, pp. 6, 31, 38, 49. 4.  Liang Shuming, 1987, Essence of Chinese culture, Shanghai: Academia Press, pp. 169–70. 5. Han Keqing, 2002, Civil society: Re-examination of China’s modernization course, Tianjin Social Sciences, Issue 3. 6. Social Structural Transition Research Group of China Institute of Strategy & Management, 1998, Short-to-medium-term trends and hidden dangers in China’s social structural transition, Strategy and Management, Issue 5. 7. Nee V., 1989, A theory of market transition: from redistribution to markets in state socialism, American Sociological Review, Vol. 54, pp. 663– 81. The market transition theory consists of three interrelated theses: (1) The market power thesis: If the surplus products are no longer monopolized by redistribution department, but subject to market for allocation and distribution, it will give rise to two consequences: (i) Resource control will be mainly held by market transaction, not by redistribution system. (ii) When the pricing for labor force and commodities is based on the contract between buyers and sellers, instead of on administrative decree, the direct producers will have more decisive power in exchanging for commodities or services. In short, the transition from redistribution system to market implies transfer of power, which benefits direct producers but goes against redistributors. (2) The market incentive thesis: Unlike the redistributive economy that constrains direct producers, the market economy fully releases their initiative for production. In redistributive economy, the labor force pricing based on administrative decree seldom considers the differences in laborers’ work performance, and such pricing is usually lower than market pricing. In contrast, in market transaction, producers are entitled to disposing their products and laborers, and providing workers with more surplus products. Since payment closely concerns one’s work performance, a decent income is able to stimulate their work activity. Such argument implies better economic returns for those properly educated, which justifies the human capital theory that education is the best criterion for measuring one’s productivity. (3) The market opportunity thesis: In national socialism, in the process where redistributive economy is transiting into market economy, there will be a

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new opportunity structure to access to market. It is not only the mobility inside the redistribution departments or the opportunity to enter such departments; more importantly, it means market will become another channel for socio-economic mobility. As result of the changes on opportunity structure, entrepreneurs are seen as accomplished as government officials. The above three theses constitute the cardinal content of the social transition theory, according to Ni Zhiwei, and reveal the essential process where market transaction is replacing administrative decree, and then dramatically changing the power of resource control, incentive for production and opportunity structure; such changes will ultimately alter forms of distribution. 8. Social Structural Transition Research Group of China Institute of Strategy & Management, 1998, Short-to-medium-term trends and hidden dangers in China’s social structural transition, Strategy and Management, Issue 5. 9. Li Peilin, “Another invisible hand”: Social structural transition, development strategy and corporate organizational innovation, quoted by Yuan Fang, et al., 1998, Vision of sociologists: China’s social structural transition, Beijing: China Society Press, p. 62. 10. Li Qiang, 2000, China’s four benefit groups at present, Academics in China, Issue 3. 11. Sun Liping, 2002, Formation of lower social stratum in the context of resource reaccumulation, Strategy and Management, Issue 1. 12.  Sun Liping, 2002, Are we facing a fractured society?, Strategy and Management, Issue 2. 13. Shi Yuankang, Civil society and modernity, quoted by Liu Junning, et al., 1997, Economic democracy and economic freedom, Beijing: SDX Joint Publishing Company, p. 71. 14.  Wang Haiming, 1998, New theory of equality, Chinese Social Science, Issue 5. 15. Huntingdon, 1989, Political order in changing societies, Shanghai: Shanghai Translation Publishing House, p. 62. 16.  Li Qiang, April 3, 1998, Two Stages of Chinese Social Structural Transformation, Guangming Daily. 17. Wu Zhongmin, 1996, Discussion on China’s Progressive Modernization Model, Journal of Literature, History & Philosophy, Issue 4. 18. Lin Liling, 1998, Discussion on the differentiation and integration of Chinese interest groups during social transition, Modern Philosophy, Issue 2. 19. Wang Yalin, He Mingsheng, 1997, Discussion on the development quality of modernization, Sociological Studies, Issue 3.

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20.  Wu Zhongmin, 1995, China’s social development, Hunan Publishing Group, p. 70. 21. King Yeo-Chi, 1993, Critique and inheritance of the May 4th new tradition, in King Yeo-Chi, ed., Chinese society and culture, London: Oxford University Press, p. 188. 22. Satori Giovanni, 1998, The theory of democracy revisited, trans. Feng Keli and Yan Kewen, Beijing: Oriental Press, p. 381. 23.  Wang Haiming, 1998, New theory of equality, Chinese Social Science, Issue 5. 24. Shi Yunxia, 1998, Analysis of the views of justice and equality of modern democratic socialism, Wuhan University Journal (Philosophy & Social Science), Issue 2. 25.  Feng Keli, 2000, Further discussion on social justice, Magazine of Reading, Issue 2. 26.  Dahl Robert, 1999, On Democracy, trans. Li Baiguang, Lin Meng, Beijing: The Commercial Press, p. 71. 27.  Cheng Lixian, 1999, Social justice, equality and efficiency, Journal of Peking University (Humanities & Social Sciences), Issue 3. 28.  Hou Junsheng, 2001, Theory of western sociology, Tianjin: Nankai University Press, p. 174. According to T. Parsons, there are five pairs of “pattern variables” for analyzing a social system: (1) Affectivity neutrality vs. affectivity. (2) Self-orientation vs. collectivity-orientation. (3) Universalism vs. particularism. (4) Achievement vs. ascription. (5) Specificity vs. diffuseness. Different combination of these “pattern variables” reflects varied social relations and social structure. In terms of the modernization theory, one of its focuses is comparative analysis of modern society and traditional society. Parsons pointed out that because of modern economy, highly-specialized profession and rationality principle, the modern society tends to become simply functional, achievement-oriented, universalism-oriented, self-oriented and affectivity-neutral, while a highly homogeneous traditional society is just the opposite. 29.  Weber M., 1997, Wirtschaft und gesellschaft, trans. Lin Rongyuan, Beijing: The Commercial Press, p. 56. 30.  Ye Zhengqi, 1996, Rediscussion on the fight between tradition and modernity, Sociological Studies, Issue 6. 31. King Yeo-Chi, 1993, Critique and inheritance of the May 4th new tradition, in King Yeo-Chi, ed., Chinese Society and Culture, London: Oxford University Press, pp. 192–93. 32.  Bian Wu, 1995, Rediscussion on supremacy of justice—Possibility of equality starting point, The Eastern Miscellany, Issue 2. 33. Qin Hui, 1999, Social justice and experiences & lessons from China’s reform, Science & Technology Review, Issue 1.

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34. Adler M. J., 1998, Six great ideas, trans. Xi Qinghua, Beijing: SDX Joint Publishing Company, p. 190. 35. Wu Zhongmin, 2000, A new theory of justice, Social Sciences in China, Issue 10. 36. Wu Zhongmin, 2000, Analysis of Equality of Opportunity in Current China, Science & Technology Review, Issue 9. 37. Bell Daniel, 1997, The coming of post-industrial society, trans. Gao Gu, et al., Beijing: Xinhua Publishing House, p. 466. 38. Bell Daniel, 1997, The coming of post-industrial society, trans. Gao Gu, et al., Beijing: Xinhua Publishing House, pp. 466–500. 39. Rawls J. B., 1988, A theory of justice, trans. He Huaihong, et al., Beijing: China Social Science Press, p. 101. 40. Rawls J. B., 1988, A theory of justice, trans. He Huaihong, et al., Beijing: China Social Sciences Press, p. 96. 41. Sartori G., 1998, The theory of democracy revisited, trans. Feng Keli and Yan Kewen, Beijing: Oriental Press, p. 401. 42. On February 26, 1951, the then Government Administration Council (GAC) issued the Labor Insurance Regulations of the People’s Republic of China, marking that the Chinese labor insurance system for urban workers was officially established. 43. In 1952, the GAC issued the Instructions on Implementation of the Free Medical Treatment and Prevention for the State Functionaries with the People’s Governments at All Levels, Political Parties, Mass Organizations and Affiliated Institutions Throughout the Country, the public medical care system was implemented since then. In September 1955, the Circular Concerning Medical Treatment of the Children of State Functionaries, jointly released by the Ministry of Finance, Ministry of Health, and Personal Bureau under the State Council, stipulated that the family members of state functionaries are entitled to medical treatment at half cost. 44. In 1953, the then Ministry of Labor promulgated the Draft Amendment to the Implementation Rules of the Regulations of the People’s Republic of China on Labor Insurance, stipulating that the enterprises or investors shall bear all expenses on canteen, nursery, corresponding premises, equipment and personnel salary; in case the nutrition staff find it hard to pay for their own diet, or the parents fail to afford the food expenses of their kids in nursery, they can apply for the special subsidy covered by the labor insurance fund. 45.  On December 29, 1955, the State Council promulgated the Interim Measures on Handling Retirement of State Functionaries, the Interim Measures on Handling Resignation of State Functionaries, the Interim Provisions on Calculation of Working Years Upon Resignation and Retirement of State Functionaries.

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46.  In 1956, the National Outline for Agricultural Development (1956– 1967) and the Standard Charters for Advanced Agricultural Production Cooperatives were adopted, requiring the agricultural cooperatives to properly take care of their members that have lost working ability and have no means of livelihood, so as to guarantee their food, clothing, fuels, education and burial. 47. In early 1955, Mishan Township, Gaoping County of Shanxi Province took the lead in establishing the local cooperative medical care system in which commune members contributing part of “health fee” and production cooperatives contributing part of “welfare fund”. In 1960, the Central Committee of the CPC forwarded the Report of the Ministry of Health on the On-site Meeting for Rural Health Work, defining this system as the “collective medical care system”, which has since then become the basic medical care system in Chinese rural areas. 48. Ministry of Labor and Social Security, Literature Research Office of the CPC Central Committee, 2002, Selected important documents on labor and social security in the new era, Beijing: China Labor & Social Security Publishing House, Central Party Literature Press, pp. 133, 138. 49. Han Keqing, 2010, The third way and China’s welfare reform, Tianjin Social Sciences, Issue 2; Han Keqing, 2008, Civil society and construction of China’s social welfare system, Tianjin Social Sciences, Issue 1. 50.  Andersen Gøsta Esping, 1990, The three world of welfare capitalism, Bristol: Policy Press, p. 62. 51. Goffman E., ed., 1963, Stigma: Notes on the management of spoiled identity, Englewood Cliffs, NJ: Prentice-Hall, Inc., pp. 3–4, in Li Xianhong, et al., 2009, Concepts of HIV/AIDS-related stigma and discrimination, and developments of research tools, Advances in Psychological Science, Vol., 17, Issue 2, pp. 414–20. According to Goffman E, “stigma” is a kind of feature or trait that makes people deeply humiliated; such feature is categorized into three groups: physical defects, a stain in one’s character, and rejection for his/her clan or religion. The later-generation scholars expounded the notion of “stigma”, i.e., it usually refers to a negative trait that is perceivable, and it makes the individual/group that carries the negative trait to be rejected. Isolation, prejudice, discrimination, departure or escape from the normal social strata, such kind of escape carries a self-deprecation tone. 52. Han Keqing, 2011, Financial crisis and institutional response amid reconstruction of China’s social welfare system, Dongyue Tribute, Issue 3.

CHAPTER 3

Impact of Economic Globalization on China’s Social Welfare Policy

3.1  Economic Globalization: An Increasingly Prominent Reality Sociology neither ignores the realistic problems that keep emerging nor forgets the underneath causality. In today’s China, the Chinese people feel quite at ease at seeing foreigners of all skin colors walking among them, English has become a communication tool for certain groups of Chinese people, the cross-boundary personnel flow is increasingly common, foreign commodities are ubiquitous, the foreign food led by McDonald’s and KFC are hot sales, everywhere there are advertisements publicizing Hollywood blockbusters and global brand products…These signs manifest that the Chinese people have entered into a completely new era where the national, cultural, racial and ethnical divisions are no longer distinct.

Han Keqing, 2007, Economic globalization, inequality and China’s social policy choices, Dongyue Tribute, Issue 3; Han Keqing, 2004, Impact of capital globalization on China’s social class structure, Strategy and Management, Issue 4; Han Keqing, 2005, Economic globalization and construction of China’s social security system, Social Sciences in Guangdong, Issue 2. © China Renmin University Press 2020 K. Han, Social Welfare in Transitional China, Sociology, Media and Journalism in China, https://doi.org/10.1007/978-981-32-9660-2_3

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3.1.1   Globalization and Economic Globalization Globalization is currently a worldwide trend. According to the United Nations Development Programme (UNDP)’s Human Development Report 1999, “globalization, a dominant force in the 20th century’s last decade, is shaping a new era of interaction among nations, economies and people”.1 Some scholars summarize globalization as “a process (or set of processes) that embodies a transformation in the spatial organization of social relations and transactions, generating transcontinental or interregional flows and networks of activity, interaction, and power” (D. Held et al. 1999).2 As Anthony Giddens maintains, “globalization can thus be defined as the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa” (Giddens 1990),3 it is an infinitely extended state deriving from the notion of “separation of time and space”. Starting from the theory of modernity, Giddens proposes that globalization is an implicit consequence of modernity. And he adds that commercial corporations, particularly those transnational ones, are not only economically powerful, but capable of affecting the political decisions in their homeland or other areas. Corporations are a driving force in world economy, their growing influence has triggered local commodity market (including currency market) to join in the tide of global expansion. However, the capitalist market economy is never a single commodity market or service market, but encompasses commercialization of labor force, meaning that laborers are no longer controlled as a part of production mode, but a separate commodity. This process evidently conveys a sense of inequality of globalization.4 To understand economic globalization, we shall firstly comprehend the connotation of globalization. Some scholars believe economic globalization is the same with globalization, but stressing intensified internationalization of economic activities, which imply increasing integration and interdependence of different regions. Following this way of thinking, the European Commission has made a classic definition of economic globalization: “it is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology, and capital”.5 Other scholars believe economic globalization is only a component and a form of manifestation of globalization. For example, the Lisbon Group, which

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consists of scholars from several countries, holds that globalization has seven aspects of content: the globalization of the possession of finance and capital; the globalization of market and market strategy; the globalization of technology, related scientific research and development as well as knowledge; the globalization of living style and the mode of consumption as well as cultural life; the globalization of the adjustment capability and political control; the globalization of the world political unity; and the globalization of observation and consciousness.6 We hold that economic globalization and globalization is an organic integrity, with the former functioning as the driving force and prominent feature of the latter. In terms of the internal logic, economic globalization is basis for the changes upon the entire society, it is sure to lead to changes upon politics, economy and culture of a society. Therefore, economic globalization is narrowly defined globalization, while the broadly defined globalization is a research subject that is far more complicated and extensive than economic globalization. According to the studies of the World Bank, the development of globalization has gone through three stages or three waves since 1870 in light of constantly increasing trade, capital flow and immigration. During the first wave (1870–1914), being driven by decreasing transportation cost and vigorous free trade between Britain and France, the worldwide flow of trade, capital and labor force had kept mounting. During the second wave (1945–1980), the developed economies achieved unprecedented integration, marked by rapid growth in their multilateral trade. As for the third wave (1980 to date), some characteristics make it different from its predecessors: (1) The most striking feature is that a large number of developing countries get involved by the world market. (2) Certain developing countries are becoming increasingly marginalized in the world economy, and caught in shrinking income and worsening poverty. (3) Such phenomena as international immigration and capital flow, which were still negligible during the second wave, have begun to stand out.7 In a nutshell, economic globalization is globalization in terms of free trade, free capital flow and cross-boundary immigration. 3.1.2   Impact of Economic Globalization on Wealth and Income Distribution What impact of economic globalization will exert upon wealth and income distribution? Is it widening the international or domestic

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polarization between the rich and the poor? Each sticks to his/her argument, there is no consensus. There has been a widespread understanding of globalization, i.e., it is globalization that widens the gap between rich and poor between different economies and within a given economy, thus the rich countries become richer and poor countries become poorer; in other words, the wealthy class receives more privileges from globalization, and the poor are somewhat left behind, although they are inside the same society. Heckscher-Ohlin model, the opening degree of trade will impact income distribution among factors of production, but the degree of impact varies among different economies. The impact on family income distribution is decided by, which factors are adequate in a country, and the situation for family holding of these factors. They believe there is no systematic relation between changes on trade policies and family wealth gap. In other words, the poor families, from open trade, may not be less than other families. In order to testify such argument, Dollar and Kraay built a database about income gap, which involves the Gini Coefficient of several economies, and Lorenz Curve that was produced based on the annual materials of these economies. It turned out that it was hard to make comparison of the income distribution data of different countries, because of the concept, measurement indicator (gross or net value), unit of target object (individual or family), coverage of investigation (nationwide or regional). Therefore, they decided to focus on the income distribution data based on the above information, so as to underhand the changes upon the 1/5 of the global population that earned the minimum income. The result showed that the income growth rate of the poor and the overall per capita income growth rate, is one-to-one relation. There is no inevitable relation between the changes on income distribution and growth rate. In the meantime, the further investigations show that the proportion of trade in GDP, no relation to the Gini Coefficient, while other indicators, such as openness indicator, average duty rate, degree of capital manipulation, no relation to the changes on wealth-poor. Therefore, although the free trade and investment will generate a divided consequence: both winner and lose will come out in a short term, but the losers do not come from the poor. Trade increase will go along with rapid economic growth, there is no change upon income distribution pattern, indicating that trade increase will improve the poor people’s living standard.8

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The studies of the World Bank also show that, the wealth gap in certain economies did widen in the past 20 years, but it does not that all the open economies will have widening wealth gap. Take Costa Rica and Vietnam for instance, their income distribution has been stable; in Malaysia and the Philippines, the income gap narrowed. In 1980s, Mexico, the wealth gap expanded, but then narrowed in 1990s. In most economies, the wealth gap between rich and poor has been changing slightly, the income growth rate of the poor is closely related to the per capita GDP growth rate. In addition, China, India and Uganda have achieved remarkable results in joining in economic globalization. Since 1980s, the latest global wave, greatly cut the number of the poor across the global. Since 1980s, the number of the global poor dropped about 200 million, over 1993–1998, along with progress of globalization, the number of the absolute poor dropped to 120 million. In other economies, the number of the absolute poor increased by 20 million.9 Some scholars point out that, the class that defends globalization has been gaining power across the globe, and has generated a serious social crisis, and affected the workers, farmers, employees and self-employed personnel that relies on the entire world. It is the promotion of globalization policy and penetration that induces a small group of people that advocates globalization and the majority of people that are being exploited. The widening income inequality among diverse social class is outcome of expanding globalization, there are other forms of inequality, cross political and cultural boundaries. Taxation tends to be more regressive: more and more government taxation comes from the workers’ salary, the percentage of the taxes from transnational companies has been declining. It is partially attributed to a big legal loophole, and the block that is created by tax lawyers that are employed by major corporations, and transfer the location of profit to the countries with low tax rate, the so-called transfer pricing. Along with regressive taxation mechanism is the increasingly progress national subsidy or budget. On the one hand, there is low-interest loan, export preference, subsidies to factory construction, land property transfer, infrastructure development, research and development—rights and interests owned by major corporation. On the other hand, the sharp decrease in the social welfare granted to workers. The state has been increasing subsidy to the capital of transnational corporations, but reducing the welfare granted to workers, the personnel receiving pension, low-income families, sick and handicapped people, single-parent families and children. Such social inequality is

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attributed to two factors: continuous concentration and centralization as a result of merger, purchase and joint venture, as well as close integration of national elite and globalized consortiums. The largest social crisis exists in the countries that went the farthest during the process of globalization. There are the largest group of the workers without medical insurance, labor union, the part-time or half-day workers without or with minimum social welfare, followed by the UK. In contrast to Europe, the low unemployment rate which is boasted by the United States is offset by its highest rate of low income and guarantee-free workers—such situation is unaccepted by the European workers’ community. The similar situation also exists in the third-world countries. The unemployment rate in Argentina and Brazil, 18% and 15%, with exponential growth in unemployment rate along with the globalization process. The similar process is also seen in east Europe. Since the 1980s, east Europe began to transit to the capitalism, the living standard dropped 30–80%.10 Economic globalization usually enables all production factors to flow and to be allocated more freely and more efficiently across the world, which will lead to increase in economic wealth objectively. In the long run, increasing world wealth is favorable for improving people’s welfare. However, currently, what we are seeing is intensified unfairness of social distribution. It is attributed to the following reasons: (1) Institutional reason. Under the capitalist system, even a wealthy society is not wealthy enough to reduce the massive sufferings. (2) The reason of development of market force. Globalization is usually associated with the development of market force, stimulating the development of inequality that threatens social integration, because it enables semi-monopoly to return to market force. (3) The reason of competition. The welfare state regime is a historical product of labor force and capitalists, it is a strategy adjustment, the capital to meet certain social requirements. However, globalization has broken such social contract. (4) The reason of structural changes. Another serious consequence of globalization is the changes on employees’ structure, which has led to income changes. The investigations have shown that, the job opportunities for high-income technicians have been on the rise, the job opportunities for middle-income employees have been falling, while the job opportunities for low-income workers have been rapidly increasing. The consequence of such development is that, the unfair social income distribution is being exacerbated. In 1960, the 20% of the global population, their average per capita income was about 30 times more than the 20% of the poorest population, soared to 78

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times in 1998. Along with the progress of globalization, since 1970s or 1980s, some old norms have been gradually cast aside, replaced by welfare capitalism. Its ideological theory stresses individual freedom, individualism and worship for individual achievement, stress individuals to take over responsibility. Economically, standardized and large-scale production of commodities, and the associated labor form, replaced by varied forms of “flexibility”, correspondingly, an ever increasingly divided society.11 Well, is economic globalization a benefit or a disaster? Especially for such developing countries as China, while bringing economic growth, will economic globalization become an origin for new phenomena of inequality? While facing the realistic requirements for social development, we shall pay attention to economic globalization, and make appropriate explanations and predictions. Daniel Bell said, “as long as there exist regular development and repeatedly occurring phenomena, it is possible to make predictions; or there exists continuous development trend, while the direction of such trend (not necessarily the accurate track), can be predicted with statistical time, or it could be arranged to historical development trend, then, predictions are possible”. “The changes upon values and concepts and appearance of new society, there are important social reforms, its development trend could be depicted by historical stages. Here, Bell pointed that predictions are possible and feasible. He also pointed out that “social structure is a main organizational structure that decides individual life in a society…from rural society to urban society, from agricultural economy to industrial economy, from federal state to a centralized state, all important changes upon social structure. Because they are structural, and gradually intensified, and hard to be reversed. Therefore, they are easily identified. However, such change upon structure is not large scale, not allow us to describe accurate details about the future social pattern. When such change takes place, we are not likely to predict its future, but we can identify the ‘agenda of the question’ faced and resolved by the society, which is predicted by the agenda itself”.12 “Agenda of problem” refers to “post industrialized society” according to Bell, he cares about a kind of social prediction of the western social structural changes. The “Agenda of problem”, is social fact, globalization, the Chinese social structure, especially the impact on social inequality, and the countermeasure about social welfare in China brought forth by such impact.

56  K. HAN

3.2  Impact of Economic Globalization on China’s Income Distribution 3.2.1   China’s Foreign Trade and Absorption of Foreign Investment In a sense, the process in which China is increasingly involved in the wave of economic globalization witnesses its foreign trade and utilization of foreign funds keep mounting. It is self-evident that foreign trade plays a vital role in promoting China’s economic development. Being a bridge that links China’s economy with the world market, foreign trade not only drives China’s economic growth, but increases its Foreign-trade Dependence (FTD). From 1978 to 2001 when China entered into the WTO, its total foreign trade volume had increased dramatically. Foreign trade was playing an ever significant role in the entire national economic development, with the FTD jumping from 9.8% in 1978 to 44.7% in 2001; during the same period, the export contribution rate to China’s GDP rose from 4.6 to 23%, while such contribution rate of import went up from 5.2 to 21%. Figure 3.1 demonstrates the developments of China’s foreign trade from 1978 to 2001.13

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Fig. 3.1  China’s total foreign trade volume in 1978–2001 (Source National Bureau of Statistics [NBS], China Statistical Yearbook 2002, Beijing: China Statistics Press)

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In the meantime, in a global view, the flow of capital and technologies is far more active than that of commodities. Economic globalization has turned in the entire world into a unified market system, especially connect foreign trade with capital market. In the worldwide foreign investment wave, the globalization of productive capital has become the core of capital globalization. The authentic capital utilization in China started from 1978 after the opening up policy was put into place. In 1979, China promulgated the Law of the People’s Republic of China on ChineseForeign Equity Joint Ventures, and first three foreign-funded companies were allowed to invest in China in 1980. In June 1995, China’s State Council, Interim Provisions on Investment Made by Foreign-Invested Enterprises in China, and Catalogue for the Guidance of Foreign Investment Industries. In 1998, in light of the new situations, the opinions for further widened the landscape of opening up and improve level of utilization of foreign investment. Along with expanding of foreign investment and fields, more and more source countries and regions have entered into China, and more and more internationalized transnational companies entered into China. Since 1993, the inflow of foreign investment into China ranked the world second place, and the first place among the developing countries, only behind the state with the FDI less than the United States. According to China Statistical Yearbook 2002, from 1979 to 2001, China’s paid-in use foreign investment totaled $568.4.1 billion (bln), including $147.16 foreign loan, $393.51 FDI and other foreign investments at $27.74 (Table 3.1). Accordingly, China’s inflow of foreign capital drew in multinational companies. In light of the Almanac of China’s Foreign Economic Relations and Trade 2002, more than 200 of the world top 500 multinationals had investment in China, covering a wide range of businesses, thus vigorously expanding China’s overall foreign investment scale and building up domestic industries’ technical strength. Table 2.2 shows the sales revenue of the top 20 foreign-funded enterprises in China based on the statistics from the Ministry of Foreign Trade and Economic Cooperation of China. 3.2.2   Economic Globalization Uplifting Economic Status of Social Members on the Whole As early as in the eighteenth century, Adam Smith pointed out that foreign trade is an important condition for modern economic growth.

58  K. HAN Table 3.1  China’s paid-in foreign investment (Unit: bln USD) Year 1979–1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 1979–2001

Total 17.14 4.46 7.26 8.45 10.23 10.06 10.29 11.55 19.20 38.96 43.21 48.13 54.80 64.41 58.56 52.66 59.36 49.67 568.41

Amount of foreign loan

Foreign direct investment

13.04 2.51 5.01 5.81 6.49 6.29 6.53 6.89 7.91 11.19 9.27 10.33 12.67 12.02 11.00 10.21 10.00 0.00 147.16

3.06 1.66 1.87 2.31 3.19 3.39 3.49 4.37 11.01 27.52 33.77 37.52 41.73 45.26 45.46 40.32 40.72 46.88 393.51

Other foreign investments 1.04 0.30 0.37 0.33 0.55 0.38 0.27 0.30 0.28 0.26 0.18 0.29 0.41 7.13 2.09 2.13 8.64 2.79 27.74

Source NBS, China Statistical Yearbook 2002, China Statistics Press

In the 1930s, D. H. Robertson, a professor with University of Cambridge, presented a more explicit proposition that “foreign trade is the engine for economic growth”.14 The contemporary economic theories hold that trade openness will increase income of abundant factors, but reduce that of scarce factors. A country will see increasing income brought forth by trade, but imbalanced income distribution. According to the Factor-Price Equalization Theorem, under specific conditions, the profit of different factors, i.e., land rent, wage rate and profit rate, will show a tendency of convergence across the world. Intuitively, trade drives up the profit of abundant factors of each country, but pulls down the profit of scarce factors, because abundant factors are relatively cheap, while scarce factors are fairly costly, meaning that the prices for usually cheap factors will rise, while the prices for usually expensive factors will drop, so as to reach a globally unified price. Theoretically, if labor force or capital could freely flow from low-income and low-profit countries to high-income and high-profit countries, the wage or profit of capital

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will become universally unanimous. In other words, in the labor-intensive countries, though the level of wage was low at the beginning, it would go up later; in contrast, in the countries lack of labor force, they tended to set high wage standards, which would then gradually shrink.15 According to the studies of the World Bank on the average per-hour wage in the manufacturing sector, the developing countries differed greatly from their developed counterparts. For example, the average perhour wage was about $30 in Germany, but merely 30 cents in China and India, which was only 1% of that in Germany.16 Such gap indicated enough room for developing countries to raise workers’ wage, particularly for China which heavily relied on export of manufactured goods, there was theoretically great potential to raise workers’ wage, in view to the wage gap between developed countries, which came into being along with development of foreign trade. In fact, the Chinese urban-rural residents have seen their household income increase notably since 1978. Although it is too simplistic to say that the growth in the Chinese people’s household income and wage is a direct consequence of China’s participation in the global trade and market, it cannot be denied that the development of foreign trade and accelerating process of marketization have stimulated growth in workers’ wage. Moreover, the high-wage standard in foreign companies has also exerted an important demonstration effect. In order to visualize the understanding of the implications of economic globalization on China’s income distribution, we used “per capita total import-export volume” and “per capita FDI” as independent variables, and “per capita GDP” and “workers average wage” as dependent variables, and then analyzed the total import-export volume, total local population, per capita GDP and workers’ average wage of each of the 31 provinces/municipalities in 1995 and 2001, in reference to the data excerpted from the China Statistical Yearbook (1996, 2002). Two things should be noted: (1) There were no separate data about Chongqing Municipality in 1995, its data were included into those of Sichuan Province, since Chongqing was still under Sichuan’s jurisdiction at that time. (2) Tibet Autonomous Region was a special case with zero FDI in 1995 and 2001, such abnormal data were excluded from the final statistics. See Table 3.2. By using the statistical software SPSS10.0, a Regression Analysis Ordinary Least Square (OLS), the result (Table 3.3), the F value of the regression equation in 1995 and 2001 shows significance at the level of

Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang Anhui Fujian Jiangxi Shandong Henan Hubei Hunan Guangdong Guangxi

Province/ municipality

2960.30 853.88 60.87 45.57 43.46 322.23 100.58 64.48 1721.40 230.82 266.50 33.39 446.27 32.57 160.18 24.50 58.98 31.90 1513.20 68.03

3726.80 1810.00 85.64 59.32 85.60 472.27 119.17 88.80 3772.80 698.18 711.00 57.21 657.83 36.57 320.25 29.11 59.87 41.81 2267.70 37.53

86.33 161.46 8.49 2.07 2.53 34.81 15.74 13.97 204.42 73.46 29.13 8.03 124.93 7.11 30.89 5.26 10.83 7.94 149.39 14.81

127.85 212.50 10.00 7.15 4.50 59.99 12.55 8.95 265.90 94.02 47.94 5.32 113.90 9.45 38.94 4.79 19.89 12.28 153.31 8.02

2001

1995

1995

2001

Per capita FDI (USD)

Per capita import-export volume (USD)

11151.0 9766.5 4427.5 3548.9 3642.7 6825.5 4355.7 5441.8 17399.0 7295.5 8159.3 3331.1 6672.9 2965.8 5746.1 3298.9 4142.4 3434.0 7834.9 3535.1

1995 25,523 20,154 8362 5460 6463 12,041 7640 9349 37,382 12,922 14,655 5221 12,362 5221 10,465 5924 7813 6054 13,730 4668

2001

Per capita GDP (yuan)

8144 6501 4839 4721 4134 4911 4430 4145 9279 5943 6619 4609 5857 4211 5145 4344 4685 4797 8250 5105

1995

(continued)

19,155 14,308 8730 8122 8250 10,145 8771 8910 21,781 11,842 16,385 7908 12,013 8026 10,008 7916 8619 9623 15,682 9075

2001

Workers’ average wage (yuan)

Table 3.2  Per capita total import-export volume, per capita FDI, per capita GDP and workers’ average wage in 31 provinces/municipalities in 1995 and 2001

60  K. HAN

18.94 53.83 90.51 47.93 24.59 32.01 42.81 70.53

325.38 – 30.73 17.02 46.39 35.33 56.35 30.25 39.18 94.63 94.43

219.48 59.22 35.87 1.63 2.45 – 9.22 2.62 0.34 0.76 3.31

146.69 – 4.78 0.74 1.51 – 9.61 2.89 6.98 2.98 1.08

58.66 8.28 6.73

2001

1995

1995

2001

Per capita FDI (USD)

Per capita import-export volume (USD)

Source NBS, China Statistical Yearbook (1996, 2002), China Statistics Press

Guizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang

Hainan Chongqing Sichuan

Province/ municipality

Table 3.2  (continued)

1795.9 3022.6 2332.5 2845.8 2268.3 3451.1 3294.4 5027.1

5027.6 – 3120.5

1995

2895 4866 5307 5024 4163 5735 5340 7913

7135 5654 5250

2001

Per capita GDP (yuan)

4475 5149 7382 4396 5493 5753 5079 5384

– 4645

5340

1995

8991 10,537 19,144 9120 9949 12,906 10,442 10,278

8321 9523 9934

2001

Workers’ average wage (yuan)

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62  K. HAN Table 3.3  Regression analysis of the impact of per capita total import-export volume and per capita FDI on per capita GDP and workers’ average wage Workers’ average wage 1995 Constant Per capita import-export volume R2 Adjusted R2 F value Constant Per capita FDI R2 Adjusted R2 F value

Per capita GDP 2001

1995

2001

4936.410*** (29.625) 1.603*** (6.884)

9625.349*** (20.768) 2.901*** (6.969)

3894.020*** (9.234) 3.922*** (6.655)

5983.769*** (11.045) 6.630*** (13.625)

0.629 0.615 47.395 4716.398*** (25.447) 16.854*** (6.416) 0.604 0.589 41.165

0.626 0.613 48.569 9023.749*** (20.426) 41.434*** (7.460) 0.665 0.653 55.653

0.613 0.599 44.283 3478.836*** (7.907) 44.646*** (7.159) 0.655 0.642 51.257

0.865 0.860 185.650 5237.561*** (7.694) 97.406*** (11.382) 0.822 0.816 129.558

Note The figures in the round brackets denote ‘T Test’; ***denote Significance Level is 0.01

0.000, and passed the t-test at 0.01 level, indicating that the per capita import and export volume and per capita FDI have significant impact on average workers’ wage. Based on time series, the R2 of per capita import and export volume on workers’ average wage is about 0.63, the R2 on per capita GDP is 0.61 in 1995 and 0.87. The regression equation shows that, the regression coefficient of per capita import and export volume on workers’ average wage in 1995 is 1.6, which rises to 2.9 in 2001, indicating that an increase of $1 in per capita import and export volume, workers’ average will increase 1.6 yuan. In 2001, an increase of $1 in per capita import and export volume, workers’ average will increase 2.9 yuan. A comparison shows that the per capita import and export volume has a more prominent impact on per capita GDP. By 2001, the per capita import and export volume affect over 86% of per capita GDP. In 1995, an increase of $1 in per capita import and export volume, per capita GDP increases 3.9 yuan, which rose to 6.6 yuan in 2001. With regard to the regression effect of per capita GDI on workers’ average wage and per capita GDP, the R2 of per capita FDI on workers’

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average wage was over 0.6, and the R2 on per capita GDP was 0.66 in 1995 and 0.82 in 2001. In comparison, the per capita GDI on per capita GDP and workers’ average wage in 2001 was more significant. The observation of the regression equation shows that the regression coefficient of per capita FDI on workers average wage was 16.85 in 1995, which rose to 41.43 in 2001, indicating that an increase of $1 in per capita FDI in 1995, the workers’ average wage would increase 16.85 yuan; by 2001, an increase of $1 in per capita FDI, the workers’ average wage would increase 41.43 yuan. In comparison, the effect of per capita FDI on per capita GDP was more significant. By 2001, the per capita FDI affected over 82% of per capita GDP. In 1995, an increase of $1 in per capita FDI, per capita GDP would increase 44.65 yuan, which reached 97.41 yuan in 2001. Thus, while China keeps carrying out the reform and opening up policy, it is ever more deeply involved in economic globalization, and the Chinese people have seen their material life gradually upgraded, although the enhancement of people’s economic status is accompanied by throes of uneven income distribution. Generally speaking, economic globalization not only improved the Chinese people’s living standard and living conditions, but also caused extreme imbalance among regions, urban-rural areas and industries, owing to development of foreign trade and imbalanced FDI in different regions, urban-rural areas and industries.

3.3  Economic Globalization and China’s Inequality Economic globalization will destruct China’s traditional social structure. While accelerating China’s economic growth, economic globalization also shocked China’s income distribution pattern, and helped generate new forms of structural inequality and wealth gap. The World Bank Annual Report 2002 stated that China embarked on modernization on basis of extremely even income distribution and dire poverty. The intra-rural inequality has in fact alleviated, however, the inequality between rural areas and rapidly developing urban areas has been aggravating. Moreover, the inequality between the provinces with or without urban agglomeration is also worsening.17 Doubtlessly, economic globalization is an important factor that intensifies the inequality among regions, urban-rural areas, industries and sectors.

64  K. HAN

3.3.1   Economic Globalization: Key Factor Leading to Imbalanced Regional Economic Growth Although China has entered into a new stage of economic globalization since 1978, different provinces/municipalities vary greatly in their extent of participation in economic globalization and economic benefit therefrom. In reference to the studies of Hu Angang, professor with Tsinghua University, and other scholars, the sequence of the FTD by province/ municipality in 1999 was Guangdong (1.4026), Shanghai (0.7808), Tianjin (0.7659), Beijing (0.6995), Fujian (0.4291), Jiangsu (0.3534), Zhejiang (0.3127), Liaoning (0.2904), Shandong (0.2247), Hainan (0.1827), Xinjiang (0.1412), Ningxia (0.1381), Jilin (0.1266), Shanxi (0.1265), Tibet (0.1295), Shaanxi (0.1156), Heilongjiang (0.0864), Inner Mongolia (0.0826), Hebei (0.0817), Anhui (0.0801), Guangxi (0.0792), Yunnan (0.0768), Chongqing (0.0741), Hubei (0.0660), Qinghai (0.0656), Jiangxi (0.0636), Sichuan (0.0610), Guizhou (0.0600), Hunan (0.0556), Gansu (0.0500) and Henan (0.0435).18 The sequence of total import-export volume by province/municipality in 2001 was Guangdong, Shanghai, Beijing, Jiangsu, Zhejiang, Shandong, Fujian, Liaoning and Tianjin, mostly those lie in China’s eastern coastal region (see Fig. 3.2). Obviously, there was a notable imbalance in foreign trade among different provinces/municipalities, because foreign trade and foreign capital remained concentrated in east China, such landscape was identical with the imbalanced economic development among different regions. Similarly, the distribution of FDI and foreign-funded enterprises between China’s central-western regions and eastern coastal region is apparently unequal. With respect to China’s three major economic zones,19 the FDI and other foreign investment are highly concentrated in the eastern region. In 1984, the eastern region held 96.73% of China’s total foreign investment; to be more specific, Guangdong Province accounted for 73.42%, while the central and western provinces/municipalities respectively held 1.19% and 2.08%. Since the mid1980s, the share of the eastern region in China’s total foreign investment has somewhat dropped, that of the central region has been rising slightly, while that of the western region has remained at downside, i.e., falling from 6.81% in 1987 to 2.75% in 1999, down more than 4 percentage point.20

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