China
China
China
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China is increasingly linked to the global market economy and is itself becoming a market
economy. In 1991, Deng Xiaoping inspected the special economic zones in southern
China and stressed that “development is the only hard and fast principle”, thus liberating
investors from the depressing and stagnant atmosphere that had prevailed after the
Tiananmen massacre in 1989. Radical economic liberalization across the country in 1992-
1993 attracted a large quantity of international capital and boosted China’s economy, but
this also encouraged speculation in real estate and increased inflationary pressures. Yet
motivated by the implementation of a “soft landing” in the mid-1990s using macroeconomic
controls, the state decided to carry out comprehensive reforms in the direction of a market
economy. This included further reform of state-owned enterprises, social services, and
social security The result has been insufficient domestic demand.
Since 1998 the Chinese government has adopted pro-active fiscal policy to counter the
trend of reduced growth rates. The principal measures have included issuing long-term
bonds to support public construction works, increasing staff wages in administrative units
or institutional agencies, and cutting taxes to stimulate investment and consumption. Such
expansionary policies seem to have contributed to an increased growth rate in the last
year, Yet growing income inequality, increased unemployment, and a high level of
uncertainty about changes in the social security system for low-income families could limit
the viability of this approach, by constraining social demand.
Despite economic reforms, the employment experiences of urban workers is still largely
structured by enterprises that are defined by form of ownership, economic sectors and
administrative statutes. While the gap between the various levels of average wages in
state-owned units and collectively-owned units has remained large, the difference in
average wages between state-owned enterprises and enterprises having other forms of
ownership (joint ownership, stock ownership, limited-liability corporations, foreign
investment etc.) has been reduced. This is largely the result of policy to raise staff wages
in administrative units and institutional agencies as mentioned above. Proponents of
reform argue that this reflects the improved performance of production workers in state-
owned enterprises induced by wage reform. However, an increased proportion of total
‘wages’ in the form of bonuses and subsidies (which has taken place since the
government’s delegation of control and responsibility to managers) has disproportionately
benefited administrative personnel in state–owned enterprises.
On the other hand, the average wage levels in emerging industries such as
telecommunications, banking and insurance, and real estate have increased significantly in
recent years. Meanwhile the government’s recent attempts to stimulate domestic
consumption have raised average wage levels in state-owned industries such as health
care, sports, education, culture, scientific research and in government agencies. However,
wage levels in more traditional manufacturing industries, where older state-owned
enterprises are concentrated, have stagnated throughout the decade relative to other
industries. This is partly due to the difficulties these enterprises have had in providing
adequate income to their workers once the government ceased to bear direct financial
responsibility for these enterprises.
Table 3: Average wages of administrative staff and workers with and related indices
Indices of
Average money wage (in
average real
yuan) (1 yaun = $.12)
wage
Enterprise Enterprises
Year State- Urban State- Urban
s with with
collective
owned Other owned collectively other
ly
-owned
Enterp Enterp
enterpris types of -owned types of
rises rises
es
Ownership Enterprises wnership
Year Farming, Mining and Manufac- Production Construc- Geological Post & and Retail and Estate Services Care, Culture and Research Agencies,
And Supply
Forestry, Quarrying turing tion Prospecting Telecommu- Trade Insurance Trade Sports & Art, Radio, and Party
of
Total Animal Electricity and Water Nications & Catering Social Film and Polytech- Agencies
Husbandry Gas and Conservancy Services Welfare Television nical and Social
1990 2140 1541 2718 2073 2656 2384 2465 2426 1818 2097 2243 2170 2209 2117 2403 2113
1.00 0.72 1.27 0.97 1.24 1.11 1.15 1.13 0.85 0.98 1.05 1.01 1.03 0.99 1.12 0.99
1991 2340 1652 2942 2289 2922 2649 2707 2686 1981 2255 2507 2431 2370 2243 2573 2275
1.00 0.71 1.26 0.98 1.25 1.13 1.16 1.15 0.85 0.96 1.07 1.04 1.01 0.96 1.10 0.97
1992 2711 1828 3209 2635 3392 3066 3222 3114 2204 2829 3106 2844 2812 2715 3115 2768
1.00 0.67 1.18 0.97 1.25 1.13 1.19 1.15 0.81 1.04 1.15 1.05 1.04 1.00 1.15 1.02
1993 3371 2042 3711 3348 4319 3779 3717 4273 2679 3740 4320 3588 3413 3278 3904 3505
1.00 0.61 1.10 0.99 1.28 1.12 1.10 1.27 0.79 1.11 1.28 1.06 1.01 0.97 1.16 1.04
1994 4538 2819 4679 4283 6155 4894 5450 5690 3537 6712 6288 5026 5126 4923 6162 4962
1.00 0.62 1.03 0.94 1.36 1.08 1.20 1.25 0.78 1.48 1.39 1.11 1.13 1.08 1.36 1.09
1995 5500 3522 5757 5169 7843 5785 5962 6948 4248 7376 7330 5982 5860 5435 6846 5526
1.00 0.64 1.05 0.94 1.43 1.05 1.08 1.26 0.77 1.34 1.33 1.09 1.07 0.99 1.24 1.00
1996 6210 4050 6482 5642 8816 6249 6581 7870 4661 8406 8337 6778 6790 6144 8048 6340
1.00 0.65 1.04 0.91 1.42 1.01 1.06 1.27 0.75 1.35 1.34 1.09 1.09 0.99 1.30 1.02
1997 6470 4311 6833 5933 9649 6655 7160 8600 4845 9734 9190 7553 7599 6759 9049 6981
1.00 0.67 1.06 0.92 1.49 1.03 1.11 1.33 0.75 1.50 1.42 1.17 1.17 1.04 1.40 1.08
1998 7479 4528 7242 7064 10478 7456 7951 9808 5865 10633 10302 8333 8493 7474 10241 7773
1.00 0.61 0.97 0.94 1.40 1.00 1.06 1.31 0.78 1.42 1.38 1.11 1.14 1.00 1.37 1.04
1999 8346 4832 7521 7794 11513 7982 8821 10991 6417 12046 11505 9263 9664 8510 11601 8978
1.00 0.58 0.90 0.93 1.38 0.96 1.06 1.32 0.77 1.44 1.38 1.11 1.16 1.02 1.39 1.08
Note: Figures in second rows denote the ratios to overall average money wages. Source: National Bureau of Statistics, PRC.
Falling poverty in rural areas; rising poverty in urban areas
Official statistics reveal that the Chinese government has been highly
successful in reducing the incidence of poverty in past decades. While this is
one of China’s great accomplishments in human development, interpretations
should be made cautiously. Estimates of the population in poverty covers only
those counties concentrated mainly in the central and western parts of the
country as defined by the central government. Estimates do not include those
people residing in more developed rural areas who, nevertheless, are living in
absolute poverty according to provincial standards. The emergence of urban
poverty also makes official measurements problematic given that official
figures normally include only residents in rural areas and people with chronic
illnesses. The urban population is defined as people who have an urban
hukou or household registration. Urban people who actually do live in poverty
include, the unemployed, (laid-off and, under-employed workers in state-
owned enterprises, pensioners who have not received their pensions, and the
dependents of all these workers. Moreover, people belonging to the “floating
population” are statistically invisible. This population is made up of – the rural
migrants to urban areas, who fill the worst jobs in the private sector and
foreign-owned enterprises – but who are not eligible for public services and
legal protections at a time when they need them most because of their rural
hukou status.
* figures denote the ratios to the national average total. Source: National Bureau of
Statistics, PRC.
Number of Union
employees membership