China's Hukou System

Markets, Migrants and Institutional Change

Jason Young

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9781137277305
• eBook ISBN: 9781137277312
• Topic: Politics & International Relations
• Subtopic: Asian Politics
• Index: Politics & International Relations

By 2010, 260 million citizens were living outside of their permanent hukou location, a major challenge to the constrictive Mao-era system of migration and settlement planning. Jason Young shows how these new forces have been received by the state and documents the process of change and the importance of China's hukou system.

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Markets, Migrants and Institutional Change

Economic development in the post-Mao era has caught the eye of developing and developed countries alike. For the developing world, China and the other East Asian economies represent much of what they are hoping to emulate in their own development projects. For the developed world, China is no longer considered the ‘sick man of Asia’

and is now an integral part of the global economic system attracting high levels of foreign direct investment and maintaining high levels of economic growth and a healthy balance of trade surplus with the developed world. This development success is particularly striking considering the many setbacks, impediments and false starts in China’s modernisation drive since the 19^th century.

In 1792 Lord Macartney led an embassy to China to negotiate a treaty of commerce and establish a British Embassy in Beijing. At that time China was the largest and most significant economy in the world and the Qianlong Emperor, stating that China had all things, saw no need for British manufactures and rejected Macartney’s requests. China was experiencing one of its most expansive eras (conquering Xinjiang and Tibet, defeating the Western Mongolians and forcing concessions in the South), and the Qianlong Emperor presided over an inward looking confident ‘Middle Kingdom’. In hindsight it appears that, ‘China was pressing up against the limits of economic possibility given traditional technologies – creating severe crisis – just at the time when a massive challenge was developing from the West’ (Naughton 2007:40).

The defeat of China’s forces at the hands of the British Empire in the First Opium War (1839–42) and a combined set of forces in the Arrow War (1856–60), the Taiping Rebellion that swept over southern China in the 1860s, the colonisation of much of China’s tributary regions and the First Sino-Japanese War (1894–95) all pressed the need for reform in China. ‘Self-Strengthening Reforms’

began in the 1860s and a philosophy of ‘Chinese studies for the base, Western studies for use’

became prominent. However, the failure of the ‘Hundred Days of Reform’

illustrated the ruling Dynasty’s inability to incorporate new forms of foreign science, technology and philosophy and reform the basis of Chinese governance and economy. The ailing Qing Dynasty fell in 1911, ushering in one of China’s most turbulent and revolutionary eras.

After the 1911 revolution, China became a divided and contested sphere further postponing modernisation attempts. Warlordism, the foreign concessions, the disastrous Second Sino-Japanese War (1937–45) and the crippling Civil War (1927–50) between the Nationalists and Communists delayed and destroyed China’s modernisation projects and its ability to steadily build up its economic infrastructure and human capital. Over this period, ‘Constitutionalism’

the ‘May Fourth Movement’

the ‘New Life Movement’

and the ‘Three Principles of the People’

which called for ‘livelihood, democracy and nationalism’

all pushed for a progressive China but each were severely hampered by the political environment. With the establishment of ‘New China’ in 1949 some progress was made but soon further obstacles emerged as the new government maintained an isolationist and reactionary international position and embarked on an overly ambitious and ultimately restrictive model of state socialism and economic planning following the Maoist interpretation of the politico-economic philosophy of Marxist-Leninism.

In the early years of the People’s Republic, Mao had called for ‘a hundred flowers to bloom and a hundred schools of thought to contend’

What became known as the ‘hundred flowers campaign’

was a reference to the ‘Hundred schools of Thought’

that emerged in a period of cultural and intellectual expansion during the Spring and Autumn and Warring States eras

770–221 BC). This call to pluralism was however quickly retrenched in favour of Party control with disastrous consequences for debate and critique in China’s policymaking process. The ideological alignment with the Soviet Union and the focus on socialist modernisation encapsulated by the slogan ‘the Soviet Union today is our tomorrow’ also quickly faded as relations between the two powers worsened after the death of Stalin. The ‘Great Leap Forward’

1958–60) and the ‘Great Proletarian Cultural Revolution’

1966–76) saw pragmatic considerations put aside in favour of ideological fervour with disastrous consequences. Emerging from decades of stunted politico-economic development after the death of Mao in 1976 and the re-instatement of civil order and the constitution, China embarked on an ambitious series of reforms that revolutionised the way of life in China.

The urgency of China’s material conditions in the late 1970s spurred the Chinese leadership to take a radically different approach to the challenge of modernising China. The failure of the Cultural Revolution and the deep dissatisfaction it created amongst the people of China allowed the Party to distance itself from the old revolutionary guard and to side-line traditional theorising of socialist transformation. A new set of ideas were held up by leaders. Experimentation was promoted as ‘seeking truth from facts’

and ‘crossing the river by feeling for stones’

The phrase ‘one should not care if a cat is black or white as long as it catches mice’

signalled the end of purely ideologically driven policies and encapsulated the focus on pragmatic development solutions. Tenacity and hard work once again factored in social advancement as the economy was transformed from an ailing planned economy into a dynamic market economy for enormous material and social gain.

As such, the post-Mao era is widely regarded as a period of ‘transition’ and ‘transformation’ (Goldstein 1995; Solinger 1995; Nolan 2004; Zhao and Guo 2007) and the policies of the era are well known and extensively written about (Naughton 2007; Das 2008; Brandt and Rawski 2008). The period begins when liberal reformers within China’s party-state slowly gain the upper hand and under the guidance of paramount leader Deng Xiaoping introduce a series of policy changes known as ‘reform and opening’

These policies involved a shift ‘from a command economy to a private-sector-led decentralised market-orientated economy, from a rural-agrarian to an urban-industrial society, from a low-income to a lower-middle-income (as defined by the World Bank) economy and from an autarkic to an open economy’ (Das 2008:3). While the fall of the socialist regimes in Russia and Eastern Europe brought about abrupt measures to end communism, command economics and socialist governance, in China, reform has been guided instead by the principle of ‘incrementalism’

The Chinese economy has incrementally liberalised with steady adaptation to market conditions under limited political liberalisation. This ‘socialist market economy’

as it is termed in China, has prioritised agricultural modernisation, development of the private sector, greater use of rural labour, and the attraction of foreign direct investment in China’s coastal areas and industrial parks whilst concurrently maintaining many of the organs and institutions of the socialist planned economy, such as a dominating state-owned enterprise (SOE) sector and a fully functioning hukou system. Rather than dismantling existing economic planning arrangements the market economy has grown alongside the existing command economy, a phenomenon Barry Naughton (1995) terms ‘growing out of the plan’. Reformers chose to freeze the absolute size of the centrally planned economy whilst allowing the market economy to grow alongside in an effort to avoid a ‘big bang’ model of drastic reform that many in the Party feared could compromise stability and Party-leadership through short-term inflation and high unemployment. ‘Given the obvious fact that the economy was growing rapidly, this implied that the plan would become proportionately less and less important until the economy gradually grew out of the plan’ (Naughton 1995:9). The freeze on the command economy meant future growth of state-owned enterprises and private sector industries would rely on the market, making the dual-track model a transitional model for the marketisation of China’s economy. This politico-economic transition remains ongoing.

This chapter provides an overview of the changes that have occurred in the institutional environment of the hukou system and explores the relationship between the state, the market and migrants. The focus is on explaining the major socioeconomic changes that have occurred in the post-Mao era and the puzzle of why the hukou system still plays a central role in the market-oriented economy. The first section of the chapter takes a broad look at three of the most significant politico-economic reforms of this era: decollectivisation, state sector reform and regional planning. More than any other, these reforms have impacted the functioning of the hukou system through the rise of internal migration in China. The second section explores the relationship between migration, development and the state and introduces studies of the role of the state managing migration in China’s transitional era. New institutionalist analysis is employed to contextualise how institutions shape the behaviour of migrants. This is followed by a review of theories of institutional change in which the major argument of the book is introduced and located in the historical institutionalist literature. Approaches to explaining how institutions change over time and existing conceptualisations of institutional change in China’s hukou system are outlined with particular focus on Dorothy Solinger’s use of ‘agency and structure’ and the institutional exclusion typology postulated by Fei-Ling Wang. The chapter identifies the reforms and socioeconomic changes of the post-Mao era that created the need to adjust the hukou system and outlines the theoretical basis for this claim.

Markets and migrants

The impact of the reform era policies on the hukou system has been enormous. They have changed how existing regulations and enforcement function and required the state to reform but not yet abolish the system. This has occurred through the growth of internal migration which has been spurred by three key reforms: firstly, the breakdown of collectivisation and the introduction of the ‘household contract responsibility system’

HCRS) that unbound an excess of rural labourers that led to them seeking employment in non-agricultural industries; secondly, reform of urban SOEs and the growth of private enterprise and markets that allowed rural migrants to survive and participate in urban economies and provided the economic incentive to try to improve their economic livelihood through urbanisation; and finally, the incremental ‘opening’ of specific areas of China to rapid development, foreign direct investment (FDI) and joint enterprises that led to a widening of regional and socioeconomic disparity.

Firstly, migration is said to have increased due to the breakdown of collectivisation and the introduction of the HCRS that released many rural workers from the land creating a huge surplus labour pool (Mallee 2000). The reforms of the post-1978 era were designed specifically to start in rural areas due to a concern that ‘China’s stability depends on the stability of those areas’ (Deng 1984) but these reforms were not originally intended to return the right of rural people to farm the family plot; in fact, the Third Plenum of the 11th Central Committee of the Communist Party of China (Dec, 1978) specifically banned this. However, reducing taxes, stabilising compulsory procurement quotas, raising prices, increasing state investment in agriculture and granting greater autonomy to collectives ‘set off a complex series of interactions between peasants and government leaders that eventually led to the ‘rural responsibility system’ [HCRS] and the widespread adoption of family farming’ (Naughton 1995:139). Rural people began dividing land into individual household plots and an unstoppable trend towards the now standardised HCRS began.

Collectivisation of China’s agricultural sector had been in place since the late 1950s. Part of the motivation to set up massive agricultural communes and collectivise the rural labour force was to bring as much of the productive forces under central and local leadership as possible in an effort to improve rural efficiency through a socialist division of labour and by conferring on central planners the means to direct and plan economic exchange between rural and urban areas. However, collectivised farms continually failed to produce the expected gains in productivity (Wen 1993). After they were dismantled in the early 1980s and the HCRS introduced, it became clear that communes were less productive than family farming. The HCRS was not, however, privatisation of rural land. Instead, ‘land proprietary rights’

were maintained in the ‘collective economic organisation’

and only ‘land use rights’

and ‘land management rights’

were contracted to individual families. This effectively privatised production in rural areas without privatising farm ownership. The uptake of the HCRS was swift, with 0% uptake in 1978, 14% in 1980 and 99% from 1984 onwards. China’s food production increased almost immediately after reintroduction due primarily to productivity gains (Lin 1992). As the benefits of the HCRS ‘experiment’ became apparent the government gave formal blessing to the system.

It is this system which is largely attributed with providing the impetus for greater efficiency and productivity that led to a requirement for less agricultural labourers and consequently high unemployment in rural areas. Once China’s rural areas returned to family-based farming and rural people were again allowed to sell above quota grain back to the state and in local and urban markets and raise their own stock as side-line businesses, China’s rural areas were swept by a wave of local entrepreneurialism (Huang 2008). But decollectivisation also u...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• List of Abbreviations
• Acknowledgements
• Use of Chinese in the Text
• Introduction
• 1 Markets, Migrants and Institutional Change
• 2 The Hukou System
• 3 Institutional Change at the National Level
• 4 Institutional Change in Beijing, Shenzhen and Chongqing
• 5 Hukou Reform for the New Century
• Conclusion
• References
• Index