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Chapter 1
Introduction
Welfare-centric approaches are ill equipped to account for East Asian development experiences. Based on the level of social expenditures either in absolute amount or as a percentage of gross domestic product (GDP), East Asian societies are too low to qualify for the title of a welfare state, particularly when they were at the stage of economic takeoff. Even after two decades of âwelfare deepeningâ since the 1990s, their social expenditures in general are still not high by the standards of their international peers. Concepts and perspectives such as âreluctant welfarismâ have been used to set East Asia apart from other welfare regimes.
Treating East Asia as a residual category in the taxonomy of welfare regimes, however, misses out on the positive side of East Asian development experiences. Japan and the âfour little dragonsâ of South Korea, Taiwan, Hong Kong and Singapore have achieved a high level of economic and social development in just a few decades in a relatively peaceful manner. China is now following suit and on a scale that has geopolitical implications which make China different from its East Asian neighbours. Welfare-centric approaches, which view East Asiaâs social policy as underdeveloped and/or marginalised, fail to account for East Asiaâs progress in improving social well-being.
Some of the alternative perspectives are more appreciative of East Asian development experiences, led by the earlier works of Catherine Jones and James Midgley.1 For instance, the âdevelopmental stateâ perspective casts a more positive light on East Asia.2 However, the emphasis on the role of an interventionist state limits the relevance of East Asiaâs experiences to broader challenges encountered in other regions. The global spread of neo-liberalism makes the idea of âdevelopmental stateâ or âinterventionist stateâ unfashionable and less attractive. Moreover, democratisation and âwelfare deepeningâ in some East Asian societies since the 1990s have led to the debate on East Asia âgrowing out of the developmental stateâ.3 The perspective of âproductivist welfare regimeâ, which views East Asiaâs social policy as growth oriented, is more to the point.4 Nonetheless, the issue of whether East Asian development experiences is temporarily confined to the earlier stage of industrialisation or has a much broader implication remains to be answered.
The âsocial investmentâ perspective, which has gained popularity in Europe, has the potential to provide a more convincing and positive account of East Asia. It is appealing as a political agenda because it sees social expenditures as investment rather than cost; it is also a useful analytical tool for policy analysis as it is specific about policy areas to receive priority funding. In a broad sense, East Asian societies, including mainland China, fit well with the social investment perspective. In East Asia, social policy has been part of a broader development strategy. Programmes seen as social consumption have been discouraged or postponed, while programmes seen as social investment have been given priority. The underlying philosophy is that development-oriented social policy facilitates economic growth, which in turn reduces welfare dependence and creates resources for improving social well-being. In this way, economic development and social development are mutually reinforcing.
China in the past three to four decades has demonstrated some of the core features of the social investment strategy. Its social policy has been development oriented. Education and science and technology have received priority funding and policy support compared with that of other social programmes. Economic development has been a major driving force for Chinaâs social development. Thanks to rapid and sustained economic growth, Chinaâs general social well-being had been improved even before the social protection programmes were put in place for rural residents and nonworking urban population. Overall, Chinaâs development has been impressive. This book focuses on some of the key aspects of Chinaâs social investment strategy, including different levels and types of education, talent schemes, and science and technology development. Some of the distinctive features are also highlighted, such as the leadershipâs strong and sustained commitment to development, and the ability to mobilise resources for priority programmes, sometimes involving unpopular or unconventional means. This book also sheds light on the weaknesses and flaws of Chinaâs social investment strategy, such as its narrow focus on education and science and technology, its strategy of concentrating resources on a small number of selected schools and universities, and institutional fragmentation that prevents adequate social investment for a large number of people.
Chinaâs Social Policy Reform
1980s-early 2000s
China since the late 1970s has been involved in a dual transition from an agrarian economy to an industrial one and from a planned economy to a market-oriented one. The latter, which sets China apart from other East Asian societies, has strongly shaped Chinaâs social policy reform in one way or another.
In a review of Chinaâs development in the Mao period, Walder characterises the Chinese model as a variant of Stalinist forced-draft heavy industrialisation. The economy and society were fundamentally restructured for this purpose. In the urban areas, the majority of urban residents were deployed to workplaces or âwork unitsâ, which distributed a wide range of goods and services, rationed or unrationed. Many large government agencies, enterprises, schools and hospitals operated as self-contained communities. In the countryside, villagers were organised into rural collectives, which were responsible for their livelihoods through collective farming and cooperative social programmes. Within urban workplaces and rural collectives, there was âa nearly complete fusion of political and economic power, and extensive political organizationâ, âa remarkable lack of residential and job mobilityâ due to the system of household registration and food rationing, and âbroad dependence on workplaces for the distribution of goods and servicesâ.5
In the 1970s, this model was seen by many outside of China as an alternative model of development for the third world for its independence from foreign capital and the world system, and for its achievement in increasing industrial and grain output, raising life expectancy, controlling epidemic diseases and expanding basic education. However, the problems of this model had become clear by the late 1970s. Economically, industrial productivity had declined steadily from the 1950s; socially, there was little improvement in consumption throughout the 1960s and 1970s. Chinaâs development performance especially paled in comparison with its East Asian neighbours. By the late 1970s, the development gap had widened, with China lagging far behind Japan and the âfour little dragonsâ. It became clear that âeffective state management of relationship with the world economy, and not withdrawal from it, was the effective strategyâ.6
Since the late 1970s, China has begun to shift from class struggle to economic development, with economic reform and âopen-upâ as the main strategy, scholars have observed a dramatic departure from the Mao era in the social welfare domain in the 1980s: âThe egalitarian ideals and collective solution of the Maoist era have disappeared, and in their place is an ideology that validates individual rather than group goals, and private rather than public solutionsâ.7 Out of practical considerations, the state endorsed decentralisation and marketisation as the reform strategy. To incentivise local governments for economic development and due to government financial constraints, the central government devolved financial responsibilities to the provincial governments in the form of fiscal contract. In return, the provincial governments were granted the right to retain most of the revenues. The similar arrangement was replicated down the administrative hierarchy from the provincial to the prefectural, county and town/township governments.8
In the 1980s and early 1990s, there was a sharp contrast between rural and urban areas in terms of welfare benefits. In the countryside, there was a clear retreat from collective welfare programmes. In terms of social relief and assistance, while the success of such programmes in the Mao era was subject to âthe quality of village leadership and the cohesion of the communityâ and to a less degree âthe absolute levels of wealthâ, in any area âwhere decollectivization significantly weakened the commitment or ability of village-level leaders to maintain local welfare services or finances, the quality of programmes declinedâ.9 In the area of health care, there were substantial losses in the numbers working in health (and education) despite the fact that every component of the rural non-agricultural sector was gaining employees. Most of the village-level cooperatives that offered collective insurance and provided primary care were dismantled, and rural residents with some type of insurance dropped from 85% in the 1970s to 9% in 1987.10
In the area of education, the central government explicitly delegated financial responsibility for rural education to the township government. In practice, the government budget only covered teachersâ wages. Other expenditures such as school operational costs and maintenance/renovation of school buildings had to be financed by local resources either through funds collected from households, school-generated revenues or fees charged directly to students. In relative terms, there was a shift of financial burden from government to rural community and families. As a result, through the 1980s and 1990s, âprovincial and county economic indicators were closely linked to educational investments, per-pupil spending and school availabilityâ.11
In contrast to âthe general pattern of contraction in the rural areas, government programmes serving urban residents have undergone rapid expansionâ in areas from health care and education to pensions and price subsidies.12 The rapidly growing welfare funds were increasingly channelled to urban residents. Some scholars have seen this pattern as a result of the political strategy to distribute welfare services as a reward to the âmost deserving onesâ, be they individuals or classes.13
The observation by Deborah Davis in the late 1980s that urban workers in state-owned enterprises belonged to the âmost deserving onesâ no longer held from the mid-1990s. After several rounds of effort to reinvigorate state-owned enterprises failed in the 1980s, the government turned to a radical strategy of âkeeping large state-owned enterprises and letting go of the smaller onesâ (zhuada fangxiao) in the mid-1990s. The new move not only fundamentally changed the economic and employment structure, but also made it imperative to establish a new social security system for millions of laid-off workers. Unlike the period of the 1980s and early 1990s when there was more dismantling than building in the social policy domain, a new social security system came into being between the mid-1990s and the early 2000s. Some of the ideas were mooted in the 1986 labour contract reform. However, the building of a new social security system did not gain much momentum until the mid-1990s when ...
