Introduction
Before economic reforms started in mainland China in the late 1970s, the practice of ‘organized dependence’ (Walder, Reference Walder1986) ensured that every worker's social welfare was taken care of by their work unit (danwei). The state only attended to those being left out of the unit system and those workers who were not sufficiently supported by the units. The state could therefore focus on the macro regulation of unit operations and their personnel arrangements. It is against such a context that the welfare services offered by the state were remedial and narrow in nature (Leung and Nann, Reference Leung and Nann1995).
Post-Mao leaders followed a neo-liberal approach in both running the economy and managing social policy. However, the nexus between the state and workplaces fractured as a result of marketisation and new questions about the role of the state in social provision have emerged (Mok et al., Reference Mok, Wong and Lee2002). With reform transforming the ‘fixed employment system’ into an ‘employment contract system’, the original distribution system characterised by ‘equalitarianism’ is gradually changing, which inevitably leads to the division of social classes. Some social groups in China have become wealthy, but rapid economic development has also widened the gap between the rich and the poor and intensified regional disparities (Keng, Reference Keng2006; Mok et al., Reference Mok, Wong, Walker, Zhang, Mok and Ku2010). The China Human Development Report 2009/2010 highlights that China has one of the most uneven income distributions in Asia (United Nations Development Programme China, 2010).
Fundamental issues are now being raised about the role of the state in social provision in a ‘socialist market economy’ (Painter and Mok, Reference Painter, Mok, Ramesh, Araral and Wu2010). In this wider market transition, large-scale reforms of state-owned enterprises have taken place, a development that has deprived a large number of laid-off and unemployed workers, rural migrant workers, temporary workers and self-employed workers of support as they become independent from the ‘organized dependence’ of traditional welfare arrangements (Wong et al., Reference Wong, Mok and Lee2002). The social and political consequences of marketisation and the commodification of social services in the post-Mao era have created pressure for change, and Chinese citizens openly criticise the government for denying its social protection responsibilities (Shi and Mok, Reference Shi and Mok2012).
In 2003, the Hu-Wen leadership adopted a people-centred development approach that aimed to maintain economic development but put more emphasis on social equity by extending social protection measures to cover vulnerable groups (Ngok, Reference Ngok, Mok and Forrest2009). The focal point of the current debate is the extent to which welfare restructuring achieves productive employment and sustainable livelihoods. This means ensuring ‘people's capacities to exercise choice, access opportunities and resources, and use them in ways that do not foreclose options for others to make their living, either now, or in the future’ (Singh and Gilman, Reference Singh and Gilman1999: 540), and equal opportunities for people's future development in transitional China.
Since the economic reforms began, China has achieved tremendous economic growth but with significant drawbacks, such as unequal economic development by region and unbalanced development across industries (Li et al., Reference Li, Chen, Li, Tian, Li, Lu and Ru2011; United Nations Development Programme China and China Institute for Reform and Development, 2008). The 2008 global financial crisis created significant additional social pressures. In particular, university graduates and migrants suffered most as they were exposed to an increase in informalisation of employment with limited coverage of social security benefits (Gallagher et al., Reference Gallagher, Lee, Kuruvilla, Kuruvilla, Lee and Gallagher2011). The plight of low-paid and unemployed workers and their families echoes Standing's (Reference Standing2011) analysis of ‘precarious’ labour insecurity characterised by an absence of protection against loss of employment and a lack of adequate stable income or comprehensive social security protection. Labour insecurity raises concerns of how to enable all people to attain secure and sustainable livelihoods. Meanwhile China's one-child policy, population ageing and family structure changes have further weakened care-giving functions of traditional extended families, and engendered growing demand for care and support (Mok et al., forthcoming).
Central government has recently given special attention to social welfare provision by placing great emphasis on the quality and accessibility of health, education and other social protection measures, in order to address the tensions of growing inequality. Pronouncements by the Hun-Wen leadership on the need to build a harmonious society have been linked with improved services such as health and education for the poor (Mok and Ku, Reference Mok and Ku2010). The state's responsibility for regulating and assuring the conditions for collective welfare, such as work safety, a minimum wage for peasant workers, the provision of affordable health care and unemployment relief, has risen to new prominence on the policy agenda. The government has begun to establish various social welfare systems targeted at the poor, including a minimum standard of living, education, housing, health care and employment services. However, as China's social welfare is not grounded on sound and well-resourced public finance, the development of social welfare has been constrained in practice by the limited state resources allocated to it. Although disadvantaged groups had expected to see improved living conditions in recent years, they are still socially marginalised (Wong, Reference Wong1998). Although more measures have been adopted to improve social service delivery and social protection for Chinese citizens, current Chinese social welfare still has a strong remedial feature in terms of social protection. This article is located in the political economy context discussed above, and aims to critically examine major social development challenges and social policy responses in China. It does so with particular reference to Guangzhou, one of the most advanced economies in China. We critically examine major social policy strategies adopted by its government. Our analysis is informed by focus group discussions with Guangzhou residents, and their evaluations of how well the government is managing their changing welfare needs.
Methods
Guangzhou, located at the Pearl Delta, is capital city of southern China's Guangdong province, and was chosen as a case study because it stands at the forefront of economic development in the coastal region of China, but also faces challenges resulting from industrialisation and urbanisation (United Nations Development Programme and China and China Institute for Reform and Development, 2008). The empirical qualitative study attempts to examine how urban residents in Guangzhou, particularly those from disadvantaged groups, assess their welfare needs, and how they evaluate the municipal government's welfare policies or social protection measures in dealing with their needs.
A literature review and analysis of the government's policy strategies and priorities in key policy areas was conducted as a first step. It was followed by a focus group interview with local and international scholars. This expert group shared their views and opinions on the welfare system of Guangzhou in particular and of China in general. This was useful in developing questions for the focus group discussion with urban residents in Guangzhou. A purposive sampling method was adopted to identify participants for focus group discussion. The focus group participants included urban residents of various age groups, different occupations and different family backgrounds, with the sessions conducted between June and December 2010 in three different communities in Guangzhou. All interviews were conducted in Chinese and the transcripts translated into English. The analytical framework focuses on three key perspectives: the welfare needs of urban residents in Guangzhou, shortfalls in current welfare policies and welfare expectations from the central and municipal governments.
Findings
Minimum standard of living
Generally speaking, low-income people are those in most need (Gu, Reference Gu2008). The minimum living standard guarantee acts as the social safety net but still focuses on the ‘minimum’ (Wang, Reference Wang and Xu1999) and on ‘survival’ (Yang, Reference Yang2004). Guangzhou established its minimum standard of living scheme for urban residents in 1995 and has adjusted the benefit rate six times since. In 2008, the minimum standard of living in Guangzhou was 4,380 yuan per person annually, equivalent to just 17.3 per cent of the average annual per capita disposable income of 25,317 yuan (Statistics Bureau of Guangzhou Municipality, 2008).
In recent years, as elsewhere in China, Guangzhou's cost of living has increased significantly, with the city's annual urban CPI increasing by 5.9 per cent in 2008 for instance (Statistics Bureau of Guangzhou Municipality and Guangzhou Investigation Team of National Bureau of Statistics, 2011). Realising the pressure of inflation on the living standards of low-income households, Guangzhou promulgated The Pilot Scheme of the Adjustment of the Minimum Living Standard in Guangzhou in 2010 (for details of the Pilot Scheme, see Mok et al. (2013)), and established a ‘linkage growth mechanism’ that adapts the standard of ‘minimum living’ to price fluctuations. But the Pilot Scheme sets quite rigorous starting conditions for the ‘growth mechanism’, that is, only when ‘the price index of low-income consumers rises to a certain level (≥4%) and lasts for 6 months’ will the adjustment mechanism be launched. This means that the adjustment of the standard of ‘minimum living’ always lags behind price changes. A single mother with a son in junior high school argued that in the face of price inflation the minimum living standard guarantee could not meet their basic needs:
The allowances we received were little more than 100 yuan at the beginning stage, which could barely help us. Later, it rose to more than 500 yuan, and now there is 603 yuan. But the changes cannot match the rises in price levels. When the allowance level began to rise, I felt very happy. However, the price levels rose even faster. My son is now growing up, who needs to eat more meat, so I have to let him have my share as well. (FG-C4: female and forty-two-year old)
In recent years, Guangzhou has promulgated and implemented a series of policy measures such as medical aid and students’ aid to assist low-income families. However, these relief measures set strict limitations on the amount of allowances payable, and have rigorous application procedures, and so still cannot cater for the special difficulties of some low-income households. This is highlighted by the experience of a focus group participant who is living with a son who had heart disease when he was young:
(My son) had heart surgery. At the same time, when he was in hospital, the government had just begun to launch the student health insurance programme. Therefore, the insurance was covered by Bureau of Civil Affairs of Guangzhou Municipality. However, when my son left the hospital, I went to Bureau of Social Security of Guangzhou Municipality to apply for its insurance, the officer turned me down and explained that the insurance policy did not cover the period in which my son was in hospital. The policy took effect on July 1 while my son had already left hospital on June 22. So we could not get even a penny of subsidy . . . We turned to the neighbourhood committee for help, then it sought help from the Civil Affairs Bureau, and they just replenished us 1,000 yuan. They said they have already tried their best . . . Our family now owes more than 50,000 yuan for the cost of surgery. The few hundred yuan we received from the government could do nothing to alleviate our living burdens. (FG-B6: female and forty-four-year old)
Health care services
Disease sends many families into poverty (Williams, Reference Williams, Mechanic, Rogut, Colby and Knickman2005; Braveman, Reference Braveman2006). In China, many aspects of the health care security system require further improvement. According to the WHO's evaluation of the performance of health care security systems, China ranks 144 out of 191 countries (World Health Organization, 2000). Guangzhou has set the extension of coverage as a priority objective in improving the health care security system. Apart from promoting health care security to urban workers, Guangzhou also developed specific policies that would extend coverage to include informal workers, migrant workers and non-Guangzhou household registered employees in various ways. By the end of 2010, the number of people covered in Guangzhou was 6,784,000 (Statistics Bureau of Guangzhou Municipality and Guangzhou Investigation Team of National Bureau of Statistics, 2011).
However, with the reduction of government resources, medical institutions have enlarged their commercial operations to boost revenues and cover costs amidst the marketisation of public services provisions and delivery. Currently, the main source of funding for medical institutions comes from business operations, while government resources comprise only a small share (Liang and Zhao, Reference Liang and Zhao2007). This inevitably leads to rising medical fees particularly when incentives for, and the systems monitoring, cost-efficiency are weak and medical costs poorly controlled (Zuo and Hu, Reference Zuo and Hu2001). A survey conducted by the Guangzhou Social Facts and Public Opinions Research Centre (Reference Tang and Li2010a) shows that 80 per cent of Guangzhou residents thought that medical expenses were ‘too high’ or ‘high’. Although Guangzhou has made effective efforts to boost coverage, these benefits have been offset by high medical costs, and thus reduced public satisfaction with the health services. A public evaluation survey of Guangzhou social insurance in 2009 revealed that 54.1 per cent thought medical insurance had provided little or even no help in relieving the financial burden of people with ‘serious illnesses’, while 56.0 per cent thought it provided little or no help in relieving the financial burden of people with ‘minor illnesses’ (Guangzhou Social Facts and Public Opinions Research Centre, Reference Tang and Li2010b).
Another challenge facing China's health system is demographic change, as declining birth rates and increased life expectancy produce population ageing. Usually, older people are heavier users of medical care services and this group typically regards health care services as the most important social welfare service in China. The current scope of health care provision is not usually sufficient for their needs. For instance, a hypertension patient stated:
I have to spend 700–800 yuan a month on medical check-up and medicines while I receive only 100 yuan subsidies a month and 300 yuan reimbursement for health care security. There is a very large gap between them. (FG-A12: male and seventy-year old)
Housing services
Excessive housing costs will lead to poverty, and thus housing security is an important safeguard for disadvantaged groups (Ritakallio, Reference Ritakallio2003). In the planned economy era, the government allocated housing and provided housing security for urban residents. Since the late 1970s, the housing system has been marketised and monetised. The pressure to supply housing and government spending on housing were thus both reduced. The reform was underpinned by neo-liberal ideas and transferred power from the government to the market (Zhu, Reference Zhu and Ngok2007). With less government housing subsidy after the reforms, people have had to venture into the real estate market to buy their houses. Due to weak macro-control of housing prices, property prices have, for many, soared to levels beyond what is affordable. For example, in October 2010, in ten districts in Guangzhou the average price of primary housing exceeded 15,000 yuan per square metre (China News, 2010), while the annual per capita disposable income of urban residents in Guangzhou in the same year was only 30,658 yuan (Statistics Bureau of Guangzhou Municipality and Guangzhou Investigation Team of National Bureau of Statistics, 2011). The beneficiaries of housing reforms are usually those with higher political and social status with institutional resources and power rather than those at the bottom of the spectrum of the society. There is little evidence that market-oriented reforms can lessen social stratification (Logan et al., Reference Logan, Bian and Bian1999).
In Guangzhou, the housing security system comprises economic and suitable houses, low-rent houses, price-limited houses and so on. However, the application criteria for housing security are stringent (Tables 1 and 2), and the pool of potential recipients is limited. Strict application requirements have created a large group of people called the ‘sandwich class’, who are neither eligible for the government's housing schemes nor able to purchase private housing. In the face of rising property prices, even university graduates, who are usually regarded as the potential middle class, have been affected. In the late 1990s, China increased its college enrolment rate, and, as a consequence, the number of the college graduates has increased every year and contributed to very strong competition for jobs. The average monthly salary of new college graduates declined from being equivalent to 3.32 times the average per capita monthly disposable income of urban households in 2005 to 2.06 times in 2009 (Li and Lu, Reference Li, Lu, Ru, Lu and Li2010). The vast majority of college graduates are therefore unable to purchase property in the private market, but are also quite unlikely to meet the rigorous application requirements for low-rent or economic and suitable housing. One of the focus group participants who graduated from college in 2009, and is now working with a monthly salary of more than 2,000 yuan, finds housing is the biggest problem:
Application requirements for low-rent houses in Guangzhou
Application requirements for economic and suitable houses in Guangzhou
I think the young people are the most suffering group. We are not only unable to afford housing but also not eligible for low-rent houses. (FG-B5: female and twenty-three-year old)
Her colleague, who is also a university graduate, is very frustrated about the housing issue:
We are forced to face the housing problem especially after marriage, aren't we? Although the government has introduced a number of policies about economic and suitable houses, the application requirements are extremely harsh for us. And even if my future husband and I will be eligible for applying for the economic house, I think we may not be able to buy it, because I know that we have to pay a large sum of money beforehand. (FG-B4: female and twenty-four-year old)
Education services
Guangdong province has fully implemented ‘free and compulsory education’ in urban and rural areas since 2008. However, educational spending remains one of the three heaviest burdens (together with housing and health care spending) for average families. Although the latest policy has eliminated tuition fees and some miscellaneous costs (books and other supplies) for primary and junior secondary students, families still have to pay a large sum of ‘contribution fees’ or ‘sponsorship fees’ to urban schools. One of the focus group participants is concerned about high educational expenses, especially for the low-income families:
Schools always comes up with a lot of fees items, such as school uniforms, lunch, and even a ‘nap fee’ if the students have to sleep at noon after lunch. For extra lessons at weekends, we also have to pay the tuition fees. (FG-B1: female and twenty-three-year old)
Since the adoption of the ‘one-child policy’, the only child is typically ‘lavished with parental attention, luxuries and opportunities not experienced by any previous Chinese generation’ (Wang and Fong, Reference Wang and Fong2009: 1137). This is illustrated by the sharp rise in tuition fees in Guangzhou's kindergartens, and one of the focus group participants shared a similar concern:
The average kindergarten tuition fees are several hundred yuan a month while some famous kindergartens even charge more than ten thousand a year. (FG-B5: female and twenty-four-year old)
There is now a strong call for the extension of ‘free compulsory education’ to pre-primary and senior secondary education in Guangzhou. According to a survey conducted in 2008 by the Statistics Bureau of the Guangzhou Municipality, ‘the pressure of education expenses’ has become the second major factor for the decline of household living standards in Guangzhou, after only ‘prices inflation’ (Huang and Le, Reference Huang, Le, Tang and Li2009). Our interviews on the residents’ evaluation on educational services in Guangzhou clearly show their worries about the burden of educational expenses. Such a burden is likely to increase as education services become more market-oriented. As a result, existing social inequalities will be aggravated and public satisfaction lowered (Mok, Reference Mok2012).
Discussion
The foregoing discussion on how Guangzhou citizens have heightened welfare expectations, and the major measures the Guangzhou city government has adopted to match citizens’ needs, has clearly flagged the special role that local government plays in the implementation of national policy in China. However, we should not make the mistake of taking the Guangzhou case as representative of all of mainland China, as welfare regionalism means that different parts of China have different experiences. Our recent research in relation to welfare regionalism in general, and labour insurance variations in particular, has shown how local bureaucrats tangle with local business/enterprises when interpreting and implementing national policy (Mok and Wu, Reference Mok and Wu2013). We discovered how local cadres have manipulated the system by acting or not acting when responding to national calls for policy implementation. The policy of decentralisation adopted in managing social welfare has led to different types of administrative decentralisation, including administrative delegation or vertical specialisation of administrative functions, as well as various forms of political devolution and fiscal decentralisation (Mok and Wu, Reference Mok and Wu2013).
Since the central government has decentralised welfare provision and social protection responsibility to local governments, decentralisation is both about dispersing power vertically within the state, and dispersing power horizontally away from the state. The command economy essentially merged administrative and economic power under central state control, while the transition process involves both dissolving the merger and also downsizing the centre. Administrative and economic reforms are intertwined processes in which this ‘dual decentralisation’ is the core element. Vertically, economic and administrative decentralisation has empowered local governments responsible for economic growth and management of labour insurance and social service delivery. For these reasons, the local responses in enhancing social protection being discussed in Guangzhou city should not be taken as a general pattern commonly found in other parts of mainland China. Instead, whether local governments will commit to promote social protection very much depends on how local bureaucrats respond to vertical decentralisation. Guangzhou has taken vertical decentralisation as administrative deconcentration, following the central government closely when implementing national policy.
Since China is huge in terms of territories, it is not difficult to find other cities or provincial governments that are acting very differently when handling vertical decentralisation, since they have tried to manipulate situations by adopting a far more flexible and relaxed approach in following the national policy guidelines. More specifically, fiscal decentralisation has undoubtedly required local governments to collect fees from local firms and pool the funds to pay for social insurance, including retirement benefits, health care, unemployment, workplace injury, and maternity leave. However, since China's welfare regime is not organised on the basis of universal or citizen-based rights, welfare generosity varies with occupational and sectoral divisions. This development strategy prioritises high-growth at the expense of other public goods, such as health care and education, and thus social policy is designed for ‘political legitimacy’, with state sectors of strategic significance enjoying more welfare resources, while social provisions in non-state sectors are more scarce (Mok and Ku, Reference Mok and Ku2010).
Whether people in mainland China can have social cohesion depends on whether policy actions can ensure that ‘every citizen, every individual, can have within their community, the opportunity of access: to the means to secure their basic needs; to progress; to protection and legal rights; to dignity and social confidence’ (Council of Europe, 2001: 5). It is a dilemma about how to strike a balance between welfare restructuring and economic development if the goal is to enhance cohesiveness among various individuals and groups within society, boost social solidarity, reduce income and wealth disparities and increase trust and cooperation within communities or families (Colletta et al., Reference Colletta, Lim, Kelles-Viitanen, Colletta, Lim and Kelles-Viitanen2001; Forrest and Kearns, Reference Forrest and Kearns2001; Chan et al., Reference Chan, To and Chan2006). However, meeting the competing demands of social welfare and economic growth remains a challenge confronting the Chinese government. How successfully local governments promote social cohesion through social policy very much depends upon political will and capacity for policy implementation (Wu, Reference Wu2013).
In adopting the approach of ‘economic efficiency first’, and a residual welfare model of welfare, China, like many other East Asian countries or regions, has maintained low social welfare spending during the transitional period. The state only provided basic protection and necessary ‘residual’ services. Since economic reform, the state-owned enterprises and working units have gradually abandoned their responsibilities for providing working security to their workers, while the state has not fully taken up those responsibilities, meaning responsibility and power has been gradually transferred to the market. However, without a sound and comprehensive blueprint, the government's premature ‘withdrawal’ from social security has led to immediate harm to those most in need. Wong (Reference Wong1998) maintains that there is a great gap between social insurance and relief which needs to be bridged. Therefore, the strategies adopted by the Guangzhou city government in responding to the heightened welfare expectations of local citizens may help bring social harmony to the city, but welfare regionalism means that it is not possible to generalise the case of Guangzhou to the whole of mainland China. Nonetheless, it is necessary to critically reflect upon the underlying principles and philosophy of ‘Productivisim’ in a world in which it would be desirable to make serious attempts to reconfigure economic and social policy instruments in order to promote social stability and balanced social development, especially in the globalisation era or in the midst of economic crisis (Chan, Reference Chan2003, Reference Chan, To and Chan2006; Kwon, Reference Kwon2008).
Conclusion
This study has reviewed the current welfare system in Guangzhou which follows the logic of ‘supporting the poor and relieving the needy’. Priority is always likely to be given to the most needy. Yet in the face of rapid economic, social and demographic changes, policy-makers also have to be alert to the living difficulties facing the general public. Although the Guangzhou municipal government has already taken certain steps to address the changing needs of their residents in the past few years, without big changes in the underlying policy philosophy the social outcomes of these piecemeal policies will be limited.
Currently, some experts are advocating a form of social policy that is based upon assessment of the needs of recipients, or evidence-based conditions, in order to address social imbalances, particularly in the midst of economic crisis. For instance, Cook and Lam (Reference Cook, Lam, Farnsworth and Irving2011) examine the extent to which China's leadership has been able to adopt social policies that effectively respond to the urgent needs of individuals and look to identify new constraints to policy implementation following the financial crisis. However, neither academia nor government has yet arrived at a consensus concerning how to formulate the content of policies based on assessed needs, or on how to define the relationship between needs assessment and institutional frameworks. In view of welfare regionalism, coupled with growing concerns of citizens with regard to variations in terms of social protection across different parts of China, the central government and local governments should work hand in hand to improve social welfare provision and social protection for the people.
Acknowledgement
The authors would like to thank the Hong Kong Institute of Education for providing research funding. Some of the data used in this article are derived from the project RG25/2009-2010R. Some of the findings generated from the research project related to this article were also published in Mok, K. H. and Huang, G. (Reference Mok, Ngok and Huang2013) ‘Resident Evaluation and Expectation of Social Services in Guangzhou’, Journal of Current Chinese Affairs, 42, 3, 7–28.
