Social Construction and Social Development in Contemporary China (China Perspectives) [1 ed.] 0367404052, 9780367404055

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Social Construction and Social Development in Contemporary China

What is the social structure of Chinese society in the 21st century? How should China address the problem of migrant workers? How can China form a modern society? These key sociological issues are some of the topics this book covers. This book is a collection of the research articles and lectures that Dr. Lu Xueyi, the former Head of the Institute of Sociology at the Chinese Academy of Social Sciences, has published since the 1980s. The author discusses the social structure, social stratification, social construction, and development of contemporary Chinese society. Arguing that the gap between economic and social development has become the major social issue facing modern China, the author advocates paying close attention to the country’s social structure and the growth of the middle class. The book will be of interest to all scholars and students of Sociology and Chinese Studies. Lu Xueyi graduated from the Department of Philosophy of Peking University in 1962 and from the Institute of Philosophy of the Chinese Academy of Social Sciences (CASS). He was also the research fellow of the Institute of Sociology of the CASS and an Elected Honorary Member of the CASS in 2006.

China Perspectives

The China Perspectives series focuses on translating and publishing works by leading Chinese scholars, writing about both global topics and China-related themes. It covers Humanities & Social Sciences, Education, Media and Psychology, as well as many interdisciplinary themes. This is the first time any of these books have been published in English for international readers. The series aims to put forward a Chinese perspective, give insights into cutting-edge academic thinking in China, and inspire researchers globally. Titles in sociology currently include Social Transformation and Chinese Experience Peilin Li China’s Low Birth Rate and the Development of Population Guo Zhigang, Wang Feng, Cai Yong Petitions and Power A Story of the Migrants of a Dam in China Xing Ying Living Conditions and Targeted Aiding Mechanisms of the Urban Underclass in China Zhu Li, Mao Feifei The Way to a Great Country A Macroscopic View on Chinese Population in the 21st Century Tian Xueyuan Social Structure and Social Stratification in Contemporary China Lu Xueyi Social Construction and Social Development in Contemporary China Lu Xueyi Economic Transition and People’s Livelihood: China Income Distribution Research Zhao Renwei Economic Transition and People’s Livelihood: China Economic Transition Research Zhao Renwei

For more information, please visit www.routledge.com/series/CPH

Social Construction and Social Development in Contemporary China Lu Xueyi Translated by Yan Peng Wittrock

This book is published with financial support from the Chinese Fund for the Humanities and Social Sciences. First published in English 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 Lu Xueyi Translated by Yan Peng Wittrock The right of Lu Xueyi to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. English Version by permission of China Social Sciences Press. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN: 978-0-367-40405-5 (hbk) ISBN: 978-0-429-35596-7 (ebk) Typeset in Times New Roman by Apex CoVantage, LLC

Contents

Editor’s words A note on translation and romanization Acknowledgments 1 A study on basic ideas and strategies for establishing a new urban housing system

vii x xi

1

2 A new situation and new tasks at the new stage of rural development: some suggestions on carrying out the campaign for building new socialist rural areas centered on the development of small towns

26

3 Accelerating the reform of the current household registration system

46

4 The program of building a new countryside of Jiangsu province should be halted immediately

49

5 Towards a comprehensive, coordinated, and sustainable development of Chinese society

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6 Theory and practice of social construction

68

7 The core task of social construction at the new stage: adjustment of social structure

88

8 Building new socialist cities should be the strategic focus of the Twelfth Five-Year Plan

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Contents

9 China’s current economic and social situation, and social construction

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10 Social construction is the realization of social modernization

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11 China’s main task in the next 30 years is social modernization

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12 The era of social construction has arrived

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Index

160

Editor’s words

This collection brings together the results of Mr. Lu Xueyi’s research on China’s social structure, social stratification, social construction, and development since the late 1980s. It consists of in-depth and extensive reflections on issues concerning the cause of modernization in contemporary China from a sociological perspective. Most of the contents have been published or presented in public lectures. Sadly, Mr. Lu passed away on May 5, 2013 before he could see the publication of his second volume of collected works as Honorary Member of the Chinese Academy of Social Sciences (CASS). One cannot help but feel a deep sense of sorrow for this. Most articles included in the volume were personally selected by Mr. Lu before his death, and the basic elements and themes were checked and approved by him. Since the 1970s, Mr. Lu devoted himself to the study of the “three rural” problems of agriculture, rural areas, and farmers (San Nong 三农问题), provided many insights and policy proposals, and made a great contribution to the solution of the “San Nong” problems. All these are well reflected in his first volume of collected works and six other published monographs and collections of essays, including The Household Contract Responsibility System (1989), On San Nong (2002), New Theory of San Nong (2005), and A Continued Discussion on San Nong (2013). These works deserve careful reading and understanding of all people who are concerned with the problems of agriculture, rural areas, and farmers. Ever since he became Head of the Institute of Sociology at CASS, Mr. Lu, using sociological theories and methods, carried out a wide range of investigations and research on the problems and challenges China faced in social modernization, making important contributions to China’s social development and social construction, as well as the development of sociology in China. In collaboration with a vast number of sociologists, he initiated and organized a large-scale investigation of 100 counties and county-level cities, and 100 villages, and published a number of academic works of considerable value. He started from the study of contemporary rural social strata, continuously broadened the scope of the research and formulated the research framework of 10 major social strata in contemporary China, which caused a huge reaction in the academic and social circles. On this basis, he went on to explore the mobility of social strata and its impact on China’s economic and social development. Through systematic investigation of the social

viii Editor’s words structure, its development and change in contemporary China, he found that the development of social structure in China lagged behind the development of economic structure by about 15 years and made in-depth analysis of the deep-seated causes for this. All these achievements not only promoted sociological research and its development in China, but more importantly, clarified in depth the basic national conditions in contemporary China and provided a scientific rationale for the modernization of Chinese society. In his later years, Mr. Lu became keenly aware that since the beginning of the new century, uncoordinated social and economic development has become the main problem facing China’s development. In the light of this, he pointed out that China’s economic development had come to a historical turning point. In the next 20–30 years, strengthening social construction should be the main strategic focus in China’s social modernization. In his view, social construction is the construction of a modern society or social modernization, the core of which is to adjust and optimize the social structure and continuously expand the middle class of society. The purpose is to coordinate the development of social and economic construction, achieve social equity and justice, and promote social harmony and stability. According to him, strengthening social construction should proceed in stages, in a step-by-step and organized manner. For this, he argued that China urgently needed to carry out nine major tasks of social construction, including improving basic livelihood, developing social undertakings, adjusting income distribution, coordinating urban and rural development, promoting the development of social organizations, bringing forth new ideas of social management, building social norms, reforming the social system, and adjusting the social structure. These thoughts are mainly reflected in four research publications edited by him: Research Report on Social Strata in Contemporary China (2002), Social Mobility in Contemporary China (2004), Social Structure in Contemporary China (2010), and Social Construction in Contemporary China (2013). Mr. Lu attached great importance to the development of the discipline of sociology in China. He spared no effort to promote the development of sociology and the building of talent teams. He did everything possible to recruit talents for the Institute of Sociology, worked hard to improve the layout of the discipline system, and laid a solid talent and disciplinary foundation for the development of the Institute of Sociology. He created a new idea of training sociological personnel for sociological research institutions, colleges, and universities through project cooperation. To this end, he made careful plans and worked hard to organize their implementation. As Dean of the School of Humanities and Social Sciences at Beijing University of Technology, he established the discipline of sociology and made social construction the distinguishing feature of the school. He trained academic talents, organized research projects, and served the needs of social practices. Together with well-known experts and scholars nationwide, he made the suggestion to the central authorities to increase the support for the development of sociology and to strengthen the discipline for the purpose of promoting the building of a harmonious society, which was affirmed and approved for implementation by the leading persons of the Central Committee. He also raised funds by

Editor’s words

ix

himself and set up the first foundation for the development of sociology in order to reward outstanding achievements and talented people in sociology and promote the development of the discipline. Nearly 30 essays of Mr. Lu’s are included in this collection. The English edition is divided into two volumes, namely Social Structure and Social Stratification in Contemporary China and Social Construction and Social Development in Contemporary China. The publication of this collection is not only to cherish the academic contributions of Mr. Lu, but more importantly, to bring together Mr. Lu’s thoughts and actions in these important fields so as to stimulate sociological research in China and to provide more scholarly thoughts and wisdom for the construction of a modern society in China. Gao Ge Beijing, April 2019

A note on translation and romanization

Mr. Lu Xueyi uses two expressions interchangeably to refer to what the term middle class normally denotes while avoiding to use the term 中产阶级, which is a Chinese equivalent to the English term the middle class. These two expressions are 中间阶层 zhongjianjieceng and 中产阶层 zhongchanjieceng, in which 阶层 jieceng means literally stratum. Both expressions can be in translation rendered to refer to the middle class. To be faithful to the way in which the author himself used these expressions, I have translated the former literally into the middle stratum and the latter the middle class, as it is suggested by the author in his chapter “Theory and Practice of Social Construction” in the second volume of this collection of his essays. I have tried to make the translation of Chinese sayings and idioms quoted by the author as faithful as possible to the original. When deemed necessary, corresponding idioms in the English language are provided in parentheses following the translation. Chinese names and place names are romanized in the pinyin system. No exception is made for commonly known Chinese names and place names spelled in the old systems of romanization, such as Sun Yat-sen and Peking, which, in the pinyin system, are Sun Zhongshan and Beijing. Chinese names are rendered in their Chinese order, with family names first and given names last. Translator Stockholm, April 2019

Acknowledgments

The successful publication of this collection is the result of the close collaboration between Mr. Lu Xueyi’s students, the translator, and the colleagues at China Social Sciences Press. Thanks should be given to Ms. Gao Ge 高鸽, Mr. Lu’s assistant, and Mr. Yan Ye 颜烨, Mr. Lu’s student, for providing explanations and additional notes necessary for the English edition. A word of thanks should also be given to Sun Yanwen 孙砚文, the colleague at China Social Sciences Press, who has shown unfailing patience and offered professional support for the translation work. Special thanks should be given to Yan Peng Wittrock 彭燕, the translator of this collection, for her rigorous and meticulous work and never ceasing to follow academic standards in the course of translation. She has made numerous helpful suggestions to make the English version more suitable for readers outside China, most of which have been incorporated in the final version of the translation. Editor Beijing, April 2019

1

A study on basic ideas and strategies for establishing a new urban housing system1

On April 5, 1980, Deng Xiaoping delivered a speech on housing system reform in China and provided an overall plan with the objectives, tasks, and steps of reform. In 16 years since then, significant progress has been made in the housing system reform in cities and towns. Nationwide, the pace of the reform has been accelerated and the content of the reform deepened, especially after the third work conference on housing reform in 1993 and the issuing by the State Council of the Decision on Deepening the Urban Housing Reform in 1994. Dramatic breakthroughs have been achieved with respect to setting up the system of housing provident funds (HPF 住房公积金), steady sales of public-owned housing, and the promotion of rent reform. The results are remarkable. We have now reached the crucial stage of realizing the transition from the old to a new urban housing system.

Housing system and long-term national stability A country’s long-term stability requires the building of a whole set of basic systems conforming to the national conditions. These basic systems include political, economic, military, and cultural systems. They are supported by a series of other important systems and institutions, such as those of education, science and technology, personnel, land, enterprise, housing, and so on. The housing system is not only an important part of the economic system, but also that of the social system. Live and work in peace and contentment (安居乐业). This cannot be realized without comfortable housing. Thus, the adjustment of the housing system through reform is an important dimension of ensuring a country’s long-term stability. The housing system in rural areas in contemporary China has been built by farmers themselves, and the houses are for use and owned by farmers themselves. This is in line with China’s basic national conditions, and with the wishes of the broad masses of farmers. As a result, farmers’ housing has been greatly improved in recent years, with almost no state financing and the government has not put much thought into it. When it comes to the housing system for urban residents, due to historical reasons, we have adopted the policies of allocating land free of charge, using public funds for construction and management of housing, free distribution, and a system in which residents pay very little rent. The implementation of these policies has led to heavy state investment (at present, 100 billion yuan

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Establishing a new urban housing system

annually). Cadres at all levels have devoted a great deal of time and energy to it. Nevertheless, the housing problems of urban residents have not been satisfactorily solved. In 1994, the living area of urban residents was only 7.9 square meters per person. There were more than 400 million households that lacked housing. Urban residents had a lot of complaints about the housing problem, which led to multiple social problems. Comfortable housing gives a family a sense of security; building a housing system based on self-ownership can lighten the burden of the state and is conducive to social stability. Housing itself is a commodity with a dual nature. It is both a durable commodity and an asset with value-maintaining and value-increasing functions. For urban employees, housing self-ownership can bring stability not only to their daily lives, but also to their psychology. Those with constant means of support have also constancy in heart (有恒产 者则有恒心). Take farmers as an example; with the land use and management rights, they will have the ability and base to weather some degree of economic fluctuation. Looking back at the processes of opening up and reform in the past 18 years, comparatively speaking, rural reform has been relatively smooth, whereas urban reform has been more difficult. Right from the beginning of the rural reform, the household contract responsibility system was introduced. The broad masses of farmers were granted autonomy, and benefited substantially from it. This brought the initiatives of farmers into full play, which led in turn to a series of changes in the countryside. Although the reforms and development in rural areas have gone through twists and turns in recent years, rural society is – on the whole – stable, and agriculture is developing. Continued progress has been made in the rural economy. In 1989–1990, over 10 million farmers, who had moved to cities and worked for many years, were sent back to their hometowns when the state carried out macro adjustment and control. No country could do this easily without causing multifaceted problems, but it was done successfully in the rural areas in China. No major problem occurred. What made this possible? It was made possible because migrant workers had 1.5 mu of contracted land,2 which provided them with the basic means of support. This means that over 10 million people have the ability and base to withstand economic fluctuations. The society has maintained stability. This is an important experience to bear in mind. In contrast to the rural reform, urban reforms have encountered great difficulties and gone through difficult twists and turns. The reform of large and mediumsized state-owned enterprises, of the institutional frameworks, as well as of the personnel, medical care, pension, and housing systems, have all met with difficulties. Why has it been so difficult? Putting aside other aspects, the following two factors are of special importance. First, reform entails the proper handling of the relationship between giving and taking. The experience of Chinese statesman in ancient times was to “give first and then get.” As the saying goes, “Give in order to take” (将欲取之,必先与之). The success of any reform depends on the support and backing of the people. Reforms can be motivated and successful only when the majority of people know that it will bring them tangible or visible benefits.

Establishing a new urban housing system 3 The secret of success in the rural reform has been that farmers obtained autonomy and benefits from it. In contrast, urban reforms in recent years have not drawn sufficiently on this basic experience. People have been made to contribute to the medical system reform, and employees required to pay their bit for the reform of unemployment insurance and the pension system. The same goes for the housing system reform. When the rent raising scheme was first implemented, employees were asked to pay a little more. No doubt, in the long run, these reforms are beneficial to the employees and masses, but practical interests affect the grassroots enthusiasm even more. The work to provide incentives for the people has fallen short, and hence, some of the reforms have been carried out without the support of the majority of the people. The employees do not have the same strong incentive for reform as farmers had, which has made it difficult to carry out the reform programs. Second, the capacity of the masses to cope with the reforms needs to be taken into consideration. For a long time, China implemented the low-wage policy (many benefits were tacitly provided to employees through welfare programs). In recent years, a small number of people have become rich whereas the living conditions of most employees have been improved only moderately. They are not well-off and have meager family assets. According to the sample survey by relevant parties, in 1994, the average number of color TV sets per household in urban areas was 0.86, refrigerators 0.62, radios 0.72, cameras 0.3, and bicycles 2. In addition, there were some furniture and clothes. In families of intellectuals, there were also some books. The total value of these belongings, even if calculated at the original price of the purchase, amounted only to around 20,000 yuan. Under normal circumstances, it was not a problem to maintain daily life by wage income in spite of meager family assets, but at times of great economic setbacks, it was difficult for them to get by. For individuals and families under market economy conditions, there is always a chance that these kinds of twists and turns occur. For instance, enterprises may need to lay off staff and workers. Say a working couple over 40 are both laid off. How will this family support itself? The current housing reform will enable most employees to own their housing, and the families of the laid-off employees will have the capacity to withstand economic fluctuations with margins for recovery. This is beneficial for the government and enterprises, as well as for individuals. In contemporary China, if a land system of 1.5 mu land per person can be successfully put into effect through reform, we will achieve basic social stability in rural areas. In cities and towns, on the other hand, if a housing system of one apartment per household can be set up through reform, basic social stability in urban areas will then be achieved. Many articles on reform and development should take these two basics as the starting point.

Establishing a new housing system The purpose of the housing system reform is to establish a new housing system. This is a common view shared by all three housing reform schemes after 1988.

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The third scheme, in particular, made it clear that a new housing system for urban areas compatible with the socialist market economy should be established. Seven aspects of reform were proposed. However, all three schemes shared one common deficiency; namely, they failed to see that housing reform was part and parcel of the social system reform. More attention was paid to economic development and less consideration was given to social development. Housing has both economic and social attributes. The housing system is an integral part of the economic system, as well as the social system. Thus, housing system reform should not only be coordinated with reform of the economic system to allow for economic development, but also with social system reform and be conducive to social stability and development. Generally speaking, housing systems in different countries can be classified into three types. The first type is one that cannot only achieve high economic efficiency, but also embodies social justice and makes it possible to achieve social stability. The second type is one that enables the achievement of high economic efficiency, but does not embody social justice and is unfavorable to social stability. There is also a housing system that neither achieves economic efficiency nor guarantees social stability. Obviously, the first type of housing system is the most ideal. Our goal of carrying out the housing system reform is to establish a new housing system that is not only conducive to promoting the development of production and achieving high economic efficiency, but one which also embodies social justice and makes it possible to achieve social stability. In other words, we need to create and put into practice a new socialist housing system featuring socialism with Chinese characteristics. Reforming the urban housing system is for the benefit of urban residents. The future housing system model and housing system reform must take into account the actual benefits and long-term interests of most urban employees and residents. Such a system should enable them to settle down at one place. It should be convenient in terms of work, study, and entertainment, as well as being conducive to the support of the elderly, raising children, and building up of family assets. It should enable people to live in peace and get on with their pursuits. All this should be borne in mind when creating a new housing system. Through housing reform and years of effort, every Chinese family should have the possibility to live in safe, hygienic, satisfactory, and well-suited housing. The three housing reform schemes all pointed to the need of housing commercialization. This is correct: decades of practice both at home and abroad have proved that the denial of the nature of housing as commodity, and the allocation of housing as an in-kind welfare under the conditions of the old planned economic system, did not solve the housing problems of the vast majority of workers and residents in urban areas. On the surface, housing was allocated to urban residents for nothing or almost nothing. They paid nominal rent each month, and seemed to have received welfare benefits. But this way of allocating housing proved too costly. First of all, the state’s financial resources were limited and unable to meet the subjective need for housing of urban residents. Those (though a great majority) who received housing did so invariably at the expense of people who didn’t.

Establishing a new urban housing system 5 Second, this way of allocating housing without compensation can only be fair and reasonable on the basis of a high degree of political consciousness of both the allocator and the recipient – and this, in reality, is impossible. As pointed out in the housing system reform plan of 1988: The current housing system in our country has serious drawbacks. The state invests a large amount of money to build houses for residents in cities and towns. But due to the lack of mechanisms to restrict unreasonable demands, urban housing problems have not been alleviated. Unfair distribution of housing has become a serious social problem. Third, this way of distributing housing has resulted in a situation whereby housing chooses its occupant, rather than the occupant choosing housing. With the exception of a small number of people who have limited choice of housing, most people have to live in whatever dwellings are allocated to them, losing thereby the basic right of individuals to choose (commodities). Therefore, it is impossible for most people to be satisfied with the method. Fourth, the construction and allocation of housing by the government and working units constrain the initiatives of individuals to solve their housing problems. Hundreds of millions of urban residents are unable to play an active role in this major issue concerning both individuals and families, and to bring their own potentials into full play. As a result, housing construction cannot meet the demand and the development of housing productivity is limited. This method was implemented for more than 40 years. Up to 1994, the average per capita living area in urban areas was only 7.9 square meters. Farmers on the whole were poorer than city dwellers. But their average per capita living area had reached 22 square meters. Thus, the real losers were urban dwellers. The solution to the housing problem lies in the realization of commercialization of the housing sector. Housing is a commodity. Just as with color TVs, refrigerators, and other consumer durable goods, housing should be built, purchased, or rented according to one’s own needs, preferences, and ability to pay. In modern countries, there is greater social mobility. Career change and population migration are frequent. (According to statistics based on relevant materials, the average American moves 14 times in life.) It is also common for people to change their residence due to career moves and other reasons. When this happens, it should be very convenient for people to sell or return their houses, and to purchase or rent houses in a new place. Housing is a commodity. Residents should pay more for buying or renting larger and better housing. Without adequate economic means, one can only purchase or rent smaller housing with lower quality. In cases where people have the same economic means, Resident A would rather rent a less desirable home and buy a color TV and a refrigerator, while Resident B would prefer renting better housing to buying a color TV or a refrigerator. As the saying goes, one cannot have both fish and bear’s paw at the same time (one cannot have the cake and eat it, too). This is only fair. Housing is more durable than a color TV, a refrigerator, or other durable consumer goods, and has the function of maintaining and increasing value. Deng Xiaoping proposed in 1980: “Urban residents

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should be allowed to purchase their own housing and also build their own houses.” Corresponding laws should be enacted to protect the rights and interests of individuals to own their own homes in order to arouse the enthusiasm of individuals and families for house purchase and building. Now the saving deposits of urban residents have reached nearly 2 trillion yuan. Some of which can be used to buy and build houses, making housing a form of wealth accumulation for residents. China has always had a tradition of storing wealth among the people (藏富于民). Local governments should provide the conditions and conveniences for residents to build, buy, rent, and repair houses. Now farmers have the guaranteed right to use and manage the contracted land for 30 years. They can buy their own means of production and invest in land. Rural areas have a means of wealth accumulation. If purchasing and building houses can serve as a means of wealth accumulation for workers and residents in urban areas, it will not only solve the problem of longterm housing shortage, but also promote social stability. It will be a solution that serves many purposes. Since the reform and opening up, more power of investment in and management of housing construction have been delegated by the state to the work units (单位) of party and governmental organs, enterprises, and institutions. Before 1979, more than 80% of the urban housing construction funds came from the financial allocations of the central and local governments. By 1997, government funding had been reduced to only 23%. Work units have gradually taken over the functions of building, distributing, and managing housing. In the country as a whole, apart from Shanghai, about 30% of public housing in most large and medium-sized cities is directly managed by government housing management departments, and 70% by the work units themselves. Under the present housing system, the state ownership of public housing exists in name only. Nominally, more than 3 billion square meters of public housing in cities and towns are owned by the people collectively. But they are scattered in various work units at all levels. Work units build and purchase housing. Distribution and management of housing all take place within work units, but once the use right of housing is granted to workers (residents), work units’ ownership of and right to use and control of housing will be in name only. Housing is nominally publicly owned, but in reality is at the disposal of individuals. Once allocated to individuals, housing cannot only be occupied by individuals themselves for a long time, but also passed on to future generations. Most of the existing public housing is actually owned by work units. For them, housing is not only a huge resource and wealth, but also a heavy burden. On the one hand, work units own a lot of real estate. They appear to have a lot of assets on the books. For the work units that own housing, allocation of housing can be used as a means of attracting talents, whereas taking back allocated housing may be used as a way of preventing their employees from “job hopping.” On the other hand, work units have to shoulder not only the responsibility of distributing housing to all employees, but also that of maintaining and managing housing already allocated. A huge amount of human, financial, and material resources have been put into the fulfillment of such responsibilities by the work units, and a lot of

Establishing a new urban housing system 7 energy and patience from the leaders are involved. The difficulties they have gone through are unspeakable. Without doubt, some people have used their power for personal gains and for obtaining housing, causing a lot of disputes. The real power over housing lies with the work units. The key to housing reform, therefore, also lies with the work units. Work units are the actual implementers and operators of housing reform. The state’s and government’s housing reform policies must be implemented and put into practice through work units. It is therefore important that the state and the government formulate corresponding policies on issues relating to housing, properly handle the relations with the work units, and coordinate the relationships among work units and between work units and individuals. Several housing reforms met with setbacks because of failure to obtain the approval of most work units, which led to a wave of house sales at low prices. This is the lesson we need to bear in mind. There are millions of work units of party and governmental organs, enterprises, and institutions that perform the functions of building, distributing, and managing housing in the whole country. The state should distinguish different situations and deal with the housing problems of each work unit differently. Although they are all work units, their situations differ greatly from one another. Analyzing from the perspective of housing, one can divide these units into four types. The first type is work units with both money and housing. Most of them are top- and middle-level work units of party and governmental organs, large-scale enterprises and institutions, or of small enterprises with high profits and operational efficiency. They have considerable housing stock and financial resources for subsequent housing construction. There are fewer households in need of housing. It is relatively easy to solve the housing problems of their employees. Once a clear national housing reform policy is in place, the transformation of the housing system will also be relatively smooth. The second type of work units are those with money but no housing. Most of them belong to companies, enterprises, and institutions created in recent years. They pay relatively high salaries, but do not have the responsibility of providing and managing housing. Work units as such are freed from carrying out the task of housing reform. Nowadays, there has emerged the situation called “one family, two systems,” in which one spouse works in a company with a high salary and the other works at a state organ, public enterprise, or institution, living in low-priced housing. At the time of the housing reform, there have been problems between the work units that provided the housing and the well-paid employees and the companies where they work. The third type are the work units with housing stock but having little or no money. Most of them are state-owned institutions or enterprises that used to have a good economic foundation and good economic returns, but now suffer from poor economic performance or already run at a loss. These units have neither the capital nor capacity to continue building housing for their employees. At the time of the housing reform, two ways of solving the housing problem can be identified. Those units that formerly owned a large housing stock with few families in need of housing provision can sell the existing housing to the resident households. The

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Establishing a new urban housing system

capital thus received can be used to continue building or buying houses, and in this way solve the problems of those employees in need of housing. For work units that do not have enough housing and with many households waiting for housing provision, the capital obtained from selling the existing housing cannot solve the problems of households without or with insufficient housing. These units have to find other solutions to the problem. The fourth type are units that have neither housing nor money. They are mostly small enterprises and institutions at the grassroots level, or units that for a long period of time have suffered from poor economic performance and losses. The housing problems of the employees in these units were severe and hard to solve already from the start. They are therefore also the problems most difficult to solve at the time of housing reform. It requires special attention from the local governments, and special measures should be taken to deal with their problems. The management of housing by work units is a product of the planned economy for decades. Experiences have shown that this system can neither obtain high economic efficiency nor achieve fairness. It causes endless disputes and problems. The third housing reform scheme correctly proposed to achieve the socialization of housing. The aim and outcomes of the housing reform is to let employees and residents solve their own housing problems through the market and society instead of turning to work units or leadership. It is to free work units from the management of housing. Except for very few large units such as top state organs, universities, and special scientific research institutes that may retain some responsibility for the management of housing, all work units should, through various forms, transfer the rights and obligations of housing construction and management to the society and the market. Turning over housing resources entails at the same time laying down the burden. Transforming implicit subsidies into wages to the employees will enable them to solve their own housing problems through the market. Needless to say, this transition will have to go through several intermediaries and processes. Under the new housing system, the roles of the state and the government in housing needs to be transformed. The roles of the state and the government as planners, owners, distributors, maintainers, and managers should be transformed into roles as supervisors and regulators. The housing problem of the masses is a matter for the masses themselves. Housing should be managed by society and distributed through the market. The state and local governments should make appropriate policies at the macro level according to the national and local conditions, establish a variety of real estate markets, supervise, and regulate the operation of the market, so that residents can solve their housing problems through the market. This does not mean that the state and local governments at different levels are totally freed of housing management. They still have to take good care of the housing needs of two kinds of people. The first is the housing needs of the civil servants. Under the condition of the socialist market economy, the incomes of the civil servants are always low. For them to work better for the country, the government should provide them with social welfare-based housing, which will serve also as a form of compensation. This is a common practice in many countries around the world. The second is the housing needs of low-income households

Establishing a new urban housing system 9 beset with difficulties. The local governments at different levels should have at their disposal a certain amount of relatively low-standard housing which can be allocated to residents under the poverty line at relatively low rents, so that they are properly provided for. This has the nature of social security and social relief. According to current statistics, among the households classified as families with housing problems, some are not beset by economic difficulties. These households can solve their housing problems through the market and normal channels. They do not belong to the group needing special help.

Necessary conditions for deepening the housing system reform Housing reform is a difficult matter. The old urban housing system was part and parcel of the planned economic system. It was also an integral part of the bifurcated urban-rural social structure. It has evolved into a huge system. Over the years, intricate relations and patterns of interests have evolved between the government and the work units, among work units, between work units and individuals, and among individuals. It is extremely difficult to reform the system and the whole set of institutions, and to adjust the patterns of relationships between the existing interest groups. Housing reform involves the vital interests of every urban resident, and is a matter of general concern to them. Most of the reforms that have been carried out in urban areas touch upon the interests of only some people, and only these people care about these reforms. For instance, only the people in the work units of party and government organs and institutions care about the restructuring of organizations, whereas the reform of enterprises is a matter of interest only for enterprise cadres and workers. From senior cadres, ministers and professors down to ordinary people and workers, housing system reform is the only reform that is of concern to everyone. However, in its early stage, we underestimated the importance, the long-term nature, and the difficulties of urban housing reform. We did not put this important reform concerning long-term order and stability in its rightful position, and failed to put in due forces that it deserved. As a result, some of the difficult problems have not been solved appropriately. To further deepen the reform, we must aim at the establishment of a new housing system. We believe that there are two necessary conditions that must be prepared: one is ideological and public opinion preparation, and the other the organizational preparation. The reform of the housing system is not only the reform of the economic system, but also the reform of the social system; it will inevitably lead to the changing of traditional ideas on the housing issue and the consumption concepts of the masses. From the practices of the past few years, we can see that there is a great deal of ideological resistance coming from various strata. For the reform to be successful, we must do a good job in the ideological work. There are two main aspects of ideological work relating to housing reform. One is to have a correct theoretical understanding of the reform. The other is to resolve in time various forms of ideological resistance to ensure smooth progress.

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Establishing a new urban housing system

What kind of urban housing system should be built? Should we build one housing system for both urban and rural areas, or two different systems like the ones currently in effect? Should home ownership or rental housing be the predominant form of housing provision under the socialist market economy? Under the current system, housing is nominally owned by the state, but actually controlled by the work units. How can we reasonably transfer this system to one in which house ownership by workers and residents predominates? Should the goal of the housing reform be raising funds for more and faster housing construction to increase the housing stock and solve the housing problems of needy families, or should it focus on the establishment of a new housing system? At the stage of low-wage income, should the housing consumption quota be 5%, 10%, or 50%? Which is the reasonable level? How will the real estate market be built in the future? In practice, some of these questions are deeply theoretical and others practical. Housing reform cannot be carried out in a healthy way without these matters being clarified. Therefore, some people say that housing reform theories lagging behind and opinions at odds are the main constraints on deepening housing reform. More than a decade ago, when the reform of the household contract responsibility system was implemented in rural areas, the whole nation from the top down – from major newspapers and periodicals, leaders of party and governmental organs, people engaged in practical work in rural areas to economists, sociologists, and well-known scholars – were talking about and discussing the rural reform with great vigor and momentum. In contrast, on the issue of housing system reform, also a matter of vital interest for hundreds of millions of urban residents, cadres and the masses talked a lot about it in offices and at home to little avail. Questions raised 10 years ago are still questions and have not been clarified, thus impeding the progress of the housing reform. The issue of setting up a new housing system is now put on the agenda. Considerable scientific research forces should be mobilized and concentrated to reinforce the study of housing systems and theories of housing reform. Of special importance, various forces should be mobilized to strengthen public opinion guidance and propaganda work on housing reform, making the aim, nature, and significance of the housing reform, its methods, and procedures as well as the experiences of various pilot projects known to every household, and in this way create the impetus for the reform. In order to be mentally prepared for housing reform, the old concept of welfare housing should be changed and a new concept of housing consumption established. Establishment of an authoritative and practically functioning organization is a necessary condition for deepening the housing system reform. Housing reform involves the interests and work of various departments, such as those responsible for planning, finance, banking, state-owned asset management, urban construction, and land. It won’t do without an authoritative leading body to coordinate and make overall arrangements. Housing reform is a top-down process, involving the interest adjustment of many work units and thousands of households. In particular, the present housing system is actually one of work unit ownership. The housing conditions for leaders of various departments and work units are, on the whole,

Establishing a new urban housing system 11 relatively good. Some of them have taken up more housing through open or back channels. It is the immediate interests of these people that the housing reform will first touch upon. Without a relatively high degree of consciousness and the breadth of mind which give top priority to the overall situation, it will be quite difficult for them to actively push ahead with the reform. In fact, most residents now live in houses with the lowest rent in the world, and get the cheapest services. Unless the relationship between the long-term interests and practical interests are made clear for them and the relations between the country, collectivities, and individuals straightened out, they will not be positive about the housing reform and will have a strong incentive for it, as farmers had for the contract land. It is therefore important to have an authoritative organization to plan and carry out this major reform in the light of the overall situation and long-term interests, and in response to the needs of the socialist market economy. This authoritative organization should not only carry out investigations and research and formulate plans, but also engage in a lot of practical work, such as making arrangements, coordinating, and driving on the reform. It must be a practically functioning organization, not one merely in name. At present, the state has a housing system reform leadership group. Its office is placed under the State Commission for Restructuring the Economic System. In provinces and cities, the situations are different. Some place the offices under the Commission for Restructuring the Economic System and others under the Urban Construction Committees. Some have established housing system reform organizations and carried out the reform vigorously, whereas others have just one office, the only function of which is to hold meetings, print documents, and then read, copy, and forward them. The situations are even more different when it comes down to regions and cities (counties). Some have offices with staff, and others have offices with just a sign. The housing reform has now come to the crucial stage of transforming the mechanisms. Only by establishing and truly putting into operation authoritative and powerful housing reform institutions, from the top down, can we solve this century-old conundrum. At present, the first thing to do is to get organizationally prepared by setting up housing reform institutions in the three major municipalities, 35 housing reform pilot cities, and about 200 medium-sized cities above the prefecture level. This is a necessary condition for deepening the housing system reform.

Steps and main measures to realize the transition to a new housing system To deepen the housing reform and realize the transition to a new housing system compatible with the socialist market economy, we should choose the right time to put an end to the welfare-based housing allocation and let no new houses into the old system. Thereafter, the old way of housing allocation can be applied side by side the new for some time. Once the follow-up work is done, the two ways can be merged, and a new unified housing system can be put into practice.

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Establishing a new urban housing system

More than 10 years of housing reform has prepared various conditions. Time has come to resolutely terminate the continued operation of the old system. In the light of the practices of housing reform around the country, whether through increasing rent or selling public housing, a new housing system cannot be established if there is no clear deadline for the operation of the old system and if new houses continue to enter the old system. In some cities, up to 90% of public housing has been sold. But cadres and employees are still waiting for public welfare housing. Those who have not been provided housing wait for housing allocation, those who have inadequate housing wait for additional rooms, and those who have poor quality housing wait for better houses. The old system operates as usual, and the new system cannot be established. Putting an end to the welfare-oriented housing distribution and terminating the operation of the old housing system is a major issue involving the vital interests of hundreds of thousands of families, and is a crucial step toward the establishment of a new housing system. It must be done very seriously, conscientiously, scientifically, and meticulously. First of all, a decision with authority has to be made by the State Council. Second, once the decision has been made, it should be implemented nationwide at the same pace. If the reform is only carried out in a few places while most areas stand still, the same situation will occur, as it did in cities such as Yantai during the early stage of the housing reform; namely, despite rent raising and the granting of subsidies, these cities were unable to go further with the reform as isolated forces and suffered setbacks. Third, we should choose the right moment to implement the decision throughout the country. For example, January 1, 1997 or July 1, 1997. If possible, it is best to start the implementation in connection with the next wage reform. Housing reform itself is a great benevolent policy. It is thus also appropriate to choose a time before or after the 15th National Congress of our party. Once the welfare-based allocation of housing is brought to end and the old system stops to operate, a series of follow-up work should be properly done, so that the new housing system can be gradually established and put into operation. First, properly handle the relationship between the government, the work units, and the masses of employees living in public housing. Second, properly handle the housing problems of employees who have worked in a work unit for many years but have not yet been provided with housing, and the housing problems of new employees whose housing needs have not yet been met. Third, create the basic conditions for the operation of the new housing system. Fourth, properly handle the linkage between the old and the new systems. Housing construction should not be stopped. Neither should the real estate market. Contributions to housing provident funds should be collected as usual. In the meantime, the replacement of the old system by the new should be properly carried out. This rests on the planning and arrangements of the housing reform institutions in various regions and cities. Properly handle the relationship between the government, the work units, and the employees already living in public housing and smoothly decouple these employees from their work units on the housing issue. This is the most important

Establishing a new urban housing system 13 aspect in carrying through the housing reform. Once this problem is properly dealt with, the housing reform will be half successful. In 1994, there were 108.9 million employees and 22.49 million retired workers in all kinds of state-owned units, totaling 131.39 million people. Taking dualcareer families as the average (while most of the households consist of a working couple, there are employees who live alone. This may be offset by households with more than three people), there were altogether 65.695 million households. At present, there are more than 3 billion square meters of state-owned housing. In 1994, the average floor area per household in the three large cities of Beijing, Tianjin, and Shanghai was 61.2 square meters. Calculated on this basis, 74.57% of the employees live in public housing. Without doubt, the percentage varies from city to city and from work unit to work unit. Some have a higher percentage and others a lower. This is just an average. Nonetheless, it is a basic fact that nearly 75% of the employees in the work units of the state-owned enterprises and institutions live in public housing. In the old system, housing distribution was – in general – based on position, rank, and seniority. In most working units, employees with higher ranks and longer length of service live in larger and better housing, whereas the housing conditions for other employees decrease, according to the previously stated criteria. A small number of people take up more and better housing through various means, arousing intense discontent among the masses. From city to city and from work unit to work unit, the housing conditions of employees in similar situations vary greatly. This, too, is an objective existence. Although housing in most work units are not spacious, the distribution is – on the whole – relatively reasonable. This is especially true with public institutions such as education and scientific research, where many leading cadres, university chancellors, and vice chancellors – just like ordinary workers – live in apartments with only three rooms. This is, as well, a basic fact. The basic housing reform policies to solve the housing problems for nearly 75% of the employees should be formulated on the basis of these two basic facts. With the approval and support of these employees, the housing reform will proceed smoothly, and the new housing system will not be difficult to establish. The reason why it was difficult to raise the rent in the past was because it meant practically to take back some of the benefits already given to the employees. Taking money from personal (employees’) pockets is not an easy thing to do. Later, the sales of public housing ended several times in a wave of low-price selling. Although public housing sales have become relatively easy nowadays, it has been difficult to press ahead with the sales in some cities. In Nanking, for instance, until March this year, public housing was still hard to sell. Many people say, “It is better (cheaper) to rent than to buy housing.” Others hold that buying a house is the purchase of a maintenance right. Still others worry that they will stand to lose if they do not buy, but if they do buy, they may face endless trouble (no one is in charge of the maintenance) in the future. In the past, the boundaries of rights between buyers and sellers were unclear at the sales of public housing. There were always people on the selling side who thought that the prices were too

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Establishing a new urban housing system

low and that the state suffered losses. People on the buying side, on the other hand, believed that it was all the same whether to buy or not, since there was nothing there for them to gain. Some even said that buying was to be deceived, and they stood only to lose. Under the new housing system, the proportion of home ownership among employees and residents will be relatively large. This is a major trend in countries of the world after years of practice and twists and turns. For nearly 75% of the employees who live in public housing, it is entirely up to individuals and their families to decide whether they will buy their own dwellings or continue to live in rental housing according to their own situations and wishes. But no matter if one buys or rents a house, the decision has to be made in accordance with the principles of the socialist market economy. In general, workers should be encouraged to buy their own housing. Practices at various places indicate that if the terms of the sale are reasonable and made clear to them, most of the employees will be willing to purchase their dwellings. The sale and purchase of public housing is nothing different than selling and buying goods on the commodity markets. The essence of both is the transfer of rights. So far as the state and the work units are concerned, selling already distributed housing over which they have only nominal ownership and the right of disposal to resident employees at favorable prices is, as a matter of fact, a form of compensation, since housing consumption was not previously included in their wages. This is not only to provide preferential benefits, but also to settle the relationship with the employees who buy their homes on the housing issue. As far as the employees are concerned, by paying the corresponding housing prices to the work units, they obtain the rights to own, use, and benefit of the housing allocated to them, as well as the right of disposal. They can live in the housing themselves or sell, rent out, pledge it as collateral, inherit, give as a present, or earn income from it. In short, they have obtained the property right which places their housing fully at their own disposal. The reason why house selling and buying was not particularly successful in the past was precisely because the rights and obligations of both parties were unclear. Property rights were not clear due to the absence of clear-cut and resolute decisions. After a housing sale this time, property rights should be made clear. Those who purchase their homes should have ownership. In the long run, this will not only lighten the burden of the state, but also relieve the work units of theirs. Work units will no longer be in charge of housing. Employees will be responsible for their own housing. When they want to increase or reduce their living spaces, they will turn to the market instead of their respective work units. Once owing housing property, employees may use it, as well as maintain it and increase the value of their housing. They can settle down and get on with their pursuits. It is also conducive to the stability of the society. Selling price is the most controversial and difficult question in housing reform. It is also one of the keys to the success of the reform. Housing reform is not only part and parcel of the economic system reform. It involves, at the same time, the adjustment of social interest relations. Thinking and calculating only in economic

Establishing a new urban housing system 15 terms will definitely not make things clearer. To solve the housing problems, we must also consider the overall long-term interests of the country and the balance of the interests of all social strata, taking into account the rights and interests of the state and the work units, as well as individuals. Political and social considerations are therefore equally important. In housing reform, we should start from the overall situation of national economic development and social stability, and adjust the interest relations of all parties to achieve social fairness with justifiable results. As far as the state is concerned, the authorities involved should overcome the idea of getting rid of the burden and reclaiming the funds. More than a decade of practice has shown that the success of any reform will have to pay an economic price, as well as a social price. There are similar practices abroad. When Britain carried out housing reform, state-owned housing built by the government was sold off at one-third of the market price. But at the same time, the government’s huge expenditure on housing every year was greatly reduced. Currently, China has 3 billion square meters of public housing which, through the reform, can be returned to the society, employees, the masses, and the market. The capital recovered can be used for housing construction (to solve the problems of those lacking or having inadequate housing), management (setting up various housing service agencies), and for the financial funds for the establishment of a new housing system. According to statistics, from 1979–1995, the state invested 1.138 trillion yuan in urban housing. Together with other investments, a total of 2.55 billion square meters of urban housing, about 45 million units, was built in these 16 years. According to our estimates, if the 3 billion square meters of public housing can be sold at an average price of 400–500 yuan per square meter, about 1.2–1.5 trillion yuan will be recovered. Another 120–150 million square meters of new housing (more than 20 million units) can be built to solve the housing problems of employees with no or inadequate housing. Theoretically, this is possible. But in practice, there are a lot of practical problems to solve. The authorities concerned should have uniform standards to regulate the use of this capital. This is the capital of the housing reform. As for workers, cadres, and individuals, the policy of low wages implemented in the past did not include all housing consumption factors. However, we should bear in mind first of all that our country is different from the Soviet Union and Eastern European countries, where 85–90% of workers and cadres live in public housing. In 1991, the average per capita living area in Russia was 16.8 square meters. In China, on the other hand, there was a large proportion of households with no or inadequate housing. Second, our country is in the period of modernization, and the state has limited financial resources. Third, compared to those who have no or inadequate housing, households living in public housing have enjoyed many years of benefits of low rent. It is only reasonable for these households to pay a portion of their money to buy their rental housing. The state should draw up pricing standards for the sale of public housing on the basis of various factors. In 1992, the department concerned laid down the Temporary Measures for Management of Commodity Housing Prices. During the housing reform, a large number of distributed public housing units will be sold.

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Establishing a new urban housing system

A pricing management method should also be worked out, so that the pricing of local work units in different places is well founded and the workers and the masses know the reasons underlying the pricing. The pricing method should stipulate the selling price of public housing for a certain work unit in a certain place and must provide certain procedures of approval to prevent the phenomenon of low-price selling which occurred in previous years. The method of calculating the selling price of public housing should be simple and clear for workers to understand. The rights and interests of both sellers and buyers should be clearly defined so as to facilitate the future exchange and circulation of the markets and help to realize the commercialization of housing. After several years of probing and practicing, the implementation in various regions of the 11 provisions of the 1994 housing reform decision on the steady sale of publicly owned housing has achieved the recognition of cadres and the masses of workers. House selling prices in various places are gradually becoming reasonable. Low-price selling has been checked, and the invested capital recovered. The masses accept the prices since they accord with the payment ability of the workers. Having investigated more than 10 cities, we believe that we still have the following problems. 1

2

3

Currently, there are three kinds of prices that run in parallel in public housing sales: market price, cost price, and standard price. Market price mainly refers to the price of commercial housing sold by real estate companies. They are affordable for only a few people. Occupied public housing is mainly sold at the cost price and the standard price. In most medium-sized and small cities nowadays, the cost price has come very close to the standard price. Moreover, the standard price is set in the reversed way (according to the affordability of the buyers), and its calculation is complicated. We suggest that the two prices merge into one. Only the cost price should be used later. At present, apart from the cost discount, there are three additional discounts for buyers: length of service discount, discount for sitting residents, and onetime payment discount. While these are basically reasonable, they blur the essence of the government’s preferential treatment of home buyers; namely, to compensate for the low wages in the past that contained neither home purchase factor nor adequate housing consumption. After the abolition of the standard price, emphasis should be laid on the length of service discount, such as giving a direct discount of 20–40% for each working year. The longer the length of service, the more contributions, the more discount and compensation. For retired cadres and employees, and for those who made special contributions in the wars and socialist construction in the past, as well as for those and the families of those disabled or killed on duty, the state may also stipulate to give them more preferential treatments and make it clear that it is a compensation for people who made special contributions to the country in the past. Previously, only partial property rights came with houses purchase at the standard price. The rights and interests of the buyers and sellers were unclear,

Establishing a new urban housing system 17 which was unfavorable to future housing circulation. We should do a good job of bridging the standard price and the cost price, and the difference between the two prices should be made up by the buyer in order to obtain the full property right of the housing units they have purchased. Quantity and standard of sales In 1994, the State Council promulgated the Decision on Deepening the Urban Housing Reform. Article 18 stipulated: When employees buy public housing at the cost price or the standard price, a household can only make one purchase. The quantity of housing units purchased must be made strictly in accordance with the control standards for housing distribution laid down by the state and by the people’s governments at different levels. All purchase that exceeds the standards must be made at market price without exception. This regulation is reasonable. As far as the situations of various local work units are concerned, an overwhelming majority of the public housing of the resident employees are within the stipulated standards. Only a small number slightly exceeds the standards. For various reasons, a few cadres and special workers occupy more than twice or even several times more public housing above the standards. This is what the masses oppose most. The problem should be properly dealt with in the housing reform. The existing housing situations should be investigated and registered before the reform. The City of Xiamen’s practice of entering the housing information of the households into the computer should be promoted. This can prevent the occurrence of one household occupying several housing units, as well as cheating in the reform. 1 2

3

For cadres and employees who occupy public housing more than double the standards or own several housing units in various places, once the facts are established, the work units should take back the extra units occupied. When the family of an employee buys a housing unit at the cost price, they have enjoyed preferential treatment by the state and in this way settled their relationship with the state on the housing issue. The same employee, whether in connection with job promotion or job transfer, can no longer buy housing at the cost price. Further home purchase should all be made at the market price. There are cadres and employees who have, through various contacts and channels, bought publicly owned housing at cost prices many times. This is an unhealthy trend which has aroused strong discontent among the masses. It should be investigated and dealt with by the discipline inspection and supervisory departments. Shanghai has formulated a provision requiring cadres at and above the section level to declare their house occupation. This is a positive measure to prevent such phenomenon from happening. The authorities concerned should formulate housing reform disciplines and require cadres

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Establishing a new urban housing system and employees to abide by and implement them in order to ensure the smooth progress of the housing reform.

Accelerate rent reform while selling houses The first goal is to gradually achieve cost rent and then move towards market rent. Residential rent reform should be in step with the pace of house selling. If the process of rent increase is too slow, it will lead to the situation such that people think that renting a house is better than buying one, thus affecting the enthusiasm of some people for home purchase. This is unfavorable for the housing reform as a whole. There are two ways to raise rent. One is to take small steps and increase rent without subsidy. Beijing, for instance, increased the rent to 1.3 yuan per square meter this year. Next year, it will be raised to 1.8 yuan per square meter. No subsidy has been or will be paid. The other way is to raise rent together with the granting of subsidies. This was what Yantai City did. In our view, raising rent with concurrent subsidy has too many problems in the actual implementation and is not easy to operate. Because the situations differ greatly from region to region, and from work unit to work unit, especially because of the poor economic conditions of many companies and public institutions, some of them even unable to pay salaries on time, subsidies are difficult to raise and distribute. Moreover, it is not conducive to achieving the goal of housing commercialization. We suggest that Beijing’s method of rent raising without subsidy be adopted. It is important, however, to study how to coordinate rent raising with progress in the sales of public housing. Now more and more workers are buying houses. The policy of rent raising should be more forcefully enforced. If rent is too low, it may create the feeling of losing out among those who have bought their homes. The wait-and-see attitude is unfavorable for the smooth progress of housing reform as a whole. The issue of compensating employees not living in public housing At the time when the termination of the welfare-based housing provision was promulgated, nearly 75% of the employees either already live in public housing, plan to buy or continue to rent their homes. Their interests relating to housing have to be properly settled. But what about the remaining 25%? According to a survey, most work units use the length of service as the main criterion for housing allocation. Most of the employees who do not yet live in public housing are young workers around the age of 30. Their salaries are, in general, not high. They all labor or work at the front lines of enterprises and public institutions. Their need for housing is the most pressing, since they are waiting either to get married or to have and raise children. They have high expectations for the welfare-oriented housing provision. A plan should be worked out to solve the housing problems of these people, so that their interests are taken care of in advance. In addition, there should be a clear and consistent statement, a sort of early “Notice of Reassurance”

Establishing a new urban housing system 19 (安民告示). This is essential not only for social stability, but also for the production and work of the units involved. There are two ways to solve the housing problems of this category of workers: 1

When the reform of terminating the welfare-based housing allocation is under way, for workers who do not live in public housing, once confirmed as being without housing according to the relevant regulations of their regions or sectors, housing vouchers may be issued to them based on their length of service (count up to the month of the year when welfare housing distribution is terminated), 1 square meter per working year, as compensation for their labor contributions to the country without being able to enjoy welfare housing benefits. For a household with both husband and wife at work and the length of service of both over 20 years, they may obtain 40 square meters of paid housing vouchers. In the future, when they buy housing from the housing companies of their work units (or housing companies elsewhere), 1 square meter of housing voucher can be used as a substitute for 1 square meter of the housing price. Based on the situation of their future residential construction, work units in various places may make a promise to carry on this practice for a number of years.

The reason for offering this compensation is that in the past, under the conditions of the planned economy, wages paid to workers did not include the costs of home purchasing (rental costs included). This part of the expenses was retained in the hands of the state for housing construction. The housing built was then allocated to workers free of charge. Some workers did not enjoy this part of the welfare. Housing vouchers should be granted to them as a form of compensation during the housing reform. We have now 3 billion square meters of public housing. In 1994, there were 131.31 million employees and retirees in the country. The longest length of service among them was 40–50 years, and the shortest one year. Taking 20 years of service as an average, every working year is equivalent to about 1.14 square meters. Together with other factors, it is appropriate to offer a compensation at 1 square meter per working year. After granting this compensation, the relationship between the work units and these employees on the housing issue will be brought to an end. Some countries in the Commonwealth of Independent States also adopted this form of compensation. For example, when Kazakhstan carried out the housing reform in 1991, every employee could obtain 400 купон for every working year. This could then be used as a substitute for money for purchasing housing. An employee with 27 years of employment could buy an apartment of 27 square meters with the sum granted to him, and the additional amount was paid by the employee. 2

When terminating the welfare-based housing allocation, the work units may issue a statement to the effect that employees without housing can still enjoy the benefit of discount based on the length of service when they buy houses

20

Establishing a new urban housing system from the housing companies of their work units (or from housing companies elsewhere) in the future. That is to say, at the time of home purchase, they will get a 20–40% discount based on the length of service before the termination of the welfare housing provision. The amount required should be paid by their former work units.

The second way is relatively simple and easy to link up to the previous ways of selling houses. But as long as they do not make a purchase, the relationship between the work units and these employees on the housing issue remains unsettled. It will drag on for quite a long time. The first way accords the employees clear preferential treatments. The relationship between the work unit and the individual on the housing issue is resolved once and for all. This is conducive to the operation of the new housing system. No matter which method is adopted, the compensations to the employees without housing must be fair and reasonable, and the relationship between the work units and the individual workers on the housing issue must be properly settled. The work units henceforth become dissociated from the housing problems of the individuals working in the units. New method for new people For those who enter the workforce after the termination of welfare housing distribution, the work units are in principle not responsible for solving their housing problems. They have to meet their housing needs through the market. In the past, the expenditures of the government and work units on housing of workers and staff members were paid into their wages as clarified items of subsidies. This was done in two ways. One was to grant all the subsidies directly to the individuals; the other was through the housing provident funds. When the subsidies were transferred under the names of the individuals, they were deposited into their personal accounts in the HPF. At present, the second option looks better. It not only helps to raise funds for housing construction, but also prevents the outflow of these funds. Furthermore, it facilitates the government’s macro control, so that it won’t go so far as to have a great impact on the macroeconomic order when cash housing subsidies are paid into the wages. At present, wages are still relatively low and market housing prices are too high (especially in several large and medium-sized cities). Under such circumstances, it is quite difficult for the newcomers in the workforce to buy or rent housing through the market. Thus, some interim measures must be taken at the current stage. We must find a way to adjust market housing prices to the level at which the ratio of the price of a 56-square-meter housing unit to the average annual income of these employees stays within the range of 6:1. Meanwhile, we should make it possible for the new employees to live in their own housing by taking mortgage loans or loans of other forms through the banking system. We should also, through the regulation of the market, make it possible for those who prefer rental housing to rent a two-room apartment with a rent not exceeding 5% of their wages. Different regions should work out some concrete methods to implement the interim measures, according to their housing situations and the income levels of the employees.

Establishing a new urban housing system 21 Setting up housing development and management companies as a transitional medium for the establishment of a new urban housing system Working units with housing construction, distribution, and management functions including those of ministries, commissions and bureaus, large and medium-sized enterprises, and public institutions may all set up housing development and management companies. Such companies can be organized on a systematic basis. The cultural, educational, and health care systems in a city or a region may organize housing construction and management companies for their systems. Housing construction and management companies adopt the shareholding system. Work units may convert the assets of their real estate sectors into shares and transfer them to the companies. The companies have independent accounting and bear themselves the profits and losses. The work units which set up the companies are the largest shareholders of these companies. But the companies are the legal persons. They do businesses and operate independently. In the first few years, the companies have the following functions: (1) properly settling the relationship between a work unit and their employees on the housing issue and solving the problems left over from the past; (2) organizing the maintenance management of public housing sold to employees by setting up housing service agencies specializing in this; (3) managing the renewal and rental of unsold public housing, carrying out rent reform, collecting and managing rent; (4) carrying out activities such as raising funds for housing construction, selling, and renting out housing; and (5) assuming the responsibility for helping the employees who newly enter the work units to purchase or rent housing according to the new measures after the termination of welfare housing distribution. After the establishment of housing construction and management companies, the work units will hand over their housing-related rights and responsibilities to the companies and no longer have the function of solving the housing problems of their employees and staff members. After a certain number of years, when the problems relating to the housing issue between the work units and their employees from the past have all been solved and when the real estate markets have been gradually built up, these companies may, step by step, dissociate themselves from the work units. The shares originally held by the work units can be transferred to the state-owned assets management institutions. The companies, on the other hand, will be integrated into the real estate enterprises in the cities and regions where they are located to become genuinely independent real estate development and management companies, achieving socialized and market-oriented management. Actively and steadily setting up the housing market A number of companies, which not only sell newly built housing, but also buy and sell housing already in existence, should be set up as agencies through which urban residents can buy, sell, or rent out housing. In line with the general rule,

22

Establishing a new urban housing system

public housing sold to employees and residents in the previous reforms may lawfully enter the market for sale or lease five years after the purchase. The five-year limit will soon successively fall due. Markets, companies, and intermediaries must be in place to carry out the business of buying and selling, and letting and renting. Once launched, the scale of this kind of business activities will be considerable. The scale will be even bigger in the coming two years, with a large amount of housing for sale and the five-year limit for reselling running out. So, a significant number of housing companies and intermediaries will emerge to meet the demand. In the meantime, a series of supporting institutions – such as finance, credit, real estate assessment, and legal notarization – should be established and developed accordingly. Preparations with regard to planning, organization, finance, legal provisions, and so on, should be made in advance. To avoid disorder resulting from headlong rushes and the absence of legal provisions, business activities of this kind should be brought into the orbit of the socialist market economic system and the system of law from the start. Putting right the situation already in chaos would mean great losses. Fully implementing and improving the system of housing provident funds in an all-round way Shanghai introduced the housing provident fund system in 1991 and has made great achievements. By the end of 1995, the capital accumulated had reached 7.718 billion yuan. This year the amount will exceed 10 billion yuan. Loans granted to work units and building companies amounted to 6.67 billion yuan, and to urban residents for housing purchase and construction 662 million yuan. At the present stage, the following aspects should be improved: 1

2

3

Vigorously promoting the housing provident fund system through local governments and housing reform institutions and expanding the accumulation scope of the funds as widely as possible. By the end of 1995, there were 33,628 work units with 4.63 million employees participating in the HPF system in Shanghai, which accounted for 98% of the total number of employees. In 1994, the total amount of the HPF accumulated by the work units of stateowned enterprises and institutions was 517.7 billion yuan. If the scope of accumulation can reach 80%, the capital collected annually will be more than 40 billion yuan, which will be a great financial support for the establishment of the new housing system. Putting the use of the funds under strict supervision so as to maintain the credibility of the HPF and to enhance the initiatives of work units and workers to contribute to the funds. It has already been learned that some cities and work units appropriated the funds for other purposes. The purpose of formulating principles for the use of the funds is to facilitate the transformation to the new housing system, and not to strengthen the old. The issue of social justice. At present, the HPFs operate on the basis of a low interest rate for both deposits and loans (低进低出). That is to say,

Establishing a new urban housing system 23 low interest payments to the employees who contribute to the HPFs and a low interest rate for those who use the fund loans. For employees who both contribute to and use the capital of the HPFs, low mortgage costs and low interest payments offset each other. This is reasonable, but for those who only contribute and never use the fund money in their lifetime, this means a loss economically. It is especially unfair to those employees who contribute to the funds and still cannot afford to purchase their homes. The masses are willing to accept a policy only when it both takes into account their needs and achieves fairness. Therefore, we suggest that the money paid into the funds should be returned to employees who have contributed to it but never borrow from the funds at the time of their retirement. Interest payments can be calculated partially according to the bank deposit rates prevailing on the market. It is fair to do so. Only a just and fair policy can win the support of the majority and be sustainable. Organizing and setting up home loan banks is imperative 1 2

The capital obtained through the sales of public housing by various work units and the HPF accumulated by them should be well administered, and used according to the relevant policies of the state. Housing construction requires large sums of money and the fund-raising support of the financial system. The financial system provides the residents with installment mortgage loans, an internationally prevailing practice. This will be the primary form through which most residents buy self-owned housing. This financial arrangement can increase the house purchasing ability of residents, so that the funds invested in residential construction by housing developers and building companies can be successfully recovered by selling houses to residents. The purpose of setting up home loan banks is to create housing fund circulation and turnover mechanisms such as fund-raising for housing construction, housing supporting systems, housing purchase loans, and the recovery of investment in housing construction and of mortgage loans.

Promote vigorous development of housing construction and construction industry The present scale of China’s construction industry is far from enough to meet the growing housing needs of the vast masses. In 1994, the per capita living space of urban residents was only 7.9 square meters. If the level of urbanization reaches 32% (now 28%) by 2000, the urban population increases to 416 million and the per capital living space to nine square meters, then another 1.7 billion square meters of housing have to be built and the scale of construction will have to be about 50% larger than it is now. The housing system reform will be an opportunity for the great development of the housing construction industry. The parties concerned should plan

24

Establishing a new urban housing system

well and seize this opportunity to lead the construction industry to a sound development. 1

2

3

4

After the termination of welfare housing allocation in the whole country, work units will no longer be directly responsible for the housing problems of workers and residents; nor will they actively raise funds as before. Construction companies and real estate development enterprises will lose their biggest buyers. Individuals, on the other hand, are unable to build up the capacity to buy housing on a large scale in a short time. Under such circumstances, there is a great possibility of a substantial decrease of buyers in the housing construction industry at a time when the new system is replacing the old, creating, as a result, difficulties for the construction and real estate development enterprises. Arrangements should be made by the parties concerned in advance so as to avoid losses. Construction companies should adapt to the needs of the development of the housing market. In 1994, in terms of the composition of employees and the total output value, state and collectively owned building companies in urban areas accounted for more than 99%. Non-public enterprises such as joint ventures, joint-stock enterprises, foreign-invested and private enterprises accounted for only 1%, but when it came to the level of technical equipment and labor productivity, the latter were superior. In the future, non-public construction enterprises will develop significantly. The construction industry will be characterized by multiple forms of ownership coexisting and developing in parallel with public ownership as the main form. Housing in the future will take many forms. Deng Xiaoping once said: “House building in rural areas should have new designs. Don’t keep on building only small courtyards. Multistoried buildings should also be developed.” House building in rural areas should have new designs. It should be the same in cities and towns. We cannot always build matchboxes, tower buildings, and apartments. Housing is a place for the daily use by millions of people. Residents should have the right to decide what kind of house to build and how to design it. They may design and build themselves, or hire a designer to do the job. In this way, the styles of housing in the future will be rich and colorful. The housing problems of residents will be solved through a variety of ways and forms. Construction companies build, and residents buy. This should not be the only form. Housing can be built through the joint efforts of public and private building companies, by residents working together, or by residents themselves. Local governments and work units should provide the conditions for housing construction, such as marking off house sites and offering favorable loans as well as economic benefits, and give full play to the initiatives of workers and residents in solving their housing problems. In this way, the housing problems of urban residents – a global conundrum – will not be difficult to solve.

Establishing a new urban housing system 25

Notes 1 This article is a research report which was begun in 1996 and completed in August the same year after half a year’s investigation and research in many cities. The first draft was written by Zhang Qizi, Li Chunling, Jing Tiankui, and Zheng Yefu. It was revised and finalized by Lu Xueyi, and handed over to the housing leadership group of the State Commission for Restructuring the Economic System after completion. Parts of the report were published in Essential Reports of the Chinese Academy of Social Sciences. ZhuRongji, Li Tieying, and others made comments. 2 Editor’s note: Mu (亩) is a unit of area used in China. One mu is equivalent to 0.0667 hectares.

2

A new situation and new tasks at the new stage of rural development1 Some suggestions on carrying out the campaign for building new socialist rural areas centered on the development of small towns

In recent years, sales of agricultural products have been sluggish and the market has been sagging with price drops. Township and village enterprises are declining. Farmers’ income increases slowly. These problems are reflections of periodical changes in the development of agriculture and rural economy. The problem at present is how to understand the new stage of rural development. What are the goals and tasks at this new stage? What policies and methods should be adopted to solve current problems? How can the new missions and new tasks at this new stage of rural development be realized? These questions should be answered in both theoretical and practical terms.

New problems at the new stage of rural development Since 1996, there have been good harvests in succession, but the income of farmers has decreased, and it is hard to get the market in gear. The year 1996 witnessed the third bumper harvest in agriculture since the reform and opening up. The total grain production broke the record, exceeding 1 trillion jin (1.009 trillion jin).2 In 1997, the whole country was hit by a great drought and in 1998 by severe floods. Despite this, agriculture production continued to increase. Comparing 1996 with 1998, the total production of grain increased by 1.5%, the total output of cotton 7.1%, oil-bearing crops 4.7%, sugar 17.1%, fruits 17.2%, meat 24.6%, and aquatic products 18.8%. The year of 1999 will be still another bumper harvest year. Total grain production will once again exceed 1 trillion jin, at the same level as in the year of 1996. One should say that the situation in agricultural production has been very good in recent years, and has guaranteed the supply. However, since the winter of 1996, grain, cotton, and other agricultural products have become difficult to sell and prices are falling. After the summer of 1999, the main agricultural products all run into sales difficulties. The market has turned sluggish and prices has fallen successively. Agricultural products have gone from shortage to excess, and the market for agricultural products has changed from a sellers’ market to a buyers’ market. The prices of agricultural products are falling continuously by a large margin, making farmers’ income a problem. In November 1996, the average

A new situation and new tasks 27 price of the three commodities corn, wheat, and rice, in urban and rural markets across the country, was 1.0355 yuan per jin. On November 30, 1999, the average price of these three commodities in the grain markets nationwide was 0.7075 yuan per jin, a drop of 0.328 yuan per jin. The decline was 31.68% compared to 1996. Calculated on the basis of 1996’s total grain output of 1 trillion jin nationwide with the market price of 1.0355 yuan per jin, the income obtained by farmers from grain in the whole country was 1.0355 trillion yuan. There were 864.39 million farmers that year. The per capita income obtained from grain was 1198 yuan. The total grain output in the country will once again reach 1 trillion jin in 1999. The grain price on the market is 0.7075 yuan per jin in November. The farmers’ income from grain reduced to 707.5 billion yuan, a decrease of 328 billion yuan compared with 1996. The per capita income decreased by 31.68%. The estimated number of farmers that year was 870.83 million and the per capita income from grain was 812.7 yuan, a decrease of 385.3 yuan and 32.16%, compared with 1996. Because the commodity rate of grain was low, about 30%, the cash income of farmers did not decrease that much. Due to falling prices, the cash income of each farmer reduced by a little over 100 yuan. However, it is a fact that, in the annual per capita net income of farmers, the income from grain will decrease by more than 300 yuan in 1999 compared with 1996. The price of cotton at its highest, according to the standard purchase price of lint cotton set by the state, was 7 yuan per jin. The price has decreased successively in recent years. At present, it is only 3.8 yuan per jin. The total cotton output of the country in 1996 was 4.203 million tons, that was 8.406 billion jin. The income of farmers from cotton was 58.842 billion yuan, with a per capita income of 68.07 yuan. The total cotton output in 1999 was the same as in 1996. However, farmers’ income from cotton was only 31.9428 billion yuan, 26.899 billion yuan less than in 1996. The per capita income was 38.68 yuan, a drop of 31.39 yuan compared with 1996. The decline was 46.1%. In the current income structure of farmers, the income from agriculture is still the main source. In 1996, the per capita net income of farmers was 1926 yuan, of which 1065 yuan – about 55% of the total net income – was from agriculture and animal husbandry. And among the income from agriculture and animal husbandry, the largest part came from grain. In many regions, it accounted for more than 60% of the farmers’ net income. In the past three years, the prices of grain and cotton have fallen by 30–40%, which has caused a substantial drop in farmers’ real income. Even in the economically developed province of Guangdong, the situation is the same. In 1998, the grain output in the country increased by 1.2%. Pork, aquatic products, fruits and vegetables, etc., also had different degrees of increase in production. However, due to the decline in the prices of agricultural products, the per capita cash income of farmers decreased by 3.6% compared with 1997. In recent years, urban and rural enterprises have been languishing. Under the pressure of competition in the domestic market and the impact of the Asian financial crisis, exports of township and village enterprises have declined, and their products become a tough sell. It is increasingly difficult to obtain loans. These enterprises face considerable difficulties to develop with the weakening of the

28 A new situation and new tasks capacity to take on laborers. The pace of growth has slowed down, and economic returns decreased. The losses incurred have exceeded 15%. About 40% of township and village enterprises have stopped or partially stopped the production. The sluggish township and village enterprises have hindered the development of the whole rural economy and caused a substantial reduction in farmers’ business and wage income. Due to various factors, such as the reform of the state institutions and state-owned enterprises, and the cutting of the payroll to improve efficiency, urban enterprises have dismissed a large number of migrant workers. Some cities have also formulated many regulations restricting the employment of migrant workers. It has become more and more difficult for farmers to work in cities. Many farmers, who have worked in cities for many years, have to go back to the countryside. According to the estimation of authorities concerned, the year with the largest number of migrant workers was 1995, reaching about 80 million. The number has gradually decreased in recent years. In 1999, there are about only 50 million. Calculated on the basis of an average annual net income of 2000 yuan for each migrant worker in cities, rural income will be reduced by more than 60 billion yuan. In these respects, farmers’ real income – especially that of farmers in the central and western regions, whose income is mainly from agriculture – has decreased in the past three years rather than increased. It is the first time that this situation has occurred since the reform. Therefore, the government proposed to develop rural markets in 1997. Two years have passed since then, and rural markets have not expanded. According to various investigations by different authorities, the most important reason is not that farmers don’t need the goods sold in the rural markets, but rather that the vast majority of farmers have no money. Rural development has run into obstacles. This is mainly the result of the failure of the second-step rural reform to further break through the shackles of the planned economy and the bifurcated urban-rural social structure. Since the 1990s, the planned economy has resurged in many respects, resulting in the widening of the gap between urban and rural areas, and solidifying the separation between the urban and rural areas. The problems in rural areas are becoming more and more serious. In 1978, the reform was launched first in rural areas. The household contract responsibility system was put into practice and the people’s communes were dissolved, which brought about a giant leap in productivity. As the production of agricultural products increased, there emerged a large number of surplus rural laborers. Restricted by the household registration system which classified residents as urban or rural, farmers set up township and village enterprises, which made it possible for them to leave the land but not the home village (离土不离 乡).3 However, as the number of farmers in China was huge, rural areas simply could not absorb so many surplus laborers. By the end of the 1980s, a large number of farmers had already moved to cities to seek employment. This was also what the cities needed. The number of migrant workers reached its peak in the middle of the 1990s. Due to the restriction of the household registration system, migrant workers’ occupations have changed, but not their status as farmers. Many

A new situation and new tasks 29 farmers work in cities for more than 10 years without their rural status being changed. They are like migratory birds coming in the spring and leaving in the winter, forming migrant-worker tides. One important reason for this phenomenon is that the pattern of the bifurcated urban-rural social structure formed under the planned economy and the household registration system to this day have not been fundamentally reformed. In the past 20 years, China has carried out large-scale industrialization and industry has entered a stage of rapid development. It should have been accompanied by the migration of large numbers of farmers into cities, thus greatly reducing their number in the countryside. This, however, has not been the case. In 1978, China’s agricultural population was 790.14 million. Instead of decreasing, the rural population had increased to 868.68 million by 1998, a rise of 78.54 million in 20 years, with an average annual net increase of 3.927 million people. In terms of economic structure, China is already an industrialized country, but in terms of employment structure, it is still a peasant society. Urbanization lags seriously behind industrialization. Social structure and economic structure are not coordinated. Urban and rural development is out of balance. These are the main reasons for many current economic and social problems. Since the implementation of the household contract responsibility system, agricultural production has kept good momentum. With the exception of a few major types of products such as aquatic products and fruits which were liberalized earlier and ran relatively well, the circulation system of main agricultural products such as grain, cotton, and oil has been oscillating between giving a free hand and control since the start of the reform in 1985. So far, it has not been possible to form a pattern compatible with the socialist market economy. The state has to put in a large amount of financial subsidies every year. The circulation sectors of grain and cotton have all suffered great losses. Farmers do not get any benefits. Since the early 1990s, Shandong province has obtained considerable experiences of industrializing agricultural operation, which has been taken up by many places successively. In recent years, agricultural industrialization has been taken seriously and vigorously promoted in various regions by the central authorities and academia. But progress has been slow. In spite of the push, it has not become widespread. Why? The reason is that under the planned economy, the production and circulation of agricultural products were administered separately by different authorities. This has not been completely reformed according to the requirements of the market economy. Take the production and circulation of grain, for example. The planning and organization of grain production and the popularization of agro technology are the responsibilities of the Ministry of Agriculture; purchase, sale, distribution, and storage are managed by the Grain Bureau; grain processing is placed under the Ministry of Light Industry; and the import and export of grain are in the hands of the Ministry of Foreign Trade. So many departments are involved – and each has its own interests. To bring production, supply, and sale under a coordinated process and to set up an integrated system of agriculture, industry, and commerce is easier said than done. It is therefore not difficult to understand why agricultural industrialization has not been extensively carried out in spite of the push from the central leadership.

30 A new situation and new tasks The reform of the circulation system of agricultural products has gone back and forth. It is not because it is difficult to build a new circulation system of agricultural products compatible with the socialist market economy, but rather because some departments refuse to give up the interests formed under the former planned economic system. In the past few years, some products and their purchase have once again been put under monopoly. This is in reality the protection of the interests of these departments at the expense of the interests of the vast majority of farmers. This old practice of maintaining the planned economy is unfavorable for the formation and development of the socialist market economy. Since the middle of the 1980s, party and government organizations at the township and village levels have kept growing and the ranks of cadres has swelled with no financial support; this is the main reason why the more we try to reduce the burden of farmers, the heavier it becomes, and it also what lies behind the frequent occurrence of social conflicts in rural areas. During the period of the people’s communes, political and social governance were integrated. A commune had altogether a little over 20 cadres in the party committee and commune administration. Larger communes had more than 30 cadres. In a production brigade, there were only four or five cadres. With the introduction of the household responsibility system, the communes were dissolved. Township governments were subsequently set up. The production brigades became village committees. The titles of the cadres changed accordingly, but not their number. For quite some time (five or six years) after the implementation of the all-round contract system in the countryside, with the disappearance of the former functions of organizing collective production and operation, township – especially village – cadres felt at a loss as to what to do. Most of them went home to till the contracted land. When county (county-level city) officials went to the countryside, it was hard for them to find cadres in the villages, which gave rise to the problem of the so-called paralyzed, semi-paralyzed countryside. But it was precisely during this period of time that the burden of farmers was the lightest. Thus, it did not become a social problem in the countryside. After the middle of the 1980s, the party and the government once again laid emphasis on strengthening the leadership in the countryside and on doing a good job in providing socialized service for agricultural production. After the termination of the purchase monopoly and the introduction of purchase by contract in 1985, prices of grain in the market soared. The price for purchase by contract was much lower than the market price. The government therefore emphasized that grain purchase by contract was also a task. Farmers were mobilized to fulfill the grain quotas through the efforts of township and village cadres. Rural grassroots organizations were gradually strengthened and developed on the new economic basis. During this time, the attention of the leadership from the county (county-level city) level upwards was mostly focused on developing industry and the urban economy, and solving urban problems. When the household responsibility system was introduced in the rural areas, there were no clear arrangements and regulations concerning such questions as how to build grassroots political organizations, what the organizational structure should look like, how large the staffing should be, and how many extra staff may be permitted.

A new situation and new tasks 31 It was under such circumstances that the ranks of cadres at the township (town) level rapidly swelled. The organizations were getting bigger and bigger, reaching an unprecedented scale. First, the number of township (town) cadres increased substantially. In townships, besides party secretaries and the heads of townships, many deputy secretaries and deputy township heads were added. The chairmanship of the National People’s Congress (together with the office of the NPC) was created. Nowadays in a township (town), there are 10 or more cadres from the deputy heads upwards. Second, there was an overexpansion of organizations. In some economically more developed townships (towns), economic committees, industrial offices, and so on were set up. More and more institutions were created. The posts of eight assistants in the former township government were upgraded to offices and stations. For example, the financial assistant was upgraded to Financial Office, the public security assistant to Police Station, the water conservancy assistant to Water Management Station, the culture and education assistant to Office of Culture and Education, and the family planning assistant to Family Planning Office. Moreover, Land Management Office, Traffic Control Station, Power Management Office, and so on, were added to the list. Some less developed or underdeveloped townships gradually followed suit. Third, there was excessive overstaffing. Since there is no restriction on the appointment of farmers as cadres and functionaries, and the cadres in charge in townships could make arrangements and transfer farmer cadres just as they wanted, the number of various office personnel and workers – as well as drivers, service people, and cooks – in the township governments have greatly increased in recent years. At the present, a township government has dozens of people at the minimum, some have more than 100, even 200–300 people, several times or even 10 times more than the authorized size, which is larger than a county government in the 1950s. For village-level organizations, the state stipulates that only three to five people enjoy fixed subsidies and in large villages, and no more than five to seven people. But at present in an administrative village, apart from a few key persons in the party branch and the village committee, there are also a first deputy head of the village, a deputy village head in charge of industry, a deputy village head in charge of animal husbandry, etc. In addition, there are varying numbers of members in the party branch and the village committee, a militia company commander, a league branch secretary, director of women’s federation, director of public security, and director of mediation. Moreover, there are anywhere from more than 10 to more than dozens of people in each village responsible for family planning or working as electricians and plumbers, and so on. With so many “officials,” so many people in charge, and so many people on the payroll without state financial expenditure set for these people, the only thing to do is to impose charges on farmers under various names. How can the burden of farmers be reduced? In the past few years, the state explicitly prohibited township and village cadres to deduct various apportioned expenses from the money farmers obtained through grain and cotton sales at the grain and cotton stations. The stations were required to settle the accounts with each household after the sales. In order to get the “three

32 A new situation and new tasks reserves and five fees” (三提五统)4 and other charges, rural cadres had to go from door to door to collect them. For those who were unable to pay, the cadres would send people to urge them to pay. Some went so far as to bring security personnel or militiamen with them to demand payment, causing all kinds of clashes. Others took grain, cattle, and pigs from farmers when they failed to collect the fees, resulting sometimes in life-and-death incidents and causing tension in the relations between rural cadres and the masses. In recent years, farmers’ petitions and complaints have been increasing. The root causes behind most of them are the problems just mentioned. After the 1990s, township (town) level finance has been successively established in various regions; across the country, financial offices have been set up, but in practice, a lot of problems have arisen. The financial offices are in charge of salaries, health care, travel, welfare, and daily expenses of township (town) cadres, primary and secondary school teachers, medical staff in health centers, and a large number of personnel not on the regular payroll. These financial expenditures are rigid, but there is no fixed source and quantity of financial revenues. Particularly since the fiscal and tax reform in 1994 when the tax sharing system was introduced, more stable and better tax sources have been collected by governments at the prefectural level (prefectural-level cities) and above, which is why the financial situations at these levels have been generally or relatively good in recent years. The situations from the county level and below, on the other hand, have in general not been so good, as there is little left of the good financial and tax sources when it comes down to these levels. Counties and county-level cities retain some sources that are left. At the township (town) level, there are scarcely any tax sources or stable revenue. Most of them face financial difficulties. This is the reason why cadres and teachers in primary and secondary schools in townships (towns) very often do not get paid for months. According to the investigations of relevant parties, about 50–60% of the existing townships (towns) are unable to make ends meet and face economic constraints. Under such circumstances, there are only two ways for heads of townships (towns) to keep the governments running and maintain daily expenses. One is to rely on borrowed money. According to a survey of seven provinces in the central and western regions by relevant parties in the summer of 1998, the average liabilities of each township government was 2 million yuan at that time. A considerable number of village-level organizations were also in debt, an average of 20,000 yuan per village. Some owed debts to banks or credit cooperatives, and others got money through embezzlement or borrowing from loan sharks. The second way is to apportion the expenses on farmers and enterprises in various ways. Unwarranted fees, fines, and fund-raising are all forced out of this. Without the support of normal and stable fiscal revenues, it is hard to imagine that a government can maintain normal operation and impartial performance of governmental functions. After the reform of the financial system in 1994, deposit, loan, and other services of banks and credit cooperatives have been placed under the vertical management of the financial system. Currently, the Agricultural Bank and credit cooperatives collect deposits basically only in rural areas. Not only farmers have

A new situation and new tasks 33 difficulties to take out a loan from these institutions, but county and township governments are also in no condition to obtain loans from them. At present, in rural areas, the lack of financial channels makes it very difficult for township and village enterprises, or individual and private enterprises, to develop.

Tasks at the new stage of rural development Change the bifurcated urban-rural social structure and vigorously promote urbanization. Over the past 20 years, China has carried out reform and opening up, and achieved great success. But the bifurcated urban-rural social structure and the household registration system formed under the planned economy have been kept for too long, and few reforms have been made. Two problems have arisen from this. First, it has obstructed the flow of resources in the society, made urbanization seriously lag behind industrialization, and caused imbalance between the economic structure and the social structure. Second, it has hindered the formation of the socialist market economic system. The existing bifurcated social structure of rural and urban division has meant that the essential production factors, such as laborers, land, capital, and multiple resources, cannot flow according to the requirements of the market economy. It has hindered the rational allocation of resources and is unconducive to the development of productive forces. The practice over the past two years has shown that if more than 800 million farmers are confined to the countryside, they will not be able to get rich, and neither will the countryside become modernized. This has also affected the progress of urban modernization. The countryside cannot accommodate more than 500 million laborers. According to China’s current level of agricultural production, 150 million laborers are enough to guarantee the production and supply of agricultural products and meet the needs of national economic development and the whole society. Setting up township enterprises has been a success, absorbing 100 million laborers. However, leaving the land but not the home village is not correct. Engaging in both agricultural and industrial production (亦工亦农) will not be desirable in the long run. It is not conducive to specialization and the improvement of the quality of the workforce. Township and village enterprises are mainly engaged in the secondary and tertiary industries, and should be concentrated in small towns and even cities at a certain stage. Therefore, it is an inevitable requirement for economic development until today to open the gates of towns and cities and let farmers in with confidence. Adjusting the economic and product structures within rural areas will not achieve the anticipated results, no matter how hard one tries. The adjustment of the social structure should proceed strategically and go beyond agriculture and rural areas. We should change the current situation of China being both an industrialized country and a peasant (absolute majority) society by letting a considerable number of farmers become urban residents and workers in the secondary and tertiary industries. Such adjustment has been proven by the practice of various countries, and is consistent with the general pattern of historical development. This is true in countries with fewer people and more land (such as the United States and Canada),

34 A new situation and new tasks as well as with countries with more people and less land (such as Japan, Korea, and Western European countries). One of the 10 indicators of modernization proposed by the American professor Alex Inkeles and recognized by the international sociological community is that in a modernized country, the agricultural labor force should not exceed 30% of the total labor force in the country. The household registration system has reached the point that it must be changed. The household registration system which creates the urban and rural separation is the main obstacle that confines farmers to rural areas. Since the reform and opening up, voices calling for the reform of this rigid system are increasing. Since the 1990s, departments of public security, institutional reform, and civil affairs have held many meetings to discuss the drafting of plans for reforming the present irrational household registration system. But no reform scheme has ever been put forward since it involves the interests of urban areas, various departments, and strata, and faces the problems of different understandings arising from them. In the late 1980s, especially under the trend of great economic development after 1992, going along with the needs of urban development, a large number of farmers flocked to cities to work and do business, creating enormous amount of wealth for the cities where they reside. The work they do is the heaviest, hardest, and most dangerous, but their wages and labor insurance benefits are very low. Practice in various regions has proved that the economic prosperity of a region is directly proportional to the number of migrant workers employed. But because of the restrictions of the household registration system, migrant workers who have worked in the cities for over 10 years are still migrant workers, no matter how hard they work and how well they perform. As soon as there are political and economic disturbances, migrant workers are the first ones to be laid off. With the economic readjustment in recent years, the number of migrant workers has been reduced to less than 50 million. Recently, Beijing, following Shanghai, issued a regulation limiting the use of migrant workers in 103 occupations. At the most, the number of migrant workers in Beijing amounted to 3.3 million. Now there are fewer than 2 million. In recent years, China has clearly accorded national treatment to foreign and overseas workers and businessmen. Why should we often apply the policy of favoring some and discriminating others to our fellow countrymen? This is obviously not in line with the requirements for the development of the market economy. Over the past 10 years, tens of millions of migrant workers have made great contributions to the cause of socialist modernization, and also paid a huge price. Some work units that employed migrant workers ruthlessly exploited them economically and treated them harshly. Taking the country as a whole, handling such a huge workforce with a recruitment method that makes them come when called and go when unwanted can neither build up a well-trained, skilled, and disciplined workforce, nor produce the cadres required. As migrant workers live a life of migrant birds, their mobility is disorderly, irregular, and unorganized, inevitably causing all kinds of social problems, putting great pressures on the departments responsible for transportation, public security, and civil affairs, and making them pay very high social costs. The tide of migrant workers makes it clear that the

A new situation and new tasks 35 household registration system has come to the point where change is no longer optional. Change the situation of “urban-rural separate governance and one country, two policies,” and build a unified socialist market economic system. Since the 1950s, China has gradually built up a system of planned economy and introduced separate urban and rural governance and one country, two policies (城乡分治，一国两策). In many areas, one policy is implemented in cities and another in the countryside. Over the course of decades, it has gradually solidified. This together with the household registration system and the system of status as the distinguishing criteria give rise to the pattern of one country, two different policies. In the economic sphere, with respect to ownership and patterns of circulation and exchange, distribution, employment, and taxation, the policies towards urban residents and farmers are all different. Take employment, for example; before the reform, the government assumed full responsibility for the employment of the urban labor force, but when it came to the rural labor force, those who had land were regarded as being naturally employed. The government made no arrangement. The labor authorities of the government dealt only with the employment of the urban labor force, and had no function for managing and providing employment for the labor force in rural areas. In the social sphere, in terms of education, health care, labor protection, social security, pension, and welfare, the policies for urban and rural areas were also different. In education, for example, so far as the nine-year compulsory education was concerned, the educational facilities of primary and secondary schools in urban areas were established by government funding, whereas the educational facilities of rural primary and secondary schools were to be built by funds raised in the villages. Hence, educational fund-raising became a great burden for farmers. Electric power, roads, water supply, postal service, and telecommunications were owned by the whole people and directly managed by the relevant departments of the state. But here, as well, two different kinds of policies were implemented in urban and rural areas. For example, power supply lines and facilities at the levels of administrative villages and below were built by funds raised in the villages. Farmers had to pay themselves to bring electricity to their homes. The different ways of managing urban and rural affairs were also reflected in the prices of electricity. Same electricity, but different prices. Farmers had to pay to bring electricity home, and the electricity price they paid was several times higher than that in cities. The issue of electricity pricing has caught the attention of relevant departments. In recent years, large-scale upgrading of rural power grids has been carried out in the countryside, in an effort to create the conditions for solving this problem. For another example, in sectors such as water supply, road traffic, postal service, and telecommunications, the same strategy of “one country, two policies” was adopted. The result was that, on the one hand, farmers paid more money and suffered from the policies, and, on the other hand, the development in these undertakings was restricted. The urban and rural administrative divide and one country, two policies was formed step by step under the centralized planned economic system. The state

36 A new situation and new tasks then needed to concentrate its efforts on industrialization. There was no alternative but to adapt to the shortage economy at that time. But this was done at the expense of farmers. This system of separate governance confined farmers to the countryside, suppressed their initiatives, and caused stagnation in agricultural production, leading to more shortage in the shortage economy. As a result, the more serious the shortage, the more emphasis was laid on the system of separate policies in urban and rural areas, forming thereby a vicious circle. After the reform and opening up, rural areas took the lead in the reform, which aroused farmers’ enthusiasm for production, greatly promoted the development of agricultural production, and solved the supply problem of agricultural products. But later on, when the reform came down to the interest relations between urban and rural areas, it met with great difficulties. Some scholars have pointed out that current agricultural problems lie outside of agriculture. Rural problems lie in the cities. To solve the problems of agriculture and rural areas, we must go beyond agriculture and step outside of rural areas. The system of “separate governance in urban and rural areas and one country, two policies” must be changed. The 3rd Plenary Session of the 14th CPC Central Committee explicitly proposed to build a socialist market economy. From the practice of recent years, the transition from the planned economy to a socialist market economy has become the general trend. Practice in various countries has proved that in order to build a market economic system, the pattern of urban-rural separation, departmental segmentation, and regional blockades must be broken. Only in this way can we build a large and unified national market. However, we still face the problem of “separate urban and rural governance and one country, two policies” at present, which is obviously not conducive to the construction of a socialist market economic system and to the creation of a large unified urban and rural market. We must be determined to remove the obstacles in our understanding and interest patterns and continue to deepen the reform. We must gradually eliminate all kinds of barriers between urban and rural areas and realize the integration of urban and rural industrial structures, setting up an industrial structure system with both reasonable division of labor and coordination. We should gradually realize the integration of the labor market, so that urban and rural labor forces can break the bonds of status and flow smoothly, human resources can be most reasonably allocated, economic benefits maximized, and a new generation of high-quality labor force be created. We should gradually set up an integrated national system of urban and rural education and strengthen the basic education, so that excellent young people in urban and rural areas can receive good education and training. In terms of electric power, transportation, postal service, telecommunication, and water supply, integrated urban and rural networks and systems should be built up step by step, so that social mobility and the flow of logistics and information between urban and rural areas across the country can happen unimpeded. We should, step by step, build up an integrated urban-rural social security system and gradually change the current completely different modes of social security in urban and rural areas. Needless to say, the social security system of “one country, two policies” has been formed gradually

A new situation and new tasks 37 over the past decades, and it is very difficult to reform it, but the goal of an integrated social security system for both urban and rural areas should be made clear, and the two different systems should be gradually connected and drawn close. The two systems can no longer be built separately along the line of the urbanrural divide. A unified national social security system is not only a guarantee for the long-term peace and stability of the country, but also a guarantee and driving force for the modernization of agriculture. Overcome the two currently existing non-benign cycles of unbalanced supply and demand of commodities, and the troublesome relationship between urban and rural areas; we can still draw on the successful experience of getting out of economic difficulties by first activating the rural market in the early 1980s. In recent years, China’s economy has witnessed the problems of a sluggish market, declining economic growth rate, continuous fall of prices, and deflation. Although the government has adopted a proactive fiscal policy, the effect is still not notable. The reasons are certainly manifold. The purchase power of farmers who account for 70% of the total population is decreasing year by year since 1997. Instead of expanding, rural markets are shrinking with each passing year, which has led to the erosion of the basis for the development of the market and industry. In my view, these are the main problems encountered in today’s economic development. It can be said that we are suffering from the “urban-rural syndrome.” Therefore, it will be difficult to solve the problems if we talk about urban development only in terms of cities and the development of industry only in terms of industry. Moreover, some measures taken have been detrimental to rural development. At present, there are two negative cycles in China’s economic and social life that are pressing on us. The first cycle is the imbalance between supply and demand of commodities. Currently, there is a general surplus of major industrial and agricultural commodities, causing difficulties in sales, the sluggishness of the market, and the decline of enterprises’ willingness to invest. These, together with the reluctance of banks to lend, have led to a decrease of total domestic investment. Enterprises are stagnant, with insufficient operating rate, and wage expenditure decreases. Some enterprises have to lay off workers and even close down. A large number of employees lose their jobs, which eventually leads to the decline of residents’ purchasing power and consumption. Of the total products in China, 85% are purchased through investment and household consumption. Right now, there are problems with both of these aspects. Consequently, a large percentage of the total products cannot be sold, forming a negative cycle. The second cycle is the troubled relationship between urban and rural areas. At present, urban-rural interaction is trapped in a non-benign cycle. First came the urban economic recession. Commodities were piling up, and enterprises cut down the production and laid off workers. Local governments discriminated against migrant workers. Due to the excess production capacity of some commodities, the government proposed to close, merge or transform 15 small industries. Small industries in rural areas were the first to bear the brunt. According to the statistics of the Bureau of Township and Village Enterprises, 55,000 such enterprises in 11 provinces (cities) were forced to shut down through administrative means during the first half of 1999.

38 A new situation and new tasks Millions of rural migrant workers returned to the countryside. With the fiscal and tax reform in recent years, power and finance are centralized. The financial resources and income of provincial and prefectural governments and above have been strengthened and increased, whereas the financial situations of the counties (county-level cities) and below, especially townships (towns), are generally difficult, which aggravates the burdens of farmers and rural enterprises. Therefore, in recent years in rural areas, higher agricultural output has not been accompanied by higher income. Township and village enterprises are declining, and migrant workers are returning to their home villages. Tax burdens become even heavier. Rural economy runs into difficulties. With rural economy in recession, farmers have no money to purchase means of production and daily necessities, their purchasing power declines, and rural markets shrink. Neither do farmers have money to go to cities for shopping and consumption, which further aggravates the urban recession and leads to the non-benign cycle of urban-rural relations. These two negative cycles are, of course, interrelated. In the final analysis, they boil down to just one, namely at the new stage of economic development, a relative overcapacity in agricultural and industrial production is accompanied by inadequate investment and consumer demands in urban and rural areas, in this way forming a vicious circle. What I want to emphasize is that in China at the present stage, the number of surplus laborers is particularly large, the shortage of funds particularly serious, and the gap between urban and rural areas particularly wide because of the long-term implementation of “separate urban and rural administration and one country, two policies.” The problems in these three areas have been exacerbated by the improper urban and rural policies in recent years. How can we break these two negative cycles and get out of the current economic slowdown? Our experience of solving the economic problems and opening up a new situation in the early 1980s are worthy of reference – only, the problem then was how to accelerate the development of productive forces and solve the problem of the overall shortage of agricultural and industrial products, while our problem now is to stimulate demand and solve the problem of surplus industrial and agricultural products. In the early 1980s, the basic policy and measures we adopted were, among many contradictions, to first solve rural problems and carry out reform in rural areas. In the face of financial difficulties, the purchase prices of agricultural products were raised substantially to arouse the enthusiasm of farmers who accounted for 80% of the total population. With years of good harvest, the food problem was solved in just a few years. Farmers became rich first, their purchasing power increased greatly, and the rural economy was enlivened, which also led to the prosperity of the urban economy and greatly promoted the development of the national economy as a whole. Now we are once again facing the problem of stagnant urban and rural markets. From a comparative prospective, we can still draw on the experience of first invigorating the rural market. Farmers account for 70% of the population. We should bring into full play the initiatives of farmers through appropriate policies and create a dynamic and prosperous rural market by greatly increasing their

A new situation and new tasks 39 consumption and investment capacities. In this way, the start-up investment will not be much. Rural areas are a market with great potential, but it requires painstaking efforts to foster and develop. First, proper policies should be adopted, and second, start-up investment should be made. A few years ago, authorities concerned already put forward the proposal to develop the rural market and expand domestic consumption, but it was only a verbal and paper discussion with no proper follow-up policies. The result was discussion without action and noticeable effect. Not long ago, professor Lin Yifu from Beijing University proposed that: the government should use financial power to launch a new nationwide rural movement with the focus on bringing safe drinking water and electricity to rural areas, expanding and upgrading rural road networks to speed up the construction of rural infrastructure, through which to further stimulate domestic demand and get out of the economic difficulties. Professor Lin’s proposal is very valuable. He pointed out the essence of the problem and the way to solve it.

Start a nationwide campaign to build a new socialist countryside centered on the development of small towns A new approach should be adopted to solve the new problems that have emerged at the new stage and in the new situation. After 20 years of reform and development, China’s economy has entered a new stage, transforming from a shortage economy into a period of relative surplus of most industrial and agricultural products, and from a planned economy to a market economy. The basic framework of a socialist market economy has been gradually formed. People’s living standard has been greatly improved. It has moved from a subsistence level to enter a stage of being moderately prosperous. The national economy is moving from industrialization to a direction of simultaneous development of industrialization and urbanization. The level of urbanization has been raised from 17.9% in 1978 to 30.4% in 1998. The rapid economic development has brought about changes in the social structure. China is moving towards a coordinated development of the economy and society. However, during the course of entering the new stage, there have emerged the problems of the two non-benign cycles, overproduction and inadequate demands, and the troubled relationship between urban and rural areas. In order to get out of the difficulties, it is necessary to formulate appropriate policies to launch a new nationwide campaign to build a new socialist countryside centered on the development of small towns. This is an important step to expand domestic demand and to find ways of utilizing the surplus products and laborers and in this way get out of the present economic difficulties. With 20 years of economic construction, whether in terms of material wealth or organizational experience, it is now possible to launch a nationwide campaign to build a new socialist countryside centered on large-scale development of small

40 A new situation and new tasks towns. Over the past 20 years, we have gained considerable strength and experience of relying on various small towns for absorbing and making arrangements for the rural population. Different regions especially the economically developed areas all have a number of successful examples of small towns promoting agriculture and rural development in the surrounding areas. As long as our policy is correction and guidance properly given, there are conditions to launch such a nationwide campaign to build a new countryside. In the light of the successful practice of modern countries in dealing with urbanrural relations, we should also carry out this activity. Japan, South Korea, and Taiwan Region, when industrialization and urbanization have reached a certain level, each launched a campaign to build a new countryside on a national (regional) scale. The state (region) tilted towards rural areas in terms of manpower, material resources, and policies. Cities supported rural areas to carry out rural infrastructure constructions, narrow down the gap between urban and rural areas, and coordinate urban-rural relations. Great successes have been achieved. Take South Korea, for example; after more than 10 years of rapid industrial growth, the central government invested huge sums of money in the 1970s and carried out the campaign to build a new countryside. The government allocated 330 bags of cement and other materials free of charge to each village to carry out infrastructure construction such as water conservancy, roads, water supply, and public buildings. It played an important role in pushing forward the development of rural economic and cultural undertakings, promoting social stability and the common prosperity of urban and rural areas. Industrialization in China has been going on for almost 50 years, and 20 years have passed since the reform and opening up to speed up industrialization. Considering the bifurcated urban-rural social structure, the persistent “separate urban and rural administration and one country, two policies,” and the continued widening of the gap between urban and rural areas, we can be certain that in a few years, the economic and social problems accumulated in rural areas will be even more serious than those in the cities. Therefore, it is both necessary and timely to launch a nationwide campaign to build a new countryside focusing on the development of small towns in the near future. If this campaign can be carried out in an organized and step by step way with leadership, it will be glad tidings for 800 million farmers, which can once again bring the initiatives of the great masses of farmers into play and solve the current economic and social problems in rural areas. At the same time, it will play a positive role in forming a unified national market, promoting the development of the urban economy and the common prosperity of urban and rural areas. According to the current situation in China, to carry out such a nationwide campaign to build a new countryside in no doubt requires first, reform; second, investment; and third, meticulous organization. Merely putting up a slogan and sending a document will not be effective.

Objectives of carrying out the new rural movement At the present stage, the main objectives of the nationwide campaign to build a new socialist countryside are to adjust the bifurcated social structure which has

A new situation and new tasks 41 become an obstacle for the development of productive forces, change the situation of “separate urban and rural administration and one country, two policies,” and establish an integrated urban-rural market for the whole country. In order to realize these goals, we must first reform and strategically adjust the relationship between urban and rural areas. Let the spirit of reform take command when carrying out the campaign for the construction of a new socialist countryside. First, the household registration system must be reformed, gradually liberalized, and changed step by step to an internationally adopted system, ultimately realizing the rights of citizens to move freely between urban and rural areas, between cities and between villages, and achieving the unhindered flow of talents, so that labor resources can be rationally and effectively allocated according to the requirement of market economy. The current household registration system was formed step by step over decades, and will take a considerable process to change. We can start with the reform of the registration systems in small towns (including counties), according to the decision of the 3rd Plenary Session of the 15th CPC Central Committee. Let some farmers enter the small towns first and then gradually liberalize the systems there. The ways and means of reform can be decided by the provinces, municipalities, and autonomous regions themselves according to the actual local conditions. The methods may be varied, the steps may be fast or slow, but the ultimate goal achieved will be the same. Second, in accordance with the requirements of the socialist market economy and through reform, we should let farmers become independent commodity producers with true autonomy in production, operation, exchange, and circulation. We should continue to deepen the reform of the circulation system for agricultural products, so that the administrative and operational functions of the grain, cotton, and hemp systems can be separated. We should encourage and support farmers and their cooperative organizations to enter the distribution sector, accelerate urban and rural exchanges, and form a large unified urban-rural market. Third, we should gradually solve the practical problem of “one country, two policies” in areas such as electric power, roads, post and telecommunication, and tap water to realize equal treatment and equal price between urban and rural areas and integrated urban-rural management. In this regard, the sector of electric power has taken the lead. Through upgrading the national electricity grid, it implemented unified urban-rural management and the principle of same electricity, same price. In 1999, the average price of electricity in rural China was reduced by 0.1 yuan per kilowatt, which reduced the expenditure of farmers by 23 billion yuan. It was generally welcomed by farmers, who regarded it as a virtuous policy to enrich the people. Fourth, we should gradually build up a unified system in the spheres of education, health care, culture, books, and other social undertakings through reform. For example, there is a great difference in education between urban and rural areas. The difficulty in realizing the nine-year compulsory education lies in rural areas. The reason is not that our country’s national strength is inadequate, but that the current educational system of urban-rural divide is unreasonable. Rural areas are poor, but the construction of school buildings, purchase of equipment, salaries of

42 A new situation and new tasks teachers and staff, and daily expense of rural education are all borne by townships and villages. This is clearly unreasonable. Fifth, the township (town) level financial system that has been established throughout the country is open to question. In the economically developed regions, the secondary and tertiary industries have been well established. The stable tax and financial sources from these industries are favorable for expanding the autonomy of the townships (towns) and the development of local economic, social, and cultural undertakings in these regions. But for the vast rural areas in the central and western regions, and for regions where the secondary and tertiary industries are not developed or are just beginning to develop, the conditions are lacking for setting up township (town) finance. As mentioned earlier, the expenditure of a township (town) is rigid. If there is no relatively stable tax and profit revenues from the secondary and tertiary industries, it is far from enough just to rely on the financial and tax revenue from agriculture. In just a few years since the introduction of the township financial system, many townships (towns) in the central and western provinces (regions) are already heavily indebted and unable or often unable to pay salaries on schedule. Various unwarranted charges and fund-raising cannot be stopped, despite repeated bans. The burden on farmers becomes heavier. This kind of financial system is very unreasonable. It is practically the dumping of financial burdens by the governments above the county level and transferring them to the grassroots level. This is not only unconducive to the development of rural economy, especially the development of secondary and tertiary industries in rural areas, but is also very unfavorable for the development of rural educational and cultural undertakings, the improvement of the relations between the cadres and the masses, and between the party and the masses, as well as the achievement of social stability in rural areas. These are the reasons why this financial system warrants study and reform. To carry out a nationwide campaign for the construction of a new socialist countryside centered on the building of small towns requires a certain input of labor, material, and financial resources. Since the reform and opening up, China’s urban and rural construction has undergone fundamental changes. Since 1992, Beijing, Shanghai, Guangzhou, Shenzhen, and eastern coastal cities such as Dalian have truly achieved a small change in one year and a big change in five years. They compete to create international metropolises. Moreover, many provincial capital cities and prefectural cities imitate each other, pursuing the grandiose and craving after foreign things. In contrast, townships and the levels below, especially townships (towns) in the central and western provinces (regions), are facing financial difficulties due to the economic recession in recent years. Many townships have run into debt. The 3rd Plenary Session of the 15th CPC Central Committee made the decision to develop small towns and reform the household registration system to attract farmers into cities and towns. More than one year has passed, and the development of small towns in the central and western provinces is unsatisfactory, and farmers are not eager to enter. The reasons are manifold. One of them is that economic recession, backward infrastructure, and weak cultural and educational

A new situation and new tasks 43 undertakings in the cities and towns in these regions have made them unattractive to farmers. The 3rd Plenary Session of the 15th CPC Central Committee put forward the policy of “small towns, big strategies” (小城镇, 大战略). One of the purposes is to transfer the surplus agricultural labor force on a large scale. Only by reducing the number of farmers can they be enriched. This has become a common view at all levels. The first step is to build small towns and make them attractive for farmers to run enterprises, seek employment and do business there and to become urban residents. There are at present 45,462 townships and towns. Among them, 19,060 towns are administrative units and 2,126 of them are the seat of county or county-level city governments. If after 5–10 years of reform and development, the average size of the population in the existing 2,126 counties (county-level cities) could reach 50,000, that of 16,934 administrative towns (建制镇) could reach 10,000 and that of 26,402 townships where the township governments are located could reach 5,000, then adding the urban population in 231 provincial- and prefectural-level cities in the whole country, the number of urban residents will rise to 600 million in 2010, about 45% of the total population, which is equivalent to the 1995 world average level of urbanization. Right now, China’s urban population is 380 million. If we can increase the urban population by 22 million annually in the future, it will be more than twice as fast as the annual increase of 9.69 million in the 1990s. This can only become reality by implementing the policy of “small towns, big strategies.” Therefore, the campaign for a new countryside should focus on the development of small towns. We should first develop small towns through reform and planning and transfer 150–200 million farmers to these small towns to work in the secondary and tertiary industries. This alone will increase the income of farmers who stay in the countryside by 20–30%, and the chess game will come to life. In the meantime, we must build up the countryside, so that the production and living conditions of farmers will be gradually and completely improved. To carry out the new rural movement centered on the construction of small towns, we should arouse the enthusiasm of farmers through reform and policies, and rely on farmers’ own strength to carry out the construction of small towns and new rural areas. The government should also provide the necessary start-up capital and support in terms of finance and credit. This is especially important for those economically less developed and underdeveloped townships and towns. To develop small towns and a new countryside requires the construction of infrastructure on a certain scale, such as roads, sewers, tap water, bridges, wharfs, water conservancy systems, public buildings, and so on, all of which need cement, steel, glass, and other building materials. There is now an overstock of these industrial products. Drawing on the experiences of South Korea and other countries, the government can allocate these products to townships and rural areas either free of charge, with minor compensation or in the form of credit sale. In this way, we can start the construction of small towns and a new countryside, and give an outlet for the overstocked commodities, as well as expand in many ways domestic demand.

44 A new situation and new tasks It is a good measure that can serve multiple purposes. In so doing, we can get the large domestic market in gear with only a small amount of capital and credit, achieving the result of accomplishing a great task with little effort. The government has formulated a strategy for developing the western region in China and heavy investments will be made. The construction of small towns and a new countryside in the western region should be incorporated into the planning of the grand development strategy because prosperous small towns and a thriving countryside is not only one of the targets of this development strategy, but also the strategic support for western development. The state is working on the Tenth Five-Year Plan and the plan for 2010. Such contents as adjusting urban-rural relations, gradually changing the pattern of the bifurcated social structure, reforming the household registration system of urban-rural division, and launching the campaign for building a new socialist countryside centered on the development of small towns, should be included in the plans and programs. Enhancing the organization and leadership of the campaign to build a new socialist countryside is centered on the development of small towns. This campaign involves the adjustment of urban-rural relations and the reform of the household registration system; the circulation system of agricultural products; the management systems of electric power, transportation, postal and telecommunication; and the systems of education, health care, cultural undertakings, and finance. It is not only a major reform movement, but also a large-scale construction movement. It concerns the overall situation of reform, development, and stability, and requires top-down and bottom-up integration. It requires organization and leadership, and should proceed step by step. It needs careful planning and careful organization. Based on China’s previous experiences in organizing large-scale reforms and construction, and drawing on the experiences of similar construction campaigns abroad, a national authoritative steering group should be formed to make comprehensive plans, to publicize and mobilize, and to organize the implementation under the leadership of the Party Central Committee and the State Council. We can select a number of counties (county-level cities) in different economic regions to conduct pilot projects and gradually push forward after gaining experience to achieve the objectives of this reform and construction campaign in 5–10 years.

Notes 1 This article was published in Qiushi, 2000, issue 18. 2 Editor’s note: Jin (斤) is a unit of weight used in China. One jin is equivalent to one-half kilogram. 3 Editor’s note: since the reform and opening up, against the background of vigorous development of township and village enterprises (TVEs) nationwide, farmers can leave land cultivation and animal husbandry to work and earn wages in local TVEs. The expression “leaving the land but not the home village” generally refers to this phenomenon. Later, the expression of “leaving the land but not the home village; entering factories but not cities” (离土不离乡, 进厂不进城) was coined. The latter part of the expression refers to the phenomenon that farmers can work in enterprises in cities and

A new situation and new tasks 45 towns, but their household registration status cannot be changed. They are not urban residents with urban household registration status. 4 Editor’s note: the “three reserves” refer to the money retained for the payment of contributions to provident funds, public welfare funds, and management fees, and the “five fees” are education surcharge, family planning fee, militia training fee, special care and compensation fee, and private transportation fee. These are the so-called legitimate fundraising (合法集资) imposed by the government on farmers.

3

Accelerating the reform of the current household registration system1

The current household registration management system was formed and fully developed in the mid- and late 1950s in order to meet the requirements of the planned economy. It grew out of the bifurcated urban-rural structure, and at the same time solidified it. One may say that, under the economic and social conditions at that time, we had no alternative but to set up such a system. In an era of shortage economy, it played an important role in the implementation of the policy of “first food and then development.” The problem is that many special social functions were subsequently attached to the household registration system. For example, in the period of economic difficulties, there was a shortage of means of subsistence. The government distinguished between urban and rural populations through the household registration system and used entirely different standards to distribute food stamps, vouchers for cloth, sugar, and so on. Later on, children’s schooling, youth employment, resettlement of demobilized soldiers, housing allocation, medical care, and old-age pensions all came to be linked with the household registration. Non-agricultural registered urban residents and agricultural registered rural residents became two separate identities. The former enjoyed special preferential treatment, while the latter could hardly enjoy these benefits. After the 1960s, the government strictly restricted the change of agricultural registration status to non-agricultural registration status through a series of regulations and documents. For example, in 1961, in order to verify the urban population in the country and to implement food rationing, the government stipulated that rural and urban populations should have separate statistics and the non-agricultural population be included in the annual population report. Later, the Regulation of the Ministry of Public Security on Handling the Change of Residence Registration proposed to tighten the control on the conversion of agricultural registration to non-agricultural registration and set the quota for rural-tourban status change at 1.5% of the urban population. The state adopted planned management of the household registration. The right of examination and approval of rural-to-urban status change was vested with the people’s governments of provincial-level cities and above (including prefectural administrative offices). Counties and county-level cities had no such right. The current household registration management system, unique to China, strictly distinguishes between urban non-agricultural population and rural agricultural population. The two statuses are

Reform of the household registration system

47

entirely different, forming the pattern of “rural-urban bifurcation and one country, two policies”; that is, one policy for cities and urban residents, and another for rural areas and farmers. After 1978, a series of economic and social system reforms have been carried out. Great historic changes have taken place in the whole economy and society. After the party’s 14th National Congress, the transformation from the planned economy to a socialist market economy was clearly proposed. To date, a socialist market economy has been initially established. Originally established in order to meet the requirements of the planned economic system, the household registration system has undergone some reforms over the years, such as allowing the rural population to seek employment and live in small towns, rural residents who fulfill certain requirements to apply for permanent residence in small towns, and those who have settled down in small towns to enjoy the same opportunities and treatment as local residents with respect to education, employment, food and oil supply, social security, and so on. However, there is no fundamental reform of this household registration management system of urban-rural division. It still seriously restricts social mobility, which is an inevitable requirement for the construction of a socialist market economy. It still hampers the healthy development of the productive forces and causes a series of social contradictions and problems. First, the current household registration system cannot meet the requirements for the development and improvement of the socialist market economic system. Numerous surplus laborers in rural areas are confined to the countryside by the household registration system. The market cannot play its important role in allocating resources. In 2000, the primary industry accounted for only 15.9% of the country’s GDP. But the labor force employed in the primary industry amounted to 50% of the total employment. This is the fundamental reason why farmers’ income cannot increase. Second, the current household registration system hinders the development of urbanization. Industrialization in our country has reached an intermediate level of development, but urbanization rate was only 31% in 2000 (the world urbanization rate was 46% in 1996). Urbanization lags seriously behind industrialization, causing an imbalance between urban and rural areas. This is the main cause of the current uncoordinated economic and social relations in China. Cities are the carriers of the tertiary industry. The development of the tertiary industry cannot be achieved without the development of cities. The tertiary industry accounted for only 33.2% of the GDP in 2000, lower than the 40% average level of developing countries. In the developed countries, it has reached more than 70%. Without the development of the tertiary industry, hundreds of millions of laborers cannot be fully employed, which will impede the healthy, coordinated, and rapid development of China’s economy and cause difficulties in people’s production and life. Third, the current household registration system solidifies the bifurcated urbanrural social structure and makes the unhindered movement of people and flow of goods, services, and information between urban and rural areas according to the requirements of the socialist market difficult, creating in reality the situation of one country, two societies and two markets with uncoordinated urban-rural

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Reform of the household registration system

relations and the widening gap between urban and rural areas. In 1978, the income ratio of farmers and urban residents was 1:2.37. In 2000, it increased to 1:2.79. Farmers now account for 70% of the total population in China, but only purchase 39% of the consumer goods. This is the main reason why domestic demand is weak and most industrial products cannot be sold at present. Fourth, the current household registration management system is the root cause of social problems such as the tide of migrant workers. The migrant workers’ tide has been surging for more than 10 years. The rise and fall of the tide have put great pressure on authorities of transport, public security, and civil affairs, causing many social problems and contradictions. This cannot go on year after year. To fundamentally solve the problem, the current household registration system must be reformed. Therefore, we suggest that the State Council charges relevant departments such as public security, civil affairs, and labor protection with the task to start the reform of the household registration system, working out a new system to meet the requirements of the socialist market economy and to speed up the development of various economic and social undertakings in socialist modernization. Specific suggestions are as follows: 1

2

3

Abolish the benefit-granting functions attached to the household registration management system and remove the regulations of agricultural and nonagricultural household registration unique to China, so that people in urban and rural areas are equal before household registration. Establish a unified registration management system that permits the conversion of residence registrations. Any individual or family with a stable source of income or proper occupation in one place is qualified to get registered there, obtain residence permit or temporary residence permit, and have the same rights and obligations as residents in accordance with the law. This is to gradually realize the freedom of movement of citizens proposed in the 1954 Constitution. The free flow of labor and talent is a requirement for the development and perfection of the socialist market economy. The new registration system should speed up credential management and replace the system of residence booklets with resident identity cards and birth certificates. The current household registration system has been implemented for decades, and involves the interests of all sides and management relationships. The reform of the system will be very difficult and requires leadership. It should be conducted step by step, and proceed by regions and in stages. One or two provinces or regions can be selected to launch trial projects and push ahead with all-round reform after gaining experience. No matter how, the current system must be reformed, the earlier the better, because it has become a bottleneck in the development of various undertakings of socialist modernization.

Note 1

This article was published in Rural Economy in China, 2000, issue 6.

4

The program of building a new countryside of Jiangsu province should be halted immediately1

On February 19, 2006, the Daily Telegraph of the Xinhua News Agency posted a message: “Jiangsu Province will go all-out to carry on the town-village distribution program. According to the plan, 240 thousand natural villages in the province will be reduced to more than 40 thousand.” A person concerned at the Provincial Department of Housing and Urban-Rural Development said: At present, the rural population in Jiangsu is 40 million, which is distributed in 240 thousand villages. The natural villages are small in scale with a low population density. [. . .] Residence dispersion has resulted in waste of land, which is unconducive to both infrastructure and environmental construction in rural areas. Only concentrated residence can facilitate the construction of public infrastructure such as drainage, communication, roads, sewage, and garbage disposal in an integrated manner. This is an obvious violation of the Central Committee’s policy of soundly promoting the construction of a new socialist countryside. It is seriously divorced from reality, is contrary to the wishes of the broad masses of farmers, and will do harm to their interests. The program is just a figment of the imagination of a few people. It is very disadvantageous to the building of a new socialist countryside currently under way. If such a program of making decisions for farmers is carried out, it would not only go down badly with the 40 million farmers in Jiangsu province, but also mislead the construction of a new countryside across the country, cause trouble, and lead to serious consequences. Therefore, the program should be stopped immediately through explicit order. First, to build a new socialist countryside, we must have an overall plan for urban and rural economic and social development, and persist in taking economic construction as the center. We must promote rural economic, political, and cultural construction and party building in a coordinated manner. We should promote the development of production in rural areas along a path of civilized development featuring sound ecology and an affluent life. At present, the priority is to promote the development of productive forces in an all-round way. Plans have to be made for this. Plans should also be made to carry out production and construction, and increase the income of farmers in one’s own province, county, township, and

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The program should be halted immediately

village. In the 20-character guideline for the construction of a new countryside, increasing production and achieving affluence in life are the first, the most crucial, and the most important. They are also the starting point and end result of building a new countryside. Only when the economy develops, and the income of farmers rises, can the development in other aspects be accomplished. Jiangsu Department of Housing and Urban-Rural Development intends to carry out such a program already at the beginning of the new rural construction. The so-called program of abolishing and merging the natural villages is a move starting at the wrong end, and obviously runs counter to the Central Committee’s policy concerning the construction of a new socialist countryside. Second, building a new socialist countryside is a program that will win people’s hearts and bring benefits to 900 million farmers. We should start with what farmers care most about, demand most urgently, and most directly related to their interests. We should constantly bring tangible benefits to and motivate farmers to actively participate in the building of a new countryside. This is an essential guarantee for achieving success of this policy. Now, the program has just started. Jiangsu Department of Housing and Urban-Rural Development has already made it clear to “go all-out to carry out the town-village distribution program,” and spread words that “240 thousand natural villages in the province will be reduced to more than 40 thousand.” What would the 40 million farmers think when such a plan is conveyed to rural areas? Before obtaining any tangible benefit, they are already faced with the coming dismantling of their houses inhabited for generations, occupation of their residences inherited from ancestors, and moving to the so-called concentrated residential areas. Chinese farmers have always had the traditional habits of being unwilling to leave a place where one has lived long (安土重迁) and gold nest, silver nest, none is as good as one’s own nest of grass (East, West, home’s best). Can farmers accept such a plan of large-scale relocation? If this plan is the first move of building a new socialist countryside in Jiangsu province, will the broad masses of farmers be positive about it? Will they actively participate? This so-called program, which runs counter to the wishes and harms the interests of the overwhelming majority of the farmers, will directly dampen their enthusiasm for participating in the building of a new socialist countryside. Once implemented, it won’t be a program that wins the hearts of the farmers and brings benefits to them, but rather one that will hurt them and directly harm their interests. Third, building a new socialist countryside and achieving the goals of development in production, affluent life, civilized styles of living, clean and tidy villages, and democratic management, the contents are comprehensive and rich, covering all aspects of building a new socialist countryside. We should stick to the right direction, obtain ideological clarity, focus on the first priorities, steadily make solid progress, and do a good job of handling this important matter that has a bearing on the overall socialist modernization drive. It should be made clear that building a new socialist countryside is by no means the construction of new villages, nor is it just to make villages look better. It is even less to give primacy to the improvement of village appearances. In some regions at present, there are already signs and a tendency to misinterpret the construction of a new

The program should be halted immediately 51 socialist countryside as the construction of the look and appearance of villages. Some have proposed that villages with fewer than 300 inhabitants should be dismantled or merged. Some townships with nearly 10,000 inhabitants are to be divided into four villages. One county of nearly 1 million farmers is drawing up a plan for building over 100 centralized residential areas. When this major issue of building a new socialist countryside was first discussed, some leaders feared that it would lead to an unhealthy trend of large-scale demolition and large-scale construction, and become a pretext for a new round of image projects. Now this unhealthy tendency has emerged in some rural areas. The program drawn up by Jiangsu Department of Housing and Urban-Rural Development is an indication of this rising trend. Imagine that this plan of merging 240,000 natural villages into 40,000 concentrated residential areas were actually implemented, what would it be like? The result would be that about five-sixths of the 10 million farmhouses (about 8.30 million households) among the 40 million farmers in Jiangsu province would be demolished and new houses would be built up in their place. Isn’t this unprecedented large-scale demolition and large-scale construction? Isn’t this demolition and reconstruction of basically all the houses of farmers, rural buildings, and rural culture that have been built on the 100,000 square kilometers of land in Jiangsu over the past 2,000 years? Those who have made such a program should really get out of their offices in Nanking, go to the villages and think about it carefully, whether your blueprint for building a new socialist countryside is in accord with the wishes of the broad masses of farmers. Is it in line with the policy of the Party Central Committee? Is it possible to implement it at all? Fourth, building a new socialist countryside is a huge ongoing project of systems engineering. In today’s China with diversified social interests, people from different strata have different attitudes and behaviors towards the construction of a new countryside. Judging from the message posted by the reporter from the Xinhua News Agency, we fear that the real purpose of the plan to demolish and merge 240,000 natural villages put forward by Jiangsu Department of Housing and Urban-Rural Development is not really to engage in the building of a new socialist countryside. Rather, the drinker’s heart is not in the cup. What they really have in mind is to occupy or expropriate farmers’ land! The land issue was mentioned twice in the more than the 400-word talk to the reporters by the person concerned from the Department of Housing and Urban-Rural Development. He said: Once the plan is put into practice, it will not only greatly facilitate rural infrastructural construction, but also save large amounts of land resources. Take Changshu City (常熟市) as an example. If the existing natural villages can be merged into 125 residential areas, 100 thousand mu of land could be saved. There are 67 counties (country-level cities) in the whole province. Estimated on the basis of the example of Changshu City, 4–5 million mu of land can be vacated. This is a huge resource, and also a wealth with a total value of over 1 trillion yuan. Some people have their eye on this wealth that belongs to farmers and the state, and thus come up with such a subjective and absurd so-called program of

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The program should be halted immediately

large-scale demolition and relocation. They do not think that if over 1 million people, 300,000 rural households, and thousands of natural villages in Changshu were really merged into 125 residential areas, would Changshu still be Changshu? Would it still be the Changshu of rivers and lakes south of the Yangtze River? Would there still be a new socialist countryside in Changshu City? As mentioned earlier, the starting point and objectives of building a new socialist countryside is to achieve the goals of development in production, affluent life, civilized styles of living, clean and tidy villages, and democratic management. As for the program put forward by Jiangsu Department of Housing and UrbanRural Development, if one would make a comment, I am afraid their starting point and objective is their interest in the 400–500 million mu of land resources. A few years ago, some cadres tasted the sweetness of “making money from land.” Jiangsu province has a large population with a limited amount of land. Available land resources for reclamation and occupation are already scarce, especially in the southern regions, so some people turned their eyes on farmers’ houses and courtyards. They tried to expropriate farmers’ land by driving them to concentrated residential areas through large-scale demolition and relocation. Isn’t this an act of deprivation of the farmers in Jiangsu? This is by no means the intention of building a new socialist countryside. This act of distortion should be corrected in time. Fifth, the purposes of building a new socialist countryside are to increase the income of farmers, improve their lives and circumstances, narrow down the gap between urban and rural areas, and coordinate urban-rural relations through the development of productive forces. These are the inevitable requirements of adopting a scientific outlook on development and the construction of a socialist harmonious society. In recent years, the party and the state have attached great importance to work relating to agriculture and rural areas, and made overall plans for urban and rural economic and social development. A series of policies supporting agriculture and benefiting farmers have been implemented such as abolition of the agricultural tax, increasing investments in rural areas and agriculture, and re-establishing the rural cooperative medical care system. These policies have won the heartfelt support of the broad masses of farmers. The situation in rural areas is good, and the rural society across the country is stable. Steadily forging ahead with the building of a new socialist countryside will make the situation in rural areas better and better. But building a new socialist countryside would be led astray, the hard-won good situation in rural areas would be destroyed, and the stability in rural areas endangered, if we fail to properly carry out the correct policy of the CPC Central Committee of building a new socialist countryside, fail to act according the laws of nature and of economic and social development, and fail to prioritize and capture the essentials or act recklessly; and if we implement programs of large-scale demolition and construction such as the one adopted by the Jiangsu Provincial Department of Housing and Urban-Rural Development and let a few cadres engage in image projects that waste both manpower and money. Just imagine, if the 240,000 natural villages were merged into more than 40,000 concentrated residential areas, according to the plan drawn up by Jiangsu Department of Housing and Urban-Rural Development, some 83% of the existing houses

The program should be halted immediately 53 and courtyards of rural households would be demolished and 83% of the farmers would have to move and vacate the houses and sites, so that a few people could make money from land and engage in vanity projects. Can the more than 33 million farmers in Jiangsu province accept this? On one side, there are the masses of farmers who want to defend their homes and interests, and on the other, a few cadres who want to seize their land to get rich and promoted. One side wants to protect, and the other wants to rob. One side has a lot of people, and the other has strong power. A serious struggle and conflict over land resources would become inevitable. From then on, rural areas in Jiangsu that have always been in the lead in all kinds of work would never be peaceful again. Sixth, in order to correctly carry out the policy of the CPC Central Committee on building a new socialist countryside and ensure that this important matter, which has a bearing on the overall situation, will be handled in a healthy and smooth manner with good results, we must organize and mobilize 900 million farmers and the broad masses of cadres to actively participate in the work. The authorities concerned should pay close attention to the progress of this enterprise, constantly investigate and study, constantly sum up experiences, and discover new problems. Not only should we popularize good experiences and models, but also discern and correct timely unhealthy tendencies in the course of implementing the policy, rectify the course, and make it develop healthily and smoothly. The program recently put forward by Jiangsu Department of Housing and Urban-Rural Development is unrealistic. It neither accords with the vital interests of the farmers, nor conforms to the general direction of building a new socialist countryside, and should therefore be halted immediately through explicit order.

Note 1 This was the author’s speech delivered at the plenary session of the Jiangsu delegation during the 5th Session of the 9th National People’s Congress in March 2002.

5

Towards a comprehensive, coordinated, and sustainable development of Chinese society1

The year 2003 is the first year of implementing and realizing the guiding principles of the 16th CPC National Congress. The economy continues to grow rapidly, various social undertakings have further developed, people’s living standards continue to improve, and the society is steadily changing for the better.

Comprehensive, coordinated, and sustainable development: the proposal and application of a new outlook on development The “Two Meetings”2 held in the spring of 2003 elected new leaders of the state and government; the process of new cadres replacing the old that started at the 16th CPC National Congress was successfully completed. Over the past year, the new party and government leadership have carried forward the work started by their predecessors and opened up new prospects for the future, made overall arrangements for the work at home and abroad, promoted the construction of a moderately prosperous society in all respects, displayed a good working style by demonstrating care for the people and by doing practical things, and have won the general recognition both at home and internationally. The new leadership group’s visit to Xibaipo (西柏坡) in early 2003 showed the determination of the new party and government leaders to inherit and carry forward the outstanding traditions of the party, to revitalize the Chinese nation, and to do a good job in advancing the cause of socialist modernization. In early 2003, the State Council issued a document on ensuring and maintaining the legitimate rights and interests of rural migrant workers. In view of the discriminatory practices of some work units and employers in deducting and withholding the wages of migrant workers and in areas of employment and children’s schooling, the State Council made clear instructions to put things right. The move was welcomed by tens of millions of migrant workers. In April, 2003, Su Zhigang, a college student, was detained for no good reason in Guangzhou. He was abused and beaten to death at the house of detention. After media coverage, the incident aroused public indignation. The State Council convened a special executive meeting and decided to abolish the regulation on detention and sending back unsettled rural people in urban areas and to provide

Towards development of Chinese society 55 relief service for vagrants and beggars. A bad policy was removed. All circles in society responded warmly. Before and after the “Two Meetings,” provinces, municipalities, and autonomous regions also completed the party and government leadership transition; the new leadership is full of vigor and vitality, and a new upsurge of construction projects has emerged in various regions across the country. A new round of readjustment and streamlining has been carried out among the ministries and commissions under the State Council. The reform of the governmental institutions in 1998 focused mainly on cutting down, merging, and streamlining. The new round of institutional reform in 2003 has mainly been devoted to functional transformation so as to meet the requirements of marketization and to strengthen the role of economic regulation and control, market supervision, public services, and social management. These include, for example, the abolition of the Economic and Trade Commission, the change of the State Planning Commission and the State Development Planning Commission to the National Development and Reform Commission, the merger of domestic and international trade, and the establishment of the state-owned Assets Supervision and Administration Commission, the China Banking Regulatory Commission, and the Electrical Monitoring Committee. Looking back at the practice of 1988, 1993, and 1998, the year of change of leadership is usually a year of rapid economic growth. In early 2003, there were also signs of rapid development. On the one hand, after the leadership transition, the new leading groups at all levels all required rapid progress. On the other hand, the adjustment of the national economy went on for many years, and the infrastructure and equipment updated through heavy investment in the previous stage were put into use and played a role. Moreover, the rapid growth of foreign trade as a result of the devaluation of the US dollar and the new consumption growth such as car purchases by the wealthier strata and the purchase of housing by residents also promoted rapid development. Economic growth in the first quarter of 2003 was 9.9%, an increase of three percentage points over the fourth quarter of 2002. The annual economic growth rate will reach more than 8%. After the outbreak of the SARS (severe acute respiratory syndrome) epidemic in Guangdong in the winter of 2002, the disease spread to Beijing in March. By the mid of April, it looked as if an outbreak might occur at any moment, causing some residents to panic. The parties concerned, confined by outmoded conventions, failed to act accordingly, and the epidemic continued to spread to North China. At this critical juncture, the CPC Central Committee adopted resolute measures. The leaders of the Ministry of Health and of the city of Beijing were replaced. The national headquarters for the prevention and control of SARS led by Wu Yi was set up, and the mobilization order against SARS was issued. The masses acted together. After more than two months of hard work, the battle against SARS was finally won. The World Health Organization (WHO) lifted its ban on China in June 2003. The sudden attack of SARS, though lasting only two months in Beijing and northern China, has caused serious damage to the economic development in 2003. In particular, it has caused great losses to tourism, business services, aviation, transportation, construction, and some manufacturing industries. The economic

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growth rate in the second quarter fell to 6.2%. Fortunately, the potential for economic growth was large. As a result, the growth rate returned to 7.8% in the third quarter. The development will be faster in the fourth quarter, and 2003 will be the year of the fastest development since 1998. The economic situation is very good, which has laid a good foundation for improving people’s living standards, alleviating some social problems, and realizing social stability. The sudden attack and battle against SARS was a special and significant event of public health crisis in 2003; it serves as a warning for the future, and the lesson drawn from it has aroused the attention of all walks of life in society. The disruption of normal political, economic, and social life due to the epidemic situation reflects a serious oversight of the social management system. During the crisis, many special measures were taken to prevent the epidemic from spreading to rural areas. Although a disaster was prevented, the deep-seated problems caused the whole society to reflect. One such problem, which from one aspect demonstrated what the 16th CPC National Congress had pointed out, is that after more than 20 years of struggle, we have achieved the goal of building a moderately prosperous society. However, the level is still low and the development incomplete and very uneven. In the area of social affairs in particular, backward ideas and low standard of management have been facts for many years. Due to these problems, soon after the decisive victory against SARS, the central government proposed to implement the policy of coordinated development of economy and society, coordinated development between urban and rural areas and among regions, and harmonious development between man and nature. On June 15, 2003, China launched its first manned spacecraft, Shenzhou No. 5. Early in the morning of June 16, Astronaut Yang Liwei successfully returned to earth. This is a landmark event for China’s space industry. China became the third member of the space club in the world. It indicates that the Chinese people have taken a big step in the process of climbing the peak of world science and technology. It also indicates that since the reform and opening up, China’s comprehensive national strength has been greatly enhanced. It will have a far-reaching impact on political, economic, social, and cultural development in China as well. In October 2003, the Chinese Communist Party convened the 3rd Plenary Session of the 16th Central Committee. The Plenary Session fully affirmed the work of the Political Bureau of the CPC Central Committee since the 1st Plenary Session, deliberated on and adopted the Decision of the CPC Central Committee on Several Issues Concerning Improving the Socialist Market Economic System. This is a programmatic document for promoting all-round economic and social development. It explicitly puts forward the objectives, tasks, guiding ideology, and principles in perfecting the socialist market economy under the new situation, which is of both great theoretical and practical significance. It is one of the most important documents since the 14th National Congress, which made clear the objective to build a socialist market economic system in 1992. The Decision proposed to further improve the socialist market economy and to make overall plans for a coordinated development of urban and rural areas among regions of the economy and society, a harmonious development between man and nature, as

Towards development of Chinese society 57 well as a coordinated development at home and abroad. To sum up, it is to adopt a new outlook on development so as to achieve comprehensive, coordinated, and sustainable development.

Main contradictions and problems in social development The Central Committee attaches great importance to the “three rural” problems. On December 26, 2002, the Party Central Committee convened a Political Bureau meeting to discuss the problems of agriculture, rural areas, and farmers, and pointed out that the “three rural” problems were the top priorities on the work agenda for the whole party and that the resolution of these problems should be “given an even more prominent position.” On January 17, 2003, the Central Committee held a conference on rural work. Hu Jintao, Wen Jiabao, and others gave important speeches, linking the resolution of the “three rural” problems with the goal of building a moderately prosperous society in all respects and believing that “the most difficult and arduous task of achieving this goal is in the countryside.” It was proposed that more attention should be paid to agriculture, rural areas, and farmers in the future. The conference put forward three criteria for judging rural reform and development: (1) whether it is conducive to the emancipation and development of rural productive forces; (2) whether it is conducive to the increase of farmers’ income; and (3) whether it is conducive to the change of rural landscape and maintaining stability in rural society. In 2003, the CPC Central Committee and the State Council have done a lot of work to solve the “three rural” problems. In early 2003, the State Council made a decision that the increased investment in education, science and technology, medical and health care, and culture should mainly be used in rural areas. In the first half of the year, 23.7 billion yuan of Treasury bond investment was put in with the aim of expanding rural infrastructure construction. Another 3.25 billion yuan of investment was added in the second half of the year. It was explicitly required that the construction of the infrastructure should be carried out by as many migrant workers as possible. Pilot reform of rural taxes and fees should be promoted nationwide. The central government allocated 30 billion yuan to support the reform of the system of taxes and fees, and to effectively lighten the burdens of farmers. The Ministries of Agriculture, Education, and Civil Affairs jointly issued a notice that from 2003–2010, 70 million migrant workers across the country would be provided with job training and efforts would be made to provide information and guidance, as well as organizational support for migrant workers. The Ministry of Public Security also issued a notice on the reform of the household registration system and notified that the ministry had relaxed its restrictions on farmers’ entry into cities and that eligible farmers were encouraged to settle in small towns. Provinces, municipalities, and autonomous regions also did a lot of work to support agriculture, help farmers, and fight against poverty. However, China’s problems relating to agriculture, rural areas, and farmers have been piling up for too long. The existing bifurcated social and economic structure has become deep-rooted. The national income distribution pattern of

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“laying stress on industry at the expense of agriculture” and “focusing on cities at the expense of rural areas” has created a problem of path dependence. Although the new government has done a lot of work, it has yet to reverse the trend of the widening gap between urban and rural areas and among regions. The ratio of farmers’ per capita net income to the per capita disposable income of urban residents was 1:2.91 in 2001, 1:3.11 in 2002, and will be expanded to 1:3.2 in 2003. According to a preliminary estimation, farmers’ per capita net income will rise by 4% in 2003, lower than the increase in the disposable income of urban residents. The gap between urban and rural areas continues to expand. Moreover, the average number conceals that of the majority. About 60% of pure farmers who mainly rely on agricultural income earn less than the average. The income of a considerable number of farmers has not increased. Some farmers’ income has declined. Since 1997, this situation of income stagnation or decline has been going on for eight years, something that has never been seen since the reform and opening up. After the reform of rural taxes and fees, the burdens of farmers have been reduced somewhat. But since the problems such as fiscal transfer payment have not been properly solved, the financial situation at the county and township levels in the central and western regions has not been improved. About half of the counties and two-thirds of townships are running in debt, so the burdens of the farmers have been repeatedly lightened and increased again. The relations between the cadres and the general public in these regions are strained. There are constant clashes between them. Rural society is not stable. From September to October 2003, the prices of grain and oil markets, which had been in a long period of downturn, rose suddenly. The rise in price started in the sales area and spread to the production area. In mid-October, the price of wheat rose by 40–80 yuan per ton and that of corn by 80–100 yuan per ton. The average grain and oil prices increased by 10–20%. The rise in grain and oil prices brought along the increase in the prices of vegetables, meat, and poultry. This was the first time since 1997 that the prices of agricultural products rose substantially, which temporarily aroused widespread concern in society. Some departments and rural experts believed that the price rise this time was the natural result of market regulation. After the total grain output reached the highest level of 512.3 million tons in 1998, the output has declined in five consecutive years. The loss of farmland caused by urbanization, the use of grain fields to plant other economic crops, the abandoning of arable land, and the sharp decline in grain stock were all factors contributing to the price rise. However, China has a grain production capacity of 5 million tons, and there are still 2 million tons of grain stocks. Food security won’t become a problem in the coming years. This is why the prices of grain and oil were stabilized already in November. The rise in the prices of grain and oil, and some other agricultural products, will help increase farmers’ income and agricultural production in the future. It is also conducive to the expansion of domestic demand. For the overwhelming majority of urban residents, this amount of price rise is also affordable. So, there is no need for the government to react too much (when conditions permit, subsidies for the unemployed, laidoff workers, and people with low basic living allowances can be increased). To

Towards development of Chinese society 59 sum up, the rise in price of agricultural products this time has done more good than harm. A prominent social contradiction that has emerged in 2003 is the social conflict caused by demolition and relocation in urban areas and land expropriation in rural areas. In recent years, under the impetus of “accelerated urbanization,” especially after the recent leadership transition in various provinces and municipalities, the new teams have just taken office and are determined to make contributions. In the eastern coastal areas and some large and medium-sized cities, most of them have proposed to take the lead in realizing modernization and in building a moderately prosperous society in all respects, and set off with great intensity and urgency. Their goal is to focus on urban construction, building big cities, mega cities, and international metropolises to change the appearances of urban areas. They expand and build, demolish and construct on a large scale, and are eager to achieve results. When the financial resources are insufficient, the methods such as making money from land are adopted. Old houses are demolished, and the sitting residents are relocated with or without compensation, causing conflicts of interests with these residents. The masses whose houses have been demolished file petitions or express their protest in extreme forms, resulting in extremely bad social impact. In rural areas, a new round of “enclosure movement” is going on in various regions across the country, especially in the eastern coastal areas and in the outskirts of large and medium-sized cities. According to the incomplete statistics of 24 provinces (municipalities and autonomous regions) in the first half of 2003, there are more than 3,500 various kinds of developmental zones, high-tech zones, and university parks, covering an area of 36,000 square kilometers (54 million mu). Driven by the expectation of soaring land prices, some officials without a sense of social responsibility and corrupt businessmen (including foreign businessmen) collude with each other to occupy farmers’ contracted land under all sorts of names and through various means (the state expressly stipulates that the rights to the contracted land will remain unchanged in 30 years). They seize farmers’ land without prior consultation, give very little compensation, and do nothing to help them find other sources of income. The farmers who have lost their land have also lost their production and life support. This is the same as being unemployed. Without even subsistence allowances, they become vagrants. In recent years, among the petitions presented by farmers, issues relating to land are predominant. In the first half of 2003, 73% of the visits and letters to the Ministry of Land and Resources reported problems relating to land expropriation. A total of 4,116 first-time letters and visits received by the State Bureau for Letters and Calls had to do with land issues, and 41% of them were from the five provinces of Jiangsu, Zhejiang, Fujian, Shandong, and Guangdong. It is thus clear that the issue of expropriating farmers’ arable land has become a major social problem at present, involving 40 million farmers mainly concentrated in economically developed areas such as the eastern coastal regions and the outskirts of large and medium-sized cities. This is a matter that must be given high priority, and resolute measures must be taken in time to stop and correct it.

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The employment situation is grim. Since the middle of the 1990s, the registered urban unemployment rate has risen year after year, from 2.9% in 1995, 3.2% in 1999, and 3.6% in 2001 to 4% in 2002. It is likely to reach 4.5% in 2003, and the number of registered unemployed people will exceed 7 million. The number of laid-off employees from state-owned enterprises continues to increase. At the end of June 2003, the number was 4.64 million, while the rate of re-employment declined year by year, from 50% in 1998, 42% in 1999, and 35% in 2000 to 31% in 2001. The surplus labor force in rural areas also continues to increase. The 1960s and 1970s witnessed the birth peak in our country, concentrated in rural areas. People born then have now entered the age of employment, and right now it is the peak time. In addition, after the 1990s, township and village enterprises entered a period of downturn and were faced with restructuring and improving the technological composition. Instead of increasing, their capacities of absorbing labor force decreased. In 1996, the number of employees in township and village enterprises was 135.083 million. It was reduced to 132.877 million in 2002. After 1997, the supply of major agricultural products in China exceeded the demand. The prices of major products such as grain fell, and sales were sluggish. Farmers’ income lingered. In order to increase income, many went to cities to work. In 2002, 94.6 million farmers entered cities to work and do business. The number will continue to increase in 2003. The year 2003 is the year of graduation after the expansion of enrollment of undergraduate students in 1999. In addition to junior college graduates, there will be 2.12 million university and college graduates seeking employment in 2003. The first-time employment rate of university and college graduates in 2002 was only 70%. In the first half of 2003, when the graduates were looking for jobs, the SARS epidemic was at its worst, making it even more difficult to find jobs. Although the government did a lot of work, the effect was not obvious. The firsttime employment rate of graduates in many universities and colleges was lower than 50%. By July 2003, there were 700,000 graduates waiting for employment. Employment is the foundation of people’s livelihoods. China is a populous country with a large rural population, and is now at the stage of social transformation and the transition of the economic system, which leads to the simultaneous existence of multiple problems such as structural and technical unemployment. According to the calculation of the Ministry of Labor and Social Security, the total amount of workers in need of employment in cities and towns across the country is 24 million. According to the demand of economic growth, only 10 million new jobs can be created, lacking 14 million jobs. So, the employment situation is very grim, which will be a social problem that troubles us for a long time to come. Natural disasters occurred frequently in 2003, making it a year of multiple disasters By the end of September, earthquakes about magnitude 5 had occurred 29 times, causing serious losses to Xinjiang and other places. In October, an earthquake hit Zhangye, Shandan, and Minyue in Gansu province. Droughts and floods

Towards development of Chinese society 61 occurred alternately in various areas. Floods occurred in the basins of the Huaihe, Weihe, Hanshui, and Yellow rivers. The flooding of the Weihe River and Yellow River basins continued to the middle of October, causing disasters in some counties and cities in Henan and Shandong provinces. Various types of natural disasters caused 50.7 million hectares of crop damage. The areas hit by the disasters extended over 31.755 million hectares; 1,911 people died in the disasters, and 6.31 million were immediately evacuated. As many as 2.62 million houses collapsed, resulting in a direct economic loss of 151.4 billion yuan. The occurrence rate of production safety accidents was very high. In 2003, there have been many mine accidents. Nearly 5,000 people died in the months from January to September, about one-third of the world’s mine accident deaths. The production of raw coal in China, on the other hand, is only 20% of the world’s output. The reasons for this serious situation are manifold. One of the most important reasons is confusion in management. The results of the qualification exams of the coal mine directors in 2002–2003 in Henan province show that the qualification rate of annual examination was only 49% for township coal mine directors. Among the more than 8,000 township coal mine directors who took part in the examinations, fewer than 10% had a schooling above the high school level. Some of them had a score of only 12 points out of 100 points and some did not even have the basic knowledge of safety.3

Social trends in 2004: implementing the new strategy of comprehensive, coordinated, and sustainable development In 2003, despite the changing international situation, serious natural disasters at home, and the major epidemic attack, China has achieved sustained and rapid economic growth and comprehensive progress in various social undertakings – but the most significant achievement has been putting forward and realizing the change of the concept of development. After years of practice and exploration, the 3rd Plenary Session of the 16th CPC Central Committee clearly put forward: “We should persist in putting people first and adhere to a comprehensive, coordinated, and sustainable concept of development and promote the all-round development of economy, society, and people.” Hu Jintao said at the 3rd Plenary Session: Establishing and applying a scientific outlook on development is a summary of the practice of reform and opening up in the past 20 years and an important inspiration from the victory of the battle against SARS. It is also an urgent need in building a moderately prosperous society in all respects. In order to apply the new outlook on development, we must meet the requirements of the 3rd Plenary Session of the 16th CPC Central Committee and realize the Five Coordinates (五个统筹): coordinating urban and rural development, regional development, economic and social development, the harmonious development of man and nature, and the development at home and opening up to the outside world. The year 2004 will be the first year to apply the new outlook on development. We

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should, on the one hand, vigorously explain and publicize the content and significance of the new outlook on development and obtain a consensus among cadres and people and, on the other hand, do a good job in the following aspects. Making overall plans to achieve a coordinated economic and social development At present, economic and social development is unbalanced. This is manifested in the following four aspects. 1

2

The economic structure has been adjusted, but the social structure has not been adjusted accordingly. For example, industrialization has entered the intermediate stage, whereas urbanization is still in its early stage. The urbanization rate in 2002 was 39.09%, 10 percentage points lower than the world’s average urbanization rate of 48%. Urbanization lagged seriously behind industrialization. In 2002, the percentage of the output value of China’s three major industries was: primary industry, 14.5%; secondary industry, 51.8%; and tertiary industry, 33.7%. The percentage of the employment structure, on the other hand, was: primary industry, 50%; secondary industry, 21.4%; and tertiary industry, 28.6%. The employment structure was not in keeping with the economic structure. The economy has developed, but the development of social undertakings such as education, science and technology, public health, culture, and environmental protection has lagged behind, and is seriously out of step with the development of the economy. Take education and health service, for example. In the past 20 years, we have done a very good job of popularizing the nine-year compulsory educational system and eliminating illiteracy among young and middle-aged people. But the development of high school education, vocational and technical education, and higher education is far from ideal. In 1998, there were only 3.6 million students in regular colleges and universities. The gross enrollment rate for young people of the right age was only 6.7%. After 1999, enrollment expanded for several years in a row. The number of college and university students increased to 9.034 million, and the gross enrollment rate to 13%. However, it was still lower than the world’s average of 16.7% (1996). Medical and health service has developed extensively since the reform and opening up, but it lags behind economic development and is unable to meet the needs of the people. On the one hand, there is little financial input, and on the other hand, the system is unreasonable, prioritizing cities at the expense of rural areas. 85% of medical and health care resources and funds are invested in cities. The situation of the shortage of medical workers and medicine in rural areas is serious. The original rural cooperative medical care system basically collapsed. In the World Health Report 2000, the World Health Organization ranked 191 countries and regions around the world. China came to the 188th place. In 2003, China was hit by the SARS epidemic. Luckily, it occurred in big cities

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3

4

and the government took effective measures. Had it spread in rural areas, the consequences would have been unthinkable. Management is relatively backward and cannot keep pace with the requirements of the development of economic and social undertakings. Over the past 20 years, many cities and public utility facilities have been built up. Hardware such as high-rise buildings, luxurious hotels, and various beautified public squares with green spaces has become quite modern. But management is poor. Traffic congestion; dirty, chaotic, and bad environments; and air and noise pollution, clearly indicate that management is not good, and software is not good. Take highway traffic as an example. In 1949, the national highway mileage was only 80,700 km. It reached 17.65 million km in 2002. China built its first expressway in 1988. By 2002, it had exceeded 25,000 km, ranking second in the world. But the level of traffic management has not be improved correspondingly. Various types of traffic accidents occur frequently. In 2000, there were altogether 773,000 accidents and 109,381 deaths, twice as many as in 1986. The economic system has been reformed and a socialist market economic system has been basically established. But the management system of social undertakings has – on the whole – not been changed in accordance with the requirements of the socialist market economy. The reform in this area is still under experiment and exploration. One may say that we have not yet found a way of solving the problem. Most public institutions still operate according to the system formed under the planned economy with low efficiency, high costs, and poor quality of service, which hinder the development of social undertakings and cannot meet the needs of social development and of the people.

To achieve a coordinated economic and social development, there is an urgent need to change the current uneven development with one leg long and the other short. First of all, we should increase the theoretical understanding of the importance of social restructuring and the development of social undertakings. Both national and local construction should adhere to the principle of a coordinated development of economy and society. The strategy of single-mindedly pursuing economic development should be changed. Due importance should be attached to social development. Second, we should gradually increase the input in the development of social undertakings. According to the requirements of the socialist market economy, funds for economic construction should be allocated mainly through the market in the future and raised by society. The financial resources of the government should be mainly invested in the development of social and public undertakings such as education, science and technology, research, culture, health care, environment, and social security. Third, we must make up our minds to reform the management system of social undertakings. The goal of the reform is to set up a system that is compatible with the socialist market economy, integrates urban and rural areas, and operates

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according to the laws of socialist market economy and is conducive to mobilizing the initiative of all sectors. This is also an important part of improving the socialist market economic system. Making overall plans to achieve a coordinated development in urban and rural areas Solving the problems of agriculture, rural areas, and farmers is the key and difficult point in building a moderately prosperous society in all respects. Rural areas were the first to reform, but since the focus of the reform was shifted to cities in 1985, the reform in the countryside has lagged behind. The household registration system, employment system, circulation system, and the financial and taxation systems which were originally adapted to the planned economy have not been duly reformed. Practice has shown that the fundamental way to solve the problems of agriculture, rural areas, and farmers lies in marketization, urbanization, and industrialization. But the bifurcated urban-rural economic structure formed under the planned economy has restricted farmers’ economic and social status, and made it difficult for them to become main actors in the market competition. Since farmers enter the market with these burdens, the starting point is already unequal, which puts them in a disadvantaged position in the market competition (for instance, migrant workers who come to cities to work do the same work in the same factory, but receive only one-third or one-half of the income and welfare of workers with urban status). Since the mid-1990s, the gap between the average net income of farmers and the disposable income of urban residents is increasing year by year, reaching 1:3.1 in 2002, exceeding the ratio of 1:2.4 in 1978. The ratio in 2003 will be 1:3.2, and there is a trend to continued expansion. The 3rd Plenary Session of the 16th CPC Central Committee made it clear: “We should establish a system conducive to gradually changing the bifurcated urbanrural economic structure.” This is a strategic move to solve the “three rural” problems. Rural areas must undergo reforms to break the constraints of the planned economic system on rural productive forces and gradually establish a socialist market economic system that integrates urban and rural areas. A comprehensive, unified, and well-functioning socialist market economic system cannot be built without changing the pattern of bifurcation of urban and rural areas. First of all, we should improve the rural land system. The contractual land management on household basis is the core of the basic rural economic system. Stabilizing and steadily improving the system is the key to ensure the livelihood of farmers and rural stability. In recent years, illegal or ultra vires approval for occupying a large amount of cultivated land without giving reasonable compensation or making proper arrangements has been found in some places. In 2004, these problems should be dealt with separately, according to the Decision of the 3rd Plenary Session of the 16th CPC Central Committee. The land that should be returned and must be returned, those who should be compensated must be compensated, and those who need help to settle down must get help to settle down, making sure that farmers, who have lost their land, still have work to do and do not suffer

Towards development of Chinese society 65 economic losses. Only in this way can we protect farmland, and ensure national food security and the legitimate right and interests of farmers so as to eliminate social conflicts caused by land occupation and ensure stability in rural areas. Second, we should gradually adjust the distribution pattern of national income and change the situation of prioritizing cities at the expense of rural areas. The state has decided that the newly increased funding for education, science and technology, culture, and medical and health care should be used mainly in rural areas. This policy will continue in 2004. In areas where the distribution of resources between urban and rural areas is in great disparity, for example, 85% of the funding and resources for medical and health care goes to urban areas, while rural areas get only 15%. Not only should the amount of additional funds and resources be adjusted, but the stocks should also be adjusted appropriately. At present, most of the county and township governments in the central and western regions are still facing a very difficult financial situation. Some are operating in debt. The current financial system should also be appropriately adjusted to further improve the transfer payment system and to increase the financial support to the central and western regions and ethnic minority areas. Third, the employment environment should be improved to facilitate the transfer of surplus rural laborers to cities and towns. Practice has proven that only by reducing the number of farmers can they be enriched. In 2002, agriculture accounted for less than 15% of the GDP while the labor force in agriculture accounted for 50% of the total employment. We should speed up the transfer of the rural surplus labor force to cities and towns and to secondary and tertiary industries. We should deepen the reform of the household registration system and remove the restrictive regulations on farmers to seek employment in cities, gradually form a unified labor market for urban and rural areas, and establish a system of equal employment for urban and rural workers. Making overall plans for regional development to achieve a coordinated development in the three major regions of eastern, central, and western China Since the reform and opening up, great progress has been made in the economy and society in various regions. But because the original foundations and subjective and objective conditions are different, regional differences have increased over the years. Take urban residents’ income as an example. In 1980, the ratio of disposable income of urban residents in the eastern, central and western regions was 1.11:0.93:1. It expanded to 1.26:0.92:1 in 1990, and then to 1.40:0.94:1 in 2000. The ratio of the average annual net income of farmers in 1980 was 1.28:1.05:1 in 1980, 1.59:1.19:1 in 1990, and 1.92:1.3:1 in 2000. In recent years, there has been further expansion, and the trend will continue. Studies show that there are two more factors lying behind the slow development in the central and western regions. The first is the low degree of marketization, and the reform is relatively lagging. The current marketization rate nationwide is 69%. China has basically become a country with a socialist market economy. In terms of the

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degree of marketization in the eastern, central and western regions, the ratio is roughly 80%:50%:30%. If we take 60% as the demarcation line, then the central and western regions have not achieved marketization. The second factor is the low level of urbanization. The national urbanization rate in 2002 was 39.09%. Except for the two central provinces of Jilin and Heilongjiang, the urbanization rate of other central and western provinces and cities was below 39.09%, some even less than 30%. The majority of the population is farmers. In most large and medium-sized cities in the central and western regions, the level of economic and social development is not low. Therefore, the difference between the central/ western regions and the eastern region is, in essence, also a manifestation of the gap between urban and rural areas. Since the CPC Central Committee put forward the strategy of developing the western regions in 1999, the economy of the western region has developed rapidly, and a large number of construction projects have started. The construction of infrastructure has been progressing smoothly. Social undertakings such as science, education, and culture have exhibited a good momentum of development, and achievements are remarkable. In 2003, the state proposed to revitalize the old industrial base in Northeast China. Several central provinces and regions are implementing the Central Uplift Strategy (中部隆起战略). To achieve a coordinated development among regions, the key is to further promote and deepen the reform in the central and western regions; eliminate the obstacles in the system; accelerate the pace of marketization and urbanization; do a good job in the work concerning agriculture, rural areas, and farmers; speed up the transfer of the rural labor force to cities and towns, and to the secondary and tertiary industries; develop township and village enterprises, county economy, and the construction of small towns; and enhance the ability of self-development. The state should increase its support to the central and western regions in terms of investment projects, fiscal and taxation policies, and transfer payments. In order to bring the development of the central and western regions onto a sound track and accelerate the pace of economic and social development, the first thing to do is to curb the trend of continued widening of the gap with the eastern region and gradually achieve a pace of development in tandem with the developed eastern areas and a coordinated development of all regions in the country. Making overall plans to achieve harmonious development between humanity and nature An important connotation of the new outlook on development is to achieve sustainable development. China is still in the intermediate stage of industrialization, and the per capita share of resources is relatively small. So far, the development mode is still one characterized by consuming large quantities of resources, putting great pressure on the environment. Soil erosion, desertification, and rocky desertification are becoming more and more serious. The government has done a lot of work in flood control of major rivers, the prevention and control of desertification, the control of sources of sandstorms in Beijing and Tianjin, the sewage

Towards development of Chinese society 67 treatment in the reservoir and lake areas, and the control of air pollution in large and medium-sized cities. Nevertheless, the trend of continued deterioration of the ecological environment has not been fundamentally reversed. In the future, we should put sustainable development in a more prominent position, conscientiously implement the basic state policies of family planning, environmental protection, and the protection of resources. We should take a new road of industrialization and urbanization, and rationally develop and use all kinds of natural resources. Therefore, while increasing the input of human, material, and financial resources in protecting the ecological environment, it is necessary to carry out institutional reforms to make them not only conducive to a healthy development of the economy, but also to the preservation of the ecological environment so as to achieve the harmonious development of man and nature. In addition, we should make overall plans for domestic development and the opening up to the outside world so as to coordinate the latter with domestic development and reform. Doing a good job in coordinating the previously mentioned five aspects – namely, to properly handle the relationships between economy and society, between urban and rural areas, among regions, between man and nature, and between domestic development and the opening up to the outside world – is put forward in response to the outstanding problems in steadily pushing forward with the reform and development. It is an inevitable requirement for improving the socialist market economic system and the primary means of applying the comprehensive, coordinated, and sustainable outlook on development.

Notes 1 This article was originally published in Ru, Xin, Lu, Xueyi and Li, Peilin (Eds.) (2004). 2004: Analysis and Forecast of China’s Social Situation. Social Sciences Academic Press (China). 2 Editor’s note: the “Two Meetings” is a general designation used since 1978 to refer to the National People’s Congress of the People’s Republic of China and the Chinese People’s Political Consultative Conference (CPPCC). Since the dates and duration of the two meetings basically coincide and both are very important for the operation of the country, they are abbreviated as the “Two Meetings.” From the provincial level to the central government, the CPPCC and the National People’s Congress all basically coincide, so the term “Two Meetings” may also be applied to those held at the provincial (municipal and autonomous region) levels. 3 China’s Mining News, September 18, 2003.

6

Theory and practice of social construction1

Since 2002, in the practice of building socialism with Chinese characteristics, we have been constantly exploring and innovating in theory. Important strategic ideas such as the scientific outlook on development and the construction of a socialist harmonious society have been formulated. A series of new concepts and theories, including “people-centered” and “social construction,” have been put forward so as to continuously develop and improve the theoretical system of socialism with Chinese characteristics. In this chapter, I want to share with you some of my views on the theoretical value and practical significance of social construction.

Proposal and formation of the theory of social construction In 2004, the 4th Plenary Session of the 16th CPC Central Committee made two important theoretical contributions. First, it put forward the strategic idea of building a socialist harmonious society. As soon as it was put forward, it attracted great interest, won the approval of the broad masses of cadres and people across the country, and became a strategic target alongside a moderately prosperous society in all respects and a socialist modern society. Now the construction of a socialist harmonious society has been put into practice in the socialist modernization drive and played a significant role in transforming ideas and theories into concrete actions (精神变物质). Second, it put forward the very important new concept of social construction, which meets the needs of the new stage of industrialization and urbanization in our country. It clearly summed up the on-going construction of various social undertakings such as social organization, social structure, and social order, and explicitly called them “social construction.” With this concept, the status of these aspects of work just mentioned has been improved, and a theoretical basis has been established. The goals, as well as the future prospects, of construction are clearer. With the introduction of the new concept of “social construction,” the overall layout of China’s socialist construction has changed from the trinity of economic, political, and cultural construction to a new pattern of four-in-one including social construction. In the political report of the 17th CPC National Congress, social construction was taken up in a separate section and placed side by side with political, economic, and cultural construction, forming a layout of four-in-one. The 17th National Congress also put the four-in-one

Theory and practice of social construction 69 layout into the general program of the newly revised party constitution. Hence, one can see that it is of great importance to introduce the new concept of “social construction.” In terms of the relation between building a socialist harmonious society and social construction, the former is essentially the strategic goal and the latter an important means – a socialist harmonious society can only be realized through economic, social, political, and cultural construction. Here, the “society” in a harmonious society and the “society” in social construction, though the same word, have different meanings. “Society” is a polysemous word: it has three meanings. The first is the concept of a big society. Society here refers to a country as a whole. As Mao Zedong said in On New Democracy: our aim is to “build a new society and a new country for the Chinese nation. The new society and new country will have not only a new politics, a new economy, but also a new culture.” The second meaning refers to a dichotomy. For example, when we draw up a Five-Year Plan, we call it the Nth national economic and social development plan. The areas beyond economic development are classified into the category of social development. We often say that economic and social development should be coordinated. The society here is used in the sense of a dichotomy. It is a concept of a medium society (中社会). The third meaning is a society in an exclusive sense, referring to a small society, a society in parallel with economy, politics, culture, science and technology; for example, social construction in the four-in-one layout. The “society” in the socialist harmonious society refers to a big society, the society in the first sense of the word. The “society” in social construction refers to a small society in the third sense of the word. In this regard, we should be aware of the differences when we understand and use the concept of “society.” The fact that the overall layout of socialist construction has been expanded from the trinity of economic, political, and cultural construction to a four-in-one layout including social construction itself reflects not only the objective reality that profound changes have taken place in contemporary Chinese society, but also that we have obtained a new generalization and a breakthrough in our understanding of the profound changes in China’s economic and social structure. The earliest division of China’s construction into three aspects – political, economic, and cultural – was put forward by Mao Zedong in his book On New Democracy in 1941. He said, “Combining the politics, the economy, and the culture of New Democracy, you have the new democratic republic. It is the republic of China both in name and in reality, the New China we want to create.”2 At that time, China was a semi-feudal agricultural society. Small-peasant economy was like a vast ocean. Peasants accounted for over 90% of the population. Against this background, it was in line with China’s national conditions to conceive of a vision for the future and delineate three major areas of politics, economy, and culture. After the founding of the People’s Republic of China, when we planned the overall layout of socialist construction, we often took economic, political, and cultural construction as the framework. In 1982, when the 6th Five-Year Plan was formulated, the content of social development was added. Since then, the Five-Year Plan has been called “the Nth Five-Year Plan for National

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Economic and Social Development.” Twenty years later, the political report of the 16th CPC National Congress maintained the three-in-one layout of economic system reform and construction, political system reform and construction, and cultural system reform and construction. But when it came to achieving the goal of building a moderately prosperous society in all respects by 2020, it was pointed out that “we will further develop the economy; improve democracy; advance science and education; enrich culture, make the society more harmonious, and upgrade the texture of life for the people.” A more harmonious society was added to the objectives. This reflected the profound changes that had taken place in China’s economy and society after more than 20 years of reform and opening up. The country had, on the whole, changed from an agricultural society to an industrial society and from a rural society to an urban society. This transformation had generated new demands on economic and social construction. Great improvements in productivity and profound changes in the economic structure required corresponding changes in the social structure. Rapid development of the economy required a corresponding development of social undertakings. Great improvement of people’s material life required social stability and order. Therefore, “a more harmonious society” proposed by the 16th CPC National Congress reflected the requirement of the development of productive forces and our party’s new understanding of the law of socialist modernization. Shortly after this, the new concepts of building a socialist harmonious society and social construction were put forward at the 4th Plenary Session of the 16th CPC Central Committee. At the 6th Plenary Session, a decision was made on some important issues concerning the construction of a socialist harmonious society. The 17th CPC National Congress further pointed out that social construction focusing on the improvement of people’s livelihoods should be accelerated. In the past years, the theories of building a socialist harmonious society and social construction are gradually taking shape, becoming an important part in the theoretical system of socialism with Chinese characteristics. This is a new theoretical achievement. The series of new terms, new concepts, and new theories – such as social harmony, harmonious society, building a socialist harmonious society, building a harmonious society, and social construction put forward since the 16th CPC National Congress – reflect the requirements and characteristics of the new stage of development of China’s socialist modernization. In my own understanding, in this series of new terms, concepts, and theories, “social construction” should be the most crucial and important one because social harmony can only be achieved through “social construction” and the construction of a socialist harmonious society can only be realized through long-term “social construction” and other aspects of construction. The new concept of social construction was actually mentioned previously in the political and academic circles in the 1910s and 1930s. In 1919, Mr. Sun Zhongshan included his Preliminaries of Civil Rights (Social Construction) written in 1917 in Strategies for Nation Building, which constituted an important part of his basic thoughts on national construction. In Preliminaries of Civil Rights (Social Construction), he expressed his idea of “social construction,” namely “teaching the nationals to exercise civil rights.”3 In the last chapter of his book

Theory and practice of social construction 71 A Theory of Sociology, written in 1934, the famous sociologist Mr. Sun Benwen devoted one section to “social construction and social guidance.” The section started with a definition of “social construction”: carrying out various constructions according to the needs of the social environment and the wishes of the people is called social construction. The scope of social construction is very wide. All undertakings concerning the common life of human beings and its peace and happiness belong to it. Sometimes this kind of undertaking is of the nature of reform oriented to the innovation of existing cultural and institutional systems. Some undertakings are of a creative nature, aiming at creating cultural and institutional systems which are either introduced from the outside world or invented within a society itself. Whether they are of the creative or reformative nature, what matters is that they are all undertakings of social construction.”4 Mr. Sun Benwen also founded a magazine called Social Construction. Although the social construction proposed by Mr. Sun Zhongshan and Mr. Sun Benwen had different meanings and emphases, both contained their good wishes and ideals for the country and the Chinese nation. However, in the troubled Old China, this good idea and concept did not spread and was not put into practice as it should have been. In 1949, the People’s Republic of China was founded. But before long, sociology was abolished in China. Because of this, the important concept of social construction was not passed on and fully interpreted. When the 4th Plenary Session of the 16th CPC Central Committee put forward the concept of social construction, many people felt unfamiliar with it. I looked up The Grand Dictionary of the Chinese Language, Ocean of Words (辞海) and Origins of Words (辞源), consulted the sociological volume of The Grand Encyclopedia, and different kinds of sociological textbooks published since the 1980s. But none of them has the entry “social construction.” I have consulted several senior economists, who told me that in the vocabulary of Western economics, there is no concept of economic construction, only concepts with similar meanings such as economic development and economic growth. The term “economic construction” came from the planned economic system of the Soviet Union. First of all, there is an economic plan; that is, the state makes a blueprint for economic development, and then organizes forces to implement the plan and turn the blueprint into reality. This is economic construction. We can understand social construction in a similar way. Social construction refers to the social behavior and processes of improving people’s livelihoods and promoting social progress in a purposeful, planned, and organized way, according to the needs of a society. The connotation of social construction is very broad. There are two main aspects: one is entity construction such as the construction of community, social organization, social undertakings, social environment, and so on. The second aspect is institution building, such as the adjustment and construction of social structure and the construction of social mobility mechanisms, mechanisms for coordinating relations of social interests,

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social security system, social management system, and so on. Social entity construction provides public goods and public services. Institutional building, on the other hand, makes society more orderly and harmonious. In terms of the richness of the connotation of social construction, the 4th Plenary Session of the 16th CPC Central Committee not only put forward a new concept, but also formulated a new theory of social construction. In the past few years, the academic and political circles have elaborated on this theory in many ways. A theory of social construction is being formed. With the deepening of practice, the theory of social construction will be gradually improved and become an important part of the theoretical system of socialism with Chinese characteristics, just as the theories of economic, political, and cultural construction.

Meaning and main contents of social construction The practice of social construction has been going on all the time. After the founding of New China, large scale social construction was launched at the same time as we carried out large scale economic construction – only in the past, we did not use “social construction” to refer to such undertakings. Instead, social construction was subsumed under the name of economic, political, and cultural construction. After the reform and opening up, we called the construction in the social field social development. In fact, social construction and social development are two concepts. There are similarities as well as differences in the meanings carried by them. The similarities and differences are as follows. First, social development refers to the regular process of social change from simple to complex, from primary to advanced, and from old quality to new quality. It is an objective process independent of the will of human beings. Social construction, on the other hand, are the various purposeful, planned and organized constructive projects carried out by social actors in the social field at a certain stage in history according to the needs of a society. It is a conscious and purposeful process at the initiative of human agency. Second, social development is an objective outcome and trend formed by the interaction of many subjective and objective factors, in which roles of individuals counteract each other. Just as Marx said, it is a natural historical process which can be said to be almost without subject. Social construction, on the other hand, are social actions with definite subjects. The subject may be a government, a social organization, or private citizens. Third, social development is an objective process that people cannot control according to their own will. Although there are macro prospects, the goal is not specific. Social construction, on the other hand, are various concrete purposeful, planned, and organized projects with strong motives and explicit goals. Moreover, it can be measured and controlled. Naturally, there is an inherent unity between social development and social construction. Social construction should be conducive to social development and must follow the laws of the latter. Social development is promoted to a large extent by various constructive projects at people’s subjective initiatives.

Theory and practice of social construction 73 The meaning of social construction should be: proceeding from the reality of the development of a society at a certain stage, acting in compliance with the trend and the laws of social development, and mobilizing all kinds of social forces to carry out various constructions in the social sphere in an organized, purposeful, and planned way. In this process, the main subjects of social construction are governments, social organizations, and private citizens. The principle of such construction is fairness and justice. The goals of social construction are building a harmonious society and promoting social progress. The guarantee of social construction is the safe operation of a society, including the construction of a social safety valve. The mobilizing mechanism of social construction is to establish mechanisms that coordinate the interests of all strata and fully mobilize the people to participate in social construction. The important means by which to carry out social construction is social management. It is mainly scientific management in social operation to ensure the healthy operation of a society. Therefore, social construction is a huge project of systems engineering. Some people think that social construction is the construction in such fields as science, education, culture, sports, public health, and other areas of social undertakings. This is clearly a narrow interpretation of the meaning of social construction. As one of the components in the four-in-one general layout of building socialism with Chinese characteristics, the meaning and content of social construction is much broader and profound. Next, I shall explain some major aspects of social construction. Adjustment and construction of social structure Most important and fundamental to a country are its economic and social structures. These two structures should be coordinated, complementary to each other, and mutually compatible. Without economic development and the adjustment of economic structure, social construction and the formation of a modern social structure cannot be realized. Conversely, the construction of society and the formation of a modern social structure will lend strong support to the further development of economy. However, economic development does not mean that social construction and structural adjustment of modern society will be realized spontaneously. It depends on the promotion of all aspects of construction by social subjects in a purposeful and planned way. Now the economic structure in our country has been transformed from preindustrial economic structure (that is, the structure in the era of a traditional agricultural economy in which the proportion of agriculture was very large, whereas that of industry, commerce, and services was very small) to an economic structure of the intermediate stage of industrialization. In the economic structure of 2006, the primary industry accounted for 11.7%; the secondary industry, 48.9%; and the tertiary industry, 39.4%. However, the social structure of our country was still one at the early stage of industrialization. In 2006, the urban-rural structure in our country was 56.1:43.9, and the share of agricultural labor force was 42.6% and non-agricultural labor force 57.4%, of which 25.2% was employed in the secondary industry and 32.2% in the tertiary industry. The core of social structure

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is the structure of social strata, and the landmark index of the structure of social strata is the proportion of the middle social stratum (or the middle class 中产阶 层). According to the survey analysis of our research group, the middle social stratum (中间阶层) accounted for 22% in 2006, which was a far cry from the “olive-shaped” configuration of the structure of social strata small at both ends and large in the middle usually found in industrialized countries. The overall analysis shows that China’s economic structure today is equivalent to that at the intermediate stage of industrialization, whereas its social structure is one at the early stage of industrialization. There are contradictions between the economic structure and the social structure, which is the structural source of many economic and social contradictions in China today. In order to solve these social contradictions and problems and build a socialist harmonious society, a very important task is to continue to deepen the reform, innovate social policies, and construct a social structure that is compatible and coordinated with the economic structure. Construction of mechanisms of social mobility Social mobility refers to a social phenomenon in which members of a society transfer from one social status to another, usually including vertical mobility (social status rising or falling) and horizontal mobility (social status basically the same). In an agrarian society, the social status of an individual is basically determined by pre-endowed factors, and passes on from generation to generation. The son of a scholar is often a scholar, the son of a farmer is often a farmer, the son of an artisan is often an artisan, and the son of a merchant is often a merchant. This kind of society is called a closed society. In an industrial society, with the continuous expansion of large-scale socialized production, the industrial structure is constantly evolving to a higher level, the social division of labor is highly developed, the occupational structure is gradually becoming more advanced, and new social posts are constantly created, which requires the acceleration of social mobility. Only through social mobility can the newly created posts be filled, and rational allocation of human resources be realized. Through learning and hard work, an individual can achieve upward mobility and obtain a social post with higher status. The social status of individuals is determined by acquired factors (后致性因素). This kind of society is called an open society. In the past 30 years of reform and opening up, with the development of the economy and the advancement of industrialization and urbanization, China has been transformed from a basically closed society to a basically open society, with multiple channels and an accelerated pace of social mobility. Hundreds and millions of people have through arduous efforts realized their desire of upward mobility. New social strata and groups, such as private business owners, individual industrial and commercial households, managers, freelancers, and migrant laborers have sprung up. The ranks of industrial workers, scientific and technological personnel, and state and social management personnel have greatly expanded, while the size of the stratum of agricultural laborers has been reduced. A rational, open, and modern structure of social strata is being formed across the country.

Theory and practice of social construction 75 Modern mechanisms of social mobility based on rules of acquired merits (后致 性规则) are also taking shape. However, the household registration, employment, and personnel systems formed during the period of the planned economy have not been fundamentally reformed, and still restrict the smooth flow of social mobility. As a result, the strata (such as the middle stratum of society) that should expand cannot expand, and the strata (such as that of the agricultural laborers) that should become smaller cannot come down in size, preventing the positive evolution of the social structure. Establishing a new system of social mobility through reform and innovation is, therefore, an important task. Construction of social organizations An industrialized and urbanized modern society is a highly organized society. The members of the society all belong to one social organization or another. Many of them may belong to multiple social organizations at once. China was formerly an agricultural society with a self-sufficient small-peasant economy and undeveloped social organizations. Some people describe it as a heap of loose sand. After the founding of the People’s Republic of China in 1949, the planned economic system was put into practice. The system of work units was introduced in enterprises, and public institutions and organs in cities and people’s communes, which integrated government administration with commune management, were established in rural areas. People in the whole country thus became organized. After the reform and opening up, the work unit system was weakened. Men of work units became social men. The people’s communes were dissolved and turned into township governments and villagers’ autonomous organizations. An overwhelming majority of farmers returned to a household-based way of production and living. It happened that many villages were unable to summon a mass meeting for years. In China today, there is a practical need to get people organized in new ways under new conditions. The document of the 6th Plenary Session of the 16th CPC Central Committee proposed: to improve social organizations and enhance social service functions. We should attach equal importance to fostering development and managerial supervision, improve the policy of fostering, supporting, and managing social organizations according to the law, and give full play to the role of various social organizations in providing services, articulating demands, and regulating behavior. We should develop and standardize institutions such as lawyers, notaries, accountants, and assessment of assets and encourage the establishment of non-enterprise units in the areas of education, science and technology, culture, medical and health care, sports, and social welfare. We should bring into play the social functions of such social groups as industry associations, societies, chambers of commerce, and other social organizations to serve economic and social development.5 The social organizations mentioned here refer to non-governmental and mass organizations. There are many such social organizations in industrialized countries.

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They play the role of offering social services and social welfare, making up for the inadequacies of the government and the market. In some respects, they play a role that the government and the market cannot play. For various reasons, there are few non-governmental and social organizations in China. According to statistics, by the end of September 2006, there were 174,841 non-governmental organizations, 151,430 private non-enterprise organizations and 1,057 foundations in China, totaling 327,328, less than 2.5 per 10,000 people (compared with 52 in the United States, 110 in France and 25 in Argentina). They are far from able to meet the needs of economic and social development, and the demands of the masses of the people. This is very unfavorable for the promotion of a coordinated development of the economy and society, strengthening social management, and pushing on the building of a socialist harmonious society. In accordance with the spirit of the 6th Plenary Session of the 16th CPC Central Committee, we need to foster and support the development of various nongovernmental and voluntary organizations. Construction of coordinating mechanisms for interest relations of social strata At present, China’s social structure has undergone profound changes. Along with these changes, social interest relations have also changed profoundly. Social interest groups and their demands have become diversified, and social interest relations more complicated. Under the background of the current level of economic development, it is difficult to fully satisfy the interest demands of different social strata, which will inevitably lead to social contradictions and conflicts of one kind or another. It is a major task to build mechanisms for coordinating social interest relations and the interests of all social strata, so that all sectors of society can build, share, and win together, forming a situation in which everyone has his or her proper place and people live together in harmony. The mechanisms for coordinating the interests of different social strata should include the following three aspects. First, we should establish a scientific and reasonable mechanism for strata, groups, and individuals to express their demands and broaden the channels through which people express their opinions and aspirations, so that social conditions and public opinions can be conveyed upward without hindrance. We should reform and innovate the ways and routines by which leading cadres and high authorities conduct investigations at lower levels, so that they can get to know the real situations and the sufferings of the people in time. Second, we should establish mechanisms of equal dialogue and consultation between employers and workers and between cadres and the people, as well as among strata and groups. In industrialized societies, the most important and common social relationship is labor relations. In the past 20 years, due to various reasons, labor relations in our country have not been harmonious. Workers are in a weak position. The position of migrant workers, who have now become the majority of industrial workers, is even weaker. For a long time, their basic rights

Theory and practice of social construction 77 and interests have not been protected, causing numerous social contradictions. The Labor Contract Law introduced this time is conducive to the protection of the rights of migrant workers, but has met with resistance from the employers’ side. Huawei, Wal-Mart, and other large enterprises openly take the lead in finding ways to evade the law. How can individual migrant workers in their weak position withstand this resistance? Historical experiences show that it is necessary to establish mechanisms of equal dialogue and consultation among representatives from the three parties: the government, the employers, and the employees. There should be a platform for negotiation and dialogue. Workers and migrant workers should become organized and represented. Otherwise, even if there is a good law like the Labor Contract Law, it is difficult to safeguard the rights and interests of the weak. Third, we should establish a working system to monitor and handle social contradictions and social problems. Large and medium-sized cities should have special institutions and personnel to keep a close eye on the changing situation of the most direct and realistic interest relations that major local strata and groups are most concerned about. They should make analyses and judgments, timely formulate policies and measures, and coordinate the interest relations of all parties so as to fundamentally reduce and alleviate social contradictions and conflicts. Development of social undertakings Since the founding of the People’s Republic of China, organizations of education, health care, scientific research, culture, art, and sports are generally referred to as social institutions (社会事业单位). Together with enterprises in the economic sphere, they are called enterprises and institutions (企事业单位). Social undertakings are closely related to the production and life of the broad masses of the people and concern the well-being and future of every family and individual. Since education, health care, culture, and so on are for all the people, they are also known abroad as public services or public goods. Since the reform and opening up, undertakings such as science and education, culture, health care, and sports have been greatly developed, which has significantly improved the living standards of urban and rural residents in various aspects from clothing, food, and housing to transportation. However, one cannot deny that, since the mid-1990s, some regions and departments have misinterpreted the focus on economic construction to the point that it is considered to be the only focus, resulting in the relative lag of social undertakings such as science and technology, education, and health care. Problems have emerged such as difficulty to obtain employment, to go to school, to see a doctor, and to find housing. The 17th CPC National Congress made a very correct decision on “accelerating social construction focusing on improving people’s livelihood.” It conforms to the expectation of the people for a better life and facilitates the adjustment of social structure. It is conducive both to a coordinated development of economy and society and to the promotion of social harmony. The problem now is that, due to the long-term lack of investment in social undertakings (such as education, scientific research, and medical and health care), the gap between them and the objective needs has become too large. There is still a lot of

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work to do to really ensure that people “enjoy their rights to education, employment, medical and old-age care and housing.” Therefore, in accordance with the decisions of the 6th Plenary Session of the 16th CPC Central Committee and the 17th CPC National Congress, we should place social construction in a prominent and important position. In order to promote social undertakings, we must reform the system of social undertakings, just as the economic system reform when we carried out the economic construction. The current system of social undertakings was basically formed during the period of the planned economy and was adapted to it. Since the reform and opening up, although some reforms have been carried out, most of them are reforms in specific areas. Some of the reforms have achieved certain results and others are not successful (for instance, the reform of the medical and health care system in the 1990s). Generally speaking, the system of social undertakings has not been reformed and adjusted according to the requirements of the socialist market economic system and is therefore not yet compatible with it. Up to now, the state has taken on the overall responsibility for the management of social undertakings in areas such as science and technology, education, culture, sports, and medical and health care. Practically, it cannot meet the increasingly diversified needs of society. Neither, as a matter of fact, has the state the ability to do so with efficiency. So, we must reform the system of social undertakings, just as we reformed the economic system. Construction of a social security system A social security system is an important part of the basic economic and social system of modern countries. It is a stabilizer and a safety net in industrial societies. Unlike traditional agrarian societies, in addition to natural disasters such as droughts, floods, storms, and earthquakes, modern industrialized societies can also encounter social risks such as economic crisis, war, nuclear leakage, plague, and social unrest. Individual citizens can also run into difficulties such as unemployment, disability, illness, old age, and poverty that are difficult for families to cope with themselves. Therefore, we must establish a social security system adapted to the national conditions so as to ensure the long-term stability of the country and enable individuals to obtain assistance and services in times of difficulty. China’s social security system was gradually established on the basis of copying the social security system of the Soviet Union. After the mid-1980s, reform got underway. In the 1990s, with the development of the socialist market economy and in order to meet the need of the reform of the state- and collectively owned enterprises, “a social security system which combines overall social planning with individual accounts” was gradually established. After the 16th CPC National Congress, a new type of cooperative medical care system and the system of subsistence allowances were gradually established in rural areas. One should say that the current social security system is still far from being perfect. The coverage of social security is small, and the security funds are seriously insufficient. The level of overall social planning is low, and the gap between urban and rural areas

Theory and practice of social construction 79 and among regions is very large, which is incompatible with economic development and the urgent needs of the people. The 17th CPC National Congress put forward the goal of “accelerating the establishment of a social security system covering both urban and rural residents and guaranteeing the basic livelihood of the people.” This is a very heavy and arduous task. How to build a social security system which accords with the national conditions, fits in with the needs of economic development, has reasonable standards, functions well with effective management – and at the same time meets the needs of the people, safeguards social equity, resolves social contradictions, and guarantees national social stability – is an urgent problem to be solved. Community building By community, we mean here the form of governance and administrative organization at the grassroots level. After the dissolution, the people’s communes were transformed into towns (镇) and townships(乡), the brigades into administrative villages (行政村), and the production teams into villagers’ groups (村民小 组). The three-level organizational structure of governance remained unchanged. After the 1980s, villager self-government, democratic election, decision-making, management, and supervision were introduced in rural areas. Some regions made impressive accomplishments. Although situations varied from region to region, and the grassroots organizations in some regions were almost paralyzed, 900 million farmers became organized. Now the governance problems of grassroots organizations lie mainly in urban areas. After the mid-1980s, the pace of urbanization accelerated. In 1978, there were only 220 cities and 119.94 million urban residents in China. By 2006, the number of cities had reached 662 and the urban population increased to 577.06 million. Among them, 365.48 million were registered as urban residents and 211.58 million resided permanently in cities without being registered there. During the 28 years, urban population has increased by 457.12 million, and the number of urban registered residents by 245.54 million. Hundreds of millions of people have moved to cities and towns. Most of them are unorganized. Only the public security system has statistics. At present, in Beijing, Shanghai, Tianjin, and other large and medium-sized cities, under the municipal governments, there are districts and counties(区县). Under districts and counties, there are subdistricts (街道), townships, and towns (乡镇). The next level is residential committees (居民委员会), also known as community committees (in Shanghai, subdistricts are called communities (社区) and residential committees are called small communities (小区). In Beijing, residential committees had no cadres who were released from production or regular work before 1990. In recent years, the subdistrict offices have sent full-time cadres to residential committees and set up party organizations with thousands of residents under their jurisdiction. Urban residents are gradually becoming organized. For various reasons, in many large and medium-sized cities, there are villages in the cities. Thus, under the subdistrict offices, there are not only residential committees, but also village committees (村民委员会). In cities like

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Shenzhen and Dongguan, there are already 10 million residents, but grassroots organizations have not yet been established. There is a town in Shenzhen called Buji (changed to subdistrict office in 2004) with 1.1 million residents. It is actually the size of a big city, but still has the administrative structure of a subdistrict with an authorized staff of only 80 cadres. Under the subdistrict office, there are both residential committees (communities) and village committees. Under such conditions, it is very difficult to carry out social construction and to have effective social management. In the 1980s, there were over 2,000 counties (and county-level cities) with only a few thousand inhabitants in areas where the county governments were located. Some areas had a larger number of inhabitants ranging from 10,000 to tens of thousands. Most of them were run like rural areas under the jurisdiction of the county seats (城关镇). With the development of economy, urban areas in many of these counties (and county-level cities) have grown in size with a population of over 10,000, tens of thousands, even 200,000–300,000. Roads, highways, high-rise buildings, houses, buildings for various purposes, and other facilities have been constructed, but communities and grassroots organizations have not been built accordingly. Many are still run like rural areas and remain under the jurisdiction of the county seats. One may say that this is the main cause of frequent social conflicts and disorder. This situation needs to be changed urgently. Urban grassroots organizations should be improved through community building. Construction of the public security system To maintain the long-term stability of the country and ensure that people live and work in peace and contentment, we must do a good job in improving the public security system. Social contradictions are inevitable in any society. Modern industrial societies are open and pluralistic. Social contradictions are more frequent and complicated compared to agrarian societies. The main tasks of the public security system are to safeguard national security, protect the rights of the people, resolve social contradictions, prevent and punish crimes, maintain fairness and justice, and promote social progress in all respects. We have already established a public security system and created relatively effective practices such as mass prevention and mass management, combining the efforts of both professionals and the masses, and integrated control. However, at the present stage of social transformation and economic restructuring, we cannot fundamentally solve the public security problem by merely increasing the police force and installing more cameras. Against the background of the prominent contradictions of social interests and frequent occurrences of social conflicts, how to do a good job in maintaining national stability and protecting the rights and interests of the people, especially, while fulfilling these new tasks, how to actively explore the ways to adapt to the requirements of the socialist market economy and build a public security system with Chinese characteristics, is a new challenge we are now confronted with.

Theory and practice of social construction 81 Construction of social management mechanisms Social management is the function of the government and social organizations to organize, guide, plan, serve, coordinate, and control, as well as supervise, various sectors and aspects of social life through administrative, legal, and other means so as to ensure the normal, orderly, and safe operation of the society and realize the goal of social harmony and overall progress. Since the reform and opening up, great changes have taken place in all fields of economy and society. The former pattern of social governance in urban and rural areas no longer fits. It requires us to further study the laws of social management, update the concept and innovate the institutional mechanisms of social management, revise and formulate social policies and regulations, and integrate resources to strengthen social management. The 4th Plenary Session of the 16th CPC Central Committee proposed to establish a pattern of social management comprising “party committee leadership, government responsibility, non-governmental support and public participation.” This guideline conforms to the objective needs and is being implemented in all parts of the country. In light of the practice of social management in recent years, there is one problem that deserves attention in the innovation of the mechanisms of social management system; namely, how to make the regulatory function of the government conform to the logical direction of the law of social development (just as economic regulations should conform to the law of value). This also includes the questions of how to combine the regulatory mechanism of the government with the coordinating mechanisms of society, how to combine the administrative function of the government with the function of social autonomy, and how to combine the regulatory force of the government with that of non-governmental and voluntary organizations, gradually forming a new system of social management mechanisms coordinated with the socialist market economic system.

Like in economic construction, we should do a good job in social construction The 6th Plenary Session of the 16th CPC Central Committee proposed to place the building of a socialist harmonious society in a more prominent position. The 17th CPC National Congress further proposed to accelerate social construction with the focus on improving people’s livelihoods. These is a major strategic decision made by the Party Central Committee on the basis of the assessment of and in accordance with the overall situation of economic and social development. At present, China is facing unprecedented opportunities for development, but the challenges are also unprecedented. At home, China’s good and rapid achievements in economic construction are beyond the expectations of many people. Under such a good economic situation, the emergence of so many social contradictions and social problems is also what many people have not thought of. The 16th CPC National Congress put forward the goal of social harmony. The 3rd Plenary Session of the 16th CPC Central Committee proposed Five Coordinates in view of the Five Imbalances (五个不协调). The 4th Plenary Session proposed to strengthen

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the governing capacity of the party, including strengthening the capacity to build a socialist harmonious society. The 6th Plenary Session made a further decision on building a socialist harmonious society. All these have been widely recognized and supported by the broad masses of cadres and the people. From a sociological perspective, socialist modernization must follow the law of coordinated development of economy and society. First of all, economic development is the basis of social development. Economic development should be given priority. Second, to achieve sustainable economic development, there must be progress in science and technology, culture, and education. It should have the support of social construction and the guarantee of a harmonious and stable social environment. Otherwise, economic development will not be sustainable. Third, the purpose of economic development is to meet people’s material and cultural needs and realize the all-round development of human beings. Therefore, the ultimate goal of economic development is to serve and obey human development. One may say that economic development is the means and social development is the ultimate goal. At the previous stage, some regions took economic development as the sole objective and let GDP monopolize at the expense of development in other aspects. Social development, social construction, and the reform of the social system lagged seriously behind. Currently, the main contradiction in society is the disharmony between economy and society – the economic structure has reached the level of the intermediate stage of industrialization, while the social structure is at the level of early industrialization. This structural contradiction has become the main cause of numerous contradictions today. The central government’s proposal to build a socialist harmonious society and attach more importance to social construction is aimed at resolving this main contradiction. Building a socialist harmonious society is a long-term historical task that runs through the whole cause of developing socialism with Chinese characteristics. Therefore, we should put the building of a harmonious society in a more prominent position. The current situation of the lag of social development and social construction should be changed so as to achieve a coordinated development of economy and society. How can we do a good job of building a socialist harmonious society? In light of the readily available experience, what we should do is to carry out social construction as we carried out the economic construction. We should take social construction as an important part of the overall layout of socialist construction, and do good and solid work in carrying it out. First, more attention should be paid to social construction. In a sense, it is to make up a missed lesson. What we neglected in the past should be made up for as soon as possible. We should thoroughly apply the scientific outlook on development, continue to emancipate our minds, seek truth from facts, further our understanding of the importance and urgency of building a socialist harmonious society, genuinely put it on the agenda, and place it in a prominent position. We should change the state of solely advancing economic construction and truly develop an overall awareness of the necessity for a coordinated development of economy and society.

Theory and practice of social construction 83 Second, we should focus on development. This is the first priority of governance and national rejuvenation. It is also an inherent requirement for building a harmonious society. The problems that have arisen with reform and development are all problems in development and need to be solved through development. In particular, the current issues of livelihood – such as those relating to education, medical care, housing, and social security – all stem from the lag of social construction. Only development can solve these problems. However, development must be comprehensive, including social development, not just economic development. It should be a coordinated development of economy and society and a comprehensive, coordinated, and sustainable development. Third, we must continue to reform and open up. The 17th CPC National Congress clearly pointed out, “More importance must be attached to social construction on the basis of economic growth to ensure and improve people’s livelihoods, carry out social restructuring, expand public services, improve social management, and promote social equity and justice.”6 China’s social system, including the system of social undertakings, has undergone some reforms. Some of these reforms have achieved certain results, others are not so successful, and some have not even grasped the essence of the problems. The whole social system still bears the strong color of the planned economy era, and has not been fundamentally transformed according to the requirements of the socialist market economy. In the operation of the economy and society, contradictions between the two systems are very serious, and the social costs are very high. The systems such as the bifurcated urban-rural structure, the household registration system, and the employment and personnel systems, as well as the social security, education, and medical and health care systems, all need to be reformed. Social construction cannot be carried out smoothly without the reform of the social system. We must therefore promote institutional reform to make way for the smooth progress of social construction. At the present stage, to carry out social system reform will run into considerable difficulties as well as great resistance. It will involve the vital interests of many strata and social groups. It is in fact a revolution that must be meticulously planned and thoughtfully arranged, and combine a top-down approach with that of a bottom-up approach. Fortunately, we already have the experience of carrying out economic system reform, and have achieved great success. The reform of the social system reform will also be successful. Summing up the practice of socialist construction in the past 50 years, under the planned economic system, our government has had too much control over economic as well as social affairs. Practice has proved that it is not feasible for a government to take on everything. Rather, it should run as few affairs as possible. Through the reform of the economic system, we gave the people a free hand and managed less ourselves, and the economy made great strides forward. Social affairs are more complicated. As with the economic reform, we should also reform the social system. Let the people do the work, let social groups and non-governmental organizations do the work, and social construction will be certainly successful.

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Fourth, social construction requires organization and leadership, and should be carried out on an organizational basis. When we carried out the economic construction, the State Planning Commission (计委), the State Economic Commission (经委), the State Infrastructure Commission (基建委), and other economic departments were set up. These organs, together with the Central Committee’s Leading Group for Finance and Economy, made overall plans, organized, coordinated, controlled, supervised, led, and provided guidance to ensure that the economic construction was carried out in an orderly and effective manner. Although there were problems of one kind or another, it was generally successful. In the past 60 years, one basic experience we have obtained in state building is that any proposed strategic task must be carried out on an organizational basis. It can only be fulfilled when there are organizations and people to carry it out. If it only stays on documents and at meetings, it will become a mere scrap of paper. Positive and negative experiences have all attested to this. The success of family planning is the best example. For social construction to be successful, there must be an organizational guarantee. In 2007, Beijing set up a Social Work Committee in the municipal party committee system and a Social Construction Office in the governmental system. These two organs have one set of personnel and a joint office. There are six sections responsible, respectively, for planning, projects, social organization, community construction, party building, and qualified social workers’ team building. They have a staff of 55 members. The functions, units, and personnel of some sections and offices under the Civil Affairs Bureau, the Family Planning Committee, and other relevant ministries and bureaus are transferred to these two organs, which lead the organization and coordination of the social construction work in the whole city. In 2008, Beijing will set up corresponding institutions in various districts and counties. This is a practice worth learning from. Fifth, social construction requires considerable input. First of all, there must be leadership and personnel input. The Decision of the 6th Plenary Session of the 16th CPC Central Committee pointed out: “Party committees at all levels should put the building of a harmonious society in a prominent position in the overall work, keep to the set course, formulate policies, integrate forces, create the environment, and take on the leadership responsibility”; “We should adhere to the orientation of choosing the right people, properly select and strengthen leadership teams, and pay attention to training and selecting outstanding cadres who are familiar with social construction and management”; and “Building up a vast team of qualified social workers, a contingent of social workers with reasonable structure and excellent quality, is an urgent need for building a harmonious society.”7 In the process of economic construction, we have trained, selected, and created a large team of economic workers. If we want to do a good job in social construction, we also need to create a large team of social workers. At present, this team is still very small and scattered in various fields. It has not yet formed a joint force and achieved organizational advantage. We should, in accordance with the spirit of the decision made at the 6th Plenary Session of the 16th CPC Central Committee, set up corresponding institutions to organize and

Theory and practice of social construction 85 gradually expand in practice the ranks of personnel and qualified people engaged in social work so as to foster a team of social workers of a considerable scale, and do a good job in social construction. Second, there must be financial and material input. There was once a view that investment in economic construction was money making whereas investment in social construction was money spending. In a very long period of time, some areas and sectors invested a major part and even most of their financial resources in economic construction. Some even cut the necessary expenditure on social undertakings and sacrificed the development of the latter, causing an unbalanced and uncoordinated economic and social development. Practice has proved that this view is wrong. Since the 16th CPC National Congress, the government has increased investment in social undertakings and social construction, and the situation is improving. However, due to the long-time lack of investment and the fact that the distribution pattern of the national income has not been adjusted, there has emerged a problem of path dependence. When there is money, it is usually invested in economic construction. This should not happen in countries with a market economy. Investment in economic construction should be solved mainly through the market. According to Human Development Report 2004 of the United Nations Development Program, around 2001, public expenditure on education and health care in countries such as Sweden, Denmark, France, Germany, and Cuba was equivalent to 13–15% of the GDP and the proportion in Canada, the United States, the UK, Australia, and Japan was 10–12%, while in China, the proportion was only 4% – lower than Brazil, Thailand, and India.8 In recent years, the state has increased the investment in education and medical and health care, but the gap is still very large. In accordance with the decision of the 6th Plenary Session of the 16th Central Committee, we should: improve the public finance system and gradually achieve equal access to basic public services. We should adjust the structure of fiscal revenue, put more financial funds into the public arena, and increase financial input in education, health care, culture, employment and employment services, social security, environmental protection, public infrastructure, and public security. Truly increasing investment in social construction, promoting social undertakings and improving public services, and reducing social contradictions and social costs is, in fact, conducive to economic development. Sixth, two specific suggestions. The first suggestion is to move social construction from the fourth place to the second place in the four-in-one overall layout of building socialism with Chinese characteristics; that is, to change the current order of economic, political, cultural, and social construction to economic, social, political, and cultural construction. This is because the overall three-in-one layout of economic, political, and cultural construction has been in practice for too long and has become taken for granted. Social construction was proposed and added to the overall layout first at the 4th Plenary Session of the 16th Central Committee and was placed at the end

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after economic, political, and cultural construction. But according to the logical sequence of socialism, when economic construction reaches a certain level, the focus should be laid on social construction, and then on political and cultural construction. In view of our practice of socialist modernization, since the reform and opening up, we have focused on economic construction. In accordance with the requirements of overall development, the 6th Plenary Session of the 16th Central Committee proposed to place the building of a socialist harmonious society in a more prominent position and to pay more attention to social construction. Around the year 2000, there was a discussion in academic circles. Some held the view that the first 20 years was a period when economics flourished and made contributions, the next 20 years should be a golden age for the development of sociology, and 20 years thereafter will be a period when political science makes its contribution. There is some truth in this statement. Therefore, it is necessary to move social construction from the fourth to the second place in the overall four-in-one layout of the cause of socialism with Chinese characteristics. The second suggestion is that the Central Committee of the Chinese Communist Party and the State Council convene a conference on social construction work before or after the annual conference on economic work, or that the contents of social construction work be included in the economic work conference and the name of the conference is changed to the National Conference on Economic and Social Work. Since the first national conference on economic work was held in 1993, it has been held 15 times. At the end of each year, the principal responsible persons in the Central Committee of the CPC and the State Council will host a national conference on economic work attended by high-level cadres to analyze the situation, sum up the work, and define guidelines, main tasks, general requirements, and priorities for economic work in the coming year. This is essential for achieving a unified understanding among cadres at all levels across the country, clarifying their tasks, and concentrating their efforts on construction. Practice has proven that this is a very good and meaningful meeting format and working method. Now the tasks of building a socialist harmonious society and carrying out social construction have been put in a prominent position. The time has come to resolve the contradiction of unbalanced and uncoordinated economic and social development. Moreover, as it has not been long since the task of social construction was put forward, many cadres are not as familiar with social construction as they are with economic construction. It is therefore necessary to convene a conference on social construction work every year. This is of great importance for accelerating social construction and promoting scientific development and social harmony.

Notes 1 This article is part of the Introduction to the book 60 Years of Social Construction in Beijing (2008). Science Press. 2 Mao, Zedong (1991). Selected works of Mao Zedong, vol. 2. People’s Publishing House, p. 709. 3 Sun, Yat-sen (孙中山2002). Strategies for Nation Building. Huaxia Publishing House, pp. 300–301.

Theory and practice of social construction 87 4 Sun, Benwen (孙本文1974). A Theory of Sociology, vol. 2. Taiwan Commercial Press, p. 244. 5 Decision of the CPC Central Committee on Major Issues Concerning the Building of a Socialist Harmonious Society: A Reader (2007). People’s Publishing House, p. 27. 6 Editor’s note: Hu Jintao’s report at the 17th CPC National Congress on October 15, 2007. The full title of the report is Hold High the Great Banner of Socialism with Chinese Characteristics and Strive for New Victories in Building a Moderately Prosperous Society in All Respects. 7 Editor’s note: Decision of the CPC Central Committee on Several Major Issues Concerning the Building of a Socialist Harmonious Society adopted at the 6th Plenary Session of the 16th Central Committee on October 11, 2006. 8 See Scientific Development and Social Harmony (2007). Social Sciences Academic Press (China), p. 16.

7

The core task of social construction at the new stage Adjustment of social structure1

China has entered a new stage centered on social construction The practice of modernization shows that at different stages of development, the tasks and modes of development of a country or a region exhibit periodic features. In the early stage of development, the level of productivity is low and labor products are few. The main tasks in promoting social development are to solve the problem of food and clothing, and meet the needs of people’s basic material lives. Thus, this stage is mainly oriented to economic development, which has the priority over social development. It is only natural that the feature of this stage is the uncoordinated development of economy and society. After entering the intermediate stage of development, the backward state of productive forces has been greatly improved. The problem of food and clothing has been preliminarily solved, and the basic material needs have been satisfied. People’s demand for spiritual culture beyond material life and for all-round development are becoming more and more urgent. If the strategic objectives are not adjusted to meet the needs of the people at this stage, the contradiction of uncoordinated economic and social development will become more prominent. Coexistence of outstanding economic achievements and sharp social contradictions On the one hand, outstanding achievements have been made in the development of the economy. In the past 30 years of reform and opening up, China’s GDP has grown rapidly at an average annual rate of 9.8%, a rate rarely seen in the history of world economic development. The comprehensive national strength has risen to a new level and become the third largest economy in the world. Calculated at comparable prices in 1978, the per capita disposable income of urban and rural residents and the per capita net income of rural residents have increased by 7.16 times and 6.93 times, respectively, from 1978–2008. The living standard of people in general has reached a moderately well-off level.2 Since China became the world’s largest foreign exchange reserve country in 2006, its foreign reserves have grown at a double-digit average monthly rate. By the end of 2009, the balance of state

Social construction at the new stage 89 foreign exchange reserves had reached $2.1316 trillion US, accounting for more than one-fourth of the total foreign exchange reserves in the world. This is something neither China, which was still in a state of economic shortage 30 years ago, nor the world could think of. It also went far beyond the blueprint of the designers at the beginning of reform and opening up. It is no exaggeration to describe the changes in China as earthshaking. On the other hand, social contradictions and problems are acute and prominent. While the achievements in economic construction are far greater than expected, so many social problems and contradictions are also unexpected. When the reform and opening up were initiated in 1978, a general understanding was that poverty and economic backwardness were the main causes of the contradictions and difficulties that China faced at that time. These problems would be readily solved if we did a good job in economic construction. Today, great achievements have been made in economic construction – but contradictions and problems in the social sphere have not become fewer, but more. People’s livelihood issues such as housing, education, medical care, and care for the elderly are becoming increasingly prominent. The gap between the rich and the poor, between urban and rural areas, and among regions continues to expand. Conflicts in labor relations and among social interest groups are becoming increasingly apparent. Problems that can easily lead to destabilizing events such as land expropriation, house demolition, enterprise restructuring, and law-related events and lawsuits are prominent. In some places, serious violent crimes such as murder and kidnapping are increasing. There is also a rise in property crimes such as looting, robbery, and burglary. There have been new developments in public security. Group incidents, in particular, increased nearly tenfold from 1993–2005.3 Since 2008, group incidents as represented by the Weng’an incident4 in Guizhou province and the Tonghua incident5 in Jilin province have shown a trend of spreading. Social stability is a growing problem. The achievements in economic construction are greater than expected, and the emergence of multiple social contradictions are also unexpected. These two unexpected phenomena began to manifest themselves when China entered a crucial stage of development; namely, after the intermediate stage of industrialization. These are the new periodical features in China’s current economic and social development. China has entered a new stage focusing on social construction The experience of social construction abroad has shown that the periodical features of China’s development at present have also appeared in the course of the development of modern countries in the world. The end of the 19th century and early 20th century was a critical transitional period in the United States. While the economy developed rapidly, there also emerged social crises, such as the wide gap between the rich and the poor, and social disorder. However, at this stage, the United States timely carried out social structural reform, intensified social construction, and resolved the social crises relatively well. Social development was adapted to the process of industrialization. After World War II, Japan’s economy grew rapidly. Especially after 1960, the economy grew even faster, more than

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anyone had expected. At the same time, there emerged prominent social problems. The social structure was out of keeping with the economic structure, which caused people’s lives to be in an abnormal state. Already in the late 1970s, some scholars commented: “In terms of the balance between economic development and social development in Japan at that time, production was the first class, national income and consumption came next and living environment of the people such as housing was the third class.”6 In order to solve the problem of imbalance, Japan carried out social construction on a fairly large scale. However, for various reasons, social construction did not work out effectively. Japan paid a considerable price for the success in becoming an economic power. For example, problems such as the living environment have not been completely solved up till today. The development path of Latin America also showed the importance of social construction. In the late 1990s, the economic situation in Latin America was seriously worsened. Unemployment rate continued to rise. The gap between the rich and the poor, polarization, social unrest, and various social contradictions became pronounced and intensified, forming the “Latin America Trap” that was considered difficult to jump out. The root causes of this were an insufficient understanding of the role of social construction, insufficient efforts in social system reform, and the failure to create a social structure compatible with the economic structure. Whether it is the successful experience of the United States, the price of success in Japan or the lessons of Latin America, they all manifest the unneglectable and irreplaceable role of social construction in the process of development. We should understand the current stage of social development in China from the perspective of social construction. Since the 16th CPC National Congress, we have obtained a better understanding of the importance of social construction and included the task of social construction in such important documents as the constitution of the reigning party. In 2004, the 4th Plenary Session of the 16th CPC Central Committee for the first time put forward the strategic tasks of building a socialist harmonious society and social construction. In 2007, the overall pattern of building socialism with Chinese characteristics was expanded from the trinity of socialist economic, political, and cultural construction to a pattern of four-inone. Social construction was added and has become an important part of overall development. Entering the 21st century, while adhering to taking on economic construction as the central task, the government has repeatedly stressed that social construction should be placed in a more prominent position, and that attention should always be paid to the practice of social construction. This marks that China is undergoing the second transformation since the beginning of the 21st century and has entered a new stage with social construction as the focus. The core task of social construction is to adjust the social structure The report of the 17th CPC National Congress pointed out: Social construction is closely related to the well-being of the people. More importance must therefore be attached to social construction on the basis of

Social construction at the new stage 91 economic growth to ensure and improve people’s livelihood, carry out social restructuring, expand public services, improve social management, and promote social equity and justice. We must do our best to ensure that our people enjoy their rights to education, employment, medical and old-age care, and housing so as to promote the building of a harmonious society. From a sociological perspective, the contents of social construction all boil down to the adjustment of social structure. As long as we focus on the adjustment of the social structure, we have grasped the core of social construction. At present, building up a modern social structure compatible with the economic structure and promoting a coordinated development of economy and society through various work are the key tasks that we face and strive to accomplish. By social structure, we mean in general the way in which social members who possess certain resources and opportunities are organized and the pattern of their relations in a country or a region. Quite a few textbooks in sociology define social structure as the configuration and state of the major elements within a country or a region. In our view, this generalization fails to capture the essential elements and mechanisms that constitute social structure, and these elements and mechanisms are precisely the analytical dimensions indispensable for understanding how social structure is possible. Therefore, we believe that social structure is the result of the allocation of social resources among members of a society and their chances (fairness) of obtaining such resources. This way of seeing social structure is of greater theoretical and practical significance for understanding the state of social structure and for its adjustment. Generally speaking, social structure has the important features of being complex, integrated, stratified, and relatively stable. An ideal modern social structure should have such essential features as fairness, reasonableness, and openness. More concretely, the social structure of a country or region comprises a variety of substructures. Apart from the population structure as a basic element, there are also family structure and structure of social organizations which reflect the way of social integration; urban-rural and regional structures which express the form of spatial distribution, employment, income, and consumption structures which give expression to the mode of survival activities; and structure of social strata which embodies the pattern of social status. In these substructures, the structure of social strata is the core, directly or indirectly reflecting the situation of all aspects of the social substructures. Changes in the substructures are interrelated. The change of one substructure will affect the changes of other substructures. Adjusting the social structure involves the adjustment of its many substructures, especially the structure of strata, so that they are in line with the processes of economic and social development.

Profound changes in contemporary Chinese social structure Since the reform and opening up, profound changes have taken place in China’s social structure. One may say that these are unprecedented changes that haven’t

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been seen in thousands of years. The economic and social structural reforms have greatly accelerated the transformations of society from agricultural to industrial, from rural to urban, and from traditional to modern. The profound changes that have taken place in China’s social structure manifest themselves mainly in the following five aspects. Substructure: dramatic demographic changes Population structure is a substructure of social structure. From 1978–2007, the birth rate in China dropped from 18.25% to 12.1%, and the mortality rate remained at a relatively low level of 6.5%, while the natural population growth rate decreased from 12% in 1978 to 5.17% in 2007. Other great changes have also taken place in the age, quality, and spatial distribution structures of the Chinese population, which are manifested mainly in the following aspects: the average life expectancy of the population is prolonged, the population is aging, the cultural quality of the population has been significantly improved, and the spatial distribution of the population shows that large numbers of people are migrating from rural to urban areas and from backward areas to the economically more developed coastal regions. The fundamental changes in the population structure are having an impact on changes in the family, employment, and strata structures. Structures of social integration: family and organization structures are constantly changing Families are the cells of society. With the changes in the population structure, the family structure in China, its pattern, and social integrating functions have also undergone significant changes. First, family size has become smaller. The average size of families decreased from 4.41 persons in 1982 to 3.16 persons in 2008. Second, family types have become diversified. With the growing diversity of values in love and marriage and the rural-urban migration, family types have also shown a trend of diversification. DINK families,7 empty-nest families, and single families have appeared in cities, while the proportion of families in which grandparents assume the responsibility of bringing up grandchildren is rising in rural areas. Families leading a wandering life and separated nuclear families have also increased. Third, the pattern of family structure has changed. In urban areas, the 4–2–18 pattern is predominant, while in rural areas, the model of 4–2–29 is basically formed. Fourth, family relations have become more equal, manifested mainly in the relations between husband and wife, and among family members. Organizational structure and its integrating functions have changed. Since the reform and opening up, with the disintegration of the centrally planned system and the establishment of the market economic system, the greatest change in the organizational structure is that with structural differentiation and growth, the allocation of resources and opportunities have undergone major changes. Organizational functions have also gone through constant re-engineering. First of all, the ways and functions of government organizations to manage and control the economy

Social construction at the new stage 93 and society are changing. From being “omnipotent” (全能型), the government is re-emphasizing its public service function. Second, with the growth of enterprises and their becoming the mainstay of the market, the production function of state-owned enterprises has been strengthened, and the non-productive functions have been stripped off. Non-public enterprises and individually owned industrial and commercial businesses have grown on a large scale. Third, social organizations begin to develop and perform a social integrating function beyond those of the state and the market. In 2008, there were about 414,000 social organizations registered nationwide, including about 228,000 social groups, 182,000 private non-enterprise units and 1,597 foundations. These organizations recruited more than 4.758 million people from all walks of life. They have become important integrating forces in building a socialist harmonious society. Structure of necessity-pushed activities: changes in the three major structural markets of employment, income distribution, and consumption The structure of people’s necessity-pushed activities mainly includes the structures of employment, income distribution, and consumption, which reflect the allocation of resources and opportunities and its processes. The employment structure is the allocation of labor force in industry, trades, and professions, and to various posts. The distribution of labor force in contemporary China has changed from the state of natural economy before the founding of New China to that of the planned economy before the reform and opening up, and then to the current mode of labor distribution through the market economy. The population employed in agriculture is no longer the absolute majority of the total population. Employment in non-agricultural industries has exceeded that in agriculture. In the meantime, the population employed in the tertiary industry has exceeded that in the secondary industry. Until 1978, the distribution structure of the country’s 400 million employed population in the three industries was 70.5:17.3:12.2. After 1978, the employment structure changed significantly. By 2008, the distribution pattern of the total employed population in the three industries had evolved to 39.6:27.2:33.2. The non-agricultural employed population accounted for 60.4%. From 1978–2008, the number of employees in the secondary and tertiary industries increased by 11.664 million per year on average. The issue of income distribution concerns not only people’s livelihoods and social fairness and justice, but also the long-term stability of the country. Since the reform and opening up, the reform of China’s distribution system has continued to deepen. The system of income distribution and the framework of redistribution have undergone fundamental changes. The enormous changes in the income distribution structure have broken the egalitarianism and the “big rice bowl” situation.10 A distribution system in which multiple modes of distribution coexist, with the distribution according to one’s work as the principal form, has taken shape. It has greatly stimulated the vitality of members of society and many industry sectors, aroused the enthusiasm of the working people, and vigorously promoted

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economic and social development. At present, the main problems in China’s income distribution are the excessive income gap between urban and rural areas, among regions and various strata, and polarization between the rich and the poor, which has already had a negative impact on social harmony and stability. Consumption not only promotes social differentiation from one direction; it is also an important mechanism of social integration. In the past 30 years, the consumption structure of Chinese residents has changed from a necessity-pushed style to one of having adequate food and clothing, and then to a moderately welloff and well-off style of consumption. The Engel coefficient11 of urban households fell from 57.5% in 1978 to 37.9% in 2008, reaching the level of affluence. The Engel coefficient of rural inhabitants fell from 67.7% to 43.7%, reaching a moderately prosperous level. Although still far from below the threshold level of 30% in developed countries, it is of great significance. The proportion of consumption expenditure on education, science, culture, and health care in the consumption structure is continuously increasing, showing more and more important features of the advanced consumption structure of modern societies. Moreover, major changes have taken place in the dominant force which promotes the changes in the consumption structure of Chinese residents. The consumption functions have become more diversified. More importantly, social markers of consumption are gradually enhanced. Spatial structure: continuous adjustment of the allocation of resources and opportunities between urban and rural areas, and among regions Urban and rural, as well as regional, structures are formed through the spatial allocation of social resources and opportunities. Changes in China’s urban-rural structure are manifested, first of all, in urbanization, namely with the progress of industrialization, a large share of the rural population has been transformed into urban population and the traditional rural society has gradually been changed into an urban society. In 1952, China’s urbanization rate was only 12.8%. In 1978, it was 17.9%. In 26 years, the urbanization rate increased only 5.1 percentage points. After 1978, the process of urbanization began to accelerate. Calculated on the basis of the resident population in cities and towns, the urbanization rate reached 45.7% in 2008, approaching the generally recognized urbanization level whereby urban population accounts for 50% of the total population. Second, changes in the urban-rural structure are also manifested in the transformation of the bifurcated urban-rural system – namely, the development of the market economy breaking the administrative monopoly over the allocation of resources and opportunities in urban and rural areas – and loosened the bifurcated urban-rural social structure formed in the planned economy period. Rural reform, which began in 1978, broke the constraints of the system of bifurcated urban-rural property rights. Rural areas obtained relative autonomy in the allocation of resources, which led to a series of changes in the urban-rural system. Since the beginning of the 21st century, the state has put forward the strategy of

Social construction at the new stage 95 balancing urban-rural development and successively introduced a series of measures to support and benefit farmers. Rural areas and farmers have reaped tangible benefits. However, the gap between urban and rural areas is still very large. Since the reform and opening up, disparities in regional development are increasingly evident. The regional interaction mechanism has changed from single to pluralistic. The pattern of economic and social development in western, central, and eastern regions has gradually taken shape. The patterns and speed of economic and social development in different regions have become more distinct. The gap in living standards and development opportunities between members of society are gradually widening. Generally speaking, the level of development is the highest in the eastern region; next comes the central region, and the lowest level of development is found in the western region. The gap between the three major regions is evident. In 2008, the 11 provinces and municipalities in the eastern region – Beijing, Tianjin, Liaoning, Shanghai, Jiangsu, Zhejiang, Shandong, Fujian, Guangdong, Hainan, and Hebei – accounted for 9.5% of the land area and 40% of the population in the country, but created 58.4% of the country’s GDP, whereas the inland areas of the central and western regions, which accounted for 90.5% of the land area and 60% of the population, created only 41.6% of the GDP. The imbalance of regional structure is the basic national condition in China at present, and coordinating regional development is an important aspect of the current social structure adjustment. Status structure: a modern structure of social strata has been initially formed With the evolution of historical processes, changes in social factors such as systems and structures, and in the ways of resource allocation and opportunity acquisition, the structure of social strata in China has undergone profound changes, which have become symbolic of the core changes in the social structure of contemporary China. From 1949–1978, the change in the structure of social strata was a process of simplification. With the establishment of socialist public ownership and the planned economic system, the structure of social strata of two classes and one stratum consisting of workers, peasants, and intellectuals was finally formed. Since 1978, with profound changes in the economic system, important changes have taken place in the ways in which resources and opportunities are allocated. The original single mode of centralized allocation has been transformed into joint allocation by the state, the market, and society. This promoted the changes in the social structure and served as a catalyst for the formation of new social strata and groups, such as private enterprise owners and migrant workers. As a result, the society has been differentiated into a stratified structure of “10 major strata.”12 In terms of access to opportunities, since 1978, especially at the initial stage of the reform and opening up, policies and institutions of the state on the whole played an important even a decisive role in the acquisition and ups and downs of people’s social status. The role of ascribed factors (先赋因素) was evident.

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However, with the lapse of time, the whole society becomes more open, and later efforts (后致努力) gradually become the main principle for obtaining opportunities of upward mobility. In the past 60 years since the founding of New China, especially in the past 30 years of reform and opening up, the profound changes in China’s social structure have promoted the formation of an embryonic modern structure of social strata. The distribution of resources and opportunities among social strata constitutes the objective basis for positions in the social hierarchy. The ability of members of different social strata to obtain resources and opportunities has become an important factor in changing their status in the social hierarchy. With the disintegration of the prereform structure of two classes and one stratum and the gradual formation of new social strata, the structure of social strata has changed from simplification to diversification and from being closed to open. A modern structure of social strata has basically taken shape. Moreover, the proportion of the middle class continues to expand, which is a clear manifestation of the new structure of social strata in contemporary China. According to our calculation, China’s middle class accounted for 22% of the total employed population in 2007, an increase of 7 percentage points over the 15% in 1999. Currently, the proportion of the middle class increases about one percentage point annually. About 8 million people have entered the middle class. Nevertheless, we must not lose sight of the fact that the modern transformation of the structure of social strata in China is far from complete. The proportion of middle and lower strata is still very large and that of the middle stratum (中层) is relatively small. The overall structure shows the shape of an onion.

Contribution of social structural changes to the development of China’s economy Changes in China’s social structure have significantly contributed to the development of China’s economy. In modern society, apart from state intervention and market adjustment, the transformation of social structure is another “invisible hand” that affects the allocation of resources and economic development. It is both the result of economic growth and a driving force of social change.13 The recovery of the economic functions of the family promotes economic development After 1949, with the completion of the socialist transformation, rural land became collectivized. The productive function of rural families was seriously damaged. After 1978, with the introduction of the household contract responsibility system, farmers obtained the right to use and manage the contracted land with individual households as the units. The productive function of farmers’ families was restored, which greatly increased farmers’ enthusiasm for production. The development of agriculture in China entered a new stage of rapid growth. In cities and towns, the economic functions of families were basically transformed after 1956. On the one hand, with the transformation of the individual

Social construction at the new stage 97 economy, the household-based individual economy lost its space for existence. On the other hand, the establishment of the national supply system and the policy of high accumulation and low consumption (高积累, 低消费) kept the consumption function of urban families within the strict institutional arrangements of the state. Urban families lost the space of autonomous consumption. After the focus of the policy of reform and opening up was shifted from rural areas to cities, the development of the individual economy was first allowed by the policy. Families in urban areas regained the possession and control of the means of production. Individually owned businesses emerged like bamboo shoots after a spring rain, opening the prologue to urban reform. At the same time, with the development of commodity economy and the boom of the market, the consumption function of the family returned automatically, which further promoted the development of the commodity economy. Adjusting the employment structure to rationalize the allocation of labor force Before the reform and opening up, China’s labor employment system was highly unified and administered by the state. The employment structure was quite rigid, and the flow of labor force was hindered. After the reform and opening up, with the reform of the economic system, a large number of agricultural workers rapidly moved from the primary industry to the secondary and the tertiary industries. Farmers gained the right and opportunities to obtain employment in non-agricultural sectors. This not only solves the problem of the urgent need for a large number of cheap laborers in the secondary and tertiary industries, but also makes the income of rural laborers more diversified. Moreover, it makes China a “world factory,” and its products have gained more competitive advantages under the trend of globalization. In other words, the entry of a large number of rural laborers into cities has not only accelerated the pace of urbanization and changed the urban-rural structure, but has also realized an optimal allocation of human resources in urban and rural areas, which is of great significance for the overall development of the economy. The return of the functional autonomy of social organizations promotes the reform of the economic system Before the reform and opening up, the state exercised the overall control of the entire society, forming an all-embracing organizational structure.14 After 1978, along with the changes in the organizational structure, the functions of the three major organizations – the state, the economy, and the society – began to return to the direction of autonomy. First, the overall control of the state continues to shrink and evolves towards standardization and legalization, thus gradually changing the situation of the state assuming all responsibilities. Second, the production functions of enterprises have been strengthened and their social functions gradually removed, which is of great importance for the development of the

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market economy. Third, autonomy in social life continues to grow, and relatively independent social organizations begin to develop. Social organizations grow in the process of the gradual withdrawal of the state from the social sphere and economic organizations as the main body of the market continually stripping off their social functions while failing to assume the social responsibilities as they should. Therefore, social organizations have the function of filling the gaps left by the withdrawal of the state and enterprises from the social sphere in an organized form. In view of these changes, one can say that the return of the autonomy of various organizational functions intensifies the diversification of resource allocation mechanisms under professional differentiation. In other words, the allocation of resources and opportunities has changed from being entirely controlled by the state to joint allocation by the state, the market, and the society, which has greatly improved the efficiency of resource allocation and made an important contribution to economic growth and social development. Adjustment of urban-rural structure enables the unfolding of the spatial build-up effects of resources and opportunities Cities are regional structural arrangements to reduce the costs of resource allocation. The larger the city, the lower the costs. The structural changes in urban and rural areas since the reform and opening up are, in essence, a reallocation of resources and opportunities between urban and rural areas. Although urbanization today still lags behind industrialization and the urban-rural structure is still unsound, urbanization in China has accelerated in the past 30 years of reform and opening up, which has made the allocation of resources and opportunities between urban and rural areas more efficient and effectively promoted economic development. First of all, it has boosted the build-up effect of vocational production; second, it has facilitated the adjustment of the industrial structure; and third, it has promoted the growth of consumers and the expansion of consumption, which in turn has stimulated the growth of the economy. The rise and development of new social strata greatly enhances the vitality of the socialist market economy In the new structure of social strata that has been developing continuously since the reform and opening up, the strata that control and operate economic resources are rising and growing steadily. They include private business owners, managers, and individual industrial and commercial households. The sustained and rapid growth of China’s economy since the reform and opening up is closely related to the growth of these strata that control and manage economic resources. It can be said that without the development and growth of these new social strata in the market economy, China’s economic growth could not have been as great as it is today. In 2007, private enterprises in China amounted to 62.25% of the total number of domestic enterprises. The registered capital was 9.3873 trillion yuan, and the amount of paid taxes was 477.15 billion yuan. Private enterprises have become

Social construction at the new stage 99 an important force in promoting the development of the market economy in China. In addition, the emergence of migrant workers as a new social stratum has created enormous wealth for the country. The great contributions made by migrant workers should occupy a very important and glorious position in the history of China’s industrialization, modernization, and urban construction.

The crux of many current social contradictions In the process of economic growth, due to the lag of change in the social structure, the efficiency of resource and opportunity allocation takes precedence. This does not always lead to fairness. In other words, changes in the economic structure do not always promote reasonable change in the social structure. Once the social structure lags behind the change of the economic structure and various social substructures themselves are not coordinated, social contradictions and problems will emerge endlessly. Since the reform and opening up, China’s social structure has undergone profound changes, which have generated positive economic implications. However, during a long period of time, due to the excessive pursuit of economic growth, social construction has been neglected to some extent and resource allocation is clearly insufficient, resulting in the lag of social structure adjustment. Moreover, some of the anachronistic systems (such as the household registration system) formed during the period of the planned economy have not been fundamentally changed. Some policies (such as the policy of distribution regulation) formulated since the reform and opening up have not been adjusted in time along with the changing situation. These problems have caused or aggravated to varying degrees the unfairness of access to social resources and opportunities in China. As a result, in the social system, the irrational mechanism of resource allocation has led to the decoupling between the change in the social structure and the evolution of the economic structure. On the one hand, the development gap among members of society is widening; and on the other hand, it has become more difficult for a considerable number of members in society to obtain resources and opportunities. The lag of the adjustment of the social structure has gone beyond the reasonable limit. Changes in China’s social structure lag behind the development of its economic structure by about 15 years. Some important indicators of the current development have shown that China’s economic structure has reached the level equivalent to that at the intermediate stage of industrialization. In some aspects, according to some indicators, it has come to the level of the late stage of industrialization. So far as changes in the industrial structure are concerned, the pattern of “one-twothree” in the early stage of industrialization has changed to that of “two-threeone” in the intermediate stage of industrialization.15 When it comes to the level of per capita income, the per capita GDP or GNP in US dollars also indicates that industrialization has on the whole reached the level of the intermediate stage of industrialization. The indicators of social structure, on the other hand, show that the social structure has not been transformed along with the changes in the economic structure. Most indicators show that China’s social structure is still

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one at the early stage of industrialization. For example, so far as changes in the urban-rural structure is concerned, the urbanization rate at the intermediate stage of industrialization should be more than 60%, but the urbanization rate in China was only 44.9% in 2007. For another example, in the intermediate and late stages of industrialization, the scale of the middle class in a country or region is generally 22.5–65%. According to the study of our research group, the scale of the middle class in China was around 22% in 2007, indicating that the size of the middle class was still that at the early stage of industrialization. There are not only deviations between the economic and the social structures; the deviations are also quite large. Take the employment structure as an example. If the number of employees in the primary industry is calculated at an average annual decline of 1% over the past 30 years of reform, it will take about 25 years for the current employment structure to transform and reach the corresponding indicator sat the intermediate stage of industrialization. For another example, if the urbanization rate is calculated at an average annual increase of 1% over the past 30 years of reform, it will take more than 15 years for the urbanization rate to reach the target of over 60% at the intermediate stage of industrialization. As a third example, in terms of Engel coefficient of the consumption structure, if it is calculated at an average annual decrease of 0.82% for urban residents and 0.71% for rural inhabitants over the past 30 years, it will take at least nine and 16 years, respectively, for the coefficient to drop to the level below 30% at the intermediate stage of industrialization. Finally, when it comes to the size of the middle class, calculated on the basis of an annual increase of one percentage point in recent years, it will take about 18 years to reach the level of 40% in developed countries. Putting these indicators together and considering various factors such as China’s economic development in recent years, we can say that China’s social structure lags behind the economic structure by about 15 years. If we do not carry out the corresponding social system reform in the near future and do not increase the intensity of social construction, then, according to the current pattern of development, China’s social structure will not reach the level of the intermediate stage of industrialization until around 2025. Besides, there are also deviations within the social structure; that is, between various social substructures and the general indicators. According to the general international experience in the modernization process, the modern transition of urban-rural structure must go through three transformation points in sequence: the first is the transformation point of the output value structure, that is, when the proportion of non-agricultural output value rises to more than 85% of GDP; the second is the transformation point of urban-rural structure, namely when the proportion of urban population increases to more than 50% of the total population; and the third is the transformation point of the employment structure, that is, when the number of non-agricultural employees rises to more than 70% of the total employed population.16 Until 2008, the total agricultural output value was only 11.3% of GDP, and the proportion of urban resident population accounted for 45.7% of the total population, which was 5 percentage points lower than the target of more than 50%. The labor force engaged in non-agricultural sectors accounted

Social construction at the new stage 101 for only 60.4% of the total employed population, which was nearly 10% lower than the target of more than 70%. These deviations are among the structural reasons why the problems relating to agriculture, rural areas, and farmers have not been solved for a long time, and why it has been difficult on the whole for farmers to become better off after the problem of food and clothing had been solved. To give another example, according to the experience of industrialized countries, there is on average one social organization for every 100 people. Modern social organizations are an important integrating force in industrialized and urbanized societies and play a very important role in social management. According to the statistics from relevant departments, at the end of 2008, there was one social organization for every 3.115 people in China. The gap was more than 30 times that of industrialized countries. In general, changes in the social structure in China lag behind the development of its economic structure. This, together with the various deviations and lack of coordination within the social structure, are the main source of structural tensions and the emergence of many social contradictions and problems in society.

Policy orientation of social structure adjustment The essence of social structure is the allocation of resources and opportunities among members of society. Social structure is reasonable when resources and opportunities are properly allocated. Otherwise, problems of incoordination will occur in the social structure. The basic principle of social structure adjustment is therefore how to maximize fair and reasonable allocation of resources and opportunities. The objectives of China’s social adjustment at present are accelerating the pace of urbanization and adjusting urban-rural structure; improving the income distribution system and adjusting the income distribution structure; regulating the labor market, improving labor relations, and adjusting the employment structure; and promoting the development of the middle class and the formation of a modern structure of social strata. The focuses of social structure adjustment First, accelerate the pace of urbanization and adjust urban-rural structure. At present, China’s urbanization rate is not only lower than the world’s average level, but also lower than the level of many developing countries. This low level of urbanization also includes more than 100 million migrant workers who are statistically put under the category of permanent urban residents but who are not, strictly speaking, complete urban residents. Pushing ahead with urbanization and changing the current irrational urbanization pattern is therefore an urgent task. This naturally involves a series of policy adjustments such as the adjustment of household registration, employment, education, and social security systems in the urbanization policy. It is a historical trend to endow migrant workers with the status of urban residents and make the economic identity of modern industrial workers consistent with their social identity.

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Second, improve the income distribution system and adjust the income distribution structure. In terms of the income distribution structure, we should improve the income distribution system and gradually solve the problem of unfairness in primary distribution and redistribution. First of all, we must adjust the pattern of income distribution on the macro level and increase the proportion of labor income in the primary distribution. Second, we must speed up the reform of and improve the social security system. At present, there are many aspects of the current social security system that are unreasonable. For example, welfare benefits and social security payments in developed areas and sectors, and for strata and groups in advantageous positions, are much higher than those of ordinary social groups, especially the vulnerable and disadvantaged sectors and strata. The secondary distribution systems such as that of social security should not become a “welfare net” for those strata who are already in an advantageous position. It should rather become a genuine “safety net” for the vulnerable groups in society. Third, regulate the labor market, improve labor relations, and adjust the employment structure. Generally speaking, at different stages of development in a country or a region, the main tasks and modes of development are different. The employment structure and the labor relations are also different. At the early stage of development, many developing countries or regions, taking the advantage of cheap labor in their own countries or regions, compromise the requirements of labor protection in order to attract investors. Strong capital and weak labor has become a general feature that characterizes labor relations at this stage. However, with the progress of industrialization, labor laws and regulations must be adjusted accordingly. On the one hand, the imbalance and conflicts of interests caused by the labor relations of “strong capital and weak labor” is not only unfair, but also affects efficiency negatively. On the other hand, with the development of industrialization, labor-intensive enterprises being gradually replaced by technology-intensive enterprises has become a trend, making further adjustment and upgrading of industrial structure an inevitable choice. This requires workers to have higher skills to meet the new needs of industrialization. Therefore, the basic position of legislation on labor relations in this period will change from curbing labor costs to encouraging the training of highly skilled and productive workers. The timely realization of such a transition is one of the keys that determines whether a country or region will succeed in transforming its development model. Fourth, promote the development of the middle class and the formation of a modern structure of social strata. So far as the status of the current structure of social strata in China is concerned, the emphasis of social policy regulation should be laid on strengthening the middle class, reducing the middle and lower strata in society, and coordinating and integrating the interest relations of different strata. First, the middle class should be strengthened. The state has introduced a series of positive policies to enlarge the proportion of the middle class, increase the property income of residents, and expand the enrollment of colleges and universities, which have achieved good results in practice. Nevertheless, the current support for small and medium-sized enterprises as well, as relevant policies concerning housing, medical care, and social security of the middle class, should be further

Social construction at the new stage 103 improved and implemented. Second, the middle and lower strata in society should be narrowed down. It is above all the size of the stratum of agricultural laborers and that of the unemployed and semi-unemployed that should be reduced. In the meantime, the economic and social status and treatment of the members of these strata should be improved. To this end, we should actively increase employment, encourage the transfer of rural labor force, and create employment opportunities for the unemployed and semi-unemployed. We should do our best to provide work for these people and enable them to live by their own labor. We should continue to pay attention to the protection of the rights and interests of migrant workers, and make it possible for them to become integrated into the cities in various forms. At the same time, we should pay attention to the overall coordination of interest relations between the upper and lower echelons of the society to reduce and mitigate conflicts of interests between them. Specific policy recommendations for the adjustment of social structure First, speed up social construction, adjust the allocation pattern of public resources, and raise the level of universal access to the supply of public goods. At the new stage of social construction, we should be resolute in adjusting the allocation pattern of public resources; change the previous inclination to areas related to economic construction to areas related to social construction; increase the investment in such social undertakings as education, medical care, science and technology, and culture; accelerate the development of social undertakings; and realize the rational allocation of resources. Only in this way can we solve the dilemma of unbalanced and uncoordinated economic and social development. Second, push ahead the reform of the social management system. Much attention was previously paid to the reform of the economic management system and the adjustment of the economic structure. This was an inevitable requirement of the times. Now we need to pay more attention to the reform of the social management system and promote the development and growth of society itself. The current emphasis is to speed up the institutional reform in areas of household registration, employment, social security, and community building. This is an important part in resolving many economic and social contradictions, and in the building of a socialist harmonious society. Third, we should continue to strengthen the interest integration mechanisms to ensure social stability and order. The transformation of China’s social structure is taking place in the context of policy and institutional changes, the transition of the economic system, and the adjustment of the pattern of interests. Different interest groups become divided as a result of these changes. On the whole, the adjustment of interest integration mechanisms lags behind the needs of economic and social development at present. Various interest relations are highlighted by frequent conflicts of interest between urban and rural areas, among regions, and between social strata. In the meantime, the tendency towards structuration, systemization, and even solidification has begun to emerge. All these make it more important

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and urgent to further build up the interest integration mechanisms to ensure social stability and order. Fourth, actively promote the transformation of governmental functions. For a long time, the Chinese government had been an economic construction-oriented type of government. Under the planned economic system, the government was simply the main force of economic construction. Since the reform and opening up, even after the socialist market economic system has been established, the problem of excessive government intervention in the micro economy has not been completely solved, due to the influence of the planned economy inertia of thinking. The neglect and marginalization of public services becomes inevitable. These problems cannot be solved simply through economic development and direct engagement of the government in economic activities. Therefore, the report of the 17th CPC National Congress clearly put forward the goal of building a service-oriented government. This makes it necessary to further straighten out the relationship between the government and the market. The government should truly take social construction as the core and increasingly hand over matters such as economic development and improving efficiency to the market. Fifth, further develop and strengthen social organizations. First of all, we should reform as soon as possible the registration and management system of social organizations, the dual management system, and the system of hierarchical management (分级管理制度). We should gradually abandon the non-competitive principle and eliminate the registration dilemma in the development of social organizations. All social organizations that do not violate the Constitution and relevant laws of the state and all social organizations that aim to promote the public good and the common interests of legitimate members should be directly granted registration. We should solve the dilemma of affiliated institutions’ unwillingness to take management responsibilities due to the current affiliation system, so that social organizations can become independent corporations and undertake necessary legal and political responsibilities independently. We should deepen the reform of the social management system, truly separate government from society, reform the distribution system of public and social resources closely related to the development of social organizations, and eliminate the “financial dilemma” in the development of social organizations. We should find institutional solutions to the administrative “umbilical” relationship between the state and social organizations through the reform of separating politics from society, so that the social transformation of most administrative social organizations can be realized as soon as possible, the number of state-oriented social organizations can be reduced on a large scale, and the number of society-oriented social organizations can be increased.

Notes 1 This article was originally published in Yaobao of the Chinese Academy of Social Sciences, Reference for Leaders, 2010, no. 3. 2 Source: China Statistical Yearbook (relevant years). Unless otherwise indicated, all data in this chapter are from the China Statistical Yearbook.

Social construction at the new stage 105 3 Yu, Jianrong (2006). “Social Conflicts in Transitional China.” Phoenix Weekly, no. 176. 4 Editor’s note: on the afternoon of June 28, 2008, the family members of the deceased gathered in Weng’an county government and the County Police office for an appeal, because they were dissatisfied with the results of the death cause identification of Li Shufen, a second grade female student in Weng’an, Guizhou Province. Some people incited the people who didn’t know the truth to attack the Police office, the county government and the county Party committee building, which eventually led to a serious incident of smashing, looting, and burning. 5 Editor’s note: on July 24, 2009, the equity adjustment triggered mass incidents, and the general manager of Tonghua Iron and Steel Group Co., Ltd. was killed in the conflict. 6 Fukutake, Tadashi (1994). The Japanese Social Structure: Its Evolution in the Modern Century (S. Wang, Trans.). Taibei: Dongda Book Company, p. 107. 7 Editor’s note: double income, no kids. 8 Editor’s note: two grandparents (4 people), parents (2) and one child. 9 Editor’s note: two grandparents, parents and two children. 10 Editor’s note: the “big rice bowl” is an image metaphor of equalitarianism in distribution, which includes two aspects: (1) no matter whether the enterprise is good or bad in operation, profit or loss, the salary will be paid as it is, and the total salary of the enterprise is out of line with the operation effect; (2) within the enterprise, no matter how much or how little the employees do, whether they do well or not, the individual salary distribution will not be affected. 11 Editor’s note: Engel’s coefficient is the proportion of total food expenditure to total personal consumption expenditure. 12 Lu, Xueyi (Ed.) (2004). Social Mobility in Contemporary China. Social Sciences Academic Press (China), pp. 9–23. 13 See Li, Peilin (1992). “Another Invisible Hand: Structural Transformation of Society.” Social Sciences in China, no. 5. 14 See Sun, Liping (2004). Transformation and Rupture: Social Structure Changes in China since the Reform. Tsinghua University Press. 15 Editor’s note: the “one” “two” “three” represent three industries, respectively. Weng’an mainly refers to the production of food and other biological materials, including planting, forestry, animal husbandry, aquaculture, and other industries that directly produce natural objects. The second industry mainly refers to the processing and manufacturing industry, using the basic materials provided by nature and the first industry for processing. The tertiary industry refers to other industries other than the primary and secondary industries, with a relatively wide range, mainly including the transportation industry, communication industry, commerce, catering industry, financial industry, education, public service, and other non-material production sectors. 16 See Ru, Xin, Lu, Xueyi and Shan, Tianlun (Eds.) (2001). Analysis and Forecast of China’s Social Situation in 2001. Social Sciences Academic Press (China), p. 6.

8

Building new socialist cities should be the strategic focus of the Twelfth Five-Year Plan1

Looking at the processes of formulation and implementation of 11 Five-Year Plans in the past 60 years, we can see that an overwhelming majority of them have a strategic focus. The accomplishment of these strategic priorities has made it possible for China’s national economy to ascend one step after another and turned our country into a world economic power. For example, the strategic focus of the First Five-Year Plan was “socialist industrialization and socialist transformation of agriculture, handcrafts, and capitalist industry and commerce” (一化三改 one change and three transformations). The focus of the Sixth Five-Year Plan was “adjustment, reform, rectification, and improvement” together with reform and opening up. The focus of the Eighth Five-Year Plan was “building the socialist market economic system with Chinese characteristics,” and so on.2 The strategic focus of the Eleventh Five-Year Plan was “building a new socialist countryside.” Assessing the situation, the CPC Central Committee considered that the “three rural” problems of agriculture, rural areas and farmers were the fundamental problems that hindered China’s development. Only by properly solving the “three rural” problems could we revitalize the overall situation of economic and social development. Building a new socialist countryside was therefore clearly included in the Eleventh Five-Year Plan as an important historical task. Decisions were made accordingly. In the past five years, the central authorities and people all over the country have made great efforts to carry out this strategic task that brought about the sixth and seventh harvest years in agriculture on the basis of increasing production in 2004 and 2005. Farmers’ income has increased for seven consecutive years. Rural consumer markets have expanded and farmers’ living standards have generally improved. This has created favorable conditions for withstanding the world financial crisis in 2008 and for sustained, stable, and rapid development of the national economy. However, despite the rapid economic development, urbanization in China has for a long time lagged behind industrialization, which has resulted in many economic and social contradictions and problems. Therefore, we believe that using 10–20 years to solve the problem of the lag of urbanization is the key to promote a coordinated and healthy development of the economy and society and to build a moderately prosperous society in all respects. More importantly, we believe that it is essential to list the building of new socialist cities and the acceleration of

Building new socialist cities 107 urbanization as a strategic focus of the Twelfth Five-Year Plan. The reasons are as follows. First, the fundamental solution to the “three rural” problems depends on urbanization. In order to modernize agriculture, for farmers to become well-off, and to integrate urban and rural areas, we must solve the problems of where people go and where money comes from. The “three rural” problems can only be solved when a great number of farmers can be absorbed through industrialization and urbanization and when industry really promotes agriculture and cities bring along the development of rural areas. Second, urbanization is the key to expanding domestic demand and transforming China from an investment-export–oriented country to a domestic-demand– oriented country. Cities are carriers of consumer industrial and service products. China is already a big manufacturing country, and must be built into a consumer power to achieve sound operation. Already in the mid-1990s, it was proposed to expand domestic demand. The reason why it had been difficult to expand domestic demand was primarily the fact that urbanization was not really in progress. Third, changing the pattern of economic development depends on urbanization. At present, the quality of China’s economic development is not high, and its efficiency is low. An analysis of the industrial structure shows that manufacturing industry far outweighs the service sector. In 2008, the ratio of the primary, secondary and tertiary industries was 11.3:48.6:40.1. Cities are the midwives of the tertiary industry. The tertiary industry could not development for a long time mainly because of the lag of urbanization. To change the pattern of economic development, we must speed up urbanization. Fourth, in order to make the society more harmonious, stable, and orderly, it is necessary to change the current situation of semi-urbanization, build new socialist cities, and speed up the pace of urbanization. China now has a population of 1.33 billion. According to the place of residence and status, roughly one-third of the population live in cities and towns with nonagricultural registration status. Another one-third are migrant workers in cities and migrant workers and their families who have left the land but not the home villages. Farmers who live in rural areas account for one-third. But from the causes of social contradictions and problems and the analysis of the parties concerned, two-thirds of the contradictions arise in the second one-third of the population previously mentioned. In 2008, there were 4.885 million criminal cases filed by public security organs, of which the three crimes of property infringement, theft, fraud, and robbery, accounted for 80.85%. According to the statistics of relevant departments, more than 70% of these cases occurred in the urban and rural fringes. More than 70% of the offenders arrested were non-natives and more than 70% of these arrested criminals were migrant workers. Moreover, more than 70% of the victims of theft, fraud, and robbery were also migrant workers. From these four facts of more than 70%, we can see that most of the social contradictions and problems in contemporary China are caused by the

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unreasonable urban-rural system, the unreasonable household registration system, and the unreasonable system of migrant workers. In the processes of industrialization and urbanization in all modern countries, there are a large number of farmers move to cities and become workers and urban residents. Their economic and social status have all been improved, and they are not the main groups causing social contradictions. Thus, from the perspective of maintaining social stability and order and promoting social harmony, we should also accelerate the pace of urbanization. Reforming the current household registration system and the system of migrant workers to make it possible for them to become formal workers and for farmers to become urban residents are not only necessary for the acceleration of urbanization; it is also an important measure to resolve social contradictions from the sources. Cities are the centers of modern civilizations. They are the conditions and inevitable result of industrialization. Cities can gather and allocate all kinds of resources, minimize costs, and improve efficiency. Since the state put forward the strategy of urbanization at the end of the 20th century, the pace of urbanization has accelerated. The urbanization rate in 1998 was 33.4% and reached 45.7% in 2008, a rise of 12.3 percentage points with an average annual increase of 1.23 percentage points. The resident population in urban areas increased by 19.06 million per year. The pace of urbanization has accelerated, but why do we still have so many social contradictions? The problem lies mainly in the question of what kind of city we want to build, and the way to realizing urbanization. First, due to historical reasons, China has formed a bifurcated urban-rural economic and social pattern, which under a long period of time restricted the process of urbanization. In 1998, the strategy of building small towns and realizing urbanization was put forward with the aim of attracting farmers to seek employment and residence in small towns. But once opening up, it was large and megacities that flourished. Later, the policy of “letting big cities take the lead and promoting an urbanization path of coordinated development between large, medium-sized, and small cities and towns” was introduced. In recent years, more than 180 cities have proposed to build international metropolises. Some have suggested that China should build 20 metropolitan areas. How can we pursue a path of urbanization with Chinese characteristics? How should the future population of 1.4 billion be spatially distributed? What kind of urbanization pattern should we achieve? All these important issues should be made clear as soon as possible. The situation of each acting according to one’s own will should not be continued. Second, China is a country with a socialist market economy, and must naturally follow the laws of the socialist market economy and act in accordance with the principle of fair trade and exchange at equal values when we urbanize. However, this time, the wave of urbanization started from occupying rural land with no or low compensation in the name of city management. Over the past decade or so, nearly 100 million mu of farmland were expropriated. (In 1996, there were 1.96 billion mu of arable land in China, according to the figure published by the state. Now there are less than 1.83 billion mu, a decrease of 130 million mu, part of which was due to the strategy of returning grain plots to forestry 退耕还林). As

Building new socialist cities 109 a result, 50 million farmers were turned into persons of “three withouts” (三无 农民) – having no land, no work, and no social security. In the meantime, there emerged tens of thousands of corrupt officials and tens of thousands of billionaires who made huge fortunes through land transactions. In recent years, the state has repeatedly issued orders to protect the 1.8 billion mu of farmland. So, these people turned their eyes to farmers’ homesteads and old houses in cities. In some cities, entire areas and districts have been demolished. In some counties, entire villages, townships, and counties were dismantled (for example, Zhucheng in Shandong province). It was glorified as rebuilding dilapidated old houses and constructing new dwellings, but was in essence buying at low prices and forcibly taking the land of urban and rural inhabitants to make exorbitant profits. At present, the vicious trend of urban and rural demolition and relocation is growing in intensity and spreading with very serious consequences. Villagers and ordinary people are unable to resist, but make complaints to higher authorities and protest collectively. This is the main reason for the high volume of petitions and group incidents. It is time now to put an immediate stop to the brutal demolition and forcible taking and buying of residents’ land at low prices by people who do not follow the laws of socialist market economy. Third, the 16th CPC National Congress proposed to “balance urban and rural economic and social development.” The 3rd Plenary Session of the 16th CPC Central Committee proposed to “establish a system conducive to the gradual transformation of the bifurcated urban-rural economic structure.” The 17th National Congress proposed “to set up a long-term mechanism of industry promoting agriculture and urban areas helping rural areas and to form a new pattern that integrates economic and social development in urban and rural areas.” Achieving economic and social integration of urban and rural areas is the idea implicated in the theme of building a socialist market economy. Since the 16th CPC National Congress, the party and the state have made great efforts and done a lot of work to accelerate the integration of urban and rural areas. However, since the social system and policies of “separate administration of urban and rural areas” and “one country, two policies” have not undergone necessary reform and adjustment (for instance, the household registration system), the problem of the bifurcated urban-rural economic and social structure has basically not been solved. One of the manifestations is that although agricultural taxes and fees have for the first time been abolished and a number of policies to benefit and strengthen agriculture have been adopted, the gap between urban and rural areas is still widening. The income gap between urban and rural residents was 2.51:1 in 1998 and expanded to 3.31:1 in 2008. The second manifestation is that the State Council issued Several Opinions on Solving the Problems of Rural Migrant Workers in 1996. Local governments have conscientiously done as the document proposed and solved many of problems for migrant workers. The political, economic, and social status of migrant workers has been greatly improved. However, the problems of two kinds of status, treatment, expectations, and mentalities between migrant and regular workers still exist and have not been fundamentally solved. A serious problem is that a new generation of migrant workers is now pouring into

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cities annually on a scale of millions, infiltrating every corner of the cities, including factories, department stores, offices, schools, and organizations. The mayor of Shanghai observes that the bifurcated urban-rural structure has entered the city. The arrival of hundreds of millions of migrant workers has made tremendous contributions to the development of cities. Migrant workers have virtually become indispensable to cities. However, it is undeniable that their arrival has also given rise to many social contradictions and problems mentioned previously. Clearly, the system of migrant workers must be reformed, because it is not sustainable. We should build new socialist cities under the background of promoting urban-rural integration, and in accordance with the laws of socialist market economy. Fourth, Marxism holds that “society is a living organism.” The development of cities is a natural historical process. Urban development has its own laws. The elements of urban organisms must develop in a coordinated manner, especially economic and social development. However, there are quite a few cities that have, over a long period of time, overemphasized the centrality of economic construction and failed to carry out the necessary reform of the social system and social construction while developing the economy. This has resulted in the uncoordinated situation of a long leg of economic construction and a short leg of social construction. Voices of complaint about having difficulty to find jobs, to go to school, to see a doctor, to obtain old-age care, and to live in one’s own homes have been ceaseless for years. How can these kinds of cities be safe, livable, and harmonious? We should build cities with coordinated economic and social development and truly realize the ideal of everyone enjoying the rights to work, income, education, medical and old-age care, and housing. This is the kind of new socialist cities that we want to build. As early as 65 years ago, Mao Zedong predicted: Peasants are the source of China’s industrial workers. In the future, additional tens of millions of peasants will move into cities and enter factories. If China is to build up powerful national industries and many large modern cities, there will have to be a long process of transformation of rural population into urban inhabitants.3 After 60 years of hard work accompanied by difficulties and hardships, we have finally built up a strong national industry and realized industrialization. Over 600 cities have been built, but they are not modern enough (it was called modern in 1945). More than 200 million farmers have entered cities, but have not yet become urban residents. These are cities with a dual structure and can only be said to have achieved semi-urbanization. Joseph Stiglitz, an American professor who won the Nobel Prize in economics, has said that the two greatest human events in the 21st century: one is the industrial revolution brought about by high technology, and the other is China’s urbanization. Urbanization is a major event in China, as well as in the world. It is an important task to be accomplished in the cause of achieving socialist modernization with Chinese characteristics. It is therefore necessary to make the construction of new

Building new socialist cities 111 socialist cities the strategic focus of the Twelfth Five-Year Plan. From then on, we should find a path of urbanization suitable for China’s national conditions and realize Chinese-style urbanization. It has extremely important practical – as well as far-reaching historical – significance.

Notes 1 Originally published in Jiangsu Social Sciences, 2010, issue 6. 2 See the outlines of the First, Sixth and Eighth Five-Year Plans for relevant contents. 3 Mao, Zedong (1991). “On Coalition Government.” In Selected Works of Mao Zedong, vol. 3. People’s Publishing House, p. 1077.

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China’s current economic and social situation, and social construction1

An analysis of the current economic and social situation At present, the overall situation in China can be summarized as follows: rapid economic development, basic political stability, prominent social contradictions, and complex but not flourishing culture. Over the past 30 years of reform and opening up, in terms of economic and social development, China’s GDP grew from 364.5 billion yuan in 1978 to 30.067 trillion yuan in 2008. Calculated at constant price, the economic aggregate grew 15 times, an annual average increase of 9.8%. The per capita national income increased 12 times, an average rise of 8.6% per year. In 2009, the per capita GDP reached $3268 US and the comprehensive national strength was greatly improved. People’s living standards were also generally improved. China joined the ranks of middle-income countries. These are great achievements that cannot be overestimated. While news of economic successes keeps pouring in, social contradictions and conflicts increase substantially. In 1978, there were 557,000 criminal offenses in the country. By 2008, the number had reached 4.885 million, an increase of 8.77 times. In 1978, there were 1.235 million public security incidents. In 2008, there were 7.412 million incidents, an increase of six times. Statistics of group incidents began in 1994. There were more than 10,000 cases that year. The number increased to more than 90,000 in 2008. Various social problems, social contradictions, and conflicts come and go. Negative news is also pervasive. How to analyze and understand this complicated economic and social situation, adopt effective strategies to solve these problems, and make the great cause of socialist modernization forge ahead smoothly and quickly is the new task ahead of us. For a long time, in the broad context of taking economic construction as the central task, we were accustomed to using economic theories and methods to observe and analyze problems, and using economic means and policies to solve the problems. This was necessary at a certain stage and has proven to be effective. It solved many problems, but when the economic and social development have come to a new stage and when good news in the economic sphere is followed by bad news in the social sphere, it becomes necessary to observe and analyze

China’s current situation 113 problems by using social theories and methods, and adopt necessary social policies to solve the problems.

Major contradictions in the Chinese society at present Entering the 21st century, in the tide of globalization, marketization, industrialization, informatization, and urbanization, China’s development is facing a new situation. China has entered a crucial period of reform and development with profound changes in its economic system and social structure, profound adjustment in interest patterns, and profound changes in thinking. These drastic social changes have brought tremendous vitality to China’s development and progress and will inevitably give rise to various contradictions and problems.2 China today is full of vigor and splendor, attracting the attention of the whole world. Agriculture has had bumper harvests for six years in succession, and the economy is moving from the third largest to the second largest in the world. Outstanding achievements have been made in reform and development. The mainstream media are full of good news. Meetings and conferences are singing high praise in chorus. But on the other hand, there is a lot of negative news such as group incidents, migrant workers jumping off buildings, and so on. The internet, short messaging services, private gatherings, and folk sayings are mostly negative, which is worrisome. Last month, Daily News Digest carried two pieces of news on the front page. One was that Fujian illegal migrant workers were intercepted in Europe, and the other was that rich people go to North America to buy luxury homes and settle down. Why do so many people want to run abroad when a country is developing so well and praised by many as being in a flourishing age? In the past 30 years or so, tremendous changes have taken place in China, which were unexpected by many. In the meantime, various social contradictions and problems have emerged, which were equally unexpected by many people. How should we understand and analyze this complicated and contradictory situation? Mao Zedong pointed out in On Contradiction: In the process of the development of complex things, there are many contradictions and one of them is necessarily the principal contradiction whose existence and development determines or influences the existence and development of the other contradictions. Hence, if in any process there are a number of contradictions, one of them must be the principal contradiction playing the leading and decisive role while the rest occupy a secondary and subordinate position. Therefore, in any complex process in which there are two or more contradictions, we must devote every effort finding its principal contradiction. Once this principal contradiction is grasped, all problems can be readily solved.

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At present, there are many contradictions and problems. How can we understand them? First of all, we need to find out what kind of contradictions and problems there are; second, we should make clear which of these are the principal contradictions and what the main aspects of them are; and third, we should propose methods and strategies to solve the principal contradictions and the main aspects of these contradictions. In this regard, we have a gradual process of understanding. On November, 2002, the political report of the 16th CPC National Congress pointed out: China is in the primary stage of socialism and will remain so for a long time to come. The moderately prosperous life we are leading is still at a low level; it is not all-inclusive and is very uneven. . . . The bifurcated urban-rural structure has not yet been changed, the gap among regions is still widening, and there are still quite a large number of impoverished people. By 2020, the report continues, we should have: built a moderately prosperous society of a higher standard in all respects to the benefit of well over one billion people. We will further develop the economy, improve democracy, advance science and education, enrich culture, achieve greater social harmony, and upgrade the texture of life for the people. In 2003, having gone through the SARS crisis, the 3rd Plenary Session of the 16th CPC Central Committee was held in October that year. At the Session, it was pointed out that imbalances existed in Chinese society between urban and rural development, development among regions, between economy and society, in relations between man and nature, and between development at home and abroad. It was explicitly proposed “to put people first and establish a comprehensive, coordinated, and sustainable scientific outlook on development.” It was also pointed out that we should “promote all kinds of reforms in a coordinated manner, achieving the coordination between macro- and microeconomic reforms as well as reforms in the economic and social spheres” and “resolve a series of contradictions in time to ensure social stability and orderly progress of our work.” Economic and social development must be in keeping with each other. The situation of one leg long and the other short cannot be continued. We should appropriately deepen the reform in the social sphere in order to provide institutional guarantee for accelerating social development. The 4th Plenary Session of the 16th CPC Central Committee was mainly devoted to the discussion of strengthening the governing capacity of the party. It was pointed out that we should constantly improve the ability to steer the socialist market economy, to develop socialist democratic politics, to build an advanced socialist culture and a socialist harmonious society, and to cope with the

China’s current situation 115 international situation and deal with international affairs. Decisions were made accordingly. After the document was published, for a short while, the notions of a harmonious society and social construction became a hot topic. There were a lot of discussions on the construction of harmonious regions, harmonious villages, harmonious cities, harmonious enterprises, and harmonious communities. In response to public opinion, the CPC Central Committee held a thematic seminar for leading cadres at the provincial and ministerial levels to discuss the theoretical and practical problems of building a socialist harmonious society and social construction after the Spring Festival in 2005. Shortly after, such seminars were held nationwide on a large scale. In October 2006, the 6th Plenary Session of the 16th CPC Central Committee deliberated and adopted the Decision of the CPC Central Committee on Several Major Issues Concerning the Building of a Socialist Harmonious Society. The Decision made it clear that: in the new century and at the new stage, our party should lead the people to seize the opportunity, meet the challenge, and push forward socialism with Chinese characteristics. We must persist in taking economic construction as the central task and place the building of a socialist harmonious society in a more prominent position. In 2007, in the political report of the 17th CPC National Congress, there was a separate section entitled “accelerating social construction with the focus on improving people’s livelihood.” It was pointed out that: Social construction is closely related to the well-being of the people. We must therefore attach more importance to social construction on the basis of economic growth to ensure and improve people’s livelihood, carry out social system reform, expand public services, improve social management, and promote social equity and justice. Great efforts should be made to ensure that all people enjoy the rights to education, employment, medical and old-age care, and housing so as to push forward the construction of a harmonious society. In the Constitution of the Communist Party of China (Amendment) adopted at the 17th CPC National Congress, the goal of the CPC was changed from “building our country into a prosperous and strong, democratic and civilized socialist country” to “building our country into a modern socialist country that is prosperous, strong, democratic, civilized, and harmonious.” The general layout of the socialist cause was changed from the trinity of economic, political, and cultural constructions to an overall four-in-one layout of economic construction, political construction, cultural construction, and social construction. This fully reflects that our party’s understanding of the laws of governance by the Communist Party, of socialist construction, and of the development of human society has become more scientific. On the basis of the practice in recent years, we can conclude that among the numerous and complicated contradictions, the unbalanced and uncoordinated

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economic and social development should be the principal contradiction in present Chinese society. Just as pointed out in On Contradiction: One must not treat all the contradictions in a process as being equal. We must distinguish them into two categories, the principal and the secondary contradictions, and focus on grasping the principal one.” “There are thousands of scholars and men of action who do not understand this. The result is that, they are lost in a vast sea of fog and are unable to get to the heart of a problem and naturally cannot find a way to resolve the contradiction.

Structural analysis of the contradiction of unbalanced and uncoordinated economic and social development Theoretically speaking, imbalance and lack of coordination between economic and social development are also imbalance and lack of coordination between economic and social structures. Economic and social structures are the two most fundamental structures of a country or region. They are integral to each other, support each other, and serve as each other’s foundation. In general, changes and adjustment of economic structure come first, which will drive and affect changes in social structure. The adjustment of social structure will in turn lead to improvement and continuous change in economic structure. Thus, economic and social structures must be coordinated and complement each other. Economic structure cannot develop alone. Social structure can lag slightly behind economic structure. This lag has a reasonable limit. Beyond the limit, it will hinder sustained and orderly change in the economic structure. At the present stage, under the impetus of the reform of the economic system and sustained and rapid economic growth, China’s economic structure has reached the intermediate level of industrialized societies. Its social structure lags seriously behind the economic structure. Profound changes have already taken place in China’s social structure Just as is economic structure, social structure is composed of several substructures, which mainly include population structure, family structure, employment structure, urban-rural structure, regional structure, and organizational structure, as well as the structure of social strata. Since the reform and opening up, under the impetus of the reform of the economic system, rapid economic development, and changes in the economic structure, profound changes have also taken place in the social structure. Take the employment structure, for example. In 1978, the employment status of the labor force in the three industries was 70.5% in the primary industry, 17.3% in the secondary industry, and 12.2% in the tertiary industry and in 2008, it had changed to 39.6%, 27.2%, and 33.2%, respectively. In 1978, the number of employees in the secondary and tertiary industries was only 118.35 million. In 2008, the number had increased to 468.26 million, an increase of 349.91 million in 30 years and an average increase of 11.66 million per year. The

China’s current situation 117 labor force in non-agricultural industries already accounted for 50.1% in 1997, exceeding the threshold of 50%, which is the employment structure of industrialized countries. We can take the urban-rural structure as another example. In 1978, China’s urbanization rate was 17.9%. In 2008, it had reached 45.7%, an average annual increase of 0.91 percentage points. In 1978, China’s urban population was 172.45 million. In 2008, it had increased to 606.67 million, a rise of 434 million in 30 years with an average annual increase of 14.47 million. As a further example, the structure of social strata changed from “two classes and one stratum” to one comprising 10 strata including state and social management personnel, managers, private business owners, science and technology professionals, clerical personnel, individual industrial and commercial households, people in commerce and service sectors, industrial workers, agricultural laborers, and unemployed and semi-unemployed people. Such a great change in the social structure is unprecedented in Chinese history. At the end of the Qing Dynasty, Li Hongzhang, Liang Qichao, and others exclaimed that China is undergoing “a great transformation that has not been seen in thousands of years,” but they merely saw the beginning of it. It is only through the reform and opening up that this transformation has been actualized in China. China has been an agricultural country with a social structure of an agricultural society ever since the Zhou and Qin Dynasties. Until 1978, farmers still accounted for 82.1% of the population, which can only be said to be the social structure of an agricultural country. It is in the past 30 years that this great transformation, the transformation of the social structure into one of industrialized countries, has really taken place. However, when we carried out the reform of the economic system and large-scale adjustment of the economic structure and when the economy greatly developed, we did not carry out social construction and reform the social system in a timely manner. As a result, compared to the changes in the economic structure, China’s social structure has fallen behind. Currently, China’s social structure lags behind its economic structure by about 15 years According to the study of our research group, China’s current social structure is still at the primary level of industrial societies, whereas the economic structure has already reached the intermediate level of industrial societies. After comparison and calculation, we come to the conclusion that China’s social structure lags behind its economic structure by about 15 years. Some people may ask: how can it lag behind by about 15 years after 30 years of reform and opening up? This is because as early as 1978, China’s social structure had already fallen behind the economic structure. For example, in 1978, China’s secondary and tertiary industries already accounted for 72% of the GDP, but only 29.5% of the workforce were employed in the secondary and tertiary industries, while the agricultural labor force accounted for 70.5% that year. The urbanization rate was only 17.9% in 1978. It is thus clear that already in 1978, China’s social structure had lagged far behind the economic structure. In the past 30 years of

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reform and opening up, as mentioned earlier, the situation has not been reversed. On the contrary, it has become more serious. Taking once again the employment and urban-rural structure, for example, according to the study of Hollis Chenery and other scholars abroad, at the intermediate stage of industrialization, employees in the secondary and tertiary industries should account for more than 80% of the total labor force. But in 2008, employees in the secondary and tertiary industries in China accounted for only 60.4% of the total labor force, which was 20 percentage points less. Over the past 30 years, the average annual increase of non-agricultural labor force is 1.03 percentage points. It will take 20 years to come to the level of 80%. When it comes to urban-rural structure, the urbanization rate at the intermediate stage of industrialization should reach more than 60%. But China’s urbanization rate in 2008 was only 45.7%, 14.3 percentage points lower. Calculated on an average annual increase of 0.91 percentage points in the past 30 years, it will take 15.7 years to reach the rate of 60%. Take the structure of social stratification as a further example. At the intermediate stage of industrialization, the middle class should grow to more than 40%, but it was only 23% in China in 2008. Calculated on the basis of an annual increase of 1 percentage point in recent years, it will take 17 years for the middle class to grow to more than 40%. Naturally, this means that it would be the case under the current social system. If we can carry out social structural reform without delay, changes in the social structure will accelerate and the gap will be narrowed down and eliminated relatively quickly. On the whole, China’s current economic structure has reached the intermediate level of industrial societies, whereas the social structure is still at the primary level of industrial societies. There is a serious structural difference. This is the biggest imbalance in China’s economic and social development; that is, what we often call one long leg and one short leg. This is the structural cause for many economic and social contradictions and problems in present-day China. It is also the reason why these contradictions and problems have not been solved for a long time. In the final analysis, the problem of agriculture, rural areas, and farmers is also a structural problem, and this is the reason why it has not been properly solved for a long time. We are engaged in industrialization, but we are not pursuing urbanization in accordance with the laws of social development. Rather, we have tried to confine farmers to the countryside by various means. Industry has grown. Agriculture has developed. But the number of farmers increased from 503.19 million (rural registered population) in 1952 to 955 million in 2008. According to current statistics, the number of permanent rural inhabitants is still 721.35 million. The economic structure has been adjusted, but the social structure has not been adjusted accordingly. This is a typical case of many contradictions. In 2008, agriculture accounted for only 11.3% of the GDP, but the labor force engaged in agriculture was 39.6% in the employment structure. In the urban-rural structure, the rural resident population accounted for 54.3% of the total population that year. In other words, in 2008, 39.6% of the labor force created 11.3% of the wealth. Isn’t this agricultural labor productivity too low? It is not that Chinese farmers cannot do it and cannot do it well. It is rather that under the existing structure and system,

China’s current situation 119 a farmer can only grow a small piece of land. If he planted 1,000 mu of farmland, what would the rest of 900 people do and what would they eat? Approximately 54.3% of the rural population share 11.3% of the wealth. How can farmers not be poor? All these problems can be attributed to structural and institutional problems. This structure is the urban-rural structure formed under the planned economic system, which comprises a series of systems such as the household registration, the employment, and the labor insurance systems. Without reforming these social systems and breaking up the bifurcated urban-rural structure, the problem of agriculture, rural areas, and farmers will not be solved. Another example is the problem of expanding domestic demand. More than 10 years have passed since China proposed to expand domestic demand in 1995. But domestic demand has not gone up. With the rapid development of foreign trade after China’s accession to the World Health Organization (WHO), the problem of commodity surplus has been eased slightly. In the wake of the international financial crisis, exports have become a problem and the issue of expanding domestic demand has been raised again. Why can’t domestic demand expand? This is essentially an economic problem. But it cannot be solved only through the adjustment of the economic structure. The existing system of bifurcated urban-rural structure confines farmers to the countryside. Even if they no longer do farm work and have found jobs in the secondary and tertiary industries in cities, their registration status cannot be changed. Farmers who come to cities can only work as migrant workers and become an illegitimate resident population in cities. They live and work in cities, but still have a farmer’s style of consumption. Farmers have huge consumption needs, but they do not have money to purchase what they need. It has been calculated that three farmers together have only the purchasing power of one urban resident. If more than 200 million farmers who have come to work or do business in cities are gradually transformed into urban residents, consumption will increase by trillions. Can domestic demand be expanded only by economic means without reforming the bifurcated urban-rural economic and social system?

China has entered a new stage of social construction Since the beginning of the new era, problems relating to people’s livelihoods such as housing, education, and medical and old-age care have become increasingly prominent. The gap between urban and rural areas, among regions, and between the poor and the rich, continues to expand. Conflicts between officials and ordinary people, employers and employees, and among other social strata, have become apparent. Problems of social instability caused by land expropriation, demolition of houses, and restructuring of enterprises and institutions have increased. Corruption and other major cases frequently occur. In some places, violent crimes such as murder and kidnapping have increased. Fraud, robbery, theft, and other criminal cases have also increased. In particular, the frequency of occurrence of all kinds of group incidents remains high. In recent years, the Weng’an incident,3 the Shishou incident4 and the Tonggang incident5 in Jilin province occurred one after another, which have had a very bad impact and made the

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problem of economic and social stability increasingly prominent. Recently, a child died from maltreatment and a Foxconn migrant worker jumped from a building. In the face of complex and ever-changing social contradictions and problems, we obviously cannot only use the fire-fighting approach, treating the symptoms but not the disease. Neither can we only use economic theories and methods. There was a time when someone proposed to use money to buy peace. But this can only solve the problem temporarily and not effect a permanent cure. China’s revolution and construction have been carried out in stages. At different stages of development, the situations are different. It is necessary to adopt different strategies and policies. This is our basic experience. As mentioned previously: China has entered a critical period of reform and development. The new period is characterized by great success in economic construction and the fact that China’s industrialization has reached the intermediate level of industrial countries. But the social structure has lagged behind, causing numerous social contradictions and problems. Judging from the experiences of development of some modern countries, we have moved from the stage of focusing on economic construction to a new stage, a stage of coordinated economic and social development. The tasks of the new stage are to carry out the reform of the social system and lay stress on social construction and the improvement of social management while continuing economic construction. After the 16th National Congress, especially after the 4th and 6th Plenary Sessions of the 16th National Congress, the strategic ideas of building a socialist harmonious society and social construction were put forward. It was clearly pointed out that we should place the building of a socialist harmonious society in a more prominent position while continuing to emphasize economic construction. These judgments and decisions are all very correct. The decisions and the guidelines of these central documents have been implemented by various departments in various regions, and the effects are obvious. The construction of a harmonious and safe society has been carried out in various regions nationwide. Social conflicts have been eased. A clear example of this is the decline of the criminal crime rate. However, the impact of the international financial crisis in 2008 has led some regions and sectors to focus once again on GDP, slackening the construction of a harmonious society. As a result, social contradictions and problems start to increase again.

The main task of social construction at the new stage In recent years, in-depth research on the building of a socialist harmonious society has been carried out and extensive publicity has been made. The broad masses of cadres and ordinary people have obtained an understanding of it. It has also spread to the world and received good response. Comparatively speaking, there have been relatively little research and discussions on social construction. In terms of the relationship between the two, a socialist harmonious society is a grand strategic goal for which we should strive for a long time, whereas social construction

China’s current situation 121 is a tactical arrangement and a means. A socialist harmonious society can only be realized through a series of constructions including social construction. The meaning of social construction The purpose of social construction is to meet the requirements of the transformation of a country from a traditional agrarian society to an industrialized and urbanized modern society, and to adapt to the profound changes in the mode of production and people’s lifestyles, and interpersonal relations. It is various organized, purposeful, and planned social actions and processes that are conducive to improving people’s livelihoods, establishing a new social order, and promoting social progress. The main body of social construction is the government, social organizations, and the people. The principle of social construction is to put people first and uphold fairness and justice. The goal of social construction is to achieve social harmony and progress. Main contents of social construction After the founding of the People’s Republic of China, large-scale social construction was carried out along with large-scale economic construction – only the concept of “social construction” was not used to refer to it at that time. Social construction was placed under the name of economic, political, and cultural construction. After the reform and opening up, we call the construction in the social field social development. In fact, social construction and social development are two concepts. There are differences, as well as similarities. The 4th Plenary Session of the 14th CPC Central Committee clearly mentioned social construction and building a socialist harmonious society at the same time, and expanded the general layout of building socialism with Chinese characteristics from the original trinity of economic, political, and cultural construction to the new pattern of four-in-one including social construction. The purpose is to adapt to the changes in China’s economy and society after entering the new century and to meet the new requirements of applying the scientific outlook on development nationwide and building a socialist harmonious society. Social construction is therefore an arduous task and a gigantic project of systems engineering. We need not only to accelerate various social undertakings to provide good and equal public services to more than 1 billion people, but also reform the social system, innovate social policies, and improve social management. The core task is to build a social structure compatible and coordinated with the economic structure. Some people believe that social construction is the promotion of such social undertakings as science and technology, education, culture, health care, sports, and social security. This is obviously a narrow understanding of the meaning of social construction. As one element in the four-in-one general layout of building socialism with Chinese characteristics, the meaning and content of social

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construction are much broader and more profound. Generally speaking, social construction has the following four main tasks. Development of social undertakings In the past, we generally labeled scientific research, education, health care, culture, and sports as social undertakings. In fact, in practice, undertakings that improve people’s livelihoods – such as employment, income distribution, social security, and housing – are also social undertakings. Social undertakings are closely related to the production and life of the people, and concern the well-being and future of every family and individual. Since education, medical care, social security, and culture are oriented towards all people, many countries call these social undertakings public goods or public services. Since the reform and opening up, China has made great progress in fields such as education, medical care, culture, and social security, and the life of urban and rural residents has been greatly improved. They are enjoying a certain level of public services. However, since the mid-1990s, some regions and sectors have emphasized economic construction to the point that it has become the only focus. As a result, development in education, science and technology, culture, medical care, and sports have lagged relatively behind, making it difficult for people to obtain employment, go to school, see a doctor, get old-age care, and housing. This is also one of the reasons for the increase in social contradictions. The 17th CPC National Congress made the decision to “accelerate social constructions focusing on improving people’s livelihood.” This is very correct and in line with the demands of the broad masses of the people. It is also conducive to a coordinated development of economy and society, and to promoting social harmony and thus welcomed and supported by the people. But there is still a lot of work to do in order to truly ensure that all our people are enjoying the rights to education, income for one’s work, medical and oldage care, and housing. Judging from the practice in recent years, we should add employment to this list and place it in the first place, because it has a vital bearing on people’s livelihoods. Just as farmers must have land to till, if urban residents do not have employment, everything else will be out of the question. This is the reason why local governments are making great efforts to solve the problem of zero-employment families, which is a good act. To do a good job in social undertakings and improve people’s livelihoods is to make it possible for all members of society to share the fruits of reform and development. This is a basic task in building a harmonious society. Social institutions and social norms A harmonious society should be a society with a reasonable social system and orderly social norms. Our country has already been transformed from an agricultural and rural society to an industrial and urban society. Fundamental changes have taken place in the mode of production and in the life styles of the people.

China’s current situation 123 The social system as a whole should be changed accordingly. Only by building a new social system and setting up new social norms according to the laws of social development can the society operate in a harmonious and orderly manner. In terms of the social system, at present, the central and local system, the urbanrural system, the employment system, the income distribution system, and the system of social mobility, as well as the system for coordinating interest relations among all social strata, should all be improved and well established. Some scholars have proposed that we should rebuild society and form a tripartite pattern of state, market, and society. This is a reasonable suggestion. Building a new social system is an important issue, and it requires a long-term perspective. However, one thing is certain: the bifurcated urban-rural economic and social system is a legacy of the planned economy, and is incompatible with the current socialist market economic system. It has caused many economic and social problems and must be eradicated first with no more hesitation. (For example, the household registration system which divides urban and rural areas must be reformed as soon as possible.) A new social system will be gradually established on the basis of abolishing these outdated systems. A new social system requires new social norms. China’s agricultural society has a history of several thousands of years. Agricultural civilization was highly developed and integrated, and had a leading position in the world. Now that China has been transformed into an industrial and urban society, social norms for an industrial and urban civilization should be established. For instance, laws and regulations should be established to ensure the orderly operation of production and life in the new society, and everyone should be accustomed to abiding by laws and regulations. We should establish ethical norms compatible with the new society. Without doubt, some fine traditional norms of universal significance in the agricultural civilization should be maintained, carried forward, and gradually incorporated into the norms of the new society, forming a new Chinese civilization. Recent incidents of killing an entire family, one’s own parents, wife, and even children, and massacring innocent children in a kindergarten, are shocking and unheard of. This tells us that minimum rules in society are ignored and there is no bottom line anymore. It indicates that something is seriously wrong with social norms, which is well worth our thinking. Social management and the social security system Improving social management, ensuring social order, and maintaining social stability are inevitable requirements for building a socialist harmonious society. We should innovate the social management system, integrate resources, and raise the level of social management. The 4th Plenary Session of the 16th CPC Central Committee put forward to establish “a social management pattern of party committee leadership, government responsibility, social coordination and public participation.” This decision accords with the objective and practical needs and is being implemented in all regions with good results. In light of the practice in the past few years, there are two problems worth paying attention to.

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First, attention should be paid to the management of county society. There are more than 2,000 counties in China. In the towns where the county governments are located, there were in general only a few thousand people and at most tens of thousands of people in the 1980s. Most of them were under the jurisdiction of the county seats. These towns were responsible for both farmers in rural areas and urban residents. Now counties have developed. Some have tens of thousands of inhabitants, and others have hundreds of thousands. Roads, shopping malls, and office buildings have been built, but grassroots organizations and community building have lagged behind. Most of them are still under the jurisdiction of the county seats. The basically rural management style has led to a lot of social contradictions and poor public order. These towns have total populations of tens of millions and hundreds of millions, but they are still in a situation where there is no corresponding effective organizational management. The situation is urgently in need of improvement. In order to improve urban social management, it is necessary to set up community organizations, improve the grassroots community management network, enhance the service functions of social organizations, and strengthen the management of public security. Second, in developed areas, grassroots communities have largely expanded because they have abundant workforces, as well as material and financial resources. The residential communities were originally autonomous organizations and had no cadres released from regular work. Nowadays, more than 10 and even dozens of full-time cadres (most of them are governmental employees) have been sent to the residential committees (居委会; also called communities, 社区), turning grassroots autonomous organizations into administrative units. Some people think it is a necessary measure to strengthen social management, while others believe that this kind of social construction has made the society smaller. This is a question worthy of deliberation. Adjustment of the social structure The most important and fundamental aspects of a country or region are its economic and social structure. These two structures must be coordinated and complement each other. As discussed earlier, China’s economic structure has reached the intermediate level of industrial societies, but its social structure is still at the primary stage level. This is the structural cause of many economic and social contradictions and problems. Our task now is to continue to deepen the reform and transform the mode of economic development. We should build a modern social structure, change the situation of “one long leg and one short leg,” and promote a coordinated development of economy and society by giving emphasis to strengthening social construction and promoting social system reform, innovating social management, and accelerating the pace of social restructuring. The core of social structure is the structure of social strata. The defining indicator of the structure of social strata is the proportion of the middle class. In 2008, China’s middle class accounted for only 23% of the total employed population. The structure of social strata was far from the “olive-shaped” structure, with both

China’s current situation 125 ends being small and the middle being large that a modern society should have. As already mentioned, even if reaching the intermediate level of industrial societies, China’s structure of social strata is still far from that of industrial societies. From this, we can see that our task of social construction is arduous.

Several issues concerning the promotion of social construction At present, the principal contradiction in Chinese society is the imbalance and lack of coordination between the economic structure and the social structure. This is a structural contradiction, and the fundamental cause for today’s many social contradictions and problems. Therefore, it is necessary for us to reiterate the Decision on Several Major Issues Concerning the Building of a Socialist Harmonious Society made at the 6th Plenary Session of the 16th CPC Central Committee and place the building of a socialist harmonious society in a more prominent position. We should focus on accelerating social construction, exert ourselves to change the situation where the economic leg is long, and the social leg is short, and balance the development of economy and society. How can we do a good job in social construction? The ready-made experience is to carry out social construction just like the economic construction. Fortunately, the great success in economic construction has created for us a solid material foundation and conditions for social construction. Furthermore, the sustained development of economic construction requires the support of science, talents, intelligence, and social environment provided through social construction, which are objective needs. Therefore, in today’s China, to focus on promoting social construction is to seize the key to resolving contradictions. Many other contradictions can also be properly resolved. The experiences of modernized countries show that they have also laid stress on social construction after certain achievements have been made in economic construction. In order to promote social construction, the following things need to be done. First, we should reiterate the Decision of the 6th Plenary Session of the 16th CPC Central Committee and hold discussions on building a socialist harmonious society centered on the promotion of social construction. We should make clear such theoretical and practical issues as what social construction is, why it is necessary, and how to carry out social construction and achieve further consensus within the whole party and across the whole country. At the present stage, to apply the scientific outlook on development, we must adhere to the principle of comprehensive, coordinated, and sustainable development. Development is the first important task of governance and rejuvenating the country. It is also an inherent requirement of building a harmonious society. Problems arising from the reform and opening up should be solved through development. Scientific development must be a comprehensive and coordinated development, including social development. At present, there has emerged a situation in which the economic sphere announces good news and the social sphere reports bad news. If we see economy and society as a contradiction, the main aspect of the

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contradiction has been transferred from economy to society. To push forward the great cause of building socialism with Chinese characteristics, we must persist in taking economic construction as the central task and place the building of a socialist harmonious society in a more prominent position. This makes it necessary for us to work hard to solve the problems in social construction. According to our survey, in many rapidly developed regions, social contradictions and problems are more pronounced than in other regions. People’s satisfaction and happiness index is not high. There is a lot of talk about difficulties in finding housing, going to school, and obtaining medical and old-age care. On the other hand, from recent media reports on the Twelfth Five-Year Plan in some developed regions, the per capita GDP in several counties and cities in the Yangtze and Pearl River Deltas has exceeded $10,000 US. They are still proposing the goal of “doubling the GDP in three years, four years or five years.” The goals and tasks of building a socialist harmonious society and social construction, on the other hand, are relatively vague and general, which is worth our deep consideration. Second, the promotion of social construction needs organizational guarantees. Over the past 60 years, there has been one basic experience in nation building. All strategic tasks decided by the central government must come down to organizations, and only when there are organizations and cadres to carry them out can they be fulfilled. If they only stay in meetings and on documents, nothing will be achieved. Both positive and negative experiences have borne this out. Family planning was extremely difficult. But Family Planning Committees were set up from top to bottom. The policy was carried out conscientiously and achieved great success. In order to carry out economic construction, we set up the National Planning Commission, the State Economic and Trade Commission, the State Infrastructure Commission, and a number of economic departments. In addition, there were the State Commission for Restructuring the Economic Systems and the Central Leading Group for Financial and Economic Affairs. Great achievements have been made. The project of building a new countryside has been going on for five years. Meetings have been held, six “No.1 Documents” have been issued, and some achievements have been made, but problems relating to agriculture, rural areas and farmers keep on emerging without end. The reasons for this are manifold. A very important one is the lack of organization. Social construction is a major part in the general layout of socialist modernization. It has now become an area in urgent need to be strengthened. Corresponding organizations should have been established to carry out this strategic task on organized basis. In 2007, a Social Work Commission and a Social Construction Office were set up in Beijing. In 2009, corresponding organizations were established in Shanghai. A lot of work has been done, and considerable results have been achieved. From the practice of the social work commissions of these two cities, we can see that they have encountered difficulties and problems. The most important problem is the functional orientations of these commissions. Is the work of the social work commission macro planning and coordinating the whole social construction, or is it specific organizational work on certain aspects of social construction? Right now, they are doing the latter. For example, the Beijing Municipal

China’s current situation 127 Commission of Social Work has set up a section of community building and a section of social organization. Under the Beijing Municipal Bureau of Civil Affairs, there are also offices in charge of the work in these two areas. Their functions overlap. While it is up to the municipal government to make a clear, division of labor, macro planning and coordination are decided by higher-level organizations. At present, we should focus on social construction and promote coordinated development of economy and society and social harmony. Social construction itself is a huge project of systems engineering. There are already relevant institutions and departments doing the work of social undertakings, social organization, social management, and social security. What is important now is to pull together the resources of these social work institutions, coordinate and organize various forces, and form a joint force to accomplish this work of great importance. It is therefore necessary to set up a national commission for social construction work just as the formation of the National Planning Commission in those years when we carried out economic construction. The main task of such a commission is macro coordination, planning, organization, and regulation of the whole social construction, so that all kinds of social construction work can proceed in an orderly and effective manner. Right now, a lot of work in these areas is undertaken by the National Development and Reform Commission (NDRC). The Division of Social Affairs is only one of the 35 divisions under the NDRC. It is obviously not up to such an important task. This is the hitherto unchanged organizational reason why we have for years talked about changing the situation of “a long economic leg and a short social leg” without much success. The functions of the Division of Social Affairs, together with its existing personnel and resources, should be removed from the NDRC to form a social construction commission. This is an organizational guarantee for doing a good job in social construction and accomplishing the building of a socialist harmonious society. I suggest that we choose one province, city or county to set up a committee of social construction work as a pilot project for macro coordination and planning of overall social construction work so as to gain experience and then implement nationwide step by step. Third, social construction must have adequate input of human, material, and financial resources. In order to carry out large-scale social construction, we should have, like economic construction, adequate input of human, material, and financial resources. The first is the input of talents and human resources. The 6th Plenary Session of the 16th CPC Central Committee pointed out: “Party committees at all levels should place the building of a harmonious society in a prominent position in the overall work, keep to the right direction, formulate policies, integrate forces, create the environment, and earnestly take on the leadership responsibility”; and “Building a large contingent of talented social workers, a team with a reasonable structure and excellent quality is an urgent need for the construction of a harmonious society.” In the process of economic construction, we selected, trained, and created a large team of economic workers. To do a good job in social construction, we also need to train a large team of social workers.

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Needless to say, the team of social workers at present is still weak and small. Moreover, they are scattered in various fields and have not yet formed a joint force. In accordance with the decision of the 16th CPC Central Committee, we should “adhere to the correct orientation of employing the right people, select a strong leadership team, and pay attention to training and selecting excellent cadres familiar with social construction and management.” We should set up a work committee for social construction to organize personnel in all aspects of social work, improve their abilities in practice, and gradually expand the team. We should give full play to the organizational advantages, mobilize social forces, and unite our strength to do a good job in social construction. We should devote considerable material and financial resources to social construction. For a period of time, some regions and sectors reduced the expenditure necessary for social construction and devoted most of their financial resources to economic construction, causing an imbalance in economic and social development. Since the 16th CPC National Congress, the state has increased the investment in social construction and the situation has improved. However, due to the lack of investment in the past, the pattern of economic and social imbalance and disharmony has not changed. Moreover, a problem of path dependency has developed. Whenever there is money, it is customarily invested in economic construction. For instance, everyone agrees that education is important. But up to now, the expenditure on education has not reached the target of 4% of GDP as stipulated in the Education Law. We should, in accordance with the Decision of the 6th Plenary Session of the 16th CPC Central Committee, “improve the public finance system and gradually realize equal access to public services.” We should “improve the public finance system, adjust the structure of fiscal revenue, and put more financial capital in the public sphere, increasing financial input in education, health care, culture, employment and employment services, social security, ecological environment, public infrastructure, and public security,” truly increasing spending on social construction, and continuously improving our work concerning people’s livelihoods, social undertakings, and public services to bring benefits to the vast majority of the people, so that they can share the fruits of reform and development. This will greatly reduce social contradictions and problems, as well as the social costs. This is actually beneficial to economic development. It is also an important aspect of transforming the mode of economic development. Fourth, the social system must be reformed in order for us to do a good job in social construction. Summing up the practice of the past 60 years since the founding of New China, the government took on the full responsibility for economic and social affairs in the first 30 years under the planned economic system. Although great achievements were made, the costs were too high, and the efficiency was too low, resulting in a shortage economy. People’s livelihoods were not improved as expected. In the latter 30 years, the policy of reform and opening up was carried out. Through economic system reform, the government went all-out to mobilize the masses and arouse initiatives on all sides. It undertook macro regulation and control and reduced its involvement in economic affairs. Great achievements

China’s current situation 129 were made in economic construction. Now in social construction, we should learn from the experience of economic construction, carry out the reform of the social system, and develop a dynamic mechanism of social construction. We should go all-out to mobilize the masses, arouse the initiatives on all sides, and vigorously develop social and non-governmental organizations. Let the society take care of social affairs, and the government take care of macro planning and control. Social construction will also be successful. The current social system took shape after the 1950s in the context of the implementation nationwide of the planned economic system. It was an important part of the planned economy. It was adapted to and in the service of the planned economy (such as the household registration system and the bifurcated urbanrural structure). Over the years, reforms of the social system including the system of social undertakings have been carried out. Some are successful; others are not. Some have not even gained a clear understanding of the problems. The social system on the whole has not been fundamentally changed according to the requirement of the socialist market economy. As a result, in the operation of the economy and society today, the two systems are running in parallel, causing many contradictions and problems and the social cost is very high. The 17th CPC National Congress clearly pointed out: More attention must be paid to social construction on the basis of economic development. We should make efforts to ensure and improve people’s livelihood, forge ahead with the social system reform, expand public services, improve social management, and promote social equity and justice. Practice has proved that without reforming the current social system, social construction cannot proceed smoothly. Therefore, it is necessary to forge ahead with the reform of the social system, and clear the way for social construction. It goes without saying that the reform of the social system will be very difficult. It will touch upon the vested interests of some people and groups. There will be great resistance. It is actually another revolution. We need to assess the situation, make resolute decisions, plan scientifically, arrange carefully, and implement changes step by step. The reform of the social system is imperative, and bound to be successful.

Notes 1 Originally published in China’s Economic and Social Development Strategy, 2011, no. 5. 2 Editor’s note: cited from the Decision of the CPC Central Committee on Several Major Issues Concerning the Building of a Socialist Harmonious Society adopted at the 6th Plenary Session of the 16th Central Committee on October 11, 2006. 3 Editor’s note: on the afternoon of June 28, 2008, the family members of the deceased gathered in Weng’an county government and the County Police office for an appeal, because they were dissatisfied with the results of the death cause identification of Li Shufen, a second grade female student in Weng’an, Guizhou Province. Some people

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incited the people who didn’t know the truth to attack the Police office, the county government and the county Party committee building, which eventually led to a serious incident of smashing, smashing, looting, and burning. 4 Editor’s note: on June 17, 2009, Tu Yuangao, the chef of a hotel in Shishou of Jingzhou City, Hubei Province, died abnormally, which caused tens of thousands of people to gather around and make a riot on the road. The riot lasted for three days. 5 Editor’s note: on July 24, 2009, the equity adjustment triggered mass incidents, and the general manager of Tonghua Iron and Steel Group Co., Ltd. was killed in the conflict.

10 Social construction is the realization of social modernization1

The 4th Plenary Session of the 16th CPC Central Committee made two theoretical contributions. One was its proposal to build a socialist harmonious society, and the other was the proposal for social construction. The former put forward a strategic goal compatible with China’s national conditions and public opinion. Just like the proposal for building a moderately prosperous society in those years, once put forward, it was widely welcomed by the people across the country, reflecting the people’s desire for a harmonious society. The second proposal served the goal of a harmonious society. A harmonious society can only be realized through a series of constructions including social construction. Under the leadership of the CPC Central Committee, practical exploration and theoretical discussion on building a socialist harmonious society and social construction have been carried out nationwide. In the Party Constitution (Amendment) adopted at the 17th CPC National Congress in 2007, social construction was included in the general layout of building socialism with Chinese characteristics. The original three-in-one layout was expanded to a general layout of four-in-one consisting of economic construction, political construction, cultural construction, and social construction. This amendment reflects the deepening of our party’s understanding of the laws of social development and socialist modernization. It is an important theory for an in-depth analysis of China’s national conditions and characteristics at different stages of its development. It indicates that China has entered a new stage focusing on social construction. In the proposal of the Twelfth Five-Year Plan adopted at the 5th Plenary Session of the 17th CPC Central Committee, special emphasis was laid on “strengthening social construction” as the fundamental starting point and foothold for accelerating the transformation of the mode of economic development. In early 2011, the CPC Central Committee held a special seminar on innovative social management for leading cadres at the provincial and ministerial levels, reiterating the importance and urgency of strengthening social construction, and innovating social management. At present, strengthening social construction and innovating social management are in full swing across the country. At the beginning of such a new stage, it is necessary to clarify questions such as what social construction is, what the main contents and tasks of social construction are, and the ways to carry out social construction.

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Social construction is the realization of social modernization Since the founding of the People’s Republic of China, especially since the reform and opening up, China has strived for 30 years with economic construction as the focus and made a major accomplishment namely, basically achieving economic modernization. China’s GDP reached 39.8 trillion yuan in 2010, ranking second in the world. The manufacturing industry had already reached the first place in the world. The total volume of imports and exports in foreign trade and the national foreign exchange reserves were also the first in the world. In the economic structure of 2010, the primary industry accounted for 10.2%, the secondary industry 46.8% and the tertiary industry 43%. China’s economic development has reached the level of industrial societies at the intermediate stage of industrialization. Beijing, Shanghai, and other places have entered the late stage of industrialization. In the meantime, great achievements have been made in social construction and the social structure in China has undergone profound changes. However, comparatively speaking, due to various reasons, social construction in China lags relatively behind and the social structure is still relatively backward. Take the employment structure for example. In the total working population of 1978, the primary industry accounted for 70.5%, the secondary industry 17.3%, and the tertiary industry 12.2%. In 2009, the percentages had changed to 38.1%, 27.8%, and 34.1%, respectively. In 1978, the number of employees in the secondary and tertiary industries was 118.35 million and increased to 482.87 million in 2009. In 31 years, the number of employees increased by 364.52 million, an average annual increase of 11.76 million. With 61.9% of the total working population employed in the secondary and tertiary industries, the employment structure is already one of industrialized societies. However, the labor force in agriculture still accounted for 38.1%. When it comes to the urban-rural structure, the urban population in China was only 172.45 million in 1978, and the urbanization rate was only 17.9%. In 2009, the urban population reached 621.86 million, a total increase of 449.41 million in 31 years, with an average annual increase of 14.5 million, which brought the urbanization rate to 46.6%. (Among the urban population, many were rural residents according to their registration status who had lived in urban areas for more than half a year. According to the statistical standards before 2000, the urbanization rate was only 34%). The core of social structure is the structure of social strata. In 1978, the structure of social strata was one of two classes and one stratum (the working class, the peasant class, and the intellectual stratum). Now it has been transformed into a structure often major strata: state and social management personnel, managers, private business owners, science and technology professionals, clerical personnel, individual industrial and commercial households, business service personnel, industrial workers, agricultural laborers, unemployed and semi-unemployed people.2 Among these 10 strata, the middle class accounts for about 25%.3 It is still a long way from the level expected at the intermediate stage of industrialization. With the rapid development of China’s economy and under the impetus of changes in the economic structure, the social structure in our country has undergone

Social construction 133 profound changes. It is already a social structure of an industrial society. However, if measured according to the indicators of the international academic world, China’s employment structure, the urban-rural structure, and the structure of social strata are only at the primary level of industrial societies. The social structure, as mentioned earlier, is out of keeping with the economic structure, which has already reached the intermediate level of industrial societies. Economic and social structures are the most fundamental and important structures of a country (or a region). The two are based on each other and support each other. In general, changes in economic structure come first, which will drive and affect changes in social structure. The adjustment of social structure will in turn lead to the improvement and continuous change in economic structure. Thus, economic and social structures must be coordinated and complement each other. Economic structure cannot develop alone. Social structure can lag slightly behind economic structure. This lag has a reasonable limit. Beyond the limit, it will hinder the sustained and orderly change in economic structure, and the coordinated development of economy and society. At the present stage, China’s economic structure has already reached the intermediate level of industrial societies, whereas its social structure is still at the primary level of industrial societies. There are serious structural contradictions between the two. Theoretically speaking, the fundamental cause of many current economic and social contradictions in China is the fact that the social structure lags seriously behind the economic structure. The two structures are unbalanced, uncoordinated, and unintegrated. Like a building, the foundation is very good and rests on reinforced concrete. The four beams and eight columns are also of reinforced concrete, but the roof and the upper part of the building are still wood and plastic. As soon as there is wind and rain, there will be leakage. One cannot imagine what would happen in the event of a storm. The practice of many modern countries shows that a modern society is an integrated system. It is necessary to realize not only the modernization of the economic system, but also the modernization of society, politics, and culture. Of these four modernization projects, economic construction is the most important, fundamental, decisive, and comes first. Since the founding of New China more than 60 years ago, especially after more than 30 years of reform and opening up, the people of all ethnic groups across the country, under the leadership of the Communist Party, have made concerted efforts and, through twists and turns and untold hardships, finally basically realized the modernization of the economy and the economic structure, and achieved the prosperity of today. This is an unprecedented great achievement. It is the hope for realizing the rejuvenation of the Chinese nation and the foundation of building a prosperous, democratic, civilized, and harmonious socialist modern society. One can never overestimate this achievement. However, economic modernization alone is far from enough to realize the four-in-one socialist modernization cause. After certain achievements have been made in economic construction, we should focus on strengthening social construction in a timely manner so as to accomplish a coordinated development of the economy and society. For various

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reasons, we are a little late in carrying out social construction, creating the awkward situation of a long economic leg and a short social leg, and causing many social contradictions and problems. At present, we should make up for the mistake promptly, accelerate the pace of social construction, and promote a coordinated development of the economy and society. Focusing on strengthening social construction is not only the need to adapt to the changing situations at home and abroad and meet the new expectations of the people of all ethnic groups for a better life, but also the need to speed up the transformation of the mode of economic development and maintain long-term, steady, and rapid economic development. It is a matter of great importance and satisfies both needs with one action. Viewing the long-term development and the practice abroad and at home, the goal of social construction is to achieve social modernization. Like economic modernization, social modernization is a complicated and arduous long-term historical task, which obviously cannot be accomplished in five or 10 years. To build a modern society, we must realize the modernization of people’s livelihoods, social undertakings (such as education, science and technology, medical and health care), social systems, social management and organization, social lives and social structure, and so on. It is thus clear that social modernization is a huge and complex project of systems engineering. To achieve social modernization in a country like ours, where natural conditions as well as social historical conditions are very uneven, we should not only coordinate various relations beyond those of economic, political, and cultural constructions, but also the relations among the subsystems within the economic, political, and cultural systems, so that they can develop in a comprehensive, balanced, coordinated, and sustainable manner. This is a complicated and arduous task. We must be fully aware of this.

Main content and tasks of social construction In 2004, after the two new concepts and ideas – building a socialist harmonious society, and social construction – were put forward by the CPC Central Committee, especially after social construction was included in the four-in-one general layout of the socialist cause at the 17th CPC National Congress, Practice and exploration of social construction and social management have been carried out nationwide. New approaches, new pilot schemes, and new experiences have sprung up in large numbers. Academic circles and theorists have gone deep into the reality, investigated and studied, summed up new experiences, discovered new problems, and conducted various discussions. Newspapers and media have also published articles and information, making all sorts of comments. How to carry out social construction and innovate social management under China’s current national conditions has become a hot and important issue of general concern since the Spring Festival of 2010. Members and scholars of the Chinese Sociological Society have discussed the connotation and main tasks of China’s social construction at the present stage at various colloquiums. Summarizing the suggestions of all sides mentioned previously, there are four different arguments and views.

Social construction 135 The first view holds that social construction should focus on ensuring and improving people’s livelihoods. We should vigorously promote social undertakings such as employment, housing, social security, science and technology, education, culture, and health care. We should improve the public service system and promote equal access to basic public services. We should reform the income distribution system, increase the income of urban and rural residents, adjust the income distribution relations, improve the mechanisms of redistribution, and reverse the trend of widening income gap between urban and rural areas, and among regions, professions, and members of society, and reduce the gap to a reasonable level. We should coordinate and consider the interests of all social strata in urban and rural areas, so that the reform and development will benefit all people and lead to common prosperity. The second view argues that at present, social construction should aim at strengthening and innovating social management. We should take the solution of the prominent problems affecting social harmony and stability as a breakthrough point to improve the level of scientific social management. We should improve the social management pattern of party committee leadership, government responsibility, social coordination, and public participation, and gradually establish and improve the socialist management system with Chinese characteristics. Under government leadership, through the participation of various sectors, and by regulating social behavior, adjusting social relations, promoting social consensus, upholding social justice, resolving social problems and contradictions, maintaining social order, and coping with social risks, we can both create a dynamic and orderly foundation and a social environment for economic and social development, and promote social harmony. The third view holds that the reason why we need to carry out social construction is the fact that with the reform and opening up and economic development, China has already realized the transformation from an agrarian to an industrial society and from a planned economy to a socialist market economy. Great changes have taken place in the mode of production and in people’s lifestyles and interpersonal relations. Profound changes have also taken place in people’s ideology, moral values, and orientations. Many social contradictions and problems have arisen from these changes. It is thus necessary to accelerate social construction, establish a new social order, and advance social progress. In the meantime, we should reform the social system, innovate social policies, adjust and optimize the social structure, and establish a social structure compatible with the socialist market economy and coordinated with the economic structure. The central task of social construction is believed to be the construction of a reasonable social structure. The fourth view contends that the fundamental goal of social construction is to establish a social subject capable of controlling the market, restraining power, and curbing social disorder. In an industrial society, there should not only be a market and a government, but also a well-developed society (social organizations). A sound society is the foundation of the market economy. Looking at the history of industrialized societies for hundreds of years, market economy is not

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omnipotent. There are times when the market fails, such as periodic outbreaks of economic crises. Therefore, it must be regulated by the government at the right time. The history of industrialized societies also shows that governments are not omnipotent, either, and that they sometimes make mistakes. Thus, there should be well-developed, multiform, and sound social organizations; that is, an organized society based on the three pillars of market, government and society. Under the conditions of the development of industrialization, informatization, and socialized mass production, a well-developed social environment is necessary for the whole economy and society to develop in a healthy, orderly, and sustainable manner. The four main points mentioned here represent the main viewpoints of sectors engaged in practical work and academic circles at the present stage. There are, of course, many other opinions and viewpoints. For example, some people think that social construction should emphasize the development of social organizations, mobilize the enthusiasm of the masses, assist the government to do a good job in public and social services, and so on. With the vigorous development of social construction and social management across the country, experiences and models of social construction and management suitable for the national and local conditions are bound to be created, and a path of social construction will be forged. Genuine knowledge comes from practice. With the deepening of practice, our understanding of the main meaning and tasks of social construction will also be richer and more specific, creating a theoretical chapter on the construction of socialist society with Chinese characteristics.

Three stages of social construction From the perspective of the law of social development, the historical tasks to be fulfilled through social construction, one of the four major constructions in the general four-in-one layout of the socialist cause, are immense and arduous. It needs not only carrying out of various kinds of social undertakings that ensure and improve people’s livelihoods, but also innovating the reform of the social system, including the system of social undertakings, not only to further improve social management and the social security system, but also to innovate social concepts and norms; not only to accelerate the adjustment of income distribution relations, effectively regulate excessive income, reverse the trend of the four widening gaps, and promote social equity and justice; but also to actively foster the development and expansion of the middle class, accelerating the pace of optimizing the social structure to make it compatible and coordinated with the economic structure. Therefore, social construction will be a long historical process. Under the leadership of the CPC Central Committee, social construction and social management are undergoing vigorous development throughout the country. What will the future development be like? The four different viewpoints mentioned earlier on the main connotations and tasks of social construction, different as they are – some advocate the promotion of social undertakings, some emphasize social management, some stress social structure, and some propose the fostering of social subjects – each aim at promoting social construction, each

Social construction 137 pointing to a certain aspect of it, and each having merits of its own. Looking at the four viewpoints horizontally, they are four different opinions. If we look at them vertically, we can see them as three different stages of China’s social construction in the future. These four opinions are different key tasks to be fulfilled at these three stages. On the basis of the experiences and lessons of modernization at home and abroad and taking into account the current national conditions in China, the future development of China’s social construction will go through the following three stages. The first stage is where we are now. What we are currently doing is to start from undertakings that ensure and improve people’s livelihoods and promote social construction, which are what people care about most – the most realistic, and the most urgent. We should exert ourselves to solve the basic livelihood problems of the people such as difficulties in getting employment, going to school, seeing a doctor, and obtaining social security payments, housing, and old-age care. At the same time, starting from strengthening and innovating social management, we should solve the prominent problems affecting social harmony and stability, resolve social contradictions and problems, strengthen source management addressing both the symptoms and the root causes, prevent and reduce social contradictions to the utmost extent, maximize the factors of social harmony, and promote social equity and justice. Since the 4th Plenary Session of the 16th CPC Central Committee, especially since the 17th National Congress, great efforts have been made to promote these two aspects of work. For example, much attention has been paid to social undertakings concerning people’s livelihoods such as education, health care, and social security. The inputs of human, material, and financial resources have been increased. The situation is improving. Three key tasks – resolving social contradictions, innovating social management, and enforcing the law impartially and honestly – have been carried out in the political and legal systems, and have achieved substantial results. In recent years, efforts have been made to proceed with these tasks in an orderly and effective manner, with good results. These efforts are made in response to public opinion and are well received by the people. These two aspects of work are actually directed to the problems that the previously mentioned first and second viewpoints propose to solve. If we can accomplish the two major tasks of ensuring the improvement of people’s livelihoods and promoting social undertakings on the one hand and innovating social management on the other during the period of the Twelfth Five-Year Plan, social construction in our country will ascend to a higher level, and a large step will be taken toward a coordinated development of economy and society. We can then move on to the second stage of social construction. At the second stage, we need to promote social system reform, innovate social policies, and improve social management. We should promote a new form of urbanization, break the bifurcated urban-rural structure, and gradually realize the integration of urban and rural areas. We should broaden the channels of social mobility, foster and expand the middle class, and build a rational, open, and inclusive social structure compatible with the economic structure.

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To build a rational and open social structure equivalent to that at the intermediate stage of industrial societies is the most important and central task of social construction. We often say that we are now in a crucial period of reform and development, and the key task in this crucial period is to build a rational social structure through social construction, especially through the reform of the social system. We must break through the barrier of social construction; or in other words, surmount the hurdle of social construction. Some developing countries cannot join the ranks of modern countries because they fail to come over this barrier. China’s current social system, including the system of social undertakings, was formed in the period of the planned economy. To promote social construction, we must first reform the social system just like the reform of the economic system since the 1980s. The reform involves the household registration system, the urban-rural system, the employment system, the social security system, and the systems of various social undertakings. A social system compatible with the socialist market economic system should gradually be formed. If we do not carry out or delay the reform of the social system, we will not be able to solve the current social contradictions and problems in a satisfactory way. Neither can we adjust the social structure, let alone optimize it. For example, if the household registration system is not reformed, the bifurcated urban-rural structure will not be changed, without which the “three rural” problems and the problem of migrant workers will not be solved, either. This will make the problem of urban-rural bifurcation even more serious. There will be no urban-rural integration to talk about. Can a socialist market economy rest on the basis of a bifurcated urban-rural structure for long? If the household registration system, which was formed during the period of the planned economy and in service to the latter, is not reformed, the social structure will not be adjusted and optimized. Neither will the socialist market economy be improved. Viewing the historical process of reform and development, the second stage of China’s social construction can also be seen as the crucial and decisive stage of the reform of the social system. The time will be around the Thirteenth Five-Year Plan. From now on, at the first stage of social construction during the current Twelfth Five-Year Plan period, we must prepare ourselves for the success of this decisive stage of reform. At the third stage, with the continuous improvement of the socialist market economic system and the sustained, sound, and rapid development of economic construction, China’s economy will reach the moderately prosperous level of developed countries by the middle of the 21st century. A modern economic structure will take shape. Through the reform of the social system, social construction will accelerate. The social system and the system of social management will be further improved, the channels of social mobility will be more open, the middle class will be further strengthened, social organizations will be extensively developed, and the social structure will be further optimized. A modern social structure compatible with the socialist market economic system and coordinated with the modern economic structure will take shape. It will be an olive-shaped social structure that will provide a good social environment for comprehensive, coordinated,

Social construction 139 and sustainable scientific development. The goal of social construction is to realize social modernization and to develop a socialist harmonious society featuring “democracy and rule of law, fairness and justice, vitality, good faith and friendship, stability and order, and harmony among people.”4 There is, of course, no clear boundary between these three stages. They will intersect with each other. Only one stage will highlight the focus of a certain aspect of work. At different stages, in different regions, and according to actual situations, there will be different approaches. Since the 5th Plenary Session of the 17th CPC Central Committee, social construction and social management have been actively promoted in all regions, creating many new approaches, new experiences, and new models of practice. After a period of practice and through comparison and exchange of various experiences and multiple models, a number of practical models and theoretical systems of social construction with Chinese characteristics and suitable for China’s national conditions will certainly emerge. It is foreseeable that after going through these three stages, China will reach the level of moderately developed countries and enter the ranks of modern countries by 2040. At present, the trend of economic construction is very good. The forecasts both at home and abroad are relatively optimistic. Although there are still some difficult problems, we have embarked on the road of a socialist market economy, and these problems will be solved in due course. The key is whether we can do a good job in social construction and whether we can overcome the barrier of social construction. This is the top priority of our work in the next five, 10, 20 years. Social construction and social modernization are new areas and new tasks with which we are not familiar and of which we have no experience. We need to cross the river by feeling the stones and learn while doing it and do it while learning. Through our hard work and practice, the historical task of social construction is bound to become an important component of social modernization with Chinese characteristics.

Notes 1 This article was originally published in Sociological Studies, 2011, issue 4. 2 Lu, Xueyi (Ed.) (2001). Research Report on Social Stratification in Contemporary China. Social Sciences Academic Press (China). 3 See Lu, Xueyi (Ed.) (2010). Social Strata in Contemporary China. Social Sciences Academic Press (China). 4 Editor’s note: Hu Jintao’s speech at the Seminar on Improving the Ability of Leading Cadres at Provincial and Ministerial Levels in Building a Socialist Harmonious Society on February 19, 2005.

11 China’s main task in the next 30 years is social modernization1

Modernization is a historical process in which a country or a region is transformed from a traditional agricultural society to a modern industrial society. This involves not only the achievement of economic modernization, but also social, political, and cultural modernization. Social construction is now carried out throughout the country. This article analyzes the motivation, current situation, goals, and stages of development in China’s social construction.

China’s economy is basically modernized, while social construction is still lagging behind Since the founding of the People’s Republic of China 62 years ago, especially after more than 30 years of reform and opening up, taking economic construction as the central task, China has, through hard work and many twists and turns, basically achieved economic modernization. In 2010, China’s GDP reached 39.8 trillion yuan. Calculated at constant prices, the increase was 20.6 times over that of 364.5 billion yuan in 1978, an average annual increase of 9.9%. The ratio of the three industries changed from 28.2:47.9:23.9 in 1978 to 10.1:46.8:43.1 in 2010. The economic structure reached the level of the intermediate stage of industrial societies. Since the reform and opening up, China has also made great achievements in social construction, and profound changes have taken place in the social structure. In comparison, social construction is still relatively backward for various reasons. Taking the employment structure as an example, among the total employed population in 1978, 70.5% was in the primary industry, 17.3% in the secondary industry, and 12.2% in the tertiary industry. In 2009, the employment structure of the three industries had changed to 38.1%, 27.8%, and 34.1%, respectively. In 1978, the number of employees in the secondary and tertiary industries in China was only 118.35 million. In 2009, it had increased to 482.87 million, a total increase of 364.52 million with an average annual increase of 11.76 million (about 60% of them were migrant workers). The secondary and tertiary industries accounted for 61.9% of the total employed population in 2009. The employment structure was already one of an industrial society. However, the labor force employed in agriculture still accounted for 38.1%.

China’s main task in the next 30 years 141 In the urban-rural structure, the total population of China was 962.59 million in 1978, of which only 172.45 million were urban population. The urbanization rate was only 17.9%. In 2009, the total population had reached 1.33474 billion, with a net increase of 372.15 million in 31 years. Compared with 1978, the increase was 449.41 million. The average annual increase was 14.49 million. The urbanization rate in 2009 reached 46.6%, an increase of 28.7 percentage points over 1978, an average increase of 0.93 percentage points per year. The structure of social strata in 1978 was one of “two classes and one stratum” (the working class, the peasant class, and the intellectual stratum). Now it has transformed into 10 major strata – namely: state and social management personnel, managers, private business owners, science and technology professionals, clerical personnel, individual industrial and commercial households, business service personnel, industrial workers, agricultural laborers, and unemployed and semi-unemployed people – of which the middle class accounts for about 25%. In more than 30 years of reform and opening up, under the impetus of sustained and rapid economic development, the society is undergoing intense differentiation. Social mobility has greatly increased (many farmers have become workers in the secondary and tertiary industries annually). Every year, many farmers become urban residents. These are unprecedented changes that haven’t been seen in China in thousands of years. Profound changes have taken place in the social structure. It has been transformed from the social structure of an agrarian society into one of an industrial society. China’s current progress all comes from this social transformation. Of course, all the social contradictions and problems in present-day China also stem from it. To be precise, they are caused by the fact that this transformation is still incomplete and unfinished. According to the indicators of the development of industrial societies in the international academic circles, China’s economic structure has reached the intermediate level of industrial societies, whereas the social structure is only at the primary level of industrial societies. Economic and social structures are the most fundamental and important structures of a country (or region). They form the prerequisites for each other, and are mutually supportive. In general, the change of economic structure precedes and influences the change of social structure. The adjustment of social structure will, in turn, promote the optimization and continuous change of economic structure. Therefore, economic and social structures must be balanced, coordinated, and complementary to each other. The experience and lessons at home and abroad show that economic structure cannot advance alone. Social structure can change later than economic structure. But this lag has a reasonable limit. When it exceeds this limit, and when social structure lags behind economic structure for a long time, it will hinder the continuous change of economic structure and impede the coordinated development of economy and society. The process of modernization shows that in the process of social transformation, the economic and social development in developed countries in Europe and the United States was also unbalanced and uncoordinated for a long time. After continuous reform and adjustment, especially after World War II, these countries step by step embarked on the road of a coordinated economic and social

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development through social system reform, the adjustment of social policies, and the improvement of social management. The rise of Japan and the “four small dragons”2 in Asia – Taiwan (China), Hong Kong (China), South Korea, and Singapore – after the war drew on the experiences and lessons of developed countries. At the stage of rapid economic development, they paid more attention to the reform of their social systems and the adjustment of social policies, and carried out “social construction” relatively early. Therefore, social transformation in these countries and regions was relatively stable and rapid; economic and social development were more balanced and coordinated, and they joined the ranks of modern countries without hindrance. In the 1960s, the economy of Latin American countries such as Argentina also developed rapidly and had its heyday, but they did not carry out social system reform in time, and the social structure was not adjusted accordingly. As a result, social contradictions and conflicts became more and more serious, and social unrest severely hindered the economic development as the societies fell into the so-called “Latin American Trap”. One of the most important reasons causing the upheaval of the Soviet Union was that its economy developed, and the total economic output became the second largest in the world, and its military power and science and technology were also very strong, once forming a superpower, but no social system reform or “social construction” were carried out for a long time. The social structure remained to be one of “two classes and one stratum.” The long-term unbalanced and uncoordinated economic and social development finally led to the collapse of the society. The collapse of such a superpower provided a very painful lesson. Both the negative and positive aspects of practice have proved that the modernization of a country (or region) is a process of an integrated whole. Economic construction is the most important. The economy should be modernized first – but economic modernization alone is not enough. Social, political, and cultural modernization should follow. Modernization cannot be achieved otherwise. Moreover, economic modernization may also go backwards.

China has entered a new stage centered on social construction As early as the mid- to late 1990s, the problem of unbalanced and uncoordinated economic and social development had already emerged in China. On the one hand, economic construction advanced by leaps and bounds with remarkable achievements. On the other hand, social problems and contradictions greatly increased, and negative news kept pouring in. The reasons were, of course, manifold. From a subjective point of view, it was certainly correct to put the focus on economic construction. However, some regions and sectors turned it into the reign of GDP in the process of implementation, focusing solely on economic construction at the expense of rural areas and sacrificing resources and the environment. The level of consumption and people’s standard of living were kept low and non-economic constructions were put aside, leading to the lag of rural development, waste of resources, environmental degradation, and the widening of the gap between urban

China’s main task in the next 30 years 143 and rural areas, among regions, and between the rich and the poor. It also led to social contradictions and conflicts and the frequent occurrence of group incidents. The social situation was grim. Since the beginning of the 21st century, the Chinese Communist Party and the people’s government have attached great importance to a coordinated development of economy and society. In 2003, the CPC Central Committee proposed to apply the scientific outlook on development and emphasized the need for peopleoriented, comprehensive, coordinated, and sustainable development. In 2004, the Central Committee proposed to build a socialist harmonious society and to strengthen social construction and social management. At the 17th CPC National Congress in 2007, social construction was added to the original “three-in-one” layout of socialist construction, and a general “four-in-one” layout of economic, political, cultural, and social constructions was formed. This important content has been written into the revised constitution of the Communist Party, which marks that China’s modernization drive has entered a new stage with social construction as its focus. In October 2010 and March 2011, the 5th Plenary Session of the 17th CPC Central Committee and the 4th Session of the 11th National People’s Congress formulated and adopted the Twelfth National Economic and Social Development Plan, emphasizing that in the future, we should take the transformation of the mode of economic development as the main line and the guarantee and improvement of people’s livelihoods as the fundamental starting point and foothold for accelerating the transformation. We must significantly strengthen social construction, improve the social management system, and promote social harmony. In recent years, especially since the spring of 2011, social construction and social management work throughout the country are thriving. For example, committees or offices for social construction have been set up in Beijing, Shanghai, Shenzhen, Daqing, Nanking, and other cities. Most provinces, municipalities, and autonomous regions have formed leading groups for social construction, and special departments have been appointed to take charge of investigation into and research of social construction and management, and to be responsible for overall planning, coordination, and arrangement, as well as inspection and supervision. From the central to local governments at various levels, the input of human, financial, and material resources in social construction and management have been substantially increased. For example, the central government has decided to set the target of economic growth rate for the Twelfth Five-Year Plan at 7% (the actual annual growth rate in the period of the Eleventh Five-Year Plan was 11.2%) and to release and divert resources to increase the financial input in science and technology, education, health care, employment, social security, and housing, focusing on ensuring and improving people’s livelihoods. A reform and development plan for education and health care has been formulated to solve the pressing needs of the public for access to schools and medical care. The central government has also proposed that during the period of the Twelfth Five-Year Plan, the number of employees in the secondary and tertiary industries should be increased by 45 million, 40 million units of affordable housing should be built, and a social

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security system covering both urban and rural areas should be established to solve the problems relating to employment, housing, and old-age care. These plans are being implemented step by step, and the work is in good progress. China is now in a new period of rapid urbanization. There are about 12 million of the agricultural population entering cities and towns each year. The urbanization rate will soon exceed 50% (the urbanization rate is expected to reach 53–54% in 2015), making China a country with a predominantly urban population. All regions are making efforts to strengthen the work of reforming and improving the system of subdistricts, districts, and small residential areas (小区), and to do a good job in organizing and making arrangements for both new and old urban residents, providing better and more convenient public services, improving the governance of grassroots communities, promoting the integration of new and old urban residents, and building harmonious communities featuring mutual respect, love, and help. Chengdu and other cities are experimenting with the reform of the household registration system so as to promote the integration of urban and rural areas, and gradually do away with the bifurcated urban-rural structure. In early 2010, the government systematically carried out three key tasks, namely “resolving social contradictions, innovating social management, and enforcing the law impartially and honestly.” Over the past year, good results have been achieved. Group incidents and criminal cases have been reduced, the situation of public security has been improved, and greater social stability has been achieved. We are building up a management system of “source control, addressing both symptoms and root causes with the focus on the latter” to prevent and reduce social problems, resolve negative factors, maximize factors conducive to social harmony, and create a dynamic and orderly environment for economic and social development. Generally speaking, since the 21st century, under the impetus of various forces, China has entered a new stage with social construction as its focus. Social construction and social management have won the support of cadres and the masses at all levels, and are carried out throughout the country with good results. The awkward situation of a long economic leg and a short social leg is being changed, and the imbalance and lack of coordination of economic and social development has been eased. However, due to the lack of input in various aspects of social construction and its lagging behind economic construction for too long, too many and too complicated problems have been accumulated. In addition, we still lack experience and theoretical guidance in carrying out social construction. The task of social construction is therefore daunting, and there is still a lot of work to do. One can say that the achievements we have made so far are only the beginning. Historical comparison suggests that social construction today is just like the economic construction in the early 1980s. When the historical task of focusing on economic construction was put forward, there were no clear answers to a series of questions at first, such as how to proceed, where to start, how to reform the economic system, and how to proceed with economic development. Fortunately, the Communist Party of China is a party with rich practical experience and has a fine tradition of mobilizing the masses and relying on them. Relying on the spirit

China’s main task in the next 30 years 145 of reform and daring to try, the party crossed the river by feeling the stones, kept on exploring and advancing, took one step at a time, adding up small victories to big victories, and finally accomplished the great task of economic modernization. Social construction today is just like the economic construction then. Now the historical task of focusing on social construction has been put forward. There are no ready-made answers to the questions of how to proceed and how to accomplish the task. It is up to all of us to explore and practice. Fortunately, over the past 30 years, the great success of China’s economic construction has laid a solid material foundation and created extremely successful experiences to go by. Moreover, in the past few years, under the leadership of the CPC Central Committee, we have made a good start in social construction, and the direction and tasks are clear. At present, the question is how to implement and carry out social construction in all regions and sectors. So far as various regions and sectors are concerned, they should do just as what we did in the mid-1980s, namely to industrialize by focusing on the core tasks of economic construction, creating “Southern Jiangsu Model,” “Wenzhou Model,” “Zhujiang Model,” and “Jinjiang Model,” thus realizing first local industrialization, which in turn promoted the economic construction in the whole country. In accordance with the guidelines provided by the central government for social construction and in light of local conditions, various models of social construction will be created in different regions and sectors across the country. One can be sure that in a few years’ time, a variety of typical experiences and good models of social construction conforming to the laws of social development, as well as local conditions, will emerge, and China’s social construction will also be successful.

China’s main task in the next 20 years is social modernization Entering the 21st century, China’s economy continues to develop at a high speed, its economic aggregate continues to grow steadily, and the economic situation is excellent. In the meantime, social contradictions and social conflicts have become prominent. There are many discussions, both at home and abroad, about how to ensure a sustained, healthy, and rapid economic development, how to resolve social contradictions and maintain social stability, and what the next step should be, carrying out social system reform and focusing on social construction or reforming the political system and focusing on political system building. The Central Committee of the Chinese Communist Party, on the basis of comprehensive analysis and assessment of the overall situation at home and abroad, put forward the strategic goal of building a socialist harmonious society and the task of strengthening social construction and management at the 4th Plenary Session of the 16th CPC Central Committee. These proposals soon received a warm response from the cadres and the masses throughout the country. Since then, social construction and management have been carried out nationwide. Choosing social construction as the strategic focus for the next step of development is not only a response to the need created by sustained economic development.

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It can also provide support for it in terms of education, talents, and science and technology, increase domestic consumption, create a growing market for economic development, change the export-driven situation, and turn China into a consumer society. Choosing social construction, reforming the social system, innovating social policies, and improving social management are in themselves aimed at resolving many social contradictions and social conflicts that have already emerged. It is also to prevent and reduce social problems from the source, minimize negative factors, increase factors of social harmony, and ensure the longterm stability of the country. Carrying out social construction, reforming the social system, and building a social system compatible with the socialist market economy is also to pave the way for reforming the political system and carrying out political construction in the next step. The experience and lessons of modernization in various countries have shown that without reforming the social system, political system reform is often unsuccessful. The disintegration of the Soviet Union is a typical example of such a failure. In view of China’s basic national conditions, making social construction the strategic focus of development in the next step after economic modernization has been basically achieved is not only very reasonable, but also in line with the laws of social development. China’s path of modernization is foreseeable: the first step is to achieve economic modernization and ensure sustained and healthy economic development, the second step is to achieve social modernization, the third step is to realize political modernization, and the fourth step is the modernization of culture and building a prosperous, democratic, civilized, and harmonious socialist modern country. The goal of social construction is to achieve social modernization. Just as is economic construction, social construction is a grand, complex, and arduous historical task, which obviously cannot be accomplished in five or 10 years. It requires long-term arduous efforts. To realize social modernization, we must achieve the modernization of people’s livelihoods (such as the establishment of a modern social security system), of social undertakings (such as the modernization of science and technology, education, and medical care), of social organization and management, of social system and structure, and so on. It is evident that social modernization is a huge and complex project of systems engineering. In a large country like ours, where the natural as well as social and historical conditions are uneven, in order to achieve social modernization, we need not only to make overall plans and coordinate their relations to economic, political, and cultural construction, especially its relation to economic construction, but also coordinate the relations of various elements within each area, so that social modernization can proceed in a comprehensive, balanced, coordinated, and sustainable manner. This is an important task, one unprecedented in China. It is very complicated and arduous. We should have a full understanding of this. Judging from the experience and lessons of modernization both at home and abroad, China’s social construction will go through three stages, according to the current national conditions. The first stage, which is now under way, begins with addressing the issues concerning people’s livelihoods, issues that concern the masses most and are the most

China’s main task in the next 30 years 147 realistic and the most pressing to be solved. We should exert ourselves to solve the basic livelihood problems of the people such as difficulties in getting employment, going to school, seeing a doctor, and obtaining social security and housing. Starting from strengthening and innovating social management, we should resolve social contradictions, solve social problems, and properly handle the prominent problems affecting social stability to ensure that people work and live in peace and contentment, promote social harmony, achieve fairness and justice, and create a dynamic and orderly social environment for economic and social development. Since the 4th Plenary Session of the 16th CPC Central Committee proposed to build a socialist harmonious society and strengthen social construction, especially since the 17th CPC National Congress proposed to strengthen social construction with the emphasis on the improvement of people’s livelihoods, governments at all levels have attached great importance to these two aspects of work; increased the input of human, material, and financial resources; and strengthened their work. It is already paying off, and things are getting better. This is line with the wishes of the people and popular feelings, and has been welcomed by the people. During the period of the Twelfth Five-Year Plan, if we are able to ensure the improvement of people’s livelihoods through various social undertakings and innovative social management, we will lay a good foundation and provide a good start for social construction. This will also be a big step towards coordinated development of the economy and society, which will ensure a smooth transition to the second stage. The second stage is a critical stage, during which comprehensive reform of the social system will be carried out and social construction will be promoted on a large scale. In a sense, the improvement of people’s livelihoods through social undertakings and the strengthening of social management at the first stage is all about repayments and making up for what should have been done. In the past, we attached too much importance to economic development. All kind of resources were concentrated in economic construction. This has affected the normal and sound development of social construction, and led to the unbalanced and uncoordinated development of economy and society. The two aspects of work done in the first stage will make up for these deficiencies, thus providing the basic conditions for the reform of the social system and the large-scale promotion of social construction. Starting from the Thirteenth Five-Year Plan, we must focus on social system reform, innovate social policies, promote a new type of urbanization, dissolve the bifurcated urban-rural structure, and gradually realize urban-rural integration. We should broaden the channels of social mobility, vigorously develop social organizations, foster and enhance the middle class, create a rational, open, and inclusive social structure, and make it compatible with the economic structure. The current social system in China, including the system of social undertakings, was formed during the period of the planned economy and was compatible with the planned economic system. After the reform and opening up, reforms have been carried out, but few of them have been successful. Some have not even grasped the crux of the problems. This is also one of the important reasons why social

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construction has lagged behind. In order to push forward social construction and innovate social management, social system reform must be carried out, just as we did with the economic system when we pushed ahead with the economic construction in the past. Social system reform must be comprehensive, including the reform of the household registration system, the urban-rural system, the employment system, the distribution system, and the system of various social undertakings. All these reforms should proceed step by step in a planned and orderly way. A social system compatible and coordinated with the socialist market economy should be gradually established. From a deeper level of observation, a socialist market economic system has been in operation in our country for more than 10 years now. The market has become the basic force for the allocation of resources and opportunities. However, the social system has basically not been reformed. The contradiction between the two different systems is an important reason for the emergence of many social problems and for their being unsolved for a long time. We have at the present more than 1.2 million public institutions with over 40 million cadres and employees. Most of these institutions have not undergone substantial reforms. The problem of “eating from the same big pot of rice”3 has not been completely solved. The quality of service is not good, and the efficiency is not high. Without thorough reform, the problems will not be solved. China is currently in a crucial period of reform and development. The key to successfully going through the period is to remove all the obstacles and carry out the social system reform so as to promote social construction on a large scale and gradually realize social modernization. In the critical period of reform and development, we must pass the barriers of social system reform and social construction. Many developing countries fail to come over the barrier of social construction, and are thus unable to join the ranks of modern countries. The second stage of China’s social construction is the stage of overcoming difficult problems and therefore decisive. The time is around the period of the Thirteenth to Fourteenth Five-Year Plans. From now on, we should prepare for the success of the social system reform. At the third stage, with the continuous improvement of the socialist market economic system and the healthy and rapid development of economic construction, China’s economy will reach the level of moderately developed countries by around the 2040s, and a modern economic structure will take shape. Through the social system reform, the development of various programs in China’s social construction will accelerate. The modernization of science and technology, education, medical care, and other forms of social undertakings will be gradually realized. Social organizations will be widely developed, social management will be further improved, and channels of social mobility will be more open. The middle class will grow and become the dominant force in society. The social structure will be optimized, and a modern social structure compatible with the socialist market economy and coordinated with the modern economic structure will be formed. An olive-shaped structure of social strata will take shape. Social modernization will be achieved and provide a good social basis for comprehensive, coordinated,

China’s main task in the next 30 years 149 and sustainable scientific development. A socialist harmonious society featuring democracy, rule of law, fairness and justice, honesty and friendliness, vitality, stability, and order will be built. Of course, there are no clear boundaries between these three stages, and they will be intersecting each other; only at a certain stage, the emphasis will be on a certain aspect of the construction. Different approaches will be adopted at different stages and in different regions, according to their actual conditions. It is foreseeable that after going through these three stages, China will reach the level of moderately developed countries and enter the ranks of modern countries around the 2040s. At present, it seems that the trend of economic construction is very good. The forecasts both at home and abroad are – on the whole – optimistic. The key is whether we can, through reform of the social system, do a good job in social constructional ready underway, and whether we can achieve social modernization through social construction. This will be China’s main task in the next 30 years.

Note 1 This article was originally published in Petition Letters and Visits and Research on Problems of Social Contradictions, 2011, issue 1. 2 Editor’s note: the “four small dragons” means that since the 1960s, Taiwan (China), Hong Kong (China), South Korea and Singapore in Asia have carried out export-oriented strategies, focused on the development of labor-intensive processing industries, and achieved rapid economic growth in a short period of time, becoming the prosperous regions in Asia. 3 Editor’s note: it is an image metaphor of equalitarianism in distribution, which includes two aspects: (1) no matter whether the enterprise is good or bad in operation, profit or loss, the salary will be paid as it is, and the total salary of the enterprise is out of line with the operation effect; (2) within the enterprise, no matter how much or how little the employees do, whether they do well or not, the individual salary distribution will not be affected.

12 The era of social construction has arrived1

This book is the result of the major project Research on Innovation of Contemporary China’s Social Management System financed by the National Social Science Fund of China.2 It is also the fourth research report presented by the research group on social structure change in contemporary China, following the completion of Research Report on Social Strata in Contemporary China (2002), Social Mobility in Contemporary China (2004), and Social Structure in Contemporary China (2010). Over the past more than two years since 2010, the members of the research group conducted in-depth investigations in urban and rural areas such as Chengdu City in Sichuan province; Taicang City in Jiangsu province; Shenzhen, Guangzhou, and the City of Hainan in Guangdong province; Chaoyang, Daxing, and Shunyi Districts in Beijing; and the county of Yanqing. A large amount of literature has been studied. Well-known experts in relevant fields have been invited to hold more than 10 seminars. After several drafts, this research report is finally completed. The theme of this book stems from deep observation and systematic thinking of the epochal characteristic of China’s economic and social development. This characteristic can be summarized in one sentence: the era of social construction has arrived. After more than 60 years of socialist construction, especially after 30 years of modernization characterized by reform and opening up, China has made tremendous achievements in the economic sphere, its comprehensive national strength has gradually increased, and people’s living standards have been continuously improved. China has entered the intermediate stage of industrialization. In the meantime, profound changes have taken place in the social sphere. But such changes have exhibited features incongruous with the economic development. Generally speaking, the economy has developed, but social problems have also emerged incessantly. Factors of social instability and disharmony are increasing, and social contradictions and conflicts occur frequently. The lack of coordination between social and economic development has become the main social contradiction. How to resolve this contradiction is a major issue presented to us by the times. Social construction is an important theoretical and practical proposition facing China in the new century, the new era, and the new situation. It has an important milestone significance. From the founding of the People’s Republic of China to

The era of social construction has arrived 151 the realization of modernization in the middle of the 21st century, more than 60 years of this century-long journey have already been traversed. If the first 30 years was a process of an arduous exploration of basic institutional building in China, and the second 30 years was a successful practice of economic construction, then carrying out social construction and promoting social harmony and progress will be the themes of China’s development during the next 30 years. Looking at the theoretical development and practical exploration of social construction in the past decade, there are still some major issues that need to be clarified and agreed upon. These include the questions of why we should focus on strengthening social construction at the present stage, what social construction is, and how to carry it out. Our research group has made long-term investigations and research. The following is our understanding. First, uncoordinated economic and social development caused by the lag of social construction is the main contradiction in our society at the present stage. Since the reform and opening up, China’s economy has continued to grow rapidly and make remarkable achievements. In 2010, China’s total economic output surpassed that of Japan and became the second largest economy in the world. On the whole, China’s economic structure has reached the intermediate level of industrial societies. However, while good news keeps pouring in from the economic sphere, worries start to emerge in the social sphere. As pointed out in the report of the 18th CPC National Congress, the gap between urban and rural development, among regions, and the disparity of income distribution among residents are evident. Social contradictions have increased markedly. Problems which concern the vital interests of the people – such as education, employment, social security, medical care, housing, ecological environment, and public security – are pronounced. Some people lead difficult lives. Moral anomie and lack of honesty and integrity exist in some areas. Looking at society as a whole, China’s social structure is still at the initial level of industrial societies. That China’s social structure lags behind the economic structure is manifested in the unbalanced and uncoordinated social and economic development. This has become the main contradiction in our society at present and a “short board”3 for building a moderately prosperous society in all respects and realizing socialist modernization. Theoretically speaking, economic development and social development are a pair of contradictions. Having overcome the problem of a long-standing shortage economy, the main aspect of the contradiction has turned to the social side. Strengthening social construction and resolving social contradictions and problems have therefore become the demand of the times. Making appropriate adjustment in development strategy, placing social construction in an important strategic position on the premise of taking economic construction as the central task, and implementing the policy of equal emphasis on social and economic constructions are conducive to promoting a coordinated development of economy and society. Second, the experiences and lessons of modernization show that social construction is an inevitable stage of modernization. In the face of the current situation of social and economic lack of coordination in our country, the academic and political circles have put forward a variety

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of strategic options for reform and development. Some people believe that we should continue to deepen the reform of the economic system and continue to focus on economic development. Others argue that the fundamental reason for the uncoordinated social and economic development lies in the lag of political system reform, and they call for accelerating the reform of the political system and strengthening political construction. We believe that the focus of China’s next strategic task should be strengthening social construction. There are several practical reasons for this. The first reason is the need to build a moderately prosperous society in all respects. Checking against the index of 23 indicators in six broad categories for building a moderately prosperous society in all respects formulated by relevant departments of the State after the 16th CPC National Congress, 80.1% of the targets were achieved in 2010, 20 percentage points higher than the percentage in 2002. In terms of the economic indicators, the targets have been achieved fastest and best. The indicators of social harmony and culture, on the other hand, reveal a relatively slow rate of progress. In several aspects, the indicators show a trend of going backwards. In 2000, 99.8% of the targets in reducing the gap between urban and rural areas were achieved. In 2010, it fell back to 70.3%. The Gini coefficient4 and social security indicators have reflected a situation worse than that in 2000. On the whole, the economic performance index has been reached ahead of time, while the social progress index has not been met at all. Some have even fallen back. The goal of building a moderately prosperous society should be achieved in less than eight years. If we fail to strengthen social construction, quite a few targets in the index will fall short. The second reason is the need to accelerate the transformation of the mode of economic development. The practice over the past 10 years has shown that it is not enough to rely solely on economic restructuring to achieve the goal of transforming the mode of economic development. To promote such a transformation, we need above all to reform the social system and adjust the social structure. This is to say: we can only expand domestic demand and fundamentally revitalize the market through rationally allocating resources and opportunities; raising the income level of the lower and middle social strata; solving the problems relating to education, employment, and social security; and cultivating the middle class in society. The third reason is the need to solve the current prominent social contradictions and problems. Economic reform has brought about rapid economic development, and the cake has grown bigger, but the rules for dividing the cake has not been well established, nor has the cake been well divided, giving rise to many social contradictions and problems. At present, there are people who have difficulties being able to see a doctor, go to school, and support the elderly. These problems cannot be solved simply by increasing investment. To fundamentally solve these problems, a new social system that ensures fair and just allocation of resources and opportunities must be established and improved through the reform of the social system. The fourth reason is the need to prepare for the comprehensive reform of the political system. Experiences and lessons from the historical development of modernization at home and abroad also indicate that it is evidently not a good time

The era of social construction has arrived 153 to carry out political system reform during a period of frequent social conflicts. Political system reform must be carried out, and we are doing it now. But it is not the right time to comprehensively promote political system reform. Deng Xiaoping said in 1985: among the four modernizations, there is the modernization of national defense. If we do not engage in the modernization of national defense, will there be only three modernizations? The four modernizations must have an order of priority. The modernization of military equipment is possible only when the national economy has laid a good foundation for it. So, we must wait patiently for a few years.5 The five major constructions in the overall layout of the cause of socialist construction should also have “an order of priority.”6 When great achievements are made in economic construction and social contradictions are relatively prominent, social construction should be strengthened and social conditions should be improved through social system reform. If social organizations are developed, people will get good training at the grassroots level and in social organizations. We should first promote social democracy, and then political democracy. Good preparations should be made first before comprehensively promoting the political system reform. It should be pointed out that strengthening social construction on the basis of the success of economic construction is also the general experience of development of modernized countries. There are many examples of successfully achieving stability and prosperity through effective strengthening of social reform and social construction in the world. For instance, Roosevelt’s New Deal in the United States created a large middle class through the policy of economic revival and reform in the social sphere, which laid a social foundation for the prosperity of the post-war United States. Japan revitalized its national economy after the war, carried out comprehensive social reforms, and strengthened the social security system; in the late 1970s, a society with a middle class of 100 million people (一亿皆中流) and a welfare society came into being. Latin American countries, on the other hand, were caught in the “Latin American Trap” due to social unrest and rupture of the social structure caused by inadequate social reform. The Soviet Union hastily carried out large-scale political reform in the absence of social reform and with a weak social foundation, resulting in the collapse of the party and the country. One needs not look far for a lesson. Modernization is a long historical process. It is also a process of making key breakthroughs from one stage to another. When the economy develops to a certain critical stage, it is necessary to realize social, political, and cultural aspects of modernization through planned and organized construction actions. Judging from the basic national conditions and the current situation of economic and social development, China has come to a new historical turning point when social construction should be made the strategic focus. The conditions are sufficient, and the task is urgent. The opportunity is rare and not to be missed.

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Third, the basic objectives, principles, and tasks of China’s social construction are as follows. The goal of social construction is social modernization. Placed in relation to each other, the basic goal of economic construction is a country’s “prosperity and strength,” the essence of which is to achieve economic modernization. The basic goal of political construction is political “democracy,” and the essence is to promote political modernization. The basic goal of cultural construction is the progress of a “civilization” and the essence is the modernization of culture. The basic goal of social construction is to achieve social harmony and the essence is social modernization. The basic goal of fostering ecological civilization is to coordinate the “symbiosis” between humanity and nature, resources and environment, and realize the modernization of ecological civilization. The famous American scholar Samuel Huntington argues: “Modernization is a multifaceted process involving changes in all spheres of human thought and activity.”7 He also believes that modernization is a systematic process, in which changes in one factor are linked to and affect changes in other factors. The various factors of modernization are closely linked. Modernization is thus a long evolutionary process which starts from the beginning of a traditional society and lasts until the time when a modern society is built.8 Therefore, it is not enough for a country to achieve modernization merely through economic modernization. Social, political, and cultural modernization must be realized at the same time, or subsequently. In view of the laws of modernization and China’s current situation, social modernization should be our focus in the next stage. The so-called social construction refers to the process of building fair and reasonable relations of social interests, enhancing the common welfare of all members of society, optimizing social structure, promoting social harmony, and realizing social modernization through purposeful, planned, and organized action. This means we must take the reform of the social system as the central link and breakthrough point, spare no effort to promote social construction, and gradually achieve social modernization. The basic goal of social construction is to realize social modernization and achieve social harmony and progress. The basic principle of social construction is to adhere to the people-oriented principle, and to protect the basic rights of the people. We should uphold the principles of fairness and justice, build together and enjoy together. At present, social interests of various strata and sectors in China are not balanced and coordinated. This is an important source of social contradictions and social problems. The core principle of adjusting economic interest relations is to optimize the allocation of economic resources through the market and pursue economic efficiency. The adjustment of social interest relations has its inherent value orientations, which should be the pursuit of rational allocation of resources and opportunities in the social sphere and of social equity and justice. Here the basic principles to be followed in social construction are different from those in economic construction. When it comes to the composition and the tasks of social construction, the areas and main tasks include nine aspects: basic livelihood of the people, social

The era of social construction has arrived 155 undertakings, social distribution, urban and rural community building, social organizations, norms and management, social system, and social structure. These nine aspects of social construction are an organic whole and each aspect has its own status and functions. Fourth, follow the principle of social construction and actively and steadily promote urbanization. Industrialization and urbanization are the two wings of a country’s modernization. Industrialization and urbanization should complement each other and proceed in a coordinated manner. The level of urbanization should be compatible with that of industrialization. According to the rules of taxonomy, cities belong to the social domain and urbanization should belong to the category of social construction. Urbanization should follow the principles of social construction, persist in putting people first, uphold the principle of fairness and justice, safeguard people’s basic rights, and promote all-round development of individuals. For various reasons, urbanization in our country is put into the category of economic construction and proceeds consciously or unconsciously according to the rules of market economy. The recent phenomena of managing cities (经营城市), generating wealth from land, land-based finance, and bifurcation of the urbanrural structure are in fact taking urbanization and urban construction as a way to speed up the growth of GDP and create economic efficiency. The inevitable result has been the frequent occurrence of social conflicts, social problems, group incidents, and the worsening of the urban diseases such as environmental pollution, garbage siege, resource destruction, and traffic congestion. In recent years, haze and dense fog have hung over many urban agglomerations and have caused a lot of unease among the public. The question of “health first or GDP first” has been voiced, which is a direct criticism of the improper urbanization policy. At present, China is still in the phase of accelerating urbanization. I suggest that an urban work conference be convened to discuss the guidelines for urbanization and make decisions on a number of important issues accordingly. We should incorporate urbanization into the overall planning of social construction, properly handle the relationships between social construction, urban construction, and economic construction according to the basic principles of social construction, focusing on improving the quality of urbanization, acting in accordance with circumstances, fostering strength and circumvent weaknesses, and actively steering urbanization towards a healthy development. Fifth, to promote social construction, we must reform the social system, starting from institutional reforms that will have an impact on the overall situation. The reform of the social system is an important task of social construction. It is also a major issue in the top-level design of social construction. If the problems in the social system are not properly dealt with, it will not be possible to truly and effectively solve many social problems at the present stage, and social construction cannot proceed smoothly. China’s social construction must focus on deepseated institutional issues at the present stage, and make substantial breakthroughs in the reform of the social system. Only in this way can we effectively promote social construction as a whole.

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After the reform and opening up, China successfully carried out the economic system reform, which made it possible for the subsequent outstanding achievements of economic development. Although the social system has also undergone reforms, not many of them are successful. Some have not even grasped the crux of the problems. The reformed economic system runs in parallel with the social system that has not been successfully reformed. This is one of the important reasons for the emergence of many economic and social contradictions at present. The lag of social system reform has already affected the advancement of economic reform. Some economists have pointed out that China’s economic reform has entered the “deep-water zone,” facing increasing resistance and difficulties. In fact, the economic system reform can no longer proceed smoothly without going into social system reform. The goal of reforming the social system is to gradually establish a social system that is compatible with the socialist market economic system. To carry out the social system reform, we must first reform the institutions that have a major impact on the overall situation. The current social system of the bifurcated urban-rural structure is an example of such an institutional structure. The reform of the social system should start with removing the bifurcated urban-rural structure. Breakthroughs and success achieved in this reform will be conducive to the reforms of other social institutions. It will also be a substantial progress made in China’s social construction. Sixth, the social structure should be adjusted and optimized to cultivate a large middle class. Building a social structure comparable to the intermediate stage level of industrial societies and coordinated with the economic structure is the most important and crucial task of social construction. And the core task of adjusting and optimizing the social structure is to optimize the structure of social strata and form an olive-shaped structure “small at both ends and large in the middle.” In such a structure, the strata possessing the most economic, political, and cultural resources are very small, and those with the least resources are also very small. The middle class is the main body in this society with an olive-shaped social structure. In modern societies, the middle class is the backbone of social management and the development of social organizations. It is the leader of the mainstream values of society, the advocate and follower of social norms, and the guardian of social stability. These are the essential attributes determined by their social and political status. According to the research by scholars abroad, in countries at the intermediate stage of industrialization, the middle class should account for about 40% of the total employed population in order to form an olive-shaped social structure and to achieve balanced, coordinated, stable, and sustainable development. The golden age for the development of the middle class in a country is around the time when it enters the intermediate stage of industrialization with rapid economic growth. China is now at such a stage of great expansion of the middle class. However, according to our estimation, the middle class in China at present amounts to only 28–30% of the total employed population. The main reasons for this are the lag of social construction, inadequate reform of the social system, and

The era of social construction has arrived 157 obstructed channels of social mobility. It has, of course, also to do with the fact that we have not used the concept “the middle class” in the mainstream media or in important documents over the years. In fact, the middle class and middle-income group are not the same concept. The middle class cannot be defined by income. It is inappropriate for concerned parties to replace the middle class by middleincome earners or middle-income groups. It has led to varied interpretations and caused a lot of misunderstanding. Some people obviously belong to the middle class, but do not dare to identify themselves as such. We use objective indicators to estimate the size of the middle class in several cities and discover that the proportion of the middle class is already high, but the level of subjective identification with it is very low. We should accelerate the pace of social system reform, innovate social policies, adjust the employment structure, advance the employment structure to a higher level, and open up the channels of social mobility, including justifying the name of the middle class and accelerating the cultivation of a large middle class. This is a strategic task of social construction in China. Seventh, to promote social construction, we should grasp the law of social modernization and use the strategy of proceeding in stages. Different stages of modernization have different specific goals. The achievement of these goals constitutes the whole process of modernization. We believe that at the present stage, social construction and the realization of social modernization will go through three stages. At the first stage, in the period of the Twelfth Five-Year Plan, there are two major things at which we should excel: ensuring and improving people’s livelihoods, and innovating social management. This will make a good start for social construction, prepare and lay a good foundation for the social system reform, and, at the same time, promote a coordinated social and economic development. The second stage covers the later period of the Twelfth Five-Year Plan and the period of the Thirteenth Five-Year Plan. At this stage, efforts should be made to promote social system reform, innovate social policies, improve social management, and do away with the bifurcated urban-rural structure, gradually realizing the integration of urban and rural areas and forming a social structure that is compatible with the socialist market economic system. At the third stage, after 2020, a modern social structure compatible with the socialist market economic system and coordinated with the modern economic structure will take shape, and the olive-shaped social structure will be formed. The division of these three stages is naturally relative. They are not completely separable. In the coming process of practice, they will overlap. But at a certain stage, one aspect of work will be particularly emphasized. At different stages, in different regions, and for different practical situations, there will be different approaches. Promoting social construction in stages conforms to China’s national conditions. It is also an expression of the general law of modernization. It can be predicted that through the three stages of social construction, China will fully enter the ranks of modern countries around 2040. Eighth, social construction is a process of construction that requires all kinds of social forces to play an active role.

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To promote social construction, we should not only consider the macro background of economic and social development, resolving major contradictions and problems, but also do a good job in the practical work relating to the institutional mechanisms of social construction itself. We should, first of all, study and discuss the theoretical and practical issues concerning the building of a socialist harmonious society and social construction, further face up to the contradictions, building consensus, and truly accomplishing the important adjustment of the national development strategy in the coming period, both theoretically and ideologically. Second, set up strong organizations of social construction responsible for overall planning and comprehensive and coordinated management, and improve the institutional work mechanisms. I suggest that working committees on social construction be established to be fully responsible for the development and improvement of social construction, formulate medium- and long-term plans, and – as soon as possible – change the current situation of disunity and lack of coordination at various levels, incomplete functions, and ineffective work of the institutions in charge of social construction. Third, we should sum up and popularize the practical experiences of regions that have taken the lead in strengthening social construction, encourage the creation of various models of social construction, and provide incentives to combining pioneering spirit with top-level design to create, form, improve, and popularize a number of models of social construction with tremendous influence. Fourth, we should increase the material, financial, and human investment in social construction. State and local fiscal expenditures should be more oriented to the social sphere, vigorously improve people’s livelihoods, and develop social undertakings and public services, so that people can share the fruits of reform and development. We should increase human resource input and select, cultivate, and create a large team of talents in social construction, including teams of social workers, leading cadres and practical workers – as well as a team of researchers – in social construction. These eight points are our understanding of social construction in contemporary China as learned from experience. They are also the main content elaborated in this book. Through analyzing and refining these problems, we have attempted to provide practical references and theoretical support for current social construction and social management in China. No doubt, social construction is a new practice and a new field of theoretical research. We hope the publication of this book will serve as an icebreaker, which will enable us to obtain criticism and correction from all walks of life, especially people who work at the forefront of social construction and colleagues in sociology. It is also our hope that more scholars will join in the research on social construction and jointly pay attention to this problem of our era.

Notes 1 The article was the author’s preface to the book Social Construction in Contemporary China (2013). Social Sciences Academic Press (China). The title was added by the editor. 2 “This book” refers to Social Construction in Contemporary China, of which Mr. Lu Xueyi was the chief editor.

The era of social construction has arrived 159 3 Editor’s note: just the same as “short slab”, which refers to people’s shortcomings and not good at, originates from the barrel theory put forward by American management experts. 4 Editor’s note: in economics, the Gini coefficient (/ˈdʒiːni/ JEE-nee), sometimes called Gini index, or Gini ratio, is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measurement of inequality. It was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper Variability and Mutability (Italian: Variabilità e mutabilità). 5 Deng, Xiaoping (1993). “Speech at the Enlarged Meeting of the Military Central Commission.” In Selected Works of Deng Xiaoping, vol. 3. People’s Publishing House, p. 128. 6 Editor’s note: the five major constructions refer to economic, political, cultural, and social constructions, and the construction of ecological civilization. It was put forward in the Decision on Major Issues concerning Strengthening and Improving Party Building under the New Circumstances adopted at the 14th Plenary Session of the 17th CPC Central Committee on September 18, 2009. 7 Huntington, S. P. (1998). Political Order in Changing Societies. Huaxia Publishing House, p. 32. (Originally published in 1968 by Yale University Press. 8 See Qian, Chengdan (2010). Processes of Modernization in the World. Jiangsu People’s Publishing House, p. 15.

Index

allocation 4–6, 11–12, 18–19, 40–41, 93–99; of labor force 97; rational 33, 41, 74, 97, 103, 152, 154; of resources and opportunities 94–95, 98, 101, 103 autonomy 2–3, 41, 81, 94, 97–98 banks see home loan banks Beijing 13, 18, 34, 39, 55, 66; and adjustment of social structure 95; and social construction 126, 150; and social modernization 143; and theory and practice of social construction 79, 84 Beijing Municipal Bureau of Civil Affairs 127 Beijing Municipal Commission of Social Work 126–127 cities and towns 1–3, 5–6, 11–13, 20–22; and adjustment of social structure 96–98; building new socialist cities 106–111; and development of Chinese society 57–67; and the development of small towns 28–29, 32–38, 40–44, 44–45n3; and reform of the household registration system 46–47; and social modernization 143–144; and theory and practice of social construction 79–80 Communist Party of China see CPC community building 79–80, 103, 124, 127, 155 compensation: housing and 5, 8, 14, 16, 18–20; and the rural land system 64; and small towns 43; and urbanization 59, 108 construction 5–8, 10–12, 15–16, 19–24, 39–44, 49–52, 54–55 consumption 9–10, 14–16, 37–39, 90–91, 93–94, 97–98, 119

coordinated development 56–57, 62–64, 76–77, 133–134; and regional development 65–66; in urban and rural areas 64–65 countryside 28–30, 38–41, 43–44, 118–119; of Jiangsu province 49–53; see also rural areas, socialist CPC (Communist Party of China): 14th Central Committee 36, 121; 15th Central Committee 41–43; 16th Central Committee 61, 64, 68–72, 75–78, 84, 90, 109, 114–115, 123–128, 131, 137, 145–147; 16th National Congress 54–56, 70, 78, 81, 85, 90, 109, 114, 128, 152; 17th Central Committee 131, 139, 143; 17th National Congress 68–70, 77–83, 90–91, 104, 115, 122, 129, 131, 134, 143, 147; 18th National Congress 151; Central Committee 52–57, 66, 86, 106, 115, 131, 134–136, 143–145; Political Bureau of 56–57 Dalian 42 Decision on Deepening the Urban Housing Reform 1, 17 demographic changes 92 Deng Xiaoping 1, 5–6, 24 development: comprehensive, coordinated, and sustainable development 54–57, 61–67; contradictions and problems 57–61; coordinated development in urban and rural areas 64–65; coordinated economic and social development 62–64; see also construction; coordinated development; economic development; harmonious development; regional development; rural development

Index economic construction 39, 49, 63, 110; and adjustment of social structure 89–90, 104; economic achievements 88–89; and social construction 112, 115, 120–122, 125–129, 131–133, 138–139, 151–155; and social modernization 142, 144–147, 149; and theory and practice of social construction 72, 77, 81–86 economic development 33–34, 37–39, 62–63, 71, 73, 82–83; and adjustment of social structure 88, 96–99, 104; and building new socialist cities 106–107; and social construction 128–129, 131–132, 134–135, 150–152, 156–157; and social modernization 141–147; uncoordinated 116–119 economic structure 29, 62, 64, 73–74, 90–91, 99–101; and social construction 124–125, 132–133, 135–138, 151, 156–157; and social modernization 140–141, 147–148; and social structure 116–119 economic system 36, 47, 63–64, 70–71, 78, 83; and adjustment of social structure 95, 103–104; and the functional autonomy of social organizations 97–98; and social construction 116, 128–129, 138, 156–157; and social modernization 147–148; vitality of the socialist market economy 98–99 economy: current economic situation 112–113; and major contradictions in Chinese society 113–116; and modernization 140–142; and social construction 119–129; see also economic construction; economic development; economic structure; economic system employment 46–47, 64–65, 90–94, 100–103; and social construction 115–119, 122–123, 137–138, 151–152; and social modernization 143–144; see also employment structure employment structure 62, 93, 97, 100–102; and social construction 116–118, 132– 133, 157; and social modernization 140 family: economic functions of 96–97; structures 91–93, 116 Family Planning Office 31 Financial Office 31 “five fees” 32, 45n4

161

Five-Year Plan 69–70; Eighth 106; Eleventh 106, 143; First 106; Sixth 69, 106; Tenth 44; Thirteenth 138, 157; Twelfth 106–111, 126, 131, 137–138, 143–144, 147, 157 Fujian 59, 95, 113 Gansu 60 Gini coefficient 152, 159n4 Guangzhou 42, 54, 150 Guizhou 89, 105n4, 129n3 Hainan 95, 150 harmonious development 56, 61; between humanity and nature 66–67 Hebei 95 Heilongjiang 66 Henan 61 home loan banks 23 household registration system 28–29, 33–35, 41–42, 46–48, 64–65, 108–109 housing development and management companies 21 housing market 21–22, 24 housing provident funds (HPF) 1, 12, 20, 22–23 housing system see household registration system; urban housing system Hu Jintao 57, 61 humanity, and harmonious development 66–67, 154 income distribution 57–58, 93–94, 101–102, 122–123, 135–136 industrialization 29, 33, 36, 39–40, 47; and adjustment of social structure 89, 94, 98–102; and building new socialist cities 106–108, 110; and development of Chinese society 62, 64, 66–67; and social construction 116–118, 120–121, 132, 135–136, 150, 155–156; and social modernization 145; and theory and practice of social construction 68, 73–76, 78, 82 Jiangsu province 59, 95, 150; building a new countryside of 49–53 Jilin 66, 89, 119 labor force 34–36, 65–66, 116–118; allocation of 97 land 1–3, 6, 10–11, 33–35, 44n3, 51–53; and adjustment of social structure

162

Index

95–96; and building new socialist cities 107–109; and development of Chinese society 58–59, 64–65; land system 3, 64 Land Management Office 31 Mao Zedong 69, 110, 113 modernization see social modernization; and under economy national stability 1–3, 80 natural disasters 60–61, 78 nature, and harmonious development 66–67, 154 necessity-pushed activities 93–94 Office of Culture and Education 31 opportunities see under allocation organization structures 92–93 Pearl River Delta 126 People’s Republic of China 71; National People’s Congress of 67n2 Police Station 31 policy 7–8, 34–41, 46–47, 49–53, 55–56, 66–67; and social construction 120–121; and social modernization 146–147; and social structure adjustment 101–104 Power Management Office 31 public housing 6, 12–17, 21–23; and employee compensation 18–20; see also urban housing system public security system 79–80 regional development 61, 65–66, 95 regions 11–12, 19–21, 27–29, 40–44, 55–59, 65–67; and adjustment of social structure 102–103; and social construction 114–115, 119–120, 122– 123, 156–158; and social modernization 142–145; and spatial structure 94–95 rent reform 1, 18, 21 resources see under allocation rural areas, coordinated development in 64–65; see also rural areas, socialist; urban-rural structure rural areas, socialist 26; and the development of small towns 39–40; and new problems at the new stage of rural development 26–33; and objectives of carrying out the new rural movement 40–44; and spatial structure 94–95; and tasks at the new stage of rural development 33–39

rural development 26; and the development of small towns 39–40; new problems at the new stage of 26–33; and objectives of carrying out the new rural movement 40–44; tasks at the new stage of 33–39 rural movement 39–44 sales: quantity and standard of 17–18; and rent reform 18 SARS (severe acute respiratory syndrome) 55–56, 60–62, 114 Shanghai 6, 13, 17, 22, 34, 42; and adjustment of social structure 95; and building new socialist cities 110; and social construction 126, 132; and social modernization 143; and theory and practice of social construction 79 Shenzhen 42, 80, 143, 150 Sichuan 150 small towns 33, 41–44, 47, 57, 66, 108; development of 39–40 social construction: arrival of the era of 150–158; and China’s current economic and social situation 112, 115, 117; China’s new stage centered on 88–91, 119–125, 142–145; core task of 90–91; and economic construction 81–86; issues concerning the promotion of 125– 129; main contents of 72–81, 121–125, 134–136; meaning of 72–81, 121; and modernization 140–142; proposal and formation of the theory of 68–72; as the realization of social modernization 131–139; tasks of 134–136; theory of 68–72; three stages of 136–139 social contradictions 76–77, 79–81, 88–90, 99–101, 106–108, 141–147; and social construction 112–113, 133–135, 137–138, 150–153 social development 56, 72–73, 81–83, 85–86, 88–91, 94–95; and building new socialist cities 109–110; main contradictions and problems in 57–67; and social construction 120–121, 150– 151; and social modernization 141–147; uncoordinated 116–119 social institutions 77, 122–123, 156 social integration 91–94, 109 socialism 10–11, 29–30, 33–36, 47–54, 56, 63–65; and adjustment of social structure 95–96, 103–104; building new socialist cities 106–111; and

Index social construction 114–115, 120–121, 125–127, 133–136, 138–139, 150–151, 156–158; and social modernization 145–149; and theory and practice of social construction 68–70, 72–74, 80–83, 85–86; vitality of the socialist market economy 98–99; see also rural areas, socialist social management 72–74, 81, 103–104, 141–144, 146–148; and social construction 120–121, 123–124, 131–132, 134–139, 156–158 social mobility 137–138, 147–148; construction of mechanisms of 74–75 social modernization 140–149; social construction as the realization of 131–139 social norms 122–123, 156 social organizations 71–72, 155–156; construction of 75–76; functional autonomy of 97–98 social security system 35–37, 101–103, 146–147; construction of 78–79; and social construction 121–124, 127–128, 135–138, 151–153 social strata 101–103, 116–117, 123–125, 132–133; construction of coordinating mechanisms for interest relations of 76–77; and the socialist market economy 98–99; and status structure 95–96 social structure: adjustment of 90–91, 95, 99, 101–104, 124–125; adjustment and construction of 73–74; changes in 91–96, 116–117; and development of China’s economy 96–99; and economic structure 117–119; policy orientation of social structure adjustment 101–104 social trends 61–67 social undertakings 61–63, 70–71, 121, 127–129, 136–138, 146–148; development of 77–78, 122 society: current social situation 112–113; major contradictions in 113–116; see also social construction; social development spatial build-up 98 spatial structure 94–95 State Commission for Restructuring the Economic System 11, 25n1

163

State Council 44, 48, 86, 109; and development of Chinese society 54–55, 57; and establishing a new urban housing system 1, 12, 17 status structure 95–96 Su Zhigang 54 “three reserves” 31–32, 45n4 Tianjin 13, 66, 79, 95 Traffic Control Station 31 “Two Meetings” 54–55, 67n2 urban areas 3–6, 34–35, 79–80, 108–109; coordinated development in 64–65; and spatial structure 94–95 urban housing system 1–24; establishing a new system 3–9; and housing development and management companies 21; and long-term national stability 1–3; necessary conditions for deepening the reform of 9–11; realizing the transition to a new system 11–24; see also urban-rural structure urbanization 23, 29, 33, 39–40, 43, 47; and adjustment of social structure 94, 97–98, 100–101; and building new socialist cities 106–108, 110–111; and development of Chinese society 58–59, 62, 64, 66–67; and social construction 113, 117–118, 121, 132, 137, 155; and social modernization 141, 144, 147; and theory and practice of social construction 68, 74–75 urban-rural structure 97–98, 100–101, 116–119, 132–133, 137–138, 155–157 Water Management Station 31 World Health Organization (WHO) 55, 62, 119 Wu Yi 55 Xiamen 17 Xinjiang 60 Yangtze River Delta 52, 126 Yantai 12, 18 Zhejiang 59, 95