Understanding Local Agency in China’s Policy Reform (Politics and Development of Contemporary China) 3030762114, 9783030762117

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Xiaoye She

Understanding Local Agency in China’s Policy Reform

Politics and Development of Contemporary China

Series Editors Kevin G. Cai, University of Waterloo, Renison University College, Waterloo, ON, Canada Daniel C. Lynch, School of International Relations, University of Southern California, Los Angeles, CA, USA

As China’s power grows, the search has begun in earnest for what superpower status will mean for the People’s Republic of China as a nation as well as the impact of its new-found influence on the Asia-Pacific region and the global international order at large. By providing a venue for exciting and ground-breaking titles, the aim of this series is to explore the domestic and international implications of China’s rise and transformation through a number of key areas including politics, development and foreign policy. The series will also give a strong voice to non-western perspectives on China’s rise in order to provide a forum that connects and compares the views of academics from both the east and west reflecting the truly international nature of the discipline.

More information about this series at http://www.palgrave.com/gp/series/14541

Xiaoye She

Understanding Local Agency in China’s Policy Reform

Xiaoye She Department of Political Science California State University San Marcos San Marcos, CA, USA

Politics and Development of Contemporary China ISBN 978-3-030-76211-7 ISBN 978-3-030-76212-4 (eBook) https://doi.org/10.1007/978-3-030-76212-4 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To my beloved father, Guang’an She

Acknowledgments

I first read Karl Polanyi’s The Great Transformation in one of my comparative political economy classes in graduate school. At the time, my research interests were elsewhere. But the idea of “double movement” keeps coming back to me. I wanted to understand more, especially whether and how this concept may be helpful to understand China’s economic and social policy reforms. In my earlier years of research, several mentors at University at Albany offered tremendous help, allowing me to continue this research direction. I am mostly indebted to Dr. Cheng Chen and Dr. Meredith L. Weiss, who helped me develop and refine my initial research ideas, then offered me practical advice and emotional support during my years of research and fieldwork. As a European political economy and welfare state expert, Dr. Zsófia Barta went through my earlier drafts with careful attention to detail and helped me better situate this research project in the broader comparative field. I also want to express my gratitude to Dr. Youqin Huang, whose specialty is in urban geography and housing policy in China, for challenging my thinking from cross-disciplinary perspectives and helping me critically examine my assumptions. I am indebted to institutions and people that provided me financial and physical support for my field trips to China, and those who helped continue my research journey during the COVID-19 pandemic. I would like to thank American Political Science Association (APSA) Centennial Center for Political Science and Public Affairs, and California State

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ACKNOWLEDGMENTS

University San Marcos (CSUSM) Office of Graduate Studies and Research for their grants to support my field trips and conference travels. I want to express my sincere gratitude to Shanghai International Studies University, Nanjing University, as well as national and local public libraries in China for providing me institutional access to national and local archives, scholarly database, and other resources. I want to thank the Urban China Research Network (UCRN) for inviting me to present at their annual conference in Nanjing and for providing me a great platform to connect with researchers and policy experts over the years. Because of the pandemic, I was unable to complete the last field trip as I planned before completing the book manuscript. Nonetheless, thanks to fellow researchers and friends in China, I was able to recruit two student research assistants to collect rest of the data needed for the book. I want to express sincere gratitude to Dr. Jie Shen from Fudan University, Dr. Bin Li from Shenzhen Graduate School of Peking University, Dr. Hanzhi Yu from Zhejiang University, Dr. Limei Li from East China Normal University, and Dr. Sainan Lin from Wuhan University. The two student assistants are Bin Luo, a graduate student in urban planning from Huazhong University of Science and Technology, and Yuhan Wang, a graduate student of Political Science from Shanghai Jiaotong University and Monash University. I am grateful to all of their assistance which allowed me to continue to collect data during the pandemic. Each student assistant contributed to the success of this project, by acquiring names, contacts, and institutions along with collecting primary and secondary sources in Chinese. Prior to completion of this book, I presented various chapter drafts and related papers at APSA, Midwest Political Science Association (MPSA), Urban Affairs Association (UAA), and International Studies Association (ISA) Asia-Pacific. During these conferences, I received valuable feedback and suggestions from my discussants and fellow panelists across social science and area studies disciplines. I am therefore indebted to the discussants from all the panels, as well as those in the audience who raised exciting questions and offered new insights. At APSA, Dr. Kerry E. Ratigan from Amherst College, who has studied extensively on provinciallevel variations in Chinese social policy, provided great advice on clarifying provincial-level determinants in my research. At UAA, I got solid suggestions on how to structure the book and frame my arguments from Dr. Timothy Weaver of University at Albany, who recently published his own book on comparative urban politics. At MPSA, Dr. Ji Ma from University

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of Texas Austin, who specialized in philanthropic and nonprofit studies, provided helpful suggestions on how to examine the relations between state and the voluntary sector. And finally, at ISA Asia Pacific, Dr. Salvador Santino Regilme from University of Leiden encouraged me to explore further about the transnational linkages in local welfare models. I also benefited greatly from conversations with scholars studying postcommunist welfare politics. In particular, I want to thank Dr. Sarah Wilson Sokhey from University of Colorado, Boulder, who was willing to share her upcoming book and helped me established contact with Dr. Thomas Remington, an expert on Russian political economy. Dr. Remington later provided valuable feedback on two of the chapters in this book. These conversations and scholarly exchanges also helped me to build more connections between China’s social policy reform with post-communist reform trajectories in my theoretical framework. As a new tenure-track faculty who struggled with teaching and service, I also benefited greatly from participating in the faculty writing community at CSUSM to establish the habit of writing in the middle of the semester. And I would like to express my gratitude to Dr. Rebecca Lush and Dr. Nicoleta Bateman, who kept me accountable on my research and writing and helped me sharpen my arguments. Finally, this journey would not be possible without the support of my family. I am especially grateful to my dear partner, Jia Zhao, who has supported me unconditionally, for always being there whenever I hit an obstacle and encouraging me to keep moving forward. I want to thank him also for spending more time homeschooling our daughter during the pandemic, allowing me to focus on my research and writing. I would like to say thank you to my dear daughter Anning, who has helped me see the world in fresh perspectives and been amazingly patient and supportive as a five-year-old. Finally, to my parents, Guang’an She and Shanping Zhu for inspiring me to become a researcher and teacher just like them and encouraging me to pursue my own dream and way of life.

Contents

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Social Policy Reform and Local Agency in China 1.1 The Incomplete Return of the State in Social Policy 1.2 Political Institutions, Growth Models, and Local Agency 1.3 National Social Policies, Subnational Welfare Mixes 1.4 Overview of the Chapters References

1 4 8 12 15 19

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Authoritarian State, Growth Strategies, and Subnational Welfare Politics 2.1 From the West to the Rest: The Comparative Perspectives 2.2 Social Policy in China: Serving Economics or Politics? 2.3 Local Agency and Subnational Welfare Mixes 2.4 Revising Authoritarian Social Contracts 2.5 A Structured Comparison Approach References

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The Pro-growth National Reforms: State-Led Commodification Before 2000s 3.1 The Early Starter: Healthcare Reform Prior to SARS 3.2 Playing Catch-Up: The Delayed Housing Commodification 3.3 The Half-Ways: Pension and Old-Age Care 3.4 Local Agency in Pro-growth Reforms References

69 71 75 81 86 88

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CONTENTS

The Return of the State? The New Reforms and Changing Local Agency 4.1 Healthcare Reform: Bring the State Back in? 4.2 Affordable Housing: Quantitative Growth Without Quality? 4.3 Pension and Old-Age Care: The Second Transition? 4.4 Local Agency in the New Era: What Have Changed and What Have not? References Limits of Fragmented Universalism: Local Agency in Healthcare 5.1 From LIS to UEBMI: The Dominance of Employment-Based Approach 5.2 The Vested Interests in the Party-State: From Free Medical Care to Supplemental Insurance 5.3 Medical Assistance for Whom? From URBMI to Medical Aid 5.4 Articulating the Welfare Mixes: Comparing Local Healthcare Models 5.5 Political Institutions, Growth Strategies and Subnational Healthcare Politics References Asset-Based Welfare or Public Rental? Local Agency in Affordable Housing 6.1 Housing Monetization: The Employment-Based Housing Provident Fund 6.2 Who Are Entitled to Own? The Local Variants of Asset-Based Welfare 6.3 Housing Assistance for Whom? Embedding Public Rental Programs 6.4 Articulating the Welfare Mixes: Local Models of Affordable Housing 6.5 Political Institutions, Growth Strategies and Subnational Housing Politics References

91 93 101 107 113 119 121 122 128 131 135 145 153 155 157 164 171 176 185 194

CONTENTS

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Local Agency in Old-Age Care: Articulating State, Society, and Family 7.1 From LIS to UEBPI: The Dominance of Employment-Based Social Pension 7.2 From Civil Servant Scheme to Occupational Pension: The Vested Interests within the Party-State 7.3 Social Assistance for the Elderly: From Means Testing to Universalism? 7.4 Articulating the Welfare Mixes: Comparing Local Models of Old-Age Care 7.5 Political Institutions, Growth Strategies, and Subnational Politics of Aging References State Responsibility or Societal Participation? The Future of Authoritarian Social Policies 8.1 Political Institutions, Growth Strategies, and Local Agency 8.2 Theorizing Welfare Mix in Decentralized Authoritarian Regimes 8.3 Studying the Evolving Authoritarian Social Policies References

Index

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197 199 206 211 218 230 237 241 243 248 252 255 257

Abbreviations

CEECs CPPCC CRH ECH EOG FDI FMC GBA GDP HPF JPRH LIS MCA MLG MOF MOH MOHURD MOHRSS NBS NDRC NGOs NHC NHSA NPC NRCMI PBOC

Central and Eastern European Countries Chinese People’s Political Consultative Conference Cheap Rental Housing Economic and Comfortable Housing Export-Oriented Growth Foreign Direct Investment Free Medical Care Greater Bay Area Gross Domestic Product Housing Provident Fund Joint-Property Rights Housing Labor Insurance Scheme Ministry of Civil Affairs Minimum Livelihood Guarantee (MLG) Ministry of Finance Ministry of Health Ministry of Housing and Urban-Rural Development Ministry of Human Resources and Social Security National Bureau of Statistics National Development and Reform Commission Non-Governmental Organization (NGOs) National Health Commission National Healthcare Security Administration National People’s Congress New Rural Cooperative Medical Insurance People’s Bank of China xv

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ABBREVIATIONS

PPP PRD PRH RAC R&D SARS SEZ SCORES SOE UEBMI UEBPI UNDP URBMI URRBMI URRBPI WHO YRD

Public-Private Partnership Pearl River Delta Public Rental Housing Retiree Administration Commission research and development Severe Acute Respiratory Syndrome Special Economic Zone State Council Office for Restructuring of the Economic Systems State-Owned Enterprises Urban Employee Basic Medical Insurance Urban Employee Basic Pension Insurance United Nations Development Program Urban Resident Basic Medical Insurance Urban-Rural Resident Basic Medical Insurance Urban-Rural Resident Basic Pension Insurance World Health Organization Yangtze River Delta

List of Figures

Fig. 2.1

Fig. 3.1 Fig. 4.1

Fig. 4.2

Fig. 4.3 Fig. 4.4 Fig. 5.1

Fig. 5.2

Fig. 6.1

Budgetary expenditure as percentage of GDP by City, 2003–2020 (Data Source National Bureau of Statistics China) Tenure type by number of urban households, 2000–2010 (Data Source National Bureau of Statistics of China) Healthcare expenditure by type, 2000–2010 (Source Compiled by author using data from National Bureau of Statistics China. Data Source National Bureau of Statistics of China) Local government expenditure on affordable housing, 2010–2020 (Data Source National Bureau of Statistics of China) Old-age dependency ratio in china, 1982–2019 (Data Source National Bureau of Statistics of China) Old-age care beds per 1000 people, 1982–2019 (Data Source National Bureau of Statistics of China) Healthcare insurance coverage index by city, 2011–2018 (Data Source National Development Research Center China) Number of hospital beds per 10000 people by city, 2000–2019 (Data Source National Development Research Center China) Distribution of contributing employees by employer types, 2019 (Data Source National and local annual HPF reports)

50 80

99

103 108 114

144

145 163

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LIST OF FIGURES

Fig. 6.2

Fig. 6.3 Fig. 6.4

Fig. 7.1 Fig. 7.2

Housing Provident Fund coverage index by city, 2012–2018 (Data Source NDRC city database and local annual HPF reports) Affordable housing by program type, 2011–2015 (Data Source Municipal housing development plans 2011–2015) Real estate investment as percentage of local GDP, 2000–2018 (Data Source National development research center China) Pension insurance coverage by city, 2012–2018 (Data Source National Development Research Center China) Percentage of elderly population and old-age care beds by city in 2015 (Data Source Municipal Bureaus of Statistics)

183 184

186 229

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List of Tables

Table 2.1 Table Table Table Table

2.2 3.1 3.2 3.3

Table Table Table Table Table Table Table

4.1 4.2 5.1 6.1 7.1 8.1 8.2

Table 8.3

Comparing the ideal–typical welfare mix and the Chinese models Political institutions and growth strategies in the cases Healthcare access and expenditure, 1980–2000 Housing marketization and stratification, 1991–2003 The dual-track system of employment-based pension schemes Medical aid in urban and rural areas, 2010–2015 Overview of the new multi-pillar pension reform Comparing local welfare mixes in healthcare Comparing local welfare mixes in affordable housing Comparing local welfare mixes in old-age care Political institutions, growth strategies and welfare mixes Supplying the welfare mix: actors, orientations, and capabilities Demanding the welfare mix: actors, orientations, and capabilities

41 51 74 78 84 97 110 136 177 219 244 249 252

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CHAPTER 1

Social Policy Reform and Local Agency in China

Following 40 years of “reform and open-up” (gaige kanfang ), China has experienced tremendous economic and social transformations. In the economic realm, the gradualist and experimental approach helped China avoided short-term economic turmoil that occurred in other post-communist countries. In social dimensions, China made significant achievements in alleviating poverty and improving the quality of life for both urban and rural residents.1 Reassured by these achievements, the Chinese leaders and some scholars have proposed a Chinese variety of development model that can compete or replace the western-dominant model of liberal capitalism and democracy. At 19th Party Congress in 2017, Xi Jinping, the sixth-generation leader of the party-state, announced that China’s model, or “socialism with Chinese characteristics,” can provide “a new option for developing countries who want to speed up their development while preserving their independence” (Xinhua, 2017). Nonetheless, this economic success story has been increasingly overshadowed by growing economic and social disparities across regions and social strata. In order to achieve growth, equity was sacrificed during earlier stages of reform. The economic transformation was an unequal process, through which coastal regions, the urban areas, and those in the formal sector benefited much more in comparison to the rest. At the same © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_1

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time, the gradualist and incremental logic of economic reform prevented a complete overhaul of the state-controlled economy and a communist welfare system. As a result, communist legacies and the new economic reform processes became the intertwining forces behind new forms of inequality, stratification, and exclusion. Central to the equity problem were the growing urban–rural divide in income disparities and social safety nets, as well as the emergence of the “new urban poor”, which includes the laid-off state-owned enterprise (SOE) workers, unemployed persons with urban household registration (hukou), and low-income or less-skilled rural migrants (Liu et al., 2008). Deng Xiaoping, the secondgeneration party leader, who preferred a “let some people become rich first” approach, thought these problems can be naturally resolved later when economic prosperity is achieved. But as the economic reform deepens, his successors increasingly recognized that new forms of relative poverty and inequality can be detrimental to the party’s political legitimacy and threaten regime survival if remain unaddressed. Furthermore, China now has to deal with new economic realities, as global economic disturbances and rising labor costs have challenged the labor-intensive and export-oriented growth models. It forces the Chinese Communist Party (CCP) to embrace the concept of “the New Normal” (xinchangtai) and seek to adjust China’s growth strategy at both national and local level, with emphasis on a state-led knowledge economy and strong domestic research and development (R&D) (State Council, 2017b). Complementing this new national development strategy, the party has promoted measures to boost domestic demand and consumption, with the goal of reducing reliance on foreign markets such as United States and Europe. As demand and consumption from urban areas begin to saturate, increasing income and expanding social protection for those who were left behind now become new priorities for the party-state. To the Communist party, failure to address these social and economic challenges not only may undermine its ability to project power and influence overseas, but also can threaten its political legitimacy given its commitments to “harmonious society” (hexie shehui) and now “Chinese dream” (zhongguomeng ). Since mid-2000s, the party-state has increasingly shifted toward social entitlements, equity, and social justice in political rhetoric and policy discourses. At national level, growing consensus has emerged among party leaders, policy experts, and even the general public that excessive marketization needs to be undone, and welfare

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expansion and more inclusive social policies will help boost domestic consumption and demand. The Hu-Wen era of 2003–2012 was marked by major social policy reforms including the elimination of rural agricultural taxes, introduction of residence-based social insurance schemes, and expansion of social assistance to the poor in both urban and rural areas. Under Xi Jinping’s leadership, the party-state again promises to play a leading role in protecting the “basic rights” for all Chinese citizens, which include a set of social entitlements such as housing, healthcare, old-age care, and education. Accompanying the changing discourses, the central government has imposed significant top-down pressure in crucial realms of social policy, including social insurance, social assistance, and poverty reduction. What does this new round of policy reform mean for the poor, given the country’s growing income inequality and widening rural–urban divide? Will the increasing top-down pressure lead to recentralization and “return of the state” in key social policy domains, and therefore reduce the agency of local state and non-state actors? The existing literature on comparative welfare research and Chinese social policy has not provided a clear answer. For the comparative field, the traditional emphasis on power resources (Korpi, 1985, 2006; Korpi & Palme, 1998), the typologies in welfare capitalism and social policy (EspingAndersen, 1990; Gough, 2004; Gough et al., 2004), the discussions on East Asian productivist welfare capitalism and increasing attention to “hybridization” in post-communist welfare development (Aidukaite, 2011; Hacker, 2009) may provide some useful insights. However, the causal processes and mechanisms are yet to be fully examined in the context of economic reform without political transition. At the same time, there is lack of consensus among scholars of Chinese social policy on the competing economic and political logics, and in regard to whether there is a coherent national model emerging in the social realm similar to the economic realm. Previous scholarship on Chinese social policy highlighted the negative impact of earlier market-oriented reforms, the retreat of the state, and greater informality and insecurity as a result (S. Cook, 2002; Frazier, 2010; Selden & You, 1997; Wong, 1998). More recently, political recentralization and increasing emphasis on “top-level design” (dingceng sheji) have brought back the “politics matter” and “return of the state” arguments (Duckett, 2020; Lü, 2014; Shi, 2017a; Xiong, 2012; H. Zhang, 2012). Meanwhile, the top-down perspectives at times contradict the bottom-up approaches that emphasize local

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agency and policy entrepreneurship (Hammond, 2013; He, 2018; Shi, 2017b; Tsai, 2007; Zhu & Zhao, 2018). This book challenges the view that political and policy recentralization would necessarily lead to more state responsibility in social policy or convergence toward a more equitable and inclusive growth model. The central argument is that in response to common policy directives and pressures from above, disparities in local growth strategies have interacted with political institutions in generating “embedded” subnational welfare mix models, with varying articulations of state, market, community, and family in welfare provision. Such patterns and processes are particularly salient in coastal provinces and cities as they rely significantly less on central fiscal transfers, administrative guidance, or technical assistance. Rather, local actors seek to develop and maintain welfare regimes that are complementary to their own growth strategies within the constraints of authoritarian political institutions. The varying feedback effects from these embedded models have partly offset growing top-down pressure for recentralization. Instead of producing a coherent national paradigm toward the “return of the state,” China’s new social policy reform has resulted in a “state guidance, societal participation” (zhengfu zhudao, shehui canyu) framework with both cross-regional and within-region variations.

1.1 The Incomplete Return of the State in Social Policy Contrary to a clear guiding role of the state in formulating development plans and industrial policies, the role of the party-state and its subnational affiliates in social policy is more ambivalent and still evolving. In the economic realm, the party-state often directly intervenes in the economy by keeping the “dominant role of public ownership” while “developing diverse forms of ownership side-by-side” (Xinhua, 2015). The “socialist market economy” is in effect a highly decentralized mixed economy, where SOEs, collective enterprises, and other types of mixed-ownership firms compete with private and foreign enterprises on semi-competitive markets and industries. Such “state guidance” however was absent in social spheres for the first two decades of reform. Rather, the retreat of the state in social policy domains such as housing, healthcare, and oldage care created new forms of informality and insecurity during market

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transition, and they were not readily filled by subnational governments or societal actors. From 1980s to early 2000s, “economic growth over everything else” was a political doctrine. It led the departure from one extreme of state monopoly to the other extreme of informality and insecurity, with varying degrees of marketization across social sectors and growing reliance on family and individual responsibility. The 1994 fiscal reform also introduced a revenue-sharing mechanism which increases the central government’s fiscal position but undermined the ability of local governments to provide public goods. At local level, party cadres and bureaucrats went fully entrepreneurial, promoting export-oriented growth, attracting and competing for foreign and domestic investments, while relying on land transfers to secure a stable nonbudgetary revenue. Without clear guidance from the center, local experiments of social policy in this period focused on complementing and expediating economic reform rather than negating its effects on social spheres. The “retreat of the state” was prevalent across social sectors, although to a much less extent for those who are still employed in the state and formal sectors of the economy. The SOE reform led to massive laid offs of workers who not only lost their “iron rice bowl” (tiefanwan) but also associated welfare benefits. Together with the workers in the informal sectors especially migrants, many fell into the gap between the legacy socialist welfare system and the means-tested or category-based social assistance. With the exception of the privileged few, such as civil servants, SOE employees who did not lose their jobs, and the formal sector urban employees with hukou, the rapidly rising social costs associated with marketization were borne primarily by individuals and families who were never or no longer part of the state or formal sectors. Predictably, rising inequality, increasing social stratification, as well as new forms of informality and insecurity produced waves of societal backlashes in late 1990s and early 2000s. The situation was exacerbated by two waves of exogenous shocks, namely, the Asian Financial Crisis between 1997–1999 and the Severe Acute Respiratory Syndrome (SARS) epidemic in 2003. The absence of a social safety net left many urban and rural residents vulnerable, with negative repercussions on the image of the state and political legitimacy. Followed by the leadership change in 2003, the party-state began to formally depart from previous rhetoric of “efficiency first” (xiaolv youxian) to “more emphasis on social justice” (gengjia zhuzhong shehui gongping ). This was in turn reflected in the

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new party slogans of “harmonious society” and “scientific development” during the Hu-Wen era, and the “Chinese dream” under Xi Jinping. By the time of the 2008 Global Financial Crisis, social policy for the first time was officially included as part of the counter-cyclical package along with other stimulus measures.2 At the 19th Party Congress, Xi Jinping announced that China is now facing a new development problem, i.e., “the contradiction between unbalanced and inadequate development, and the people’s ever-growing needs for a better life,” which according to Xi has become the biggest obstacle to China’s road to a “moderately prosperous society” (xiaokang shehui) and “national rejuvenation” (minzu zhenxin) (Xinhua, 2017). The new party slogans were quickly translated into the inclusion of social policy pillars in key national legislations, administrative laws, and five-year plans, including the Labor Contract Law passed by the National People’s Congress (NPC) in 2007, the Twelfth and Thirteenth Development Plans in 2011 and 2016, the National Social Insurance Law passed by the NPC in 2010, and the announcement of Temporary Measures for Social Assistance by the State Council in 2014. At national level, a variety of social insurance and social assistance programs would in theory create a comprehensive social safety net for urban and rural residents in key policy domains including but not limited to housing, healthcare, and old-age care. Yet once they enter the phase of nationwide implementation, the success or failure of these programs become contingent upon the willingness and capacity of local governments, as well as support from societal actors such as employers and service providers. Expectedly, many reform programs fell short of their stated goals, and subnational variations in policy implementation are persistently significant. For social insurance programs, varying degrees of stratification persisted despite rapid expansion of coverage and greater integration through employment and residence-based schemes. For means-tested and category-based social assistance, local governments enjoy significant flexibility and autonomy in implementation and impose varying eligibility criteria, therefore resulting in strong variations in both coverage and generosity. Such patterns are particularly salient in rich, coastal provinces and cities, where local governments are more likely to rely on their own revenue and local policy networks rather than fiscal incentives or institutional frameworks provided by the central government. In general, programs that prioritized social protection goals, involved more direct state intervention

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and required greater local government responsibility were often met with significant resistance, adaptations or distortions. On the other hand, programs that viewed social protection as complementary to economic growth, involved less direct state intervention but invited more societal participation were more welcomed by local agents. The varying outcomes of these programs provided strong feedback effects to central policymaking. In 2017, the central government introduced a more comprehensive “basic public service equalization” (gonggong fuwu jundenghua) framework covering almost all social sectors (State Council, 2017a). Instead of a full return of the state, the central government emphasized “public-private partnership” (PPP, gongsi hezuo) and “pluralized supply mechanisms” (duoyuan gongji jizhi) rather than direct state intervention. In terms of social protection goals, the central government prioritized “equalization of opportunities” (jihui jundeng ) rather than “equalization of outcomes” (pingjunhua). Finally, rather than continue to impose top-down pressure, the framework promised to “strengthen interactive cooperation between central and local, and between government and society” (State Council, 2017a, 2017c). The new social policy reform therefore has led to an incomplete return of the state in social sectors. Despite the growing consensus that “overmarketization” in social sectors needs to be undone, the party-state has not fully committed to greater state responsibility in social sectors that could be commensurate with its top-down control in the political sector and guiding role in the economic sector. Such move would presumably result in greater coordination between production and welfare regimes, while achieving stated goals of equity and social protection at national level. A better understanding of local agency is therefore required to explain the absence of such commitment. At national level, the gradualist economic reform has institutionalized a policy system that is highly gradual and experimental, with strong emphasis on policy feedback across and within levels. Local experiments do not always turn into nationwide implementation, and national programs implemented are often adapted to meet local needs rather than original goals. At local level, it is no longer the case that local government dominates policy processes. Rather, the role of the local states to some extent resembles the “enabling” local states in western societies, though it is operated within the constraints of authoritarian political institutions.

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1.2 Political Institutions, Growth Models, and Local Agency This book examines two questions regarding social policy reform in China. First, what does the new social policy reform after 2000s truly mean for the “new urban poor”? Since 1978, rural economic reform, urban SOE reform, and the collapse of the “iron rice bowl” have led to dismantling of the communist welfare institutions and state monopoly of social protection. The reform process has contributed to decentralization and fragmentation in social policy regimes that so far have not been fully reversed. Varying degrees of marketization in social sectors juxtaposed with institutional legacies from the communist era contributed to increasing commodification and stratification of welfare provision, as well as growing cross-regional disparities in coverage and generosity of social programs. As a result, the first two decades of reform resulted in undersupply of means-tested social protection programs for the low-income urban residents, and varying degrees of exclusion for rural migrants. By contrast, civil servants and the emerging urban middle class are relatively well compensated and protected even during the marketization era. The communist legacies therefore interacted with the reform processes to preserve old forms of stratification while generating new forms of inequalities. As mentioned earlier, the new social policy reform does not simply “bring the state back in,” and the party-state has signaled no intention to equalize welfare outcomes on the national scale. It is therefore important to ask whether the “losers” of earlier reform are truly benefiting beyond the rhetorical commitments from the party-state’s top leadership. This in turn requires us to move beyond a general description at national level and consider comparative analysis at subnational level. While the central government has committed greater resources to poverty alleviation and social protection measures in poorer inland provinces and rural areas, local governments in richer, coastal provinces, and cities are left with greater autonomy and flexibility to define who are to be included or excluded in this new wave of welfare expansion. Since the “new urban poor” are unlikely to participate in local policy processes themselves, it is critical to ask which local agents tend to represent them in the policy processes, and what are the preferences or interests of those agents acting on their behalf.

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The second research question concerns why there are persistent subnational variations despite increasing common pressure from the top leadership of the party-state. Some may argue that China is simply too vast for a centralized system of any kind. But the history of China as well as other unitary states indicates that strong central government does not inherently contradict institutional flexibilities and local autonomy. Despite significant economic liberalization, political decentralization or liberalization has been extremely limited given the authoritarian nature of the state, and the party’s control over local cadres through the cadre responsibility system and the cadre selection and promotion system has been persistent and even intensified under Xi Jinping’s leadership.3 The question is therefore less about the viability of recentralization for social policy institutions, but more about why and how there has been a careful balance between “top-level design” and local discretion. Following Geof Wood and Ian Gough’s definition of social policy, this research defines social policy as a set of policies within the public spheres to achieve social welfare goals, with a variety of political, economic, and societal actors involved directly or indirectly in formulating and implementing policies (Wood & Gough, 2006). In Chapter 2, I discuss how traditional comparative welfare state approaches such as Walter Korpi’s power resources theory, Gøsta Esping-Andersen’s worlds of welfare capitalism and Hall and Soskice’s varieties of capitalism can be useful to identify patterns of similarity or differences between China and the west (Esping-Andersen, 1990; Hall & Soskice, 2001; Korpi, 1985, 2006). However, this book does not attempt to apply the concept of welfare state itself to the study of social policy in China, as it has become too value-laden to capture emerging patterns of mixed welfare production, informality, and insecurity that are prevalent in developing countries and transitional contexts.4 Empirical patterns of welfare development in China have pointed toward growingly mixed production of welfare, where the role of the state, market, community, and family have all remained in flux and worth further exploration. These patterns resemble developments in post-communist countries as well as China’s regional neighbors, where mixed models of welfare provision coexist with patterns of informality and insecurity. While social policies are defined as policies set by the state, the concept of welfare mix helps identify the varying articulations of actor constellations, orientations, and capabilities, as well as patterns of financing and service delivery across localities.5

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Despite a growing emphasis on the role of the state in political rhetoric and increasing top-down pressure, social policy reform in the past two decades has resulted in a new framework of “state guidance and society participation” (zhengfu zhudao, shehui canyu), with persistent variations in policy implementation at subnational level. Therefore, instead of asking whether there is local agency, it is time to dig deeper and analyze the nature, conditions, and latitude of local agency. While there are only a selectively few institutionalized channels for societal inputs into central policymaking, such channels at local level can take more flexible forms yet less institutionalized and transparent, and often only involves “insiders” of local political economy.6 At the same time, fiscal decentralization created a system of “fiscal federalism” that not only increases the revenue of central government and redistribution toward poorer inland provinces, but also decreases central government’s influence on local policy processes in rich, coastal provinces and cities via fiscal means (Oi, 1992; Ong, 2012; Yang, 2006). New reform programs at central level are designed with built-in ambiguities and flexibilities, leaving room for local reinterpretations and adaptations. Intentional delays or negligence of central directives are also common when there is a lack of political or financial incentives for local party cadres. Consequently, the political logics of regime survival and legitimacy are insufficient to explain the persistent subnational variations despite common pressure from the center. Neither can factional politics, since the top party leadership has changed across the factions within two decades. While international institutions and foreign models can play a role, their influence are often channeled by domestic actors. The timing and pace of the new social policy reform and its continuation after leadership change shows that the reform itself was driven less by elite politics on the top or foreign influence, but more from bottom-up forces such as earlier marketization failures, societal backlashes, and feedback effects from local experiments and implementation outcomes. At the same time, the reform outcomes, i.e., the incomplete return of the state and a welfare mix model that permits subnational variations, were shaped by changing centrallocal, state-market, and state-society relations within the boundaries of a political authoritarian state. In this book, I argue that the interactions between political institutions and local growth strategies have facilitated the experimentation and institutionalization of new models of state corporatist welfare provision at subnational level. In response to common policy directives and pressures

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from above, disparities in local growth strategies have interacted with political institutions in generating “embedded” subnational welfare mix models, with varying articulations of state, market, community, and family in welfare. A key conclusion I draw from the case studies in this book is that local agents are not created equal. Localities with higher politicaladministrative status are likely to enjoy greater fiscal capacity and policy autonomy, and a coherent local welfare mix model that is institutionally complementary to the local growth regime is more likely to emerge. Utilizing state corporatist institutions at local level, policy processes at local level are highly coordinated between the state and insiders of local political economy. These localities are also more likely to engage in direct policy coordination and bargaining with central actors, and their models are more likely to produce direct feedback effects into central policymaking. Meanwhile, localities with lower political-administrative status are more likely to be bounded by political-institutional constraints of the authoritarian party-state. With strong intervening effects of provincial governments or other political actors with higher authority, they often have to either comply with top-down pressure, or engage in new rounds of bargaining, negotiations, and adjustments. The result is less coherence in their local welfare mix models and less institutional complementarity. Within the boundaries of the authoritarian state, local governments formulate implementation plans around national social policies based on a few considerations as discussed below. First, who are responsible for and how to finance welfare provision? Given lack of central fiscal transfers, most local governments in coastal regions prefer to spend their limited fiscal capacity on the “productive” sectors, which cover not only the strategic sectors of local economy but also social policy domains of education and employment-based social insurance. Still, fiscal and administrative capacity can vary across localities, and some local governments will need to rely on local banks and firms to work out financing plans more than others. Second, who provide services? Localities with a dominant SOE sector in the economic realm are also more likely to rely on them to provide social services, in comparison to those have a more vibrant private and nongovernmental sector. Third, who are eligible for the programs and services provided? Here both political-institutional and economic factors come into play. Local governments first and foremost protect the interests and social benefits of “insiders,” which often include civil servants, SOE and public sector employees, as well as private sector

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employees who are considered as the “productive workforce.” Economically, they also attempt to attract and retain “talents” (rencai) or skilled migrants with more generous welfare packages, while maintaining basic means-tested and category-based programs and services for low-income residents to ensure social stability. On the other hand, whether and how rural, less-skilled migrants are included in any of these programs often depend on whether they are considered part of the “productive workforce,” or on the political ambitions of local cadres who desire to be promoted to the center. These highly contextualized local considerations and policy processes therefore generate new forms of state corporatist framework for welfare provision, which in turn help maintain stable dominant social blocs, and reformulate authoritarian social contracts at subnational level (Amable, 2003, 2018; Amable et al., 2012; L. J. Cook, 2007; L. J. Cook & Dimitrov, 2017; J. Y. Hsu & Hasmath, 2013b). Furthermore, these local models provide important feedback effects to central policymaking, and partially offset the top-down pressure for further recentralization and increasing state responsibility. Despite varying articulations, all these welfare mix models are built on the premise of “state guidance, societal participation” rather than direct state intervention. As a result, they contribute to persistent subnational variations and undermine the prospects for a coherent national paradigm toward state responsibility. When convergence across localities do occur, not all of them are because of top-down pressure or coercion. Rather, as the case studies in this book demonstrate, there are frequent, voluntary policy learning, diffusion, and transfer that occur at subnational level, and not all of them can be captured or disrupted by changing central directives. Given these pull factors against recentralization, it is too early to conclude that a “return of the state” and recentralization have occurred in domains of social policy.

1.3 National Social Policies, Subnational Welfare Mixes Through a structured comparison approach, this book looks into two regional clusters of “growth hubs” and examines coastal cities with varying political-administrative status and growth strategies, all of which are major migrant destinations. The two primary cases of Shanghai and Guangzhou are supplemented by two secondary cases of Shenzhen and

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Nanjing, which together offer insights into causal processes and mechanisms around the formation and evolution of “embedded” local welfare mixes. To capture the full extent of subnational variations, I investigate three policy domains of healthcare, housing, and old-age care, given their shared communist legacies and similar reversal of earlier market-reforms. Despite these similar trajectories, disparities are identified both across the cases and policy domains. For each policy domain, I begin with an overview of national reform trajectories on the key components of social insurance and social assistance, as well as financing and service delivery. For the subnational case studies, I provide a series of cross-case comparisons of local trajectories, processes, and outcomes, with respect to various components of the welfare mix. This research design therefore allows for testing the proposed explanations of growth strategies and political institutions, while controlling for potential rival explanations such as level of economic development, communist legacies, and migration patterns. The main contributions of this book are therefore threefold. First, this study challenges the conceptions that welfare states are inherently static and that authoritarian welfare states should be viewed as a residual category. Most scholars studying welfare regimes in developed or developing context tend to focus on regional and national patterns as well as general causal frameworks. This has led to a proliferation of welfare state typologies at regional and global levels. Such typologies are useful in understanding the outcomes of social policy reform in developing and transitioning context, though are less effective in tracing the processes through which these models become assimilated and adapted. Even though the post-communist welfare state literature has identified the common trend of “hybridization” across post-communist cases, such concept may disguise the significant variations in causal processes among these cases despite their shared communist legacies and reform outcomes. In comparison to its democratized Asian neighbors or post-communist countries, the traditional emphasis on the role of legislative process, labor unions, and politics of the left is less applicable in China’s authoritarian context at either national or subnational level. Furthermore, the political logics of gradualism and experimentalism are dominant while regime legitimacy and survival remain paramount, no matter in earlier marketization reforms or more recently in the development of welfare mix. In other words, communist legacies, market-oriented reforms, as well as decentralization all need to be contextualized to understand how they work together to shape a different trajectory of social policy reform in China,

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which has resulted in a stratified and only selectively inclusive model for economic growth and social development. By examining causal processes behind the embracement of welfare mix in China, this book aims to establish a middle-range theory that investigates the authoritarian variations of post-communist welfare development. Second, this book contributes to the existing literature by moving beyond the dominant focus on national level of analysis in varieties of capitalism and comparative welfare state literature. Instead, it pays attention to the more dynamic processes of subnational reform politics in authoritarian context with increasing top-down pressure. In recent years, more scholars have challenged the varieties of capitalism framework by focusing on subnational varieties and fluidity of capitalism in both developed and developing countries. On the one hand, scholars of economics, geography, and political economy have long studied subnational variations of local state entrepreneurialism, production regimes, and emerging regional economic models in China (Lin, 2009; Ma, 2005; Rithmire, 2014; Segal & Thun, 2001; Shen & Tsai, 2016; Wei, 2007; Wei & Liefner, 2012; Xu, 2011; Yao & Zhang, 2015; J. Zhang & Peck, 2016). On the other hand, scholars of local state authoritarianism and local state corporatism have challenged the assumption that national and subnational politics are “mirror images” by identifying growing subnational variations in subnational politics and policy processes (Carrillo & Duckett, 2011; Florini et al., 2012; J. Y. Hsu & Hasmath, 2013a, 2013b; P. S. Hsu, 2004; Huang, 2015; Jaros & Tan, 2020; Oi, 1992; Ratigan, 2017; Shi, 2012; Teets, 2015). Nonetheless, there has been relatively little attention to how these models of local political economy may interact to shape trajectories of national social policy reforms in China. The analysis of varieties of capitalism or welfare state cannot be implanted in China without considering the controlling effects of the party-state and its highly fixed political institutions. As the case studies in this book demonstrate, there are important within-region variations as the result of political-institutional constraints despite similarities in local growth strategies. Meanwhile, cross-regional variations in China’s welfare development cannot be fully explained by traditional models of local authoritarianism that focuses on fiscal capacity and authoritarian control of the party-state, without considering the economic logics in subnational welfare provision. It is thus essential to understand how these political and economic forces are interacting at

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subnational level to shape local and regional patterns as well as national reform trajectories. Third and more broadly, this book contributes to broader debates regarding development paradigms in a post-Washington Consensus era. In particular, I challenge the claim that there is an emerging, coherent development paradigm in China that complements state-led growth model with state-led social development. Specifically, China’s welfare development has been embedded in its context of economic reform without political transition, with significant subnational variations despite a common reform rhetoric at national level. Despite the rhetorical commitment to universalism and social protection in national social policy reforms, subnational welfare mixes continue to present strong progrowth logics and significant degrees of stratification. A coherent national paradigm is yet to emerge in social policy, and persistent inequality and social stratification remains significant challenges to not only the viability of a China model but also political legitimacy and even regime survival of the party-state. At least in the social policy domain, there has not been a distinctive Chinese model that is readily available for other developing countries to follow.

1.4

Overview of the Chapters

The rest of the book is organized as follows. To situate this book’s analytical contributions, Chapter 2 begins with a parallel assessment of the comparative welfare state literature and emerging scholarship on China’s social policy reform. It then defines the key concept of welfare mix, examines how it emerged in China, and discusses the nature of subnational variations. The rest of the chapter introduces the theoretical framework in greater detail, examining the causal processes and mechanisms of emerging welfare mix through the interaction of political institutions and local growth regimes. At local level, I argue that state corporatism in economic and social spheres help channeling preferences and priorities of the dominant social blocs into local policies, programs, and services. Social policy processes and outcomes are therefore understood as instruments for creating and maintaining local definitions of insiders and outsiders. The new urban poor is in general excluded from the local policy processes but deeply affected by their outcomes. The final part of the chapter provides an overview of the empirical approach and explains the logics of structured comparison across the subnational cases.

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Chapters 3 and 4 provide an overview of national reform trajectories in the three policy domains of healthcare, housing, and old-age care. These national reforms define the structural conditions for local agency. Chapter 3 reviews the pro-growth models across policy domains before 2000s, and how local agency were enabled and encouraged in these pro-growth models. Chapter 4 evaluates a new wave of reforms since 2000s that were reoriented toward social justice and entitlement. As the chapters demonstrate, there are significant bureaucratic fragmentation and ideological contestations at central level across the policy domains. Furthermore, central reforms rely heavily on feedback from local experiments and implementation. Chapter 4 then concludes with evolving central-local interactions in social policy in the new era of recentralization under Xi Jinping. Chapter 5 examines local agency in healthcare reform. The case of healthcare is particularly intriguing because it took the most dramatic turn due to the SARS crisis. In other words, healthcare seems to the most difficult case for local agency as the “return of the state” has been less ambiguous in national reform rhetoric. The 2009 healthcare reform announced ambitious plans for expansion of coverage through the employment- and residence-based health insurance, as well as mandated increase in government spending in Medical Aid. Beyond the progress, nonetheless, there have been persistent variations at local level in the articulations of welfare mix. For instance, Shanghai’s welfare mix model is marked by significant stratification in healthcare financing and a state-led model in service delivery. This contrasts with Shenzhen’s more integrated approach that allows for greater inclusion of migrants and more pluralized service delivery. In Guangzhou and Nanjing, local initiatives at times can be overridden by provincial priorities, resulting in less coherent welfare mix. Still, the growth logics are embedded in the bifurcating trends of state-led and more pluralized models in healthcare service delivery. Chapter 6 applies the theoretical framework to affordable housing. In comparison to healthcare, the top-down pressure is much less evident in the area of housing due to failed attempts to pass a standalone national housing law or integrate housing into the social insurance law. The chapter begins with an introduction of three highly decentralized policy instruments: the contributory social insurance program of the housing provident fund, the asset-based welfare programs that primarily benefit local residents, and the means-tested or category-based public rental programs that target the “new urban poor”. Although the central

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government has mandated expansion of coverage in recent years, the highly decentralized nature of policy implementation has resulted in significant local disparities. Local governments often choose to prioritize instruments that are mostly compatible with local growth models and other priorities. Two of the cases, Shanghai and to a less extent Nanjing, have consistently preferred the asset-based programs over public rental approaches, and prioritized SOEs in affordable housing provision. By contrast, Guangzhou and Shenzhen have prioritized public rental programs and encouraged more pluralized service delivery. For the new urban poor, their access to affordable housing is often based on whether they have contributed to local economic growth rather than their own needs. Chapter 7 explores the case of pension and old-age care reform in context of an emerging aging crisis. The greater commitment by central government on expansion of pension coverage and service delivery has been overshadowed by “low contribution, low pay” in residence-based schemes, and persistent subnational variations in old-age care financing and service delivery. Similar to earlier chapters, it begins with an overview of policy programs in old-age care: the contributory employee and resident social pensions, and the means-tested or category-based elderly assistance programs. Pension reform is particularly intriguing because of the strong resistance in the state sector yet greater inclusion of migrants across all four cases. While the civil servant pension reform in 2010s involved significant bargaining and compromise at both central and local level, the inclusion of migrants helped sustain local pension funds while meeting top-down pressure. Beyond employment-based pension, nonetheless, local governments have shown limited interests in providing need-based protection for the “new urban poor”. In Shanghai and Nanjing, access to elderly assistance programs remain limited to local residents with hukou, while state-led service delivery model is embodied in preferential policies for public providers and hierarchical coordination through state corporatist institutions. These patterns are in contrast with more inclusive policies toward migrants, greater pluralization in service delivery, as well as close policy coordination with Hong Kong in Guangzhou and Shenzhen. The concluding chapter summarizes the findings of previous chapters. Although China’s social policy reform somewhat resembles the “hybridization” patterns in post-communist countries, the processes of internalization of existing foreign models, as well as their reinventions

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through local experiments are distinctive in a decentralized authoritarian system. Rather than either prioritizing top-down pressure or local agency in the analysis, the domestic policy processes can be characterized as a multi-level game. The authoritarian political institutions define the boundaries of local agency. With greater political institutional checks, Guangzhou and Nanjing have found ways to bypass provincial-level constraints at times, but only when there is no significant top-down pressure from the center. By contrast, local welfare mix models are most coherent and more compatible with local growth models when there are less political-institutional restrictions, such as in the case of Shanghai and Shenzhen. Although local agency has remained a key feature in China’s social policy reform, there are a few inherent tensions in the current “state guidance, societal participation” framework and local welfare mix models, especially between decentralization and recentralization, state dominance and pluralization, as well as political authoritarianism and participation or accountability. The future of social policy reform therefore remains uncertain given increasing political centralization under Xi Jinping. The last part of this chapter discusses future research agenda, which highlights possibilities for further subnational comparison, as well as cross-national comparison with other authoritarian states sharing communist legacies such as Vietnam and Russia.

Notes 1. According to the United Nations Development Program (UNDP), China’s achievements include poverty reduction, universal primary education, and improving healthcare access. The UNDP report also identified three major contributing factors: rapid economic growth with gradual reforms; extensive government apparatus and progressive taxation; and declining population growth attributed to both deliberate government policies and natural outcome of economic growth (UNDP, 2015). 2. In response to the 2008 Global Financial Crisis, Chinese government issued “new policy for social security” with the goal of helping employers to reduce their production costs, maintaining income and employment levels, and minimize the negative impact of the crisis on domestic consumption and demand (Cao, 2014). 3. According to Lynette H. Ong, the party-state institutionalized the cadre responsibility system to allow central leadership to exercise control over local cadres. This include “veto targets” such as maintaining social order, “hard targets” that are quantifiable such as tax revenue, and “soft targets”

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that are non-binding and difficult to measure and quantify, such as healthcare provision and social development (Ong, 2011). 4. Some common critiques of the welfare state concept include its emphasis on formal institutions and policies, as well as the analytical prioritization of the role of the state and national level of analysis. See for example, Gough et al.’s discussion on informality and insecurity in Asia, Africa and Latin America (Gough et al., 2004). 5. Carrillo and Duckett (2011) first used the concept of welfare mix to identify local patterns of welfare production and service delivery. However, their definition of welfare mix is different from how it is defined in this book. Specifically, they identified the pre-reform era welfare institutions as welfare mix, based on the involvement of urban work units and rural communes (Carrillo & Duckett, 2011). This book however suggests that the urban work units and rural communes are part of the state and therefore considered components of the communist welfare state rather than welfare mix. The welfare mix concept is therefore defined differently with focus on post-reform subnational variations as elaborated in Chapter 2. 6. The NPC and Chinese People’s Political Consultative Conference (CPPCC) can be viewed as two institutionalized channels for societal inputs in the central policy processes. While these institutions are often viewed as cooptation mechanisms and not representative of the general population, the delegates have been increasingly vocal on social and environmental issues. In addition, it has been an established norm that new bureaucratic rules and regulations will go through a public commenting period and discussions at NPC Central Committee before they take into effect or go through further revision.

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Wong, L. (1998). Marginalization and social welfare in China. Taylor & Francis Group. http://ebookcentral.proquest.com/lib/csusm/detail.action? docID=240370. Wood, G., & Gough, I. (2006). A comparative welfare regime approach to global social policy. World Development, 34(10), 1696–1712. https://doi.org/10. 1016/j.worlddev.2006.02.001. Xinhua. (2015). Suggestions of the central committee of the communist party of china on the formulation of the thirteenth five-year plan. Xinhua News Agency. http://politics.people.com.cn/n/2015/1103/c1001-27772701.html. Xinhua. (2017, November 3). Full text of Xi Jinping’s report at 19th CPC National Congress. Xiong, Y. (2012). Social inequality and inclusive growth in China: The significance of social policy in a new era. The Journal of Poverty and Social Justice, 20(3), 277–290. PAIS Index; ProQuest Central. https://doi.org/10.1332/ 175982712X657091. Xu, C. (2011). The fundamental institutions of China’s reforms and development. Journal of Economic Literature, 49(4), 1076–1151. Yang, D. L. (2006). Economic transformation and its political discontents in China: Authoritarianism, unequal growth, and the dilemmas of political development. Annual Review of Political Science, 9(1), 143–164. https://doi.org/ 10.1146/annurev.polisci.9.062404.170624. Yao, Y., & Zhang, M. (2015). Subnational leaders and economic growth: Evidence from Chinese cities. Journal of Economic Growth, 20(4), 405–436. https://doi.org/10.1007/s10887-015-9116-1. Zhang, H. (2012). Discourse change and policy development in social assistance in China. International Journal of Social Welfare, 21(4), 433–442. https:// doi.org/10.1111/j.1468-2397.2011.00845.x. Zhang, J., & Peck, J. (2016). Variegated capitalism, Chinese style: Regional models, multi-scalar constructions. Regional Studies Regional Studies, 50(1), 52–78. Zhu, X., & Zhao, H. (2018). Recognition of innovation and diffusion of welfare policy: Alleviating urban poverty in Chinese cities during fiscal recentralization. Governance, 31(4), 721–739. https://doi.org/10.1111/gove.12332.

CHAPTER 2

Authoritarian State, Growth Strategies, and Subnational Welfare Politics

Why should we study social policy and welfare politics in China? Because of its interdisciplinary nature, the study of social policy often encompasses various social science disciplines, and at times competing definitions and explanations of their purposes, processes, and outcomes. A broad definition of social policy can encompass any policy that affect the well-being or quality of life of individuals or view social policies as instruments to protect human rights. A narrower definition can simply equate social policy with means-tested welfare programs for individuals who are unable to make a living by themselves. Social policy is a therefore a loose concept subjected to contextualized and ideological interpretations, while frequently viewed as a residual category of economic policy (Clasen, 2004; Wilensky, 1985). Earlier scholarship tends to view the relationship between economic and social policies as complementarities or equilibriums, with primary focus on the role of the state and formal institutions in advanced industrialized countries or developed democracies. Challenging this conventional view, there are emerging bodies of literature in both comparative and Chinese political economy that contend social policy is more than a residual category, and that it does not by default or always complements economic policy. This book therefore situates itself within a broader wave of comparative social policy scholarship that advocates for a more dynamic and nuanced understanding

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of social policy, especially when applied to developing, transitioning, or authoritarian contexts. The chapter begins with an overview of scholarship in comparative political economy with a focus on conceptualizations and causal explanations of social policy, covering power resources, welfare state, and neoliberalism in developed democracies, developmentalism and productivist regimes in East Asian countries, internationalization and hybrid regimes in post-communist and other contexts, as well as informal and insecurity regimes in developing countries (Aidukaite, 2009; EspingAndersen, 1990; Gough, 2004; Haggard & Kaufman, 2008; Wood & Gough, 2006). The next section introduces the emerging literature on Chinese social policy, which largely derives from a broader literature on Chinese politics or area studies, through remains mostly separate from the comparative literature. The subnational political economy approach proposed in this book seeks to synthesize the two fields and highlight the agreements on political and economic logics of welfare politics, as illustrated by the concepts and theories related to dominant social blocs in developed democracies (Amable, 2003, 2018; Amable et al., 2019), authoritarian social contracts in post-communist countries (Cook, 1993, 2011; Cook & Dimitrov, 2017), and state corporatism and its local variations in China (Hasmath, 2020; Hsu & Hasmath, 2013; Huang, 2012; Oi, 1992; Schmitter, 1974; Spires, 2011). The chapter then provides overview of the conceptual and theoretical framework, which builds upon the synthesis above to define the competing connotations of welfare mix in China and the resulting subnational variations. The analytical focus is on the causal mechanisms and processes through which political institutions, growth strategies and local agency interact to embed the welfare mixes across localities. The last part of this chapter details the empirical strategies of this book and provides justifications for the structured comparison approach.

2.1 From the West to the Rest: The Comparative Perspectives Until recently, the comparative study of social policy and welfare politics focuses predominantly on the advanced industrialized countries or developed democracies. The core concept of welfare state gradually emerged through scholarly debates around the role of the state in providing welfare for its citizens, as illustrated by Simon Titmuss’ distinction between

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institutional and residual welfare states, as well as T.H Marshall’s conceptualization of social citizenship (Marshall, 1964; Titmuss, 1975, 2019). Building upon the welfare state concept, three canonical approaches define earlier scholarship on welfare politics in the west. To begin with, Walter Korpi’s power resources theory focused exclusively on the effects of democratic institutions and working-class mobilization in advanced industrialized democracies (Korpi, 1974, 1985, 2006a, 2006b). The power resources approach prioritizes the analyzes of class-related partisan politics, defined by the distribution of power among political parties and the social groups they represented. Focusing on the decommodification and destratification functions of the welfare state, Esping-Andersen created a three-way typology of worlds of welfare capitalism that covers liberal welfare capitalism illustrated by the United States, the corporatist welfare capitalism represented by Germany, and social democratic capitalism demonstrated by Sweden (Esping-Andersen, 1990). Building on Korpi’s work, Esping-Andersen argues that the nature of class mobilization and political coalition structures have interacted with historical legacies of institutionalization to create these path-dependent trajectories. A third approach focuses on the role of employers and coordination between economic and social spheres, as illustrated by the varieties of capitalism approach by Hall and Soskice and their conceptualization of institutional complementarity. According to this approach, there are fundamental differences between liberal market economies such as United States and UK where firms coordinate production primarily through market mechanisms, versus coordinated market economies such as Germany and France where firms coordinate through hierarchical mechanisms (Hall & Soskice, 2001). Furthermore, each type of system ensures complementary among its subsystems, such as corporate governance, inter-firm relations, industrial relations, and skill formation through education and training (Hall & Soskice, 2001). The field of comparative capitalism and welfare state has over time become more coherent and adaptive in response to its challenges and criticisms, by incorporating the concept of gradual institutional change, proposing more unified typologies, and expanding the typologies to include other regional models (Amable, 2003, 2016; Amable et al., 2019; Hall & Thelen, 2009; Schröder, 2013).1 Regardless of growing synthesis in the field, recent attempts to extend these hegemonic approaches to rest of the world have produced mixed results. On the one hand, some studies

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find there are significant relationship between regime type and redistributive social policies, contributed by reelection concerns and interest group politics (Haggard & Kaufman, 2008; Przeworski, 2009). On the other hand, Mares and Carnes suggest that it becomes problematic when there are increasing number of outliers even among democratic countries where left-wing parties or trade unions play no significant roles, not to mention how they fail to explain even more significant variations in non-democratic regimes (Mares & Carnes, 2009). While recognizing the validity of these criticisms, the welfare state literature still informs the theoretical framework in this book in a few ways. First, they underline interactions between political institutions, growth strategies, and welfare provision, although primarily in democratic contexts and at national level of analysis. Second, with some careful contextualization, it is possible to apply the concepts of power resources, decommodification and stratification, as well as institutional complementarity to study social policy and welfare politics in China. Finally, selective policy learning from these mature western models has been evident in China’s social policy reform, either directly adapted by the party-state or indirectly promoted by international institutions or domestic policy networks at both national and subnational levels. The western-centric welfare state literature also serves as the corner stone for later debates on how we can properly study social policy and welfare politics in non-western contexts. Since late 1990s, a new generation of scholars have attempted to expand or challenge their typologies, develop new global typologies, or create middle-range theories covering specific non-western regions. To name a few, there have been vibrant debates regarding the ideal–typical model of productivist welfare capitalism in East Asia and its subregional variants (Aspalter, 2006; Choi, 2012; Holliday, 2000, 2005; Kim, 2016; Kwon, 1997; Yang & Kühner, 2020), new democratic or authoritarian forms of welfare politics and a general trend toward hybridization in post-communist countries (Aidukaite, 2011; Cerami & Vanhuysse, 2009; Cook, 2011; Hacker, 2009; Logvinenko, 2020; Remington, 2011; Sokhey, 2017), left-wing politics and pro-poor social policies in Latin America (Franzoni, 2008; Franzoni & Sánchez-Ancochea, 2013; Haggard & Kaufman, 2008; Holland & Schneider, 2017; Huber & Stephens, 2012), as well as informal and insecurity regimes in Latin America, Africa, and Southeast Asia, where family and community play as important roles as states and markets (Croissant, 2004; Gough, 2004, 2013; Sumarto, 2020;

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Wood & Gough, 2006). This burgeoning literature of social policy and welfare politics moves beyond the traditional focus on formal institutions and state intervention and challenges the normative assumptions around democratic institutions in western context. Two bodies of literature are highlighted here to illustrate how this new generation of scholarship provides insights to the study of Chinese social policy and welfare politics. Firstly, the emerging scholarship on the productivist welfare capitalism help partially explains economic logics behind social policy reform in China, given the geographic and cultural proximity as well as similarities in national growth strategies between China and its East Asian neighbors. Building on Esping-Andersen’s typology, Ian Holliday argues that in East Asian economies such as Japan, South Korea, Taiwan, Singapore, and Hong Kong, social policy is often subordinate to economic policy and growth objectives are overriding in comparison to social protection goals (Holliday, 2000, 2005). According to Holliday, the dominant determinant is bureaucratic politics and the resulting functionalist logic of social policy, rather than power resources or political mobilization of societal groups. Similar to Korpi as well as Hall and Soskice’s approaches, Haggard and Kaufman finds that welfare state formation in East Asia was shaped by distributive coalitions and economic interests, as well as the state-led export-oriented growth (EOG) strategy (Haggard & Kaufman, 2008).2 From a broader comparative perspective, Wood and Gough classifies the East Asian productivist model under informal security welfare regimes, based on its prioritization on human capital investment over social protection or decommodification (Wood & Gough, 2006). To some extent, China has incorporated some productivist elements into its social policy reforms since 1990s. This can be demonstrated by the consistent and ever-growing emphasis on education and skill formation across localities, as well as local government prioritization of employment-based social insurance since 1990s. Although the pro-growth logic can partially explain these moves, it would be problematic to categorize China’s social policy as solely productivist. As Young Jun Choi suggested, the political will of the party-state as well as regime legitimacy and survival are causal logics that are absent in the other cases (Choi, 2012).3 In other words, how the productivist ideas and policy instruments become internalized are no different from China’s policy learning from western models. The productivist elements should therefore be viewed as means to political stability and economic growth, rather than ends themselves. At central level, the bureaucratic

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politics argument for productivist welfare capitalism are somewhat similar to the fragmented authoritarianism framework in Chinese politics, given the key role of central ministries in advocating for competing models of welfare provision. Still, the nature of bureaucratic politics and the embodied state-society relations are not the same. At subnational level, distributive politics clearly play more important roles, but the processes through which societal interests channeled through authoritarian political institutions are noticeably different and worth further exploration. Secondly, the literature on post-communist welfare transition and increasing diversification and hybridization can inform our understanding of the political logics behind China’s welfare developments, given the shared communist legacies in political institutions, state-led economic planning, and pre-reform welfare provision. To begin with, there are constant debates about how the communist welfare regimes functioned. Although Kornai (1992) viewed the communist welfare state as excessively generous, universalistic, and egalitarian, others have challenged this conceptualization by arguing that in reality it was more paternalist, productivist, and emergency- or crisis-driven (Inglot, 2009; Kornai, 1992; Offe, 2009).4 In addition, there were significant variations within the communist bloc due to pre-communist welfare institutions such as a Bismarckian social insurance system that is employment-based (Cerami & Vanhuysse, 2009). Intriguingly, these contrasting views about the communist welfare state resemble the disagreeing perceptions about Maoera communist welfare system in China, as some interpret it as universal and generous while others view it as stratified and incomplete. The important lesson here is that instead of creating an ideal–typical image of the communist welfare state, further contextualized analysis of communist legacies is required to understand cross-national or even within-country variations. Another similarity between China and the post-communist countries is the incomplete nature of welfare transition after decades of reform. In contrast to the more comprehensive privatization in the economic sphere as promoted by the World Bank and neoliberal economists, the welfare reform in the post-communist countries were often mixed, incomplete, or even subject to reversal. Linda J. Cook reviewed the mixes of reform packages adopted by post-communist governments in Russia and Central and Eastern European countries (CEECs), and identified two primary determinants, i.e., the balance of power between supporters and opponents in the state, and the potential impacts to the fiscal and administrative

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capacity of the state (Cook, 2011). Similarly, Jolanta Aidukaite finds that there are conflicting trends of liberalization contributed by EU integration, and persistent popular support for universalism or solidarity based on experience with the communist welfare state (Aidukaite, 2011). This results in what Hacker described as “hybridization” rather than “clustering” of welfare policies in CEECs, making it difficult to classify them into the western-centric welfare worlds (Hacker, 2009, p. 152). Thomas F. Remington discovered substantial regional differences in social spending and policies within Russia, as regions that have more democratic characteristics and were more successful in economic transition tend to provide better public goods (Remington, 2011). More recently, Sarah Sokhey finds that earlier partial or incomplete pension privatization reforms were later reversed in Russia, Hungary, and Poland due to increasing pressure from the political opposition and the general public (Sokhey, 2017). The recent literature on post-communist countries therefore supports the “politics matter” arguments made by Korpi and Esping-Andersen but describes distinctive causal processes in the post-communist context. While there is a lack of political opposition in China, popular support and regime legitimacy considerations were clearly behind the reorientation in national social policy reform in China since 2000s. Similar to Remington’s findings in Russia, subnational variations are also evident in China’s case with stronger fiscal and administrative capacity in coastal regions that have prospered economically. These remarkable parallels therefore demonstrate the common interactions between communist legacies, postreform political institutions and growth strategies in shaping welfare outcomes, despite diverging political and economic reform paths between China and post-communist countries. As discussed above, the comparative literature on social policy and welfare politics has expanded over time to consider the more dynamic relationships between political institutions, economic development, and welfare provision in developing and transitioning contexts. More recently, there has been some attempts to integrate China into the broader comparative typologies in recent years, such as Jonathan London’s discussion on “market-Leninism” with mixed attributes of productivism and universalism, as well as Ringen and Ngok’s classification as fragmented liberalconservative hybrid model (London, 2014; Ringen & Ngok, 2017). Nonetheless, these explorations focus primarily on national level and therefore do not fully capture the subnational variations and changes over time. The purpose of this book is not to fit China into the comparative

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typologies. Rather, the emphasis is the identification of causal processes through which these external models become internalized at national and subnational level, and more importantly the role of local agents in policy experimentation and nationwide implementation processes. The next section highlights emerging scholarships on Chinese social policy that have provided more contextualized understanding of welfare politics at both national and subnational levels. As I will illustrate below, the emerging literature of social policy and welfare politics in China is deeply embedded in the study of area studies and Chinese politics. As a result, the causal linkages between political institutions, economic development, and welfare provision are somewhat undertheorized. By contrast, such linkages have been widely explored through comparative research, but still require further contextualization in authoritarian, post-communist context with economic transition. Therefore, I argue that further synthesis between these two fields is possible and desirable.

2.2 Social Policy in China: Serving Economics or Politics? In 2004, Joshua Ramo proposed the eye-catching “Beijing Consensus” and three theorems of state capitalism as an alternative paradigm to the “Washington Consensus” by John Williamson (Ramo, 2004; Williamson, 1993). While these two authors disagree with each other on the viability of these two models, they seem to agree on the key elements of Chinese model, which include: incrementalism, experimentation, EOG, state capitalism, and political authoritarianism (Ramo, 2004; Williamson, 2012). Scholarly debates on the Chinese variety of capitalism have continued to proliferate since then, but social policy appears to be the missing link in these debates. As a result, the fields of Chinese capitalism and social policy have largely evolved separately. In the meantime, scholarship on Chinese post-reform welfare developments can be divided into two broad camps, including the “economics matters” approaches that attempt to explain the “retreat of the state” in earlier pro-market social policy reforms, and the more recent “politics matters” approaches that seek to reprioritize the role of the party-state in welfare provision. These new debates also bring back a key question that many comparativists have sought to answer: Is China developing a complementary or coordinated model between economic and social spheres?

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With only a few exceptions, previous scholarship on post-reform China before 2000s focused almost exclusively on the economic domain and the subordinate role of social policy to support economic reform.5 Nonetheless, two exogenous shocks of the Asian Financial Crisis and the SARS epidemic have interacted with domestic welfare retrenchment to trigger societal backlashes in late 1990s and early 2000s. This was soon followed by a new generation of scholarship on welfare implications of the progrowth logic and SOE reform, and how the dismantling of communist welfare state created an institutional vacuum that neither the state or the market was ready to fill (Chen, 2003; Cook, 2002; Guan, 2005). The earlier scholarly interests on the economic linkages of social policy appeared to be short lived, with primary attention to the negative impacts of economic reform and rising informality and insecurity as a result. For these “economic matters” approaches, the key causal arguments are the economic reform and restructuring (Cook, 2002; Frazier, 2010; Selden & You, 1997; Wong, 1998), the developmental or productivist logic at national level (Guan, 2005), local state entrepreneurialism (Duckett, 2001), exogenous shocks (de Haan, 2010), and local labor market structures (Yang, 2020). Similar to the comparative literature that focusing on earlier neoliberal reform in post-communist countries and productivist regimes in East Asia, this has led to some scholars categorizing China’s reform during this period as neoliberal, productivist, or state entrepreneurial (Breslin, 2006, p. 2; Duckett, 2001; He & Wu, 2009; Sander et al., 2012). Responding to increasing societal pressure and growing concerns on social stability and regime legitimacy, the party-state has initiated a new round of reform to address informality and insecurity since early 2000s, primarily through increasing coverage and generosity in the newly established social insurance and social assistance schemes, as well as the gradual integrations between urban and rural programs. Following this reorientation, most recent scholarship has sought to “bring the state back in” while gradually de-emphasize the economic logics. Among those who favor the “politics matters” approach, the key theoretical arguments include elite politics and top-down pressure (Duckett, 2020; Lü, 2014; Shi, 2017; Xiong, 2012; Zhang, 2012), the role of central bureaucracies and fragmented authoritarianism (Duckett, 2019; He, 2018; Howell & Duckett, 2019; Huang, 2013; Zhang, 2012), central-local relations and intergovernmental relations (Béland et al., 2018; Gu, 2009; Huang & Kim, 2019; Ratigan, 2017; Sun, 2020), and bottom-up approaches that emphasizing

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local agency and policy entrepreneurship (Carrillo & Duckett, 2011; Hammond, 2013; He, 2018; Shi, 2017; Tsai, 2007; Zhu & Zhao, 2018). Notably, the majority of these theories are derived from the traditional study of Chinese politics and therefore can be viewed as analytical extensions of political sphere into social sphere. Much of this scholarship has dedicated their attention to a few key policy pillars, including the residence-based New Rural Cooperative Social Insurance Schemes, the means-tested Minimum Livelihood Guarantee (MLG), and the growing commitment to universalism in healthcare, all of which have significant political implications for regime legitimacy and social stability. On the one hand, they emphasize the political logics of regime survival, and how rational behavior of political elites lead to careful balance between regime legitimacy, economic growth, and social stability goals. On the other hand, they seek to explain national trajectories and subnational variations through a state-centric analysis of welfare politics. Despite these common causal logics, they reached different conclusions about the prospects of a possible Chinese “welfare state” or state-led social development. Although some argue for a “convergence thesis” where a coherent national paradigm is emerging (de Haan, 2010; Duckett & Wang, 2017; Ngok & Huang, 2014; Xiong, 2012; Zhang, 2012; Zhu, 2016), others hold a more skeptical view and focus on the persistent subnational variations given the complex political dynamics in the decentralized authoritarian state (Béland et al., 2018; Carrillo & Duckett, 2011; Frazier, 2010; X. Huang, 2015; Liu & Sun, 2016; Ratigan, 2017; Shi, 2017; Solinger & Hu, 2012; Yang, 2020). The social policy and welfare politics literature on China also departs from the western models of welfare politics in significant ways. While political institutions, growth strategies, and social policies are often viewed as complementary comparatively, there is significantly less attention to these linkages in Chinese contexts. One potential explanation for the diverging trends is the absence of clear institutional complementarity or synergy between economic and social policy reform at national level. Similar to post-communist countries, earlier pro-market reform did not result in complete dismantling of the communist welfare state, but instead retained some communist legacies to protect those who still work in the state and formal sectors (X. Huang, 2015). More recently, the “return of the state” also appears to be incomplete and unequal, making it harder to theorize a coherent national paradigm and completely attribute it to national-level political factors. Furthermore, there are inherent tensions

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between subnational variations and frequent policy changes in China, while the comparative institutional theories derived from cross-national comparison with primary attention to institutional stability. Based on these observations, it remains unlikely that one can argue for a new “Beijing Consensus” in social policy that is complementary to the state-led economic development model. Nonetheless, the absence of a coherent national model for economic and social development does not mean we can simply dismiss any possibility of institutional complementarity at subnational level. Rather, the subnational variations in welfare provision have indicate that some localities may have stronger capabilities to form institutional complementarity than others. The current debates on local agency however have largely remained on the political dimensions. To examine the within-country disparities on welfare provision, further research is needed to examine the variants of subnational growth strategies and how they interact with authoritarian political institutions and welfare regimes. The debates on welfare implications of economic reform and authoritarian politics also demonstrate important discrepancies between China’s political and economic institutions with its East Asian neighbors and post-communist countries. More importantly, these discrepancies so far remain undertheorized in the mainstream “politics matter” approaches in Chinese social policy. From a state-market relations perspective, the Chinese party-state not only plays a guiding role in making economic policies but also directly intervenes in economic production through the SOEs and collective enterprises at national and subnational levels. At times, the SOEs and collective enterprises are also involved in direct welfare provision for mixed political, economic, and social purposes. Public hospitals and other public service providers in social spheres can also have mixed motives as often permitted or even encouraged by local governments. These patterns blur the boundaries between state and market in both economic and social spheres. While the traditional comparative welfare approaches view firms primarily as employers, the more complicated and potentially dissimilar roles of state actors and their private counterparts may require further analysis in Chinese contexts. From a state-society relations perspective, most scholars studying China hold a more pessimistic view on the role of the civil society and view the party-state as the dominant actor.6 This contrasts with the more functionist view of the state in the East Asian productivism and the more pluralistic view of post-communist welfare politics especially among

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CEECs as discussed in the last section. Yet as the rest of this book shows, these configurations of state-society relations in China are neither static over time nor identical across localities. This book therefore adopts a relational view of the state and place it in the context of state-market and state-society relations in analyzing subnational variations of welfare provision. Building upon similar approaches in comparative political economy, the next section lays out the conceptual and theoretical framework and highlights the relational view of state-market and state-society relations at subnational level and its implications for local agency in social policy.

2.3

Local Agency and Subnational Welfare Mixes

Conceptually, how do we capture the full extent of national policy changes and subnational variations in authoritarian welfare transition? For analytical purposes, this book distinguishes between social policies at national level and welfare mixes at subnational level. Broadly, nationallevel social policies can be viewed as a set of policies and institutions within the public spheres to achieve social welfare goals (Gough, 2004). It often constitutes national frameworks of incentives and constraints, with a variety of political, economic, and societal actors involved directly or indirectly in formulating and implementing policies (Huber & Stephens, 2012). From a political economy perspective, I define social policy in narrower term of core programs with direct welfare provision and social protection functions, such as social security, affordable housing, healthcare, old-age care, while excluding policy areas that are only loosely connected or indirectly related to welfare, such as taxation, education, and environmental policies. The primary focus is on the social policy doctrines and institutions at national level with regard to financing and service delivery, and various policy instruments such as social insurance and social assistance. While social policy ideas can be developed elsewhere and imported to China, the analytical focus is on how these ideas become contested and then internalized through domestic policy processes, and what roles local agency plays in the process. Although social policies can be targeted across social strata or classes, I distinguish between policies that are intended for the dominant social blocs such as contributory social insurance, and policies that at least in theory are intended for the more disadvantaged populations such as means-tested or category-based social assistance.

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The concept of welfare mix is used to analyze the implementation of national social policies at subnational level. In the broader comparative context, welfare mix is often defined as a mixture of state, market, community, and family that are involved in welfare provision. In advanced industrialized countries or developed democracies, it is also closely connected to an emerging “third sector,” through which the financing and delivery of welfare services are channeled through intermediary community and voluntary associations beyond the state and market (Evers, 1995; Evers & Laville, 2004). However, there are different connotations associated with this concept when applied in developed versus developing, democratic versus non-democratic, and transitioning versus non-transitional contexts. Overall, the defining features of welfare mix in the western context are devolution, pluralization, and consumer choice, with normative and prescriptive connotations such as an enabling state and a proliferating third sector or welfare pluralism (Chaney & Wincott, 2014; Powell & Barrientos, 2004).7 By contrast, welfare mix in developing and transitioning countries can be viewed as coexistence of formality, informality, and insecurity and various articulations between state, market, community, and family (Gough, 2004; Powell, 2019).8 In this book, I provide a contextualized, non-prescriptive definition of the welfare mix in China with the following core features: (1) conditioned decentralization under political authoritarianism; (2) unequal and selective pluralization in financing and service delivery, and (3) stratified welfare provision as localized authoritarian social contracts. First, the decentralization of welfare provision and increasing local agency occur within the boundaries of political authoritarianism. Concepts such as devolution, third sector, and welfare pluralism that are often associated with democratic political institutions therefore are less applicable in the context of China. During earlier reform era, fiscal and administrative decentralization were designed to reduce the burdens of the state and SOEs while transferring them to families and individuals, and then to the newly emerged market and voluntary sectors. Since then, the articulations of the welfare mix are also constantly evolving as permitted by the party-state, from state dominance prior to 1990s, retreat of the state as well as greater reliance on family and individual responsibility during 1990s and early 2000s, and then to increasing pluralization of financing and service delivery to reduce informality and insecurity after 2000s. These developments reflect the willingness of the party-state to conditionally delegate its authority to achieve economic development and

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social stability goals without giving up political power or social control. Although there was some evidence for political liberalization during the Hu-Wen era, this trend has now been reversed under Xi’s more personalized political leadership.9 Furthermore, the newly emerged community and voluntary sectors remains tightly monitored by the state and often are dependent on the state in various ways (Howell, 2019; Hsu & Hasmath, 2013).10 While the party-state has consistently encouraging local governments to attract societal capital and contract out social services, the political control over the local party cadres and the SOEs has significantly tightened more recently.11 More recent studies suggested that political recentralization also imposes more institutional constraints on local governments through binding targets and scaling up the proportion of top-down and crossregional fiscal transfers (Schubert & Ahlers, 2012; Zhu, 2016). Nonetheless, the effects of political and fiscal recentralization can be felt unevenly by local governments as the central government seeks to strengthen political power not only through top-down control but also the intermediate layer of provincial governments (Zhu, 2016). On the one hand, coastal provinces and cities are less likely to be on the receiving end of central fiscal transfers and therefore more fiscally independent by nature. Cities with higher political-administrative status also tend to enjoy greater fiscal capacity and autonomy, further reducing their reliance on the central government. On the other hand, previous research shows that the party-state has more incentives to co-opt and control the more economically resourceful regions for resource extraction and regime stability purposes, resulting in greater top-down control over wealthier coastal provinces and centrally administered municipalities (Sheng, 2009). Still, as Anna L. Ahlers suggested, the “multitude of political actors, institutions, processes, and policies… will not vanish with the blink of an eye” despite the growing top-down pressure (Ahlers, 2019, p. 201). These counteracting forces within authoritarian political institutions thus set the parameters of local agency under a new era of political recentralization. Second, the pluralization of financing and service delivery mechanisms are often selective and unequal across localities. After almost a decade of local experimentations, the party-state now officially defines a guiding role of the local state in the welfare mix through “state guidance, societal participation” (State Council, 2017). The local governments therefore are the primary agents with delegated central authority to coordinate local networks of state, market, and community actors in welfare provision. The

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articulations of the welfare mix hence depend on who are granted access by the local state. With different fiscal and administrative capacity, local governments to a varying degree need to rely on employers, banks and insurance companies on the financing side, and SOEs, private firms, and NGOs on the service delivery side. Building on the conceptualizations of institutional complementarity developed by Hall and Soskice (2001), I argue that local governments are likely to rely on the same local growth regime and production networks to support policies and programs for the dominant social bloc, while supplementing them with policies and programs for “the new urban poor” through state corporatist institutions in the social sphere. Direct state intervention and the voluntary sector play residual roles in the welfare mix, which contrasts with either the welfare state or welfare pluralism approaches. The ability to develop such institutional complementarities nevertheless vary across localities because of the authoritarian top-down constraints discussed above. In a pluralized welfare mix model under democratic political institutions, welfare financing would be shaped by fiscal and administrative capacity of the local government as well as the nature of local growth regime and production networks, while service delivery would be determined by whether there is a vibrant third sector. In the Chinese authoritarian context, nonetheless, both financing and service delivery are complicated by various forms of state control and intervention, and potentially more subordinative roles of private and voluntary sectors. In the first scenario, a SOE-dominant growth strategy coupled with greater fiscal capacity and policy autonomy of local government can lead to greater institutional complementarity between a state-led growth model and state-guided welfare mix. The state-led corporatism framework is therefore consistently implemented across economic and social spheres.12 In another scenario, a more vital market-oriented economy and a vibrant voluntary sector can complement each other in forming a more pluralized welfare mix model on the ground. In less-than-ideal scenarios, however, such ability to form institutional complementarity could be constrained by greater top-down control and provincial-level constraints, stronger vested state interests as a result of communist legacies, or weaker fiscal and administrative capacity. In the latter case, the welfare mix model can be less coherent, with greater state intervention in some policy domains and more private and voluntary sector participation in others. The identification and classification of these patterns can therefore help demonstrate varying articulations of welfare

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mix shaped by interactions between authoritarian political institutions and local growth regimes. Lastly, welfare provision remains highly stratified at local level notwithstanding the increasing rhetorical commitments to universalism and welfare expansion by the party-state. Although recent national social policy reforms have promoted integration between urban and rural as well as employment- and residence-based social insurance programs, these reform initiatives have encountered varying levels of resistance and challenges in local implementation. Local welfare politics often involve welfare insiders such as the vested state interests who seek to defend the communist legacies, as well as the more privileged members of the “productive” sector that encompasses both SOEs and private firms. Furthermore, local governments still retain significant power in defining who are eligible for local welfare provision, either utilizing legacy institutions such as the household registration or hukou system, or creating new institutions of stratification such as the “residence certificate” (juzhuzheng ), “accumulated points system” (jifen zhudu) for migrant workers, preferential policies for high-skilled migrants, and instrument-specific eligibility criteria. While top-down pressure and provincial-level constraints were more evident in some cases, all local governments to some degree managed to provide their own interpretations of central policies and define privileged access and more choices to insiders of local political economy. The welfare expansion since early 2000s also greatly benefited the dominant social bloc, as local governments more rapidly expanded coverage and generosity for those employed in the state sector as well as non-state “productive” sectors. At the same time, the types and levels of stratification vary geographically and across policy domains, with differential effects on the “new urban poor”. Social insurance programs in some localities demonstrated relatively higher levels of stratification based on hukou and residence status, employment status as well as skill level in comparison to others. Furthermore, such stratification is more evident in housing compared to healthcare and old-age care, due to the absence of a housing pillar in the national Social Insurance Law. In the case of social assistance programs, some localities have provided greater access, choice, or generosity for the urban low-income residents in comparison to migrants. Such coverage however is often accompanied by strict eligibility criteria imposed by local governments because of the potential fiscal implications. In exceptional

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cases, local governments have adopted a more inclusive attitude toward rural migrants in response to greater top-down pressure by the central government or through the provincial government, or for self-interested considerations based on local economic development or sustainability of social insurance funds. However, such inclusion is primarily achieved through selective inclusion of migrants in employment-based social insurance programs that require little state responsibility. The inclusion of migrants who are considered as “productive workforce” is also compatible with the nature of the local growth regimes and labor market structures. Table 2.1 summarizes the distinctive features of welfare mix model in China in comparison to its democratic counterparts. The connotations of welfare mix in Chinese context is therefore authoritarian yet decentralized, corporatist yet state-led, and gradually expanding yet highly stratified. Through a “state guidance, society participation” framework, local governments continue to coordinate, finance, and deliver welfare programs through its state corporatist institutions, despite growing top-down pressure following political recentralization and a series of national social policy reforms. Rather than seeing a “return of Table 2.1 Comparing the ideal–typical welfare mix and the Chinese models Ideal–typical welfare mix

Welfare mix in China

Decentralization

Devolution: political decentralization accompanies localized financing and service delivery

Participation

Participatory and deliberative policy processes involving a variety of state, market and community actors at national and subnational levels Vibrant third sector with quasi-market mechanisms allowing for equal competition among state, market and voluntary providers Free choice by recipients on various financing and service delivery models based on needs and willingness

Decentralized financing and service delivery without political decentralization; stronger local agency in wealthy, coastal regions Limited societal inputs in highly bureaucratic policy processes at national level; state corporatist framework at subnational level

Pluralization

Choice

Source Compiled by author

“State guidance, societal participation”; varying degrees of competition and levels of state intervention Stratified approach based on ability to pay, employment, and hukou status; local definitions in eligibility and access

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the state” and national convergence toward universalism, the politicalinstitutional constraints have interacted with local growth regimes to facilitate the experimentation and institutionalization of subnational welfare mix models, with varying articulations state, market, community, and family.

2.4

Revising Authoritarian Social Contracts

Although China has moved away from an orthodox communist model, the economic and social transitions are far from complete. The direction of future economic and social policy reforms is also unclear. On the one hand, there is increasing political recentralization under Xi Jinping’s leadership and greater emphasis on top-down design in policy processes. On the other hand, the state has deliberately encouraged greater “societal participation” in both economic and social realms. How can we reconcile these countervailing trends? How do they affect welfare provision and the disadvantaged populations the party-state has vowed to protect? In this book, I propose a political economy framework to analyze local agency and subnational welfare politics as well as their implications for national social policy reforms in China. My core argument is that despite growing top-down pressure, disparities in local growth models have interacted with the authoritarian political institutions in “embedding” subnational welfare mix models. At subnational level, they contribute to new forms of state corporatist framework for welfare mix, which in turn help reformulate authoritarian social contracts and maintain a stable dominant social bloc to meet the dual goals of economic growth and social stability.13 By contrast, the “new urban poor” are mostly excluded from local policy processes and have only selective access and choice based on the willingness of the local governments. At national level, these local processes and outcomes provide important feedback effects to formulation and modifications of national social policies, and at least partially offset the increasing top-down pressure. To begin with, the authoritarian political institutions are still structural determinants of local agency. At central level, the logics of gradualism and experimentalism have become institutionalized over time, followed by institutional reforms toward decentralized policy processes that permit local discretion. Instead of a comprehensive top-down reform package, the new social policy reform took more than a decade to take shape, with varying timelines across policy domains, and constant policy changes at both national and subnational levels. One factor that contributed to

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the varying reform outcomes is significant bureaucratic fragmentation at central level. As soon as rhetorical changes occur, central bureaucratic agencies often become policy entrepreneurs themselves, advocating for their preferred reform plans originated from existing foreign models or recommended by domestic policy experts (Mertha, 2009). These central bureaucracies therefore play important roles in channeling elite preferences, international influence, societal inputs, and local policy feedback. They can exert influence on local governments directly through vertical relations between central bureaucracies and their local subsidiaries. When their policy preferences are in line with local priorities, they can become powerful allies and advocates of coherent local models. In other times, they can obstruct the development of local welfare regimes by promoting alternative models and discouraging local innovation that are inconsistent with their own preferences. A second set of institutional constraints lie in the politicaladministrative structure of the party-state. In a decentralized authoritarian state like China, not all local governments are created equal. It is true that the cadre management systems of the party states permeate all levels of administrative layers, including the center, provinces, cities, counties, townships, and villages. However, the ability of central government to influence local policymaking can vary greatly depending on a number of factors, including political and administrative status of each locality, local fiscal, and administrative capacity, as well as the background and tenure of local party cadres. A centrally controlled municipality (zhixiashi) or a subprovincial city granted Special Economic Zone (SEZ) (jingji tequ) status, for example, enjoys greater fiscal and institutional autonomy in comparison to other sub-provincial and prefectural cities. In the latter case, the added layer of provincial government can impose additional constraints on local agency. Fiscal and administrative capacity tend to be stronger in coastal provinces and cities, where EOG and a booming housing market has generated stable revenue and allow for expansionary social policy measures for urban employees and residents. While all party cadres have to carefully balance between their own career promotion and local development goals, previous research suggested that localists who spent most of their career in one locality are more likely to prioritize local economic and social development goals, while outsiders or centralists are less likely to align their interests with local economic and social policy priorities.14

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Regardless of these political-institutional constraints, a fully top-down view of social policy would be problematic given the increasing diversification of local political economy. Whereas poorer, inland provinces and rural regions are relying more on central policy guidance and fiscal transfer to meet growth and social protection goals, richer, coastal provinces and urban centers have relied on varying types of state corporatist structure for local governance that actively engage insiders of local political economy across economic and social spheres. Given the authoritarian context, such framework of state corporatism should be distinguished from Schmitter’s societal corporatism (Hsu & Hasmath, 2013, 2014; Schmitter, 1974). Nevertheless, they are fundamentally different from the top-down structures of communist welfare provision in the pre-reform era. Notably, the state corporatist frameworks are often reflections of not only power distribution of local political and economic elites, but also the nature of local growth strategies, with considerations to the existing production regimes, labor market structure, and future economic planning. For coastal regions, they enjoyed significant preferential policies in earlier economic reform and prioritized EOG and foreign direct investment (FDI). The local states play key roles in coordinating local growth strategies, global and local production networks, and strategic development of key industries. According to the Chinese Cities State-Business Relations reports published by Renmin University, there is a clear positive relationship between economic growth and “state-business amity”, an index that is used to describe the close relationship between local governments and firms (Nie, 2020).15 In coastal cities, this often takes the form of frequent interactions between local governments and firms through direct meetings and intermediary business associations, infrastructural, and other types of services provided by the government to firms, lower tax burden or tax incentives, and consultations with firms and association in the local economic and strategic planning processes where five-year plans for “strategic sectors” are laid out according to local long-term priorities.16 The primary effect of these state-firm interactions is an emerging state corporatist framework for local economic governance, which at times can drift from national priorities (Hasmath, 2020). Although the local states continue to play a guiding and coordinating role, the corporatist institutions for local growth strategies and state-market relations become increasingly diversified. Scholars studying Chinese regional economy have long documented these variations in

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local growth models and how local states adapt their institutional structure for economic development purposes (Lin, 2009; Rithmire, 2014; Segal & Thun, 2001; Shen & Tsai, 2016; Wei, 2007; Wei & Liefner, 2012; Xu, 2011; Xu & Yeh, 2005; Yang, 1990; Zhang & Peck, 2016). Within the coastal regions, a few distinctive growth models gradually emerged in the coastal regions from the South to the East and then to the North, which adopted various EOG strategies and achieved more rapid economic growth in comparison to the inland provinces and cities. There are, furthermore, strong patterns of within-region and cross-regional similarities and disparities which cannot be solely explained by geographic proximity. For example, there are competing models emerged in Yangtze River Delta (YRD) region over time, as Shanghai and its nearby Jiangsu province have developed state-led mixed economy that prioritized a more dominant SOE sector and state-guided FDI, while Zhejiang province has opted for a market-oriented growth strategy that promotes private entrepreneurship.17 In the Pearl River Delta (PRD) region which now is also referred as the Greater Bay Area (GBA), local governments and firms in Guangdong province first promoted low-skill, labor-intensive manufacturing-based EOG building upon strong economic linkages with Hong Kong and Taiwan (Zhang & Peck, 2016). Shenzhen, a SEZ city adjacent to Hong Kong, has developed a distinctive strategy that prioritizes technological upgrading as well as R&D (Zhang & Peck, 2016). In this book, the primary analytical interest lies in the differences in growth strategies and the resulting state-market relations, rather than geographically distinctive regional economic patterns. Specifically, I make the distinction between the state-led and market-oriented growth models, although both are coordinated by local governments and subject to authoritarian political institutional constraints. From an institutional perspective, both models can be categorized as forms of state corporatism, with only differences in growth strategies promoted by local states. The analytical focus is state-market or state-firm relations, and therefore differs from Hall and Soskice (2001)’s coordinated and liberal market economies which emphasize inter-firm relations. In the state-led model, local governments prioritize the development and dominance of SOEs in key strategic industries, while establishing a more hierarchical state corporatist framework for economic planning and policy coordination. By contrast, local governments that favor a market-oriented model encourage the development of private firms along with SOEs in key strategic industries,

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while facilitate a more flattened, pluralized state corporatist framework in economic planning and coordination. In the YRD region, Shanghai and cities in Jiangsu province fall into the state-led growth model where cities Zhejiang province mostly fall into the market-oriented model. In the PRD region or Guangdong province, most cities fall into the market-oriented model. It is important to note that a state-led model does not mean there is not a vibrant private sector. In Shanghai and cities in Jiangsu, for example, private sector employment growth has outpaced state-sector employment. However, SOEs remain dominant in key strategic industries, often larger in size, and enjoy preferential policies and closer ties with local governments in comparison to their private counterparts. Such privileged status is less seen in PRD or cities in the Zhejiang province, where a long tradition of market-oriented reforms has not only encouraged the proliferation of private firms but also equally close coordination between local governments and these firms. How does the diversification of growth models contribute to the emergence of welfare mix? The political-institutional constraints and local growth models interact to institutionalize varying state corporatism frameworks and formulate dominant blocs in economic and social realms at subnational level.18 Consider the cadre responsibility system for example. For richer, coastal areas, the lack of central fiscal support means most central government directives take the form of unfunded mandates, while the hard targets local cadres have to meet are often economic ones. Fortunately, the built-in flexibilities in national reform programs encouraged local officials to explore and establish new state corporatist frameworks at local level, allowing them to exploit local resources and networks to meet the cadre responsibility targets they are assigned. Before the Hu-Wen era, those targets prioritized economic growth, and local cadres were incentivized to explore their own models of economic growth and welfare provision with limited guidance or incentives from the top. As a result, the same local corporatist networks not only served for economic development goals, but also for financing and delivery of the welfare mix. After the Hu-Wen administration reoriented the cadre responsibility system to include hard targets on social protection goals, the local governments still returned to the same corporatist framework to develop new initiatives and coordinate local actors to meet the new goals. While central policy directives have changed, the fundamental institutional structure of local political economy have not.

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The interactions between political institutions and growth models also help explain the formation and persistent presence of local dominant social blocs in economic and social realms, as well as their privileged access to local welfare provision.19 From a social contract perspective, local governments need to accommodate the interests and preferences of the local “insiders” such as civil servants and public institution employees, as well as employees in the “productive” sector constituted by a mix of SOEs and private firms.20 Although local governments direct the coordination and negotiation of various local interests, the power distribution of these local interests as well as whether there a dominant coalition is formed through negotiations can vary across localities. In some cases, a coalition can be formed where there is harmony of interests among the core groups, such as the support for an integrated social insurance approach for the dominant bloc. In addition to greater institutional complementarity, this may result in consistent preferential treatments of the dominant bloc in welfare provision, with significantly greater coverage and generosity. In other cases, tensions may exist among different groups, particularly between those in the state sector who seek to retain their privileges through the communist legacies, and those in support of dismantling of communist legacies to boost local economic growth and welfare expansion for the market-oriented productive sectors. With the absence of a dominant coalition, the welfare mix may be less coherent, less complementary to the growth model, and more likely to subject to top-down political pressure. For the “new urban poor”, this means they will face varying levels of coverage, generosity and choice depends on how they are viewed by the local governments and the dominant social bloc. One commonality across the localities is the absence of direct participation or input by the “new urban poor” in the local policy processes. Instead, their interests, preferences, and voices are largely excluded from the local state corporatist framework. This is in direct contrast to the dominant social blocs whose interests are well represented and frequently considered by the local governments. Rather, the local governments serve as agents on behalf of the disadvantaged groups and decide their varying access to local welfare provision based on considerations of top-down pressure, economic growth, and social stability. In certain cases, these groups can be conditionally incorporated into social insurance or social assistance programs. Still, these decisions are made hierarchically by the bureaucracy,

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in contrast with greater deliberation and consultation with the dominant social blocs through the state corporatism framework. Notwithstanding increasing top-down pressure through the new mandates or the changing cadre responsibilities, the defining feature of local agency in coastal and urban areas are the persistent commitments to local economic growth by the local governments, and their reliance on the state corporatist framework to finance and deliver social programs and services. Not surprisingly, such framework often prioritizes local economic growth while maintaining political legitimacy and social stability. Still, not all local agents are created equal. In the political realm, local governments and cadres face competing incentives and disincentives the cadre responsibility system, while enjoying varying levels of capacity and autonomy depending on their political-administrative status. In the economic realm, state-market relations have changed dramatically in the post-reform era, with varying growth models and state corporatist institutions emerging to govern the local political economy. In the social realm, local governments have to accommodate a variety of needs and formulate new forms of authoritarian contracts, which seek to protect the interests and preferences of dominant social blocs in exchange for their support. Interreacting with the growth models, this creates bifurcating trends toward greater generosity and coverage for a social insurance approach for public sector employees and the “productive” workforce, versus a means-tested approach for the “unproductive” populations with strict eligibility criteria and much less generosity. Accordingly, the interactions between political institutions and growth models help explain why local governments seek to create distinctive definitions of who are “insiders” or “outsiders” of welfare provision. This in turn contributes to increasing variations in welfare mix models despite the emphasis on “top-level design” by the political leadership of the party-state.

2.5

A Structured Comparison Approach

Understanding local agency within the broader context of national social policy reforms therefore requires examination of patterns across policy domains and geographic locations. To achieve this goal, this book investigates three key social policy domains of healthcare, and affordable housing, as well as pension and old-age care. These policy domains are selected because of their importance in broader social policy reform, how they typify pre-reform and post-reform social policy trajectories, and

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the similarities in available policy options such as employment- and residence-based social insurance and means-tested or category-based social assistance. To begin with, all of these domains shared similarities in their communist legacies, with indirect state provision of programs and services through the work units and rural communes, and category-based direct state provision for disadvantaged populations prior to 1980s. In post-reform era, national policy reforms across all three policy domains began with significant retreat of the state, accompanied by state-led marketization and selective privatization in the 1980s and 1990s. However, a series of exogenous shocks between 1990 and 2000s, including the Asian Financial Crisis, the SARS epidemic, and the Global Financial Crisis, coupled with political leadership change and the influence of international organizations and domestic policy networks, contributed to reorientation of national reforms over time (Duckett, 2019).21 While the timing and pace in each domain is different, they follow the similar trajectories of gradual welfare expansion and increasing top-down pressure. In all three policy domains, the national reform has prioritized the step-by-step development of complementary social insurance and social assistance programs, in addition to gradual integration of employment- and residence-based programs across urban and rural areas. At subnational level, the evolution of welfare mix models in these three policy domains closely reflect the nature of local political economy, and a careful balance between “productive” and “unproductive” welfare provision for both economic development and social stability purposes. In the domain of healthcare, local governments adopted different approaches to stratify or integrate healthcare insurance for privileged and less privileged groups. While some localities provide direct provider subsidies or preferential policies for large public hospitals, others prioritize demand-side cash transfer programs or eliminate barriers to entry for private or voluntary sectors. If consistent patterns can be found in case of affordable housing and old-age care, they can provide further evidence for how political institutional factors and local growth strategies interact to shape local answers to the questions of who finance, who provide, and who have access in each policy domain. The selection of these three domains therefore allows us to identify local agency patterns across policy domains, while controlling for historical and national-level factors such as communist legacies, top-down pressure, and availability of policy options. To explain the subnational variations, I designed a structured comparison approach to identify localities with similar level of economic development and migration patterns but varying political-administrative status

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and growth models. Two of the cases, Shanghai and Nanjing, are in the YRD region; and the other two, Guangzhou, and Shenzhen, are in the PRD region or GBA close to Hong Kong. The primary cases of Shanghai and Guangzhou are used to identify the causal mechanisms and trace the causal processes. The secondary cases of Nanjing and Shenzhen help identify possible cross-regional diffusion based on similar growth models, while providing additional control on potential rival explanations. For analytical convenience, I use city as my primary unit of analysis, because it allows better capturing of policy implementation on the ground, as well as any disparities between urban and rural areas within their administrative boundaries. Still, this does not mean the provincial-level factors are ignored. Rather, three out of the four cases are sub-provincial cities with or without SEZ status, which help examine varying degrees of provincial-level constraints on local welfare provision. The four cities selected enjoy many similarities economically and socially, including urbanization level, industrialization, massive inward migration, and high level of economic development. In the absence of strong central fiscal support, all four local governments are largely relying on themselves and the state corporatist framework to develop local

Fig. 2.1 Budgetary expenditure as percentage of GDP by City, 2003–2020 (Data Source National Bureau of Statistics China)

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economy and provide welfare services. Despite the similarities, there are a few key differences across these cities that are of analytical interest to this book. First, the four cities have different political-administrative status, with some enjoy greater autonomy and closer ties to the central government while others are more constrained by the intermediate layer of provincial government.22 For example, Shanghai is a centrally controlled municipality equivalent to a province, and it has a long history of producing national leaders and strong influence on national economic policymaking. The other three cities are all sub-provincial cities, with two of them as provincial capitals and one granted the SEZ status. The provincial-level constraints are evident in the cases of Nanjing and Guangzhou, while Shanghai enjoys the greatest fiscal capacity and policy autonomy followed by Shenzhen. As Fig. 2.1 shows, these differences have also resulted in variations in local fiscal capacity as measured by budgetary expenditure as percentage of local gross domestic product (GDP). Second, despite similarities in level of economic development measured by GDP per capita, these four cities have relied on varying types of growth models, where Shanghai and Nanjing are considered as state-led in contrast to the market-oriented model in Guangzhou and Shenzhen. The comparison of these four cities thus help identify potential disparities in regard to prioritization of SOEs or private sector development, selective promotion of key strategic industries and matching skill formation policies, as well as the design and implementation of complementary social policy programs and services. Table 2.2 summarizes the case selection criteria. The selection of policy domains and localities is based on the logics of most similar systems design or Mill’s “method of difference” where a small number of mostly similar cases have produced divergent outcomes (Mill, 1906; Teune & Przeworski, 1970). While this method can have potential limitations when Table 2.2 Political institutions and growth strategies in the cases Political institutional constraints

Growth Model

State-led Market-oriented

Source Compiled by author

High

Low

Nanjing Guangzhou

Shanghai Shenzhen

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it comes to generalizability, it is suitable for the purpose of this research, i.e., to identify causal processes and mechanisms behind subnational variations of local agency, and how welfare mix models become “embedded” locally regardless of similar top-down pressure from national social policy reforms. This research design therefore allows for preliminary development of a causal framework that integrates previous insights on political institutions and growth strategies in comparative and Chinese social policy literature, and applies them to the decentralized, authoritarian context of China. The cases are intended to be illustrative rather than comprehensive, and the insights generated in this book can be further tested through future empirical studies across Chinese cities. The next chapter provides an overview of national social policy reform trajectories in the three policy domains. In the following three chapters, I provide detailed comparisons of processes and outcomes with respect to financing and service delivery components of the welfare mix across localities and over time. The primary finding is that cities with less political-institutional constraints are more likely to have a welfare mix model that is institutionally complementary to their local growth regimes, while cities with more political-institutional constraints are less likely to have coherent models across policy domains. Despite similar top-down pressure toward equity and social justice through national reforms, all cities illustrate varying degrees of local agency as well as a persistent progrowth logic in welfare provision. These analyses and findings are based on primary and secondary data I collected through three fieldwork trips between 2013 and 2019 as well as archival and online research. The data sources I used to include central and local policy documents, official statistics provided by national ministries and their local bureaus, interviews with policy experts, local government officials and service delivery organizations, archival data from local gazetteers offices, national and local newspapers, as well as secondary literature in both English and Chinese. When exploring patterns of local agency, I prioritize the analysis of actor constellations, orientations, and capabilities in the context of subnational welfare provision, supplemented by analysis of societal inputs within and beyond the institutionalized channels of state corporatism at local level.23 The analytical focus is local agency on the supply side, particularly the local governments and other state and non-state actors that have the power to finance, provide, and define who have access to local welfare provision. Unlike post-communist countries that experienced political transition, societal inputs for policymaking in China are often limited

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to elites or “insiders” at each level of government rather than through a relatively transparent legislative or deliberative process.24 At national level, the NPC and CPPCC as the legislative and political consultative bodies play some role in policy deliberation, and in recent years the central ministries and to a less extent local bureaucracies have increasingly used public comments to collect societal inputs. Still, the effectiveness of these channels is often in question, and the degree of institutionalization diminishes once we move down the level of analysis. At subnational level, policy implementation is guided and coordinated by the party cadres and the local bureaucracy. As the rest of the book demonstrates, the pluralization of financing and service delivery at local level does not mean that the local government is no longer dominating the decision-making process. Nor does it undermine the local governments’ ability to determine who finance, who provide, and who have access to care. The authoritarian nature of the local state and its interactions with political institutions and growth regimes therefore have created diverse state corporatist institutions at local level to adapt national social policies to local ends. The various articulations of welfare mix embody new forms of authoritarian social contracts between local governments and dominant social groups such as civil servants and the urban middle class, while providing local definitions of access and choice for the “new urban poor”.

Notes 1. Hall and Thelen sought to incorporate the concept of gradual institutional change to recent welfare developments in liberal and coordinated market economies (Hall & Thelen, 2009). Schroder attempts to synthesize the three approaches by proposing unified typology of capitalisms and arguing that institutional complementarities help stabilize them (Schröder, 2009). Amable and his co-authors expanded the varieties of capitalism framework to include Asian and Mediterranean models and reinvented the concept of institutional complementarity, treating it as the result of socio-political compromises rather than a being a function of inter-firm relations as Hall and Soskice originally suggested (Amable, 2003, 2016, 2018; Amable & Palombarini, 2009; Amable et al., 2019). 2. Haggard and Kaufman also contrast the East Asian experience with developments in Latin America and Eastern Europe (Haggard & Kaufman, 2008). While political regime type explains the level of social spending in East Asian and Eastern Europe, it is less relevant in the case of Latin America. Instead, the primary determinants for all cases examined are

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3.

4.

5.

6.

7.

8.

development strategies, fiscal constraints, and political legacies of prior social policy commitments. According to Choi, there are more diverging trends among Japan, Korea and China in recent years, as Japan is the only country that remains ideal–typical productivist but struggles to accommodate socioeconomic challenges. By contrast, both South Korea and China have gradually expanded their welfare programs and move towards greater social protection, but for different purposes and through dissimilar causal processes. Where South Korea’s movement towards universalism was driven to by a combination of bureaucratic politics, civil movements, and partisan politics, China’s productivist elements have been weakened but not completely stripped away due to the party-state’s balancing acts between goals of political stability and economic growth (Choi, 2012). Note that productivism has different connotations in communist and East Asian contexts. Claus Offe argues that in the communist systems, welfare service and benefits are provided by the work units, and often were at the discretion of managers rather than on the basis of enforceable social rights. The system therefore can be described as productivist (Offe, 2009). For the notable exceptions, see for example Chan and Tsui’s discussion on how a mixed western and traditional Chinese values become embedded in social policy reform in post-reform China, Selden and You’s review of an emerging three-pillar system in China’s pension reform as promoted by the World Bank, and Linda Wong’s historical overview of welfare developments in China since 1949 (Chan & Tsui, 1997; Selden & You, 1997; Wong, 1998). See, for example, Hsu and Hasmath’s edited volume on state-led corporatism and the role of intermediary associations and non-governmental organizations (Hsu & Hasmath, 2013). Jude Howell argues that the state’s view on NGOs and civil society has been evolving, and there has been significantly more restrictions since early 2010s in comparison to earlier years of the Hu-Wen era (Howell, 2019). As Martin Powell suggested, there tends to be normative and prescriptive connotations of “rolling back the state” or “privatization” associated with welfare mix and welfare pluralism in western context (Powell, 2019). Hogg and Baines provide a thorough review of the literature on the third sector and welfare pluralism (Hogg & Baines, 2011). For an empirical example, see Chaney and Wincotts’ discussion of the role of the third sector in devolution of welfare provision in UK (Chaney & Wincott, 2014). Some scholars such as Wood and Gough have created separate categories of informal and insecurity welfare regimes to describe patterns of non-state welfare provision in developing contexts (Gough, 2004). Nonetheless, this book adopts the definition of the welfare mix by Powell and Barrientos

2

9.

10.

11.

12.

13.

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that views the mixed economy of welfare as more encompassing, covering state, market, voluntary as well as informal welfare dimensions (Powell, 2019; Powell & Barrientos, 2004). Andrew Mertha proposed the “fragmented authoritarianism 2.0” concept to analyze political pluralization in public policy processes (Mertha, 2009). Similarly, a few other scholars have argued that the party-state has invented new forms of consultative and deliberative authoritarianism (He & Thøgersen, 2010; Tsang, 2009; Yan, 2011). Jude Howell examines the relationship between central government, local governments, and the NGOs. Specifically, she argues that the Hu-Wen era policies contributed to enhanced financial and provider capacity. However, the party state has since then take a more cautious view on NGOs. While the local governments have viewed NGOs as instrumental for local public goods provision, the policy orientations at central level have shifted significantly to constrain civil society development and strictly monitor any potential ties with international donors (Howell, 2019). Anna L Ahler provides a detailed discussion on increasing top-down control and political recentralization in Xi Jinping era, including power re-concentration at the top, retraction from the “separation of party and government” principle and renaissance of United Front work (Ahlers, 2019). Phillippe C. Schmitter defines corporatism as a system of interest representation that is recognized or licensed by the state. The state then grants deliberate representational monopoly to this system in exchange for observing certain controls on leader selection and articulation of demand and supports (Schmitter, 1974, pp. 93–94). A few scholars of Chinese politics have sought to apply the concept of corporatism in post-reform China (M. Blecher & Shue, 2001; M. Blecher & Shue, 1996; Dickson, 2000; Gallagher, 2004; Howell, 1994; Oi, 1995; Unger & Chan, 1995). Hsu and Hasmath in their edited volume review the concept of “state corporatism” in Chinese context and emphasize the role of local state in the (re-)negotiation of state-society relations in post-reform era (Hsu & Hasmath, 2013). The term “social contract” is often used to describe sets of state-society relations across developed, transitioning and developing, as well as democratic and authoritarian contexts. This can be exemplified by emerging scholarship on social rights, social solidarity, and social citizenship on developed democracies (Gilbert, 2009; Rhodes, 2016; White, 2000), transition from Soviet to paternalistic or market-based types of social contract in post-communist countries (Cook, 1993; Cook & Dimitrov, 2017; Vinogradova et al., 2015), and repressive-exclusionary social contracts in Middle East and North African regions after the 2011 uprising (Heydemann, 2020).

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14. Yasheng Huang proposed the concept of “bureaucratic integration” to measure the degree to which a party cadre’s preferences and interests are aligned with local goals, and distinguished between localists, outsiders, and centralists (Huang, 1996). More recently, some scholars such as Xian Huang has applied the potential influence of tenure and experience on local welfare provision (C. Huang, 2015; Huang & Kim, 2019). 15. According to Nie Huihua, the “State-Business Amity Index” is divided into the following dimensions: the frequency of interactions between local political leaders and firms, infrastructure and financial services provided, and tax burden. The report also provides a “State-Business Innocence Index” that evaluates the level of government corruption and transparency (Nie, 2020). 16. Angang Hu argues that this new planning process is significantly different from the Soviet-style top-down economic planning. Specifically, there are significant “democratization, scientization, and institutionalization” in making of these five-year plans, and they are now are more of “public affairs governance plan” rather than just economic planning (Hu, 2013, pp. 631–633). Whereas the national economic planning processes, the domain-specific central government mandates, as well as cadre tenure or appointment may help explain partial changes or reorientations between plans, there are also significant consistencies and path dependent patterns as the planning processes largely stand out of the central and local political or budgetary cycles. 17. Zhang and Peck contrast the various growth models from the perspective of economic geography and conceptualize China’s model as “variegated capitalism” (Zhang & Peck, 2016) For detailed discussion on how local states interact with economic actors to shape these regional patterns, see Shen and Tsai’s distinctions between local entrepreneurial, liberal, and developmental states (Shen & Tsai, 2016). 18. Maria Heimer demonstrated how decentralization and recentralization trends have coexisted through the cadre management system, where the party-state is reasserting control at macro-level while delegating dayto-day management to local governments (Heimer, 2003). Janice L. Caulfield discussed how the economic reform process interacted with the institutional incentive structures to create utility-maximizing local officials (Caulfield, 2006, p. 265). Teets, Hasmath and Lewis argue that local officials persistently involve in uncertain and risky policy innovation in the Xi Jinping era despite increasing top-down pressure (Teets et al., 2017). 19. The concept of dominant economic and social blocs were first developed by Bruno Amable in studying changing distributions of economic and political power in French and varieties of capitalism in the European continent (Amable, 2003; Amable & Palombarini, 2009; Amable et al., 2012). When a dominant bloc is formed with a coalition of political or economic

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actors, resulting in greater institutional coherence and stability. In this book I apply this concept to study who are considered as “insiders” of local political economy. Linda J. Cook and Martin K. Dimitrov provide detailed analysis of how Soviet-style social contracts were revised in the post-communist contexts where communist legacies interacted with democratic institutions, resulting in varying outcomes of welfare regimes (Cook, 1993, 2011; Cook & Dimitrov, 2017). For a full discussion of these factors and how they interact at national level, see Jane Duckett’s discussion on the concept of “network authoritarianism” and its application on the New Rural Cooperative Medical Schemes (Duckett, 2019). Kyle A. Jaros for example argues that internal cohesion and upward political ties in subnational governments often enables them to have greater agency in policymaking, with strengthened capacity in formulating regional development strategies (Jaros, 2016). In Game Real Actors Play, Fritz W. Scharpf proposes to study policy institutions from an actor-centered perspective, with focus on the identification of actor constellations and their strategic interactions in the policy processes within the boundaries of institutional constraints (Scharpf, 2018). Linda J. Cook and Jolanta Aidukaite for example have studied the role of representation and deliberation in policy processes of post-communist countries (Aidukaite, 2011; Cook, 2011). In China, there are some evidence of deliberation and citizen participation at national level, often illustrated by the public commenting period of national ministries or the legislative process by the NPC. Such processes however are less frequent or transparent at subnational level.

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Tsai, L. L. (2007). Solidary groups, informal accountability, and local public goods provision in rural China. American Political Science Review, 101(2), 355–372. https://doi.org/10.1017/S0003055407070153. Tsang, S. (2009). Consultative Leninism: China’s new political framework. Journal of Contemporary China, 18(62), 865–880. https://doi.org/10. 1080/10670560903174705. Unger, J., & Chan, A. (1995). China, corporatism, and the East Asian model. The Australian Journal of Chinese Affairs , 33, 29–53. JSTOR. https://doi. org/10.2307/2950087. Vinogradova, E., Kozina, I., & Cook, L. J. (2015). Labor relations in Russia: Moving to a “Market Social Contract”? Problems of Post-Communism, 62(4), 193–203. Wei, Y. H. D. (2007). Regional development in China: Transitional institutions, embedded globalization, and hybrid economies. Eurasian Geography and Economics, 48(1), 16–36. https://doi.org/10.2747/1538-7216.48.1.16. Wei, Y. H. D., & Liefner, I. (2012). Globalization, industrial restructuring, and regional development in China. Environmental Kuznets Curves and Environment-Development Research, 32(1), 102–105. https://doi.org/10. 1016/j.apgeog.2011.02.005. White, S. (2000). Social rights and the social contract-political theory and the new welfare politics. British Journal of Political Science, 30(3), 507–532. Wilensky, H. L. (1985). Comparative social policy: Theories, methods, findings. University of California. Williamson, J. (1993). Democracy and the “Washington consensus.” World Development, 21(8), 1329–1336. https://doi.org/10.1016/0305-750 X(93)90046-C. Williamson, J. (2012). Is the “Beijing Consensus” now dominant? Asia Policy, 13(1), 1–16. Wong, L. (1998). Marginalization and social welfare in China. Taylor & Francis Group. http://ebookcentral.proquest.com/lib/csusm/detail.action? docID=240370. Wood, G., & Gough, I. (2006). A comparative welfare regime approach to global social policy. World Development, 34(10), 1696–1712. https://doi.org/10. 1016/j.worlddev.2006.02.001. Xiong, Y. (2012). Social inequality and inclusive growth in China: The significance of social policy in a new era. The Journal of Poverty and Social Justice, 20(3), 277–290. PAIS Index; ProQuest Central. https://doi.org/10.1332/ 175982712X657091. Xu, C. (2011). The fundamental institutions of China’s reforms and development. Journal of Economic Literature, 49(4), 1076–1151. Xu, J., & Yeh, A. G. O. (2005). City repositioning and competitiveness building in regional development: New development strategies in Guangzhou, China.

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International Journal of Urban and Regional Research, 29(2), 283–308. https://doi.org/10.1111/j.1468-2427.2005.00585.x. Yan, X. (2011). Regime inclusion and the resilience of authoritarianism: The local people’s political consultative conference in post-Mao Chinese politics. The China Journal, 66, 53–75. https://doi.org/10.1086/tcj.66.41262807. Yang, D. (1990). Patterns of China’s regional development strategy. The China Quarterly, 122, 230–257. Cambridge Core. https://doi.org/10.1017/S03 05741000008778. Yang, N., & Kühner, S. (2020). Beyond the limits of the productivist regime: Capturing three decades of East Asian welfare development with Fuzzy sets. Social Policy and Society, 19(4), 613–627. Cambridge Core. https://doi.org/ 10.1017/S147474641900054X. Yang, Y. (2020). The politics of inclusion and exclusion: Chinese dual-pension regimes in the era of labor migration and labor informalization. Politics and Society, 0032329220924557. https://doi.org/10.1177/003232922092 4557. Zhang, H. (2012). Discourse change and policy development in social assistance in China. International Journal of Social Welfare, 21(4), 433–442. https:// doi.org/10.1111/j.1468-2397.2011.00845.x. Zhang, J., & Peck, J. (2016). Variegated capitalism, Chinese style: Regional models, multi-scalar constructions. Regional Studies Regional Studies, 50(1), 52–78. Zhu, X. (2016). Dynamics of central–local relations in China’s social welfare system. Journal of Chinese Governance, 1(2), 251–268. https://doi.org/10. 1080/23812346.2016.1166903. Zhu, X., & Zhao, H. (2018). Recognition of innovation and diffusion of welfare policy: Alleviating urban poverty in Chinese cities during fiscal recentralization. Governance, 31(4), 721–739. https://doi.org/10.1111/gove.12332.

CHAPTER 3

The Pro-growth National Reforms: State-Led Commodification Before 2000s

Is there a national paradigm for social policy in China? Throughout the four decades of reform, China relied on the logics of gradualism and experimentalism in both economic and social policy domains, rather than more radical reforms adopted in postcommunist countries. Instead of committing to a particular policy doctrine, most social policy reforms during earlier reform era were carried out sector by sector, often with trials and errors followed by frequent revisions based on local experiments and implementation outcomes. Expectedly, a common theme for social policy reforms during earlier reform era was that they were frequently crisis-driven and reactive. This resulted in a highly fragmented system of financing and service delivery, in addition to significant commodification, stratification as well as shortage and affordability issues. More recently, however, some scholars have argued that there seems to be increasing policy recentralization across all social domains and growing emphasis on “top-level design”. The key question, therefore, is to what extent there is a national paradigm emerging in social policy and its potential implications for local agency. In this chapter, the goal is to provide a short glimpse of pro-growth reform trajectories before 2000s across the three policy domains and how they provided the political institutional foundations for local agency. Chapter 4 will begin with an overview of recent reorientations toward social justice and an entitlement approach, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_3

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followed by a review of new reforms across the policy domains and their implications for local agency. Between 1979 and early 2000s, China’s social policy reform was primarily devised to complement economic reform and restructuring. The communist welfare system that was mostly delivered by the work units and rural communes was gradually dismantled. The retreat of the state had profound implications for social welfare of average Chinese citizens. On the one hand, the party-state sought to maintain the authoritarian social contract with political elites and selective social groups by maintaining certain components of the communist welfare legacies, while reinventing them to cover the urban employees in the productive sector. On the other hand, the party-state has pushed for greater marketization and socialization in service delivery, and increasingly transferred the welfare burden from the state and collective institutions to individuals and their families. In comparison to the other two policy domains, the marketization reform began the earliest in healthcare, partly because the state, work units, and rural communes could no longer afford the rapidly rising healthcare burden during economic reform. With maintenance of the civil servant healthcare privileges as well as transition in the employment-based healthcare insurance system, the party-state managed to sustain relatively stable levels of healthcare protection for political elites and selective urban employees. For the rest of the population, nonetheless, the individual out-of-pocket costs dramatically increased. Meanwhile, the service delivery reform adopted a similar logic to the SOE reform, prioritizing the development of more profit-seeking public hospitals rather than encouraging full-scale privatization. The result was a growing concentration of resources in large public hospitals and crowding out effects for private and nonprofit healthcare practices, which in turn exacerbates the access and affordability issues in healthcare. The SARS epidemic in 2003 soon challenged the fundamental assumptions of this state-led marketization model. For the housing domain, the market-oriented reforms were initially delayed, but then experienced the most complete commodification and a greater degree of privatization with some local variations. Between 1978 and early 1990s, the communist legacy system of work unit housing and public housing were mostly maintained with only selective local experiments. Building upon local experiments in Shanghai and elsewhere, the market-oriented national housing reform officially began in 1994 and lasted until early 2000s. This contributed to a decade of housing

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boom, increasing affordability issues and housing stratification especially in urban areas. At the same time, new affordable housing policies in both financing and service delivery were introduced, but their effects vary in both coverage and generosity in actual local implementations. In general, local governments have prioritized programs that are deemed contributive to local economic growth, while delaying or neglecting programs that would increase their fiscal burden or dampen the commodity housing boom. Finally, the reform of the communist pension and aged-care system was frequently viewed as most difficult due to strong political opposition and societal backlashes in postcommunist context. In China, although the market-oriented reforms resulted in “socialist insecurity” for the informal workers and the unemployed, the communist social contract remained mostly intact for the political elites, and to a great extent was reinvented for the urban formal sector employees. The transition phase in early 1980s was soon followed by the “retreat of the state” in both financing and service delivery. At local level, limited coverage and generosity were only provided to formal sector employees in urban areas, while the rest of urban and rural residents, as well as rural migrants, were left uncovered by any pension scheme and without access to affordable old-age care.

3.1 The Early Starter: Healthcare Reform Prior to SARS Healthcare reform in China can be generally divided into two phases: the rehabilitation, transition, and marketization period between 1979 and 2003, and the reversal of marketization toward universal entitlement since 2004. Although many perceived the pre-reform communist healthcare system to be universal, in reality it was a system with high level of decommodification yet significant degree of stratification. During the Maoist era, healthcare was marked by state monopoly in urban areas and a community-based grassroot system in rural areas. Admittedly, this system made significant achievements given the limited resources such as the constant shortage of medical supplies and professionals. Life expectancy grew significantly from 35 to 40 in 1949 to 65.6 to 70 in 1980, and the World Health Organization (WHO) highly praised China’s rural community healthcare system as a role model for less developed countries (Babiarz et al., 2015; Banister & Hill, 2004; Zhang, 2011). Although healthcare was highly de-commodified, the communist healthcare system at the time was more stratified in comparison to the Soviet model, with

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varying levels of generosity and coverage based on employment status and a sharp divide between urban and rural areas. In urban areas, there were two separate systems for healthcare financing, which are the state-financed Free Medical Care (gongfei yiliao) for civil servants and other public employees, university students and disabled veterans, and a Medical Care pillar in the Labor Insurance Scheme (LIS) (laobao yiliao) for employees and their families in the urban work units. For those who are not covered by these two systems, the local governments provide a category-based social assistance system that covers healthcare and other types of welfare services. In rural areas, healthcare financing and service delivery are achieved through a community-based system of the Rural Cooperative Medical Care (nongcun hezuo yiliao) and networks of “barefoot doctors” (chijiao yisheng ) for rural residents. Accordingly, the party-state was primarily interested in using healthcare insurance to support a Soviet-style social contract with urban employees, while maintaining residual state responsibility for disadvantaged populations in urban areas and a mutual-aid system for healthcare in rural areas for social stability purposes. Among the three social insurance schemes, only the Free Medical Care was solely funded by the state. Government officials with higher ranks tend to receive the most privileged access (Zhang, 2011). The LIS and rural cooperative care schemes require work units, rural communes, and to less extent individuals and their families to share the burden in healthcare financing. By 1978, direct government expenditure constitutes only 32% of total healthcare expenditure in comparison to 47% by work units and 20% by individual out of pockets (National Bureau of Statistics China, n.d.). The urban-rural divide was also evident as measured by healthcare access. In 1980, the number of health professionals per 10,000 people is 80 in urban areas, in comparison to 18 in rural areas (National Bureau of Statistics China, n.d.). The stratification patterns were exacerbated during the early years of post-reform era, as commodification and marketization took different pace and forms between different social groups across urban and rural areas. For urban employees, the party-state adopted a more cautious approach to gradually dismantle the legacy systems, while experimenting a new contributory employment-based healthcare insurance system namely the Urban Employee Basic Medical Insurance (UEBMI). The communist legacy systems were largely left intact before the new system was established. The goal of the new system is to gradually transfer all urban

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employees in the public and newly emerged private sector to an integrated social insurance system that resembles the conservative or Bismarckian model on the European continent. The transition between the communist legacy programs and the new employment-based program was almost seamless, although the new UEBMI required less state direct expenditure but greater contributions by employees and their work units. A notable exception was the political elites who were covered by the Free Medical Care. Although the total number of civil servants and public institution employees who are eligible were gradually declining, many continued to enjoy free access to the state-funded Free Medical Care at central and local levels even after 2000s. For younger civil servants and public employees who were eventually integrated into the UEBMI, the partystate immediately introduced additional subsidies to compensate their potential financial losses as the result of the transition. Despite the relatively intact urban social contract for state sector employees and gradually increasing coverage of private sector employees under the new UEBMI, a few social groups in both urban and rural areas were left out of the new employment-based healthcare insurance system. In urban areas, participation rates were significantly lower in the private sector in comparison to the SOEs, and those who are informally employed or self-employed were left uncovered. UEBMI remained employmentbased and therefore far from universal. It was only after SARS when the party-state began to implement nationwide the more universalistic Urban Resident Basic Medical Insurance (URBMI) and a means-tested Medical Aid system. In rural areas, the disintegration of the mutual-aid healthcare system began as early as 1979 as the rural communes dismantled and the “barefoot doctors” disappeared. Regardless of the sporadic local experiments, no nationwide efforts were made to establish the New Rural Cooperative Medical Insurance (NRCMI) until 2003. This left the rural residents and a majority of rural migrants unprotected and uncovered by any type of social insurance for more than two decades. As Table 3.1 illustrates, the healthcare financing reform between 1980 and 1990s placed greater burdens on individuals and families rather than the states or employers.1 According to the National Bureau of Statistics (NBS) data, direct government expenditure decreased from 36% in 1980 to 15% in 2000, while societal expenditure which were often contributed by urban work units and rural communes dropped from 43 to 27%. On the other hand, out-of-pocket expenditure which represent individual and family responsibility increased drastically from 21 to 59%. Furthermore,

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Table 3.1 Healthcare access and expenditure, 1980–2000 Indicator

1980

1990

2000

Direct government expenditure (%) Societal health expenditure (%) Out-of-pocket payments (%) Healthcare expenditure per capita in Urban Areas (yuan) Healthcare expenditure per capita in Rural Areas (yuan) Number of healthcare professionals per 1000 people in Urban Areas Number of healthcare professionals per 1000 people in Rural Areas

36 43 21 – – 80

25 39 36 158.82 39.31 66

15 27 59 812.95 214.93 52

18

22

24

Source Compiled by author using data from National Bureau of Statistics China

persistent urban-rural divide is evident as measured by the gaps in healthcare expenditure per capita and a number of healthcare professionals per 10,000 people. While the gap in healthcare professionals seemed to be smaller in 2000, it was primarily due to drastic decline in healthcare access in urban areas, rather than increased access in rural areas. The decline of healthcare access in urban areas were largely contributed by the market-oriented service delivery reform. Contrary to the financing reform which were strongly opposed by the political elites themselves, the marketization reform of service delivery began much earlier due to greater policy entrepreneurship at central level and less opposition from the political elites. Among central bureaucracies, Ministry of Health (MOH) was the strongest proponent for marketization reform in the healthcare sector as its minister specifically proposed to “modernize” the healthcare system by “using economic measures to manage healthcare” (People’s Daily, 2007). Between 1980 and 1985, MOH led public hospital experiments in five provinces, with the goal of establishing new fiscal allocation criteria based on the hospitals’ economic performance. By 1985, the State Council approved the MOH’s proposed marketization plan and distributed it to local governments, in addition to approving MOH’s proposal to allow practicing doctors to apply for private practice. This signaled the party state’s official support for nationwide healthcare marketization reforms. Despite the official commitment to privatization, the supply-side reform was largely state-led in reality and prioritized the goals of making public hospitals more profit seeking and reducing their dependency on the state fiscal allocations.

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The healthcare delivery reform therefore resembled similar trends in SOE reform. On the one hand, public hospitals were permitted to “assist medicine through non-medicine and supplement primary work with auxiliary work” (yigong yangyi, yifu buzhu) (State Council, 1989). While this allows for greater administrative autonomy for the public hospitals, it also established a performance-based responsibility system that encouraged public hospitals to compete for patient services and maximize profits from its patient services and medicine markups. Large public hospitals began an “arms race” to purchase medical equipment, conduct unnecessary tests and surgeries to generate profits, charge extra amount on medicines, as well as distribute bonuses to their staff based on their ability to make profits (Hsiao, 2015). The marketization reform was soon criticized by some health officials, such as the Deputy MOH Minister Daqui Yin in 1993. However, such criticism was soon muted by the pro-market MOH officials who argue that they are being “conservative and obstructing reform” (Cao & Fu, 2005). On the other hand, limited privatization at the time was based on the principle of “grasping the large, letting go the small” (zhuada fangxiao) similar to SOE reform. Under the new system, the administrative hierarchy between MOH, local health bureaus, and large public hospitals was maintained. At the same time, the state-led marketization process prioritized the survival and prosperity of large public hospitals in urban centers, while letting go of the under-performing county- and town-level health centers. The large public hospitals were encouraged to establish for-profit departments, increase fee-for-service payments and pharmaceutical sales, and reduce their reliance on fiscal subsidies from the state. By 2009, government budget subsidies constituted only 10% of public hospital revenue in China (World Bank, 2018a). Rather than seeing a full retreat of the state and a mass wave of privatization similar to postcommunist countries, in China the boundaries between state and market in the healthcare sector continued to be blurred.

3.2 Playing Catch-Up: The Delayed Housing Commodification During the Maoist era, the party-state adopted a state monopoly model for housing financing and provision similar to other communist countries. Across urban and rural areas, housing is considered part of the welfare services provided by work units and rural communes, and indirectly

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financed by the state. For disadvantaged populations such as the unemployed, seniors, and disabled, who are left uncovered by the work units and rural communes, the local governments often directly intervened and provided category-based welfare housing. Consequently, the key feature of communist welfare housing was that it was treated as a non-productive sector similar to healthcare and aged care. The average expenditure for housing between 1949 and 1978 was only 0.78% of GDP (Chan et al., 2008). While housing provision was completely de-commodified, access to housing was highly stratified based on employment, age, marital status, and titles or administrative ranks. Although Deng Xiaoping, the first post-reform leader, introduced the idea of housing commodification in the year of 1980, the market-oriented housing reform did not immediately begin. Instead, a few local experiments between 1980 and 1990s focused on a transitional model where the purchasing costs of commodity housing would be shared between local governments, work units, and employees. On the national level, the first reform attempt was made in 1988 when the State Council issued the Implementation Plan for a Gradual Housing Scheme Reform in Cities and Towns, which proposed plans to establish housing markets for rentals and sales. Nonetheless, the initial nationwide reform ended abruptly within one year, due to a number of factors such as local distortions during implementation, increasing risks for hyperinflation in late 1988, and the 1989 democratic movement at Tiananmen Square. The reform resumed in 1991 when the State Council issued a new mandate titled the Continuation of Urban Housing Reform in a Stable Manner and more guidelines calling for “all-around promotion of housing reforms in Cities and Towns” (State Council, 1991b, 1991c). Together, these statutes and guidelines represented the “retreat of the state” in the housing sector. Rather than treating housing as social rights guaranteed and provided by the state or as in-kind welfare benefits provided by the work units, the party-state redefined housing as a commodity which can be bought and sold on the market and promised residual roles of the state for people who are unable to afford commodity housing. For the majority of urban employees, the reform plan adopted the transitional model which allowed them to purchase commodity housing at a subsidized price with the rest of the cost shared by local governments and work units. In addition, the State Council proposed new affordable housing programs for middle- and low-income families, in addition to the private commodity housing which targets high-income

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populations. One policy institution was the Housing Provident Fund (HPF), which modeled the housing pillar of the Singaporean Central Provident Fund and first experimented in Shanghai when Zhu Rongji was the mayor. After Zhu became the Premier at State Council, the Shanghai model was quickly promoted nationwide. While the transitional model provided temporary solutions for urban employees who purchase commodity housing for the first time, HPF was expected to provide financing for their future purchases. Similar to the social insurance model in healthcare and aged care, HPF promises shared responsibilities between the state, the work units, and individuals. Nonetheless, unlike the Singaporean Central Provident Fund, HPF in China was never incorporated into an integrated social insurance model.2 On the service delivery side, two affordable housing programs were the ownership-based Economic and Comfortable Housing (ECH, jingji shiyongfang ) and the means-tested rental approach of Cheap Rental Housing (CRH, lianzufang ). The Asian Financial Crisis and SOE reforms in the late 1990s were the primary catalysts for the nationwide implementation of these programs. In 1998, the State Council issued A Further Step on Deepening Housing Reform and Accelerating Housing Construction in Urban Areas, which required local governments to develop commodity housing, ECH, and CRH at the same time. Specifically, the ECH program adopts an ownership approach to help middle- and low-income class families purchase government-subsidized commodity housing at below-market price. Although with resale restrictions, the ECH program was viewed as a tool to help eligible urban employees and residents to own homes they would otherwise not be able to afford. In reality, however, ECH was often adapted by local governments to meet local economic growth and social stability goals, to support urban renewal processes, or to provide preferential access to local dominant social blocs. By contrast, the CRH program was a government-subsidized rental program targeted at extremely low-income families, which required local governments to provide means-tested housing subsidies or direct provision. In contrast to ECH which was often subject to local discretion and adaptations, the CRH program experienced significant institutional drift at local level, as many local governments delayed its implementation. For localities that eventually implemented the program, there were often very strict eligibility criteria for CRH because it was less consistent with local priorities such as economic growth and fiscal sustainability.

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Meanwhile, almost all local governments quickly embraced commodity housing and prioritized its development. Within several years, the marketoriented housing reform was nearly complete. At national level, the reform supposedly established four institutional pillars for housing as illustrated by Table 3.2. This included the commodity housing pillar which apparently became the dominant form of provision, HPF as a social insurance fund for urban employees, ECH as an asset-based affordable housing program for urban middle- and low-income families, and the CRH as a means-tested program where the state provides residual protection for extremely low-income families. While the initial reform ideas were taken from Singapore, Hong Kong, and more mature models in the West, each pillar was gradually institutionalized through Table 3.2 Housing marketization and stratification, 1991–2003 Program

Tenure type

Mechanism

Target population in national policies

Target population covered in local implementations

Commodity Housing

Ownership + Rental

Market

High-income households

Housing Provident Fund (HPF)

Ownership + Rental

Social Insurance

All urban employees

Economic and Comfortable Housing (ECH)

Ownership

Quasi-market

Middle- and lower-middleincome households

Cheap Rental Housing (CRH)

Rental

State provision

Extremely low-income families

High- and Middle-Income Households Urban employees in the formal sector Middle- income households, urban workers in the formal sector, and relocated residents due to urban renewal Extreme low-income households with strict eligibility criteria on both income and housing conditions

Source Compiled by author

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cautious adaptations, multiple rounds national pilot programs, and local experiments. Within the central government, the Ministry of Housing and Urban-Rural Development (MOHURD), which was known as the Ministry of Construction at the time, played primary roles in facilitating housing commodification and the institutionalization of affordable housing programs. Ministry of Finance (MOF) was the architect of financing plans for affordable housing, while Ministry of Civil Affairs (MCA) was responsible for coordinating the distribution of means-tested rental program. The political leaders from Shanghai, especially Premier Zhu Rongji, also played key roles in advocating for nationwide implementation of these market-oriented reforms based on their prior local experience. In both healthcare and housing sectors, a state-led marketization process in service delivery took place with a coalition of pro-market bureaucratic interests and support from political leaders. Similar to the large public hospitals, the market-oriented housing reform resulted in a dramatic increase in SOE participation in the real estate sector driven by profit-maximization interests. By 2003, private companies constitute less than half of all the real estate enterprises registered nationwide. Horizontal bureaucratic fragmentation was evident at central level, with MOHURD, MOF, and MCA each with overlapping duties to oversee the affordable housing programs. Decentralization was more significant in policy implementation, as the central government allowed significant local discretions in their mandates. As a result, local governments played key roles in shaping the direction of the reform because of their increasing reliance on a booming commodity housing market for both fiscal revenues and local economic growth. The moderate degree of bureaucratic fragmentation combined with the diversification of state interests at central and local levels contributed to increasing disparities in local implementation. Even though in theory the housing reform adopted a multi-pillar approach, in reality commodity housing became the dominant pillar on a national scale. Among the three affordable housing programs, CRH was often neglected because it required greater direct government responsibility, while ECH and HPF were viewed as instruments for local economic development and social instability goals. Although the central government demanded “provide aid and guarantees for all those who qualify,” many localities chose not to implement CRH for years after the program was first announced. A MOHURD survey showed that only 6.7% of the target population of CRH was covered by the program (Wang, 2007). The

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incomplete and uneven implementation of affordable housing programs also led to rapidly increasing affordability issues, greater stratification in housing conditions, and increasing societal backlashes. The commodification and marketization processes continued through late 2000s. Despite increasing affordable housing supply following the Global Financial Crisis, the majority of urban residents by 2010 lived in commodity housing rather than the legacy public housing units or the new affordable housing units. A comparison of census data between 2000 and 2010 as illustrated by Fig. 3.1 demonstrates that housing conditions for Chinese citizens have changed dramatically and especially in urban areas. In 2000, most urban residents lived in self-constructed housing, commodified public housing, and communist legacy public rental housing, showing the market transition was far from complete. Nonetheless, the tenure types changed drastically by 2010. In urban areas, the majority of households in 2010 lived in purchased or rental commodity housing. The number of households who live in purchased or rental affordable housing was less than 1 million, only a fraction of the 8.87 million households who lived in various types of commodity housing.3

Fig. 3.1 Tenure type by number of urban households, 2000–2010 (Data Source National Bureau of Statistics of China)

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The Half-Ways: Pension and Old-Age Care

Similar to healthcare and housing, the old-age care system during Maoist era was an integral part to the communist welfare system, primarily financed by the state and provided by work units and rural communes. The communist welfare system also prioritized urban areas over rural areas, and within the urban areas the political elites over the rest of urban employees. Government civil servants and public sector employees were covered by a state-funded civil servant pension insurance scheme similar to the Free Medical Care, which did not require any individual contribution by the civil servants or public sector employees. For the rest of the urban employees, they were covered by the pension pillar in LIS. While the rural cooperative medical care system and the barefoot doctors provided socialized medical care for rural residents, such institutions were absent in the case of old-age care. Instead, the family remains the primary institution for rural old-age care. Across urban and rural areas, local governments only provided limited residual category-based old-age care to the elderly who cannot be taken care by their family members. The communist pension and old-age care system therefore were far from universal. Resembling patterns in the housing domain, individuals who worked in the state sector and in urban areas received preferential treatments in the communist pension and old-age care institutions. Between 1979 and early 2000s, pension reform followed similar trajectories with those in healthcare financing reform. A dual-track system persisted, as a new urban employee social pension insurance was created to gradually replace the LIS pension pillar, while the community legacy system of civil servant pension was preserved. With strong vested interests from the state sector, the legacy civil servant pension scheme was preserved for an extended period for the political elites and public sector employees. For the rest of the urban employees who were originally covered LIS, as well as new employees in the private sector, they were gradually transitioned into the Urban Employee Basic Pension Insurance Scheme (UEBPI) as similar to the UEBMI in healthcare. The rest of the urban and rural residents were left uncovered in this round of reform until late 2000s. Between 1979 and 1986, local experiments on UEBPI were conducted first in collective enterprises, which were incentivized to maximize their profits and compete with private enterprises on the market. It was then expanded to SOEs, and later to private sector firms. Shanghai became

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the first city to implement the new UEBPI in all firms across sectors and ownership types. While most urban employees remained employed by the work units, the establishment of labor contracts nationwide in 1986 officially ended the “iron rice bowl.” In the same year, new urban employees were required to contribute up to 3% of their salaries to the newly established UEBPI, with at least another 12% matched by the work units (Southern Weekly, 2012).4 Between 1989 and 2003, pension coverage for urban employees rose moderately from 40 to 59% for those who worked in the formal sector.5 Although the expansion was relatively moderate, the contributory UEBPI scheme partially helped relieve the financial burden from local governments and work units. Still, many firms failed to meet the contribution standards or choose not to collect any contribution at all (Frazier, 2010). At the central level, various bureaucratic agents represented competing interests in the pension reform. The central agency that promoted most adamantly a new integrated model of pension was the State Council Office for Restructuring of the Economic System (SCORES), which was later integrated into the development planning agency National Development and Reform Commission (NDRC). Not only was SCORES in charge of the local experiments in collective enterprises and Southern provinces, but also it was a strong advocate for a multi-pillar model for pension promoted by the World Bank and the creation of individual accounts in China similar to Chilean and Singaporean models.6 However, there were other bureaucratic agencies that represent different interests and competing ideas. For example, the Ministry of Labor, which later became Ministry of Human Resources and Social Security (MOHRSS), was a strong opponent to the individual account approach, while advocating for a pay-as-you-go social pooling system embedded in the original LIS model.7 Instead of a fully funded individual account that would allow for “high contribution, high pay,” they proposed a middle-ground approach where the individual account would be funded at 10% and the rest of employee contributions will be used to support the social pooling system. Finally, the Ministry of Personnel was primarily interested in preserving the civil servant scheme for its constituents, i.e., the party cadres and civil servants, and therefore opposing any proposed reforms that would end the dual tracks and integrate them into UEBPI. The central-level bureaucratic bargaining created opportunities for local agency. Between 1993 and 1996, the central governments allowed local governments to choose between the SCORES and MOHRSS plans.

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However, local discretions resulted in significant variations in employer and employee contribution rates, as well as how individual accounts were set up. By 1997, the State Council decided to take back the flexibility and implemented a new nationwide contribution requirement of 11%, with 8% by work units and another 3% by individuals. The debate around individual accounts became increasingly contentious because of significant policy drift in implementation. Despite strong advocacy from SCORES, local governments were keen to maintain the pay-as-you-go system to pay for current pensioners rather than allow individuals to accumulate their contributions and receive investment returns. This resulted in prevalence of “empty accounts” (kongzhang ) where individual account funds were not funded or misappropriated. Although the central government mandated local labor bureaus to collect the pension contributions and allocate them in a dedicated account, many local governments decided to either allow firms to retain their contributions at the firm level, or created a trustee relationship with local insurance companies. In practice, this resulted in further fragmentation of pension management systems and retainment of pre-reform legacy labor insurance institutions in many localities. Another significant deadlock occurred in the area of civil servant pension reform. As mentioned above, the central government adopted a very conservative stance to protect the communist social contract within the state sector, fearing the reform would result in backlashes from party cadres, civil servants, and public sector employees. The political elites themselves therefore strongly opposed further reform in the civil servant pension scheme, which would require them to make individual contributions and potentially equalize their benefit level with the urban employees. Some national civil servants publicly acknowledged that they wrote letters to the State Council opposing the reform (Chen, 2014). With support from the Ministry of Personnel, the civil servant scheme continued to be funded solely by the state and administered separately. Policy experiments were conducted as early as 1993 in Shanghai and in other localities later, but local reforms were often piecemeal, while more radical national reforms did not take place until 2010s. In 2000, the State Council Development Research Center proposed a comprehensive reform plan to integrate the civil servant scheme to UEBPI, but the plan was quickly shelved by the State Council. In its place, the State Council promised to “maintain the original pension systems for civil servants and fiscallyfunded public institutions” (State Council, 2000). At the local level, many

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local experiments preferred “parameter reforms” rather than “structural reforms”, maintaining a de-facto dual-track system on the ground. The pension reform between early 1980s and late 2000s therefore achieved mixed results. As Table 3.3 demonstrates, the dual-track system during the Maoist era was mostly maintained. Like healthcare, the vested interests from the state sector strongly opposed reform proposals to integrate the two tracks, resulting in a reform deadlock. Because the civil servant pension scheme did not require individual contributions. and most participating institutions are either completely or partly fiscally funded, this group continued to enjoy direct state responsibility through fiscal subsidies. The transition from the LIS to UEBPI was more successful with a shared responsibility between employer and employees, but its coverage only increased moderately from 40 to 60% of urban employees working in the formal sector (National Bureau of Statistics China, n.d.). The rest of urban and rural employees as well as residents remained unprotected by any type of pension scheme, despite the state’s rhetorical commitment to a multi-pillar system for all Chinese citizens. In the area of service delivery, the old-age care reform shared similar patterns with healthcare and housing, as a state-led marketization process Table 3.3 The dual-track system of employment-based pension schemes Urban employee basic pension scheme

Government and public institutions pension scheme

Origin

Pension pillar of labor insurance

Target population

Urban SOE and private sector employees with labor contracts

Financing

Social pooling plus individual accounts, Yes, 12–20% to social pooling

Pension scheme for civil servants and public sector employees Party cadres, civil servants and employees in public institutions with fiscal allocations Fiscal subsidies, no individual contribution Inconsistent local standards and frequent noncompliance No

Work unit contribution

Individual contribution Benefit determination Source Compiled by Author

Yes, 3–8% to individual account Based on contribution level and years

Tiered based on administrative ranks

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gradually led to socialization and marketization of old-age care. However, the marketization reform made limited progress and was far from complete by early 2000s. In 1979, MCA in charge of policymaking in the social welfare and services domain first proposed the idea of “socialization of social welfare” (shehui fuli shehuiban) and conducted several local experiments in pilot cities. The MCA reform plan called for a socialized service delivery model and adopted a pro-market rhetoric. Similar to the pro-market reforms in healthcare delivery, the primary goal was to reduce the dependency of both old-care providers and recipients on fiscal support from the state or work units.8 This would be achieved by the development of a socialized old-age care model that includes three pillars, a commercial care pillar of for-profit care for high-income groups provided by the private sector, the nonprofit care pillar for middleincome groups provided by the voluntary sector, and basic or welfare care pillar for low-income groups provided by the state. In 2000, the State Council proposed to “nurture and develop the old-age consumption market” and “socialization and industrialization of old-aged care” (State Council, 2000). By 2006, the State Council introduced several forms of PPPs, including “publicly constructed, privately operated” (gongjian minying ) and “privately set up, publicly assisted” (mingban gongzhu) (State Council, 2006). The goal of the reform was to quickly shift the burdens of care from local governments and work units to social welfare institutions as well as individuals and their families. Instead of direct state provision, the reform proposed an “enabling” state approach with a mixed old-age care system with primarily private and voluntary sector participation and means-tested residual provision by the state. In practice, however, the nonprofit pillar provided by the voluntary sector was considerably underdeveloped in comparison to the other two pillars. Limited attempts for PPPs, such as the MCA’s “Starlight” program which sought to establish community old-age care centers, failed to meet more specific care needs beyond regular recreational activities.9 In urban areas, the moderate growth of social welfare institutions and old-age care beds was unable to meet the needs of a growing elderly population, or to fill the institutional vacuum created by the “retreat of the state”. Local governments continued to provide means-tested old-age care, while limited private participation focused primarily on “high-end” for-profit care that often are integrated with real estate development and medical rehabilitation. NBS national data shows that the number of oldage care social service beds per 1000 people who are aged 65 or above

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increased only slightly between 1982 and early 1990s, then remained stagnant until 2003. The limited “socialization” attempts were therefore a reactive response to the dismantling of the community welfare system and served the interests of local governments and work units, who sought to relieve their welfare burden following the fiscal decentralization and SOE reforms. The lukewarm responses from local governments also contributed to the lack of progress in state-led marketization and socialization in oldage care. Contrary to housing which was often considered as a “strategic sector” or “growth engine” in local economy, local governments were less motivated to develop the commercial and voluntary pillars in oldage care. Meanwhile, pension reform was overshadowed by communist legacies of a dual-track system as well as significant bureaucratic fragmentation at the central level, despite rhetorical commitments to a multi-pillar model from the World Bank and an individual account approach. This in turn created conditions for local agency in implementation. The immediate effects of these incomplete reforms were significant stratification in pension coverage and generosity, as well as shortage of affordable old-age care in both urban and rural areas. Without an exogenous shock similar to SARS, these trends continued until late 2000s until a looming aging crisis began to shift the political rhetoric and resulted in more radical reforms at the central level.

3.4

Local Agency in Pro-growth Reforms

Prior to 2000s, China’s social policy reform can be characterized as primarily pro-growth in its reform rhetoric, with state-led commodification and marketization processes across the social policy domains. The reform processes, however, were much less radical in comparison to the postcommunist countries. While there was more of a consensus within the party-state in regard to promotion of a state-marketization approach, the central government relied heavily on local governments to carry out experiments before nationwide implementations. Across all social policy domains, local agency was not only evident in carrying out central reform programs, but also experimenting local models when central directions were absent. During this stage, social insurance reforms on the ground focused primarily on the employment-based pillars. Prior to national reform, local experiments such as in Shanghai and Shenzhen contributed to the identification of social pooling and individual account

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as two primary approaches for the new employment-based healthcare and pension insurance. In housing, local experiments in Shanghai contributed to gradual diffusion of a mandatory savings program dedicated to housing and its final adoption in national housing reform. The more active local agency in experimenting and implementing employment-based social insurance indicated the strong consensus between central and local political actors to utilize social policy to support economic growth. Beyond employment-based social insurance, nonetheless, there was inadequate central directions on how to provide social protection for the rest of the population. The limited central guidelines often mandate direct state responsibility for social protection without providing fiscal incentives. As a result, local governments imposed strict eligibility criteria for the limited means-tested or category-based programs, resulting in much less coverage than original intended. The residual welfare provision by the state was extremely limited. Although still primarily state-led, service delivery became increasingly decentralized and pluralized at the local level. With the built-in flexibilities in some central reforms and absence of clear central directives in other policy areas, local governments began to adopt more diverse strategies to coordinate welfare provision at the local level.

Notes 1. The statistical standards for healthcare in China are at times different from international standards. For example, societal expenditure includes social insurance funds expenditure as well as expenditures by employers or other social groups. WHO and other major countries however only have two broad categories of public and private expenditure, where direct government expenditure and social insurance funds are considered public and the rest are considered as private. 2. In the Singaporean model, the Central Provident Fund (CPF) is a comprehensive social security savings plan that covers retirement, housing, and healthcare. The implementation of HPF in China was significantly decentralized and the local HPF institutions are largely independent from other social insurance institutions. In 2010, the new Social Insurance Law integrated the contributory social insurance programs for healthcare, pension, unemployment, work injury and maternity insurance. Nonetheless, HPF was left out of the new plan. 3. The public rental housing numbers of 2000 and 2010 should be interpreted differently. For 2000, the number represents households who still

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4.

5. 6.

7.

8.

9.

lived in legacy public rentals provided by local governments or work units similar to pre-reform era. By contrast, the figure for 2010 represents the number of households who live in the means-tested CRH units or the newly established PRH programs. The contribution rates were then gradually increased to 8% for employees and 20% for work units. By 1991, the State Council announced that the contribution rates would be adjusted based on economic development and salary levels (State Council, 1991a). Calculations made by author based on National Bureau of Statistics data on urban pension contributors and urban employees. The World Bank “three-pillar” model was first proposed in its report Averting the Old Age Crisis in 1994. It proposed a model that combines “a publicly managed system with mandatory participation and the limited goal of reducing poverty among the old; a privately managed mandatory savings system; and voluntary savings” (World Bank, 1994). In response to its criticisms of being overly neoliberal, the World Bank promoted a new five-pillar model since 2005, adding a non-contributory social protection pillar and significant adjustments of the other pillars. As the World Bank explains, the pay-as-you-go system means using workers’ current contributions to pay for pensioners’ current benefits. By contrast, a fully funded individual account means the workers’ contributions are accumulated and invested, which result in greater returns for individuals who contribute more (World Bank, 2018b). Zhu Hao for example argues that “socialization reform” was dominated by the pro-market logic in practice, where community services were created to replace state and work unit responsibility. However, these new market-oriented institutions were clearly unable to meet the needs of most disadvantaged seniors (Zhu, 2017). The Starlight program was promoted by MCA since 2000s. The idea was to utilize charity lottery funds and societal donations to support the construction and maintenance of “Starlight Elderly Homes” across Chinese cities. National and local news reports across Chinese cities showed that many of these community-based elderly centers were often under-utilized due to their inability to meet more specific old-age care needs beyond regular recreational activities. Most centers were later abandoned or repurposed.

References Babiarz, K. S., Eggleston, K., Miller, G., & Zhang, Q. (2015). An exploration of China’s mortality decline under Mao: A provincial analysis, 1950– 80. Population Studies, 69(1), 39–56. https://doi.org/10.1080/00324728. 2014.972432.

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Banister, J., & Hill, K. (2004). Mortality in China 1964–2000. Population Studies, 58(1), 55–75. https://doi.org/10.1080/0032472032000183753. Cao, H., & Fu, J. (2005). 20 Years of healthcare reform in China. Southern Weekly. Chan, C. K., Ngok, K. L., & Phillips, D. (2008). Social policy in China: Development and well-being. The University of Chicago Press. Chen, Z. (2014). How long to wait before pension integration. Southern Weekly. Frazier, M. W. (2010). Socialist insecurity: Pensions and the politics of uneven development in China. Cornell University Press. Hsiao, W. (2015). Where does the marketization of China’s healthcare lead to? Critical Issues Confronting China Seminar Series. National Bureau of Statistics China. (n.d.). National Data. National Bureau of Statistics China. http://data.stats.gov.cn/. People’s Daily. (2007). 1979: Initial hospital reforms. People’s Daily. Southern Weekly. (2012). 60 Years of China’s pension system: From Heaven to Earth. Southern Weekly. State Council. (1989). Suggestions regarding expanding healthcare services. State Council. (1991a). Circular of the state council on deepening the reform of the pension system for staff and workers of enterprises. State Council. State Council. (1991b). Continuation of urban housing reform in a stable manner. State Council. State Council. (1991c). Opinions concerning an all-around promotion of housing reforms in cities and towns. State Council. State Council. (2000). Decision to strengthen old-age care systems. State COuncil. State Council. (2006). Circular on speeding up elderly care sector development. State Council. Wang, X. (2007). Cheap rental housing shortage in China. People’s Daily. World Bank. (1994). Averting the old age crisis: Policies to protect the old and promote growth. World Bank. World Bank. (2018a). A systematic analysis of public hospital reform in China. World Bank. World Bank. (2018b). Transition: Paying for a shift from pay-as-you-go financing to funded pensions. World Bank. Zhang, D. (2011). Centrally planned economy: State-led healthcare system. Solidarity, 2. Zhu, H. (2017). 30 Years of elderly care marketization reform in China: Retrospect and reflections. Academic Journal of Zhongzhou, 8, 66–72.

CHAPTER 4

The Return of the State? The New Reforms and Changing Local Agency

The growing societal backlashes initially were not sufficient to challenge the dominance of the pro-growth models in social policy. Nonetheless, a few external shocks such as the SARS epidemic, the Global Financial Crisis, and a rapidly emerging aging crisis triggered new rounds of national debates on whether healthcare, housing, and old-age care should be treated as commodities or rights. With the communist legacies still in effect for selective social groups but not for all, the increasing issues of affordability and equity began to challenge the political legitimacy of the state. Treating these external shocks as windows of opportunity, reform advocates during the Hu-Wen era actively formulated competing new reform plans in each policy domain. The increasing pluralization of the policy arena was evident across all policy domains. The final reform packages were often born out of bargaining and compromises among central bureaucracies, local governments, and to a less extent societal actors. While political and policy recentralization has been more evident under Xi Jinping’s political leadership, the central policy arena remains contested among the bureaucratic agents in some areas more than others. This chapter provides a review of new reforms in each policy sector followed by a critical evaluation of recent trends in policy recentralization as well as their potential impacts on the local agency.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_4

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In healthcare, the reform rhetoric took the most dramatic turn to greater government responsibility and a community-centered approach following the SARS epidemic in 2003. Although the comprehensive reform took another six years to be implemented nationwide, local experiments and incremental measures including reestablishing a new rural cooperative healthcare system and a residence-based scheme in urban areas began long before 2009. The critical junctures and institutional change in national healthcare reform were often driven by crisis situations, first by a state fiscal and financial crisis during 1980s, and then by a major public health crisis in 2000s. At national stage, fragmented authoritarianism led to competing interests and reform plans led by central bureaucracies such as MOH, MOF, and MOHRSS. The finalized reform plan represented major compromises and a hybrid approach that provided significant room for local discretion. Similar patterns were seen in the housing domain, but with less horizontal bureaucratic fragmentation among central bureaucracies and more vertical bargaining between central and local governments. The party leadership during Hu-Wen era began to recognize housing as a right rather than a commodity, while promising greater housing affordability and access in response to societal backlashes. On the legislative side, there were attempts to create a comprehensive national reform package like healthcare, but the law was never passed. Following the Global Financial Crisis, the central government provided stimulus packages to support affordable housing development, set hard quantitative targets for local governments, and expanded coverage in the public rental program. Nonetheless, the dramatic increase in affordable housing supply appeared to be short-lived. In addition, the quantitative growth largely failed to address housing affordability and stratification issues on the ground, due to persistent local discretions in coordinating service delivery and determining eligibility. Since late 2000s, policy debates emerged around a potential aging crisis, due to the long-term impacts of the previous one-child policy, higher life expectancy, slower pace of rural-to-urban migration, as well as persistently low fertility rates despite relaxation of population control policies. Against the backdrop of a potential aging crisis and growing societal concerns over old-age care, the bureaucratic actors at the central level began to forge consensus and seek compromises around a set of reform plans, including ending the dual-track system, expanding coverage for employment- and residence-based pension insurance, establishing a

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truly multi-pillar pension system, and adopting a “state guidance, societal participation” model in service delivery. This chapter provides an overview of this new wave of national reforms in healthcare, housing, and old-age care since 2000s, which helped redefine the structural conditions for local agency. My primary arguments are twofold. On the one hand, it is important to recognize that the recent shifts in central reform priorities could potentially impose new sets of constraints on local agency. In particular, the more concrete specifications of financing mechanisms and the establishment of new responsibility targets could potentially reduce flexibilities and discretions in local implementation. On the other hand, such policy recentralization remains limited and selective, judged by frequent adjustments in central policies as well as mixed local implementation outcomes. Instead, the effects of top-down pressure are often offset by built-in flexibilities and discretions in national reform plans born out of bureaucratic compromises and policy feedback from local experiments.

4.1

Healthcare Reform: Bring the State Back in?

The SARS outbreak was a key turning point for healthcare reform in China. Although the marketization reform was not without oppositions and criticisms before SARS, it still proceeded with strong support from the market advocates within MOH, the pro-market political leaders from Shanghai, and local governments who were keen to alleviate the increased fiscal burden following the fiscal reform in 1994. Nonetheless, the marketization reform dismantled the communist healthcare system in rural areas and reduced healthcare access in urban areas. The political elites on the other hand continued to be covered by the Free Medical Care system. The UEBMI by the time covered a majority of urban employees who work in the formal sector, but very few among the urban and rural residents who are not employed in the formal sector. According to NBS national data, roughly 1.09 billion urban employees were covered in the employmentbased UEBMI scheme by 2003. By contrast, only 8.9 million urban residents were covered by the URBMI and 6.54 million rural residents were under the NRCMI (National Bureau of Statistics China, n.d.). Both schemes were still in an experimental phase, and therefore covered only a small fraction of the general population. When the SARS hit, the majority of urban and rural residents found themselves uncovered by any type

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of government or social health insurance and had to pay for the treatments out-of-pocket. To make things worse, cases were reported where profit-seeking public hospitals declined to treat patients when they were unable to pay. These developments quickly forced the central ministries to issue an joint announcement requiring local governments, work units, and public hospitals to provide medical care based on needs rather than the ability to pay (MOF et al., 2003). The SARS crisis therefore exacerbated the steadily growing societal discontents with the market-oriented reform measures in healthcare. Furthermore, it provided an opportunity for the market-oriented reform opponents within political elites to make the case for an alternative path, due to the apparent failure of market-oriented reforms in ensuring healthcare access and affordability during a major public health crisis. In response to societal backlashes, the party-state made a series of key decisions that reoriented the healthcare reform. The first move was to restructure MOH and remove the pro-market advocates from top positions. The pro-market MOH minister Zhang Wenkang was temporarily replaced by Vice Premier Wu Yi in 2003 to address the emergency situation. Wu Yi was then succeeded by two technocrats, Gao Qiang, a fiscal policy expert who served as the Secretary General of the State Council at the time, and later Chen Zhu, who was not a CCP member but highly respected public health expert. After SARS, MOH went through significant institutional reforms and established new divisions including policy regulation, emergency management, and a rural health administration. In 2005, the head of the new policy and regulation division Liu Xinming announced that “marketization is no longer the orientation of the healthcare reform” in a work meeting (Hospital News, 2005). In the same year, news media widely reported the State Council Development Research Center’s report on healthcare reform, which includeed a shocking statement that the reform has “largely failed” (SCDRC, 2005). When reflecting on the failures, a key issue of contention was whether the failure was truly due to “over-marketization”. A pro-market expert complained that “it was evidently centrally planned administrative monopoly that resulted in artificially high drug prices and insufficient allocation of resources… but this round of healthcare reform now blames marketization” (Min, 2015). The party-state wanted to frame it as the failure of the market and called for the return of the state, demonstrating its concern for political legitimacy. Instead of addressing the issues of public hospitals’ profit-seeking behavior, the central government

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halted the privatization reform in selective cities. However, many policy experts publicly or privately doubted whether it was more of a government failure, considering the incomplete measures, the dominance of large public hospitals, the dismantling of the community-based healthcare centers, and the drastic decline in government expenditure and work unit responsibility. As the debates continued, a new round of healthcare reform began to take shape. This time MOH was no longer the dominant actor that would solely determine the reform agenda. Instead, central agencies and sectoral interests competed for influence, while international institutions such as WHO and World Bank played advisory roles. Whereas the state-led marketization reform was supported by MOH pro-market advocates and political leaders from Shanghai, the new healthcare reform during the Hu-Wen era involved a greater number of bureaucratic agencies and societal inputs. MOH Minister Gao Qiang at the time described the process as “an efficient and highly responsive working mechanism” with “a dozen department leaders, experts, and professionals communicating with each other and making policies through team work” (Lifeweek, 2008). The central government also for the first time created online channels to collect public comments and reportedly received more than 35,000 comments (Xinhua, 2008). Nonetheless, it would be inaccurate to describe the process as completely democratic or pluralized. Rather, societal interests and international ideas were primarily channeled through a few bureaucratic agencies. Among the key agencies involved, MOH, MOF, and Ministry of Labor and Social Security, which later became MOHRSS, advocated for competing priorities. MOH favored the British National Health Service Model with emphasis on supply-side reform, which would allow for continued prioritization of large public hospitals while strengthening community-based primary healthcare networks and use them as gatekeepers. By contrast, MOF and MOHRSS favored a Bismarckian contributory social insurance model in healthcare financing, which would require less direct government responsibility to achieve universal coverage and social safety net (China Newsweek, 2006). While domestic and international think tanks and policy experts were invited to draft competing plans, the reform plans largely represented the preferences of these bureaucratic agencies. Although with a limited degree of societal inputs, the finalized 2009 reform plan was a compromise between the competing bureaucratic interests. Instead of adopting one model over the other, the reform proposed

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a middle-ground approach that combined elements of direct state responsibility with socialized healthcare financing and “state guided, societal participation” in service delivery (State Council, 2009). Firstly, the MOH proposal to follow the British system to prioritizing public hospital reform and community-based gatekeeper system were adopted. While the new reform also encouraged private practice, it did not seek to fundamentally challenge the dominance of public hospitals. Secondly, the new reform proposed a more integrated social insurance model for healthcare, pension, and unemployment insurance, as illustrated by the passage of the 2010 Social Insurance Law. In healthcare, the state promised greater integration between the employment-based and residence schemes, as well as between urban and rural schemes in the contributory social insurance. Finally, the new reform promised a “pluralized healthcare” service delivery model that would allow for greater participation by the private and nonprofit sectors. In the new reform plan, the social insurance model would be complemented by two supplemental pillars of private healthcare insurance and a means-tested Medical Aid system. Whereas private health insurance is market-oriented and provides supplementary insurance based on ability to pay, the means-tested Medical Aid System promised greater state responsibility for “the new urban poor” and rural residents based on needs. Although the party-state promised greater integration and state responsibility in rhetoric, the implementation of the new healthcare reform remained horizontally and vertically fragmented. At the central level, MOH was in charge of the service delivery reform, while MOHRSS was responsible for establishing the integrated social insurance model across healthcare, pension, and unemployment insurance. Meanwhile, MCA was the primary central agency that is responsible for the implementation of Medical Aid nationwide. The horizontal fragmentation and at times lack of coordination at the central level created opportunities for local agency and discretion. The establishment of the Medical Aid program marked a drastic reversal of central government priorities from the pro-urban and promarket healthcare reform before SARS. At least initially, this program was explicitly pro-poor with a focus on rural areas, with a strong commitment to direct government responsibility. The central government provided fiscal transfer to inland provinces and rural areas, while mandating coastal provinces and cities to use their own fiscal revenue to expand coverage and generosity. Expectedly, the program was strongly supported by inland

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provinces and rural areas that received targeted central fiscal transfers. In rich coastal regions, nonetheless, significant policy drift occurred on the ground following MCA’s mandate in 2009. By 2015, 28 out of 34 provinces published Medical Aid implementation guidelines. As Table 4.1 shows, the rural residents who participated in the Medical Aid program were persistently much higher than urban residents. While the expenditure per person was greater in urban areas due to higher healthcare costs, the Medical Aid program still prioritized rural areas in its allocation of expenditures.1 Based on the limited data from NBS between 2010 and 2015, the program consistently prioritized rural areas over urban areas in terms of the number of people who received aid and direct government expenditure. However, the program was limited in both coverage and generosity, and the number of people being covered in the program was steady but did not increase since 2010. In response to lack of progress, in 2013 MCA published a new guideline to encourage societal participation in the Medical Aid program, marking a departure from the original emphasis of direct government responsibility. The new guidelines Table 4.1 Medical aid in urban and rural areas, 2010–2015

Aid for Medical Insurance in Urban Areas (10,000 persons) Aid for Medical Insurance in Rural Areas (10,000 persons) Expenses of Urban Medical Aid (10,000 yuan) Expenses of Rural Medical Aid (10,000 yuan) Expenses of Urban Medical Aid per person Expenses of Rural Medical Aid per person

2010

2011

2012

2013

2014

2015

1461.25

1549.81

1387.1

1490.09

1701.99

1666.14

4615.42

4825.3

4490.4

4868.74

5021.73

4546.87

495,203

676,408

708,802

–

–

–

834,810

1,199,610

1,329,105

–

–

–

338.89

436.45

958.19

–

–

–

180.87

248.6

295.99

–

–

–

Source Compiled by author using data from National Bureau of Statistics China

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specifically encouraged local governments to “guide” and “incentivize” voluntary and charity sector participation and use them to “effectively supplement” direct government aid (MCA, 2013). In service delivery, state-led marketization promoted by MOH prior to 2003 resulted in the dominance of large public hospitals that became increasingly profit seeking, the selective privatization that focused on “high-end” medical care in urban areas and coastal provinces, and the dismantling of a community-based healthcare system in smaller towns and rural areas. Although the 2009 healthcare reform called for the reestablishment of a community-based healthcare system, the actual reform process has been slower than expected and the full effects are yet to be examined. Contrary to the top-down state-led marketization in 1980s and 1990s, the new service delivery reform has been more incremental, decentralized, and more conditioned by feedback processes from local experiments. In recent years, the National Health Commission (NHC), which was integrated from MOH and the National Population and Family Planning Commission, published a series of case studies that are considered as successful and recommended for local implementation. Most, if not all, of these cases were located in coastal provinces, indicating stronger central-local interactions in these regions. Furthermore, NHC has yet to propose a coherent national model for public hospital reform, other than continuing to publish case studies and briefs that endorse selective local cases since 2017. Although increasing private and voluntary sector participation in the healthcare sector over the years, the private institutions are often smaller in scale and less resourceful, showing persistent crowding out effects of public hospital dominance. Hospital bed ratio between public and private facilities were 5.16:1 even though private hospitals have outgrown public hospitals in absolute numbers (Li, 2017).2 Similar patterns can also be seen in number of patient visits and hospital revenue by average based on NBS national data. Except for total numbers, public hospitals continue to outperform their private counterparts in various ways. Although the State Council published Suggestions on Supporting Social Forces to Provide Diversified Healthcare Services in 2017 to recommend local governments to equalize policy support for public and private hospitals, the lack of binding targets has produced mixed results in local implementation. Most private healthcare facilities continue to focus on “high-end” care or specialized care, and to a less extent community-based primary care,

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in comparison to more comprehensive services and specialized expertise offered at public hospitals. Overall, the new healthcare reform marked a significant departure from the earlier reform that prioritized marketization without privatization. From early 2000s to late 2010s, the share of individual responsibility in healthcare financing has drastically decreased, while coverage and generosity of employment-based and residence-based schemes have gradually increased. As Fig. 4.1 indicates, the share of individual out-of-pocket expenditure has declined significantly from the highest level of 59.97% to 28.36% in 2019 according to NBS national data. By contrast, the share of societal expenditure increased drastically from 24.10% in 2001 to 43.66% in 2019, as the result of the expansion of the social insurance model in healthcare (National Bureau of Statistics China, n.d.). Finally, the share of government healthcare expenditure has moderately increased from the lowest point of 15.69% in 2002, to 27.73% in 2019, which was still lower than its highest point of 38.69% in 1986 (National Bureau of Statistics China, n.d.).

Fig. 4.1 Healthcare expenditure by type, 2000–2010 (Source Compiled by author using data from National Bureau of Statistics China. Data Source National Bureau of Statistics of China)

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More recently, there is a greater degree of policy recentralization and less bureaucratic fragmentation in the healthcare sector under Xi Jinping’s leadership in comparison to the Hu-Wen era. Such policy recentralization is partly reflected in central-level institutional reforms, along with more frequent and concrete policy guidelines in recent years. NHC now integrates healthcare regulation and administration functions that were previously dispersed across a few agencies. In addition, an independent National Healthcare Security Administration (NHSA) created in 2018 now regulates healthcare insurance and Medical Aid at national level, and oversees medical insurance payment and medical pricing. So far NHSA and its subnational affiliates have demonstrated greater bargaining power in setting the prices for medicines and healthcare services that can be covered under UEBMI and the newly integrated Urban–Rural Resident Basic Medical Insurance (URRBMI). Together, NHC and NHSA represent two “super-ministries” that coordinate previously fragmented healthcare functions across different ministries, and one step closer to a single payer healthcare model. Still, the central bureaucratic bargaining and compromises, the variations in local implementations, as well as frequent revisions in central reform programs indicate that the party-state is yet to commit to a completely centralized model or full return of the state. Firstly, MOHRSS driven by bureaucratic interests coalesced with MOF to support the social insurance model that emphasizes “shared responsibility” rather than direct government responsibility. This is shown by the more dramatic increase in societal expenditure in comparison to the government or individual out-of-pocket expenditure. Across all schemes, the employmentbased UEBMI focuses on urban employees in public and private sectors, requires a greater contribution by employers and individuals while providing greater generosity. By contrast, the state provides more fiscal support and broader coverage for the residence-based urban and rural basic medical insurance with less generosity. Although all schemes have been nominally integrated into the Basic Medical Insurance, the contributions and expenditures of these schemes often remain independent of each other at subnational level and are not easily transferrable. Secondly, the uneven implementation of the Medical Aid program demonstrates that national policies still heavily rely on the willingness and capacity of local states due to lack of binding targets and absence of central fiscal support for coastal provinces and urban areas. As a result,

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MCA’s mandates gradually shifted away from demanding direct government responsibility to encouraging societal participation with a “guiding” role of local governments. Thirdly, service delivery reform has produced mixed results with growing private participation but continued dominance of public hospitals on a national scale. At the local level, however, there are more variations between a more state-led model where public hospitals continued to enjoy preferential policies, and a more pluralized model in other localities where non-state service providers enjoy more equal competition. Finally, although the restructuring of MOH into NHC and the creation of NHSA helped reduce bureaucratic fragmentation in the healthcare sector, such patterns are less seen in other social policy domains as discussed below. The limited institutional recentralization in the healthcare domain therefore remains an outlier rather than a new norm in national social policy reforms.

4.2 Affordable Housing: Quantitative Growth Without Quality? Similar to healthcare, there have been increasing societal backlashes against rising housing affordability and stratification issues especially in urban areas since early 2000s. With the absence of an external shock like SARS, nonetheless, housing commodification continued despite shifting rhetoric of the new CCP leadership. The Hu-Wen era between 2003 and 2012 was marked by a greater commitment to housing affordability, with significant increase in affordable housing supply but less successful attempts to curb rising housing prices. Between 2003 and 2012, a series of State Council circulars were issued to curb the potential real estate bubble and increasing housing affordability for middle- and lowincome urban residents. Initially, the state focused more on regulating commodity housing by tightening land supply, revoking commercial loan incentives that were established during marketization, and setting floorspace limits for new constructions. Nonetheless, the commodity housing market continued to boom despite the new regulatory measures being announced one after another. At the same time, local implementation of affordable housing programs continued to prioritize the ownership-based ECH over the means-tested rental CRH program before 2007. Furthermore, the overall affordable housing supply remained low in comparison to the booming commodity housing pillar.

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To address these issues of uneven implementation, the State Council in 2007 published more concrete mandates to reduce prior ambiguities in both ECH and CRH and to adjust their target populations and delivery mechanisms. The Suggestions for Solving Housing Difficulties of Urban Low-Income Households issued by the State Council was often viewed as a signal for central policies to move away from the ownership approach in both commodity and affordable housing. Essentially, the central government is now mandating local governments to tighten the eligibility criteria for the ownership-based ECH program to low-income households only, and to expand coverage of the means-tested rental CRH program to cover the same population. In addition, the new policy framework provides a more flexible approach in CRH delivery through “rental subsidies” (zujin butie) and “physical provision” (shiwu peizu) (State Council, 2007). The new instruments also allowed local governments to purchase services from private rental market and therefore reduce the administrative and financial burden associated with direct state provision. At least rhetorically, the 2007 reform focused more on the “new urban poor” and destratification, therefore departed from the pro-market reforms before 2007. Prior to the new reforms, local governments often utilized ECH to support urban renewal or provide privileged access to those who are employed in the formal sector, and limited means-tested CRH to only extremely low-income households with housing difficulties. The “new urban poor” who were not qualified for either ECH or CRH, were often left uncovered by the local governments and frequently labeled as “sandwiched households” (jiaxinceng ) in news media and policy research. The new reform redefined both ECH and CRH programs to cover these “sandwiched households” and to provide more choices for all low-income residents between the ownership and rental programs. The Global Financial Crisis provided another window of opportunity for further reforms, though the reform measures fell short of a clear “return of the state.” In 2008 alone, the State Council issued 18 decisions on affordable housing. Most significantly, MOHURD worked with MOF and the NDRC to publish a new implementation plan for CRH, which mandated a dramatic increase of 1 million units in CRH supply from the original stock of 2.5 million to 3.5 million (MOHURD, 2008). In addition, affordable housing targets were now treated as hard targets assigned down to urban district or rural county level, providing political incentives for local cadres to increase CRH supply. This trend continued in

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the following years, where new targets were announced each year with strengthened reporting requirements. The adoption of hard targets, as well as the provision of fiscal incentives produced strong effects on local government affordable housing expenditure. NBS fiscal expenditure data shows that local government expenditure on affordable housing increased dramatically from 199.04 billion yuan to the peak of 633.87 billion yuan in 2016, and then slightly declined to 583.94 billion yuan in 2019 (National Bureau of Statistics China, n.d.). Nonetheless, there are a few issues associated with this round of new reform measures. First, the growth of the programs was mostly driven by fiscal stimulus packages following the global financial crisis that prioritized infrastructure investment, which result in the prioritization of new construction in affordable housing. This means the fiscal stimulus largely subsidized the supply-side affordable housing developers who are often chosen by the local governments, rather than directly to the target population of the “new urban poor” or the “sandwiched households” through demand-side subsidies or cash transfers. Second, the Hu-Wen leadership and the fiscal stimulus appeared to have limited long-term effects on local governments’ commitment to affordable housing. As shown in Fig. 4.2,

Fig. 4.2 Local government expenditure on affordable housing, 2010–2020 (Data Source National Bureau of Statistics of China)

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the boosting effects of the fiscal stimulus package began to wane as political leadership changed in 2013, and the share of affordable housing expenditure in local government expenditure began to decline. Third, the focus on quantitative targets meant that local governments managed to maintain their discretionary power to define who are eligible for the newly constructed affordable housing. As the case studies in Chapter 5 illustrated, this led to significant local discretions in implementation, as local governments sought to adapt central policies, redefine the program objectives and revise the eligibility criteria while still meeting the quantitative targets. The new quantitative targets thus served the short-term goals of boosting affordable housing supply but did little to address issues of policy layering and drift on the ground.3 Another significant policy initiative by the Hu-Wen leadership was the prioritization of public rental over asset-based welfare or the ownership approach in affordable housing.4 In 2010, the State Council issued Guidelines regarding Expediating the Development of Public Rental Housing and formally announced the new Public Rental Housing (PRH, gonggong zulin zhufang ) which was intended to replace and expand the means-tested CRH program. After two years of local implementation and feedback, the new policy doctrine was further institutionalized by MOHURD in 2012 in the Public Rental Housing Administrative Measures. Most significantly, the new PRH program promised to expand coverage to not only low-income residents with hukou, but also migrants who have stable employment at the locality they reside (MOHURD, 2012). Nonetheless, significant local discretions are retained in regard to eligibility based on income, asset, housing conditions, and years required to qualify as “stable employment.” At the central level, the new policy required greater coordination between MOHURD, NDRC, MOF, then Ministry of Land and Resources, People’s Bank of China (PBOC), and a few more agencies in charge of tax and banking regulations.5 At the local level, the new policy specifically encouraged “state organization, societal participation,” and required local governments to “enable” societal actors through land, fiscal and financial incentives (MOHURD, 2010, 2012). Specifically, the new rule allowed local governments to work with employers to provide targeted PRH for their employees only. This represented a significant departure from the direct government responsibility and the meanstested criteria in the CRH program. The new MOHURD rule therefore provided more flexibility and discretionary power for local governments

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and encouraged an “enabling” approach in financing and service delivery. Meanwhile, selective policy recentralization was more reflected in the strengthening of regulations through concrete reporting procedures to the central government and requirements on public disclosure, both with the goal of increasing transparency and accountability. Other than the new policies regarding quantitative targets and expansion of coverage through PRH, there were also bureaucratic and legislative attempts at the central level to pass a comprehensive national housing law. The goal was to establish a national housing reform framework similar to the 2009 national healthcare reform and the 2010 Social Insurance Law. In part, this was because the housing pillar was left out in the 2010 Social Insurance Law due to the incompatibility between the contributory HPF scheme and other social insurance schemes. While all other social insurance schemes are administered and regulated by MOHRSS and its local bureaus, HPF falls into the jurisdiction of MOHURD and local housing agencies. In practice, the implementation and administration of HPF have always been highly decentralized, with local governments coordinating a network of local actors in collecting HPF contributions and determining their use. Furthermore, while other social insurance schemes were gradually expanded to cover not only urban workers but also urban and rural residents, HPF remained an employment-based contributory scheme. Although the central government’s affordable housing rhetoric has become increasingly targeted toward low-income households, local governments have frequently attempted to adapt these affordable housing programs including the new PRH to serve local economic development and urban renewal needs. Despite the party-state’s new rhetorical commitments to housing as an entitlement for all Chinese citizens, housing remains primarily a commodity rather than an entitlement in practice. Most significantly, national attempts to pass a more comprehensive housing reform have so far failed to deliver their intended outcomes. Driven by public demands and scholarly debates on the entitlement approach to housing, MOHURD invited local officials and policy experts from Shanghai to discuss the possibility of a national housing law as early as 2008. Researchers from universities in Shanghai at the time researched and debated about national housing laws from other countries, then provided recommendations to MOHURD. In the same year, the NPC Standing Committee invited Qinghua University and Shenzhen Real Estate Research Center to draft a standalone National Housing

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Security Law, with plans to pass the law in five years. The goal was to strengthen “top-level design” in housing as similar to other social policy domains, and ensure “multiple layers” and “broad coverage” (Xinhua, 2010). According to news reports, MOHURD minister mentioned that a draft version was ready for public comments, but it was never published, nor passed as a legislation. The proposal was once again brought up in 2016, when a policy expert at the state-sponsored research institute China Social Science Academy discussed the “legalization of housing policies” (Fan, 2016). In 2017, a few news articles reported that the State Council led by Premier Li Keqiang announced that it would work with the NPC to redraft a new version of “National Basic Housing Security Law” by the end of 2018, although admitting it would take years to complete the effort. However, the draft law is still to be announced since then, and the legislative attempts at national level have failed to achieve meaningful results so far.6 The failure to pass a national comprehensive reform has significant implications for housing affordability and access for average Chinese citizens. The continued rising commodity housing price have driven the lower-middle income households, new college graduates, and less skilled migrants out of the commodity housing market. The central government has at least rhetorically committed greater state responsibility for “sandwiched households”, who are above national or local poverty lines but cannot afford to rent or purchase themselves. Without national-level comprehensive legislation, nonetheless, local governments continued to adapt national reform programs for local economic development and social stability purposes. In rural areas, most rural residents rely on selfconstruction and their own funds to fulfill their housing needs. With rapid urbanization, rural residents are at the risk of losing their land and selfconstructed housing, while being forced to move into newly constructed flats in urban peripheries. As later chapters demonstrated, this created a series of issues in social security and social protection of land-expropriated rural residents. In urban areas, affordable housing regimes continued to be highly stratified, with varying coverage and generosity for selective social groups. Because the implementation of affordable housing policies remains highly decentralized, local governments enjoy discretionary power in not only coordination of financing and service delivery, but also determining who can participate in the local policy processes, and who have access to affordable housing. With some local variations, local governments coordinate

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state and private sector participation in HPF financing and administration, and a network of affordable housing developers and management companies with state, mixed or private ownership structures. On the demand side, urban employees with hukou continue to receive preferential access to ownership-based ECH or other asset-based welfare programs. Migrants working in the formal sector can benefit from the PRH program provided by their employers in coordination with local governments or industrial parks, but they tend to have less direct input in the policy process. Finally, despite some expansion in coverage and generosity of affordable housing programs, local governments have retained significant discretionary power in determining the eligibility of the “new urban poor” using a mix of legacy criteria such as employment, income, housing conditions, and hukou status, as well as new standards such as the “residence certificate” and the “cumulative points system.”

4.3 Pension and Old-Age Care: The Second Transition? Although the first reform was far from complete, new reform rhetoric for pension and old-age care began to surface at the central level in recent years, as population statistics show China is likely to have an aging crisis earlier than expected. As Fig. 4.3 shows, China’s old-age dependency ratio, measured by the share of population aged 65 or older divided by population aged 15–64, was relatively stable between 1982 and 2005 with only a moderate increase from 8.3 to 10.7. However, the old-age dependency ratio has increased at an accelerated speed since then, from 11 in 2006 to 17.8 in 2019. For rich coastal regions and urban centers, the challenge is even greater as they tend to have higher portions of senior residents with hukou. The declining fertility rates, as well as less migration inflow become dual challenges faced by most coastal cities. The one-child policy that was implemented since early 1980s contributed to the acceleration of the aging crisis, as it created a “4–2-1” family structure for those who were born between 1979 and 2015.7 Expectedly, there have been widespread criticisms not only on the one-child policy, but also on the inability of the state to provide pension and old-age care for average Chinese citizens. The aging crisis therefore could potentially turn into a political legitimacy crisis for the party-state, both because of the long-term negative impacts of the one-child policy as well as the “retreat of the state” in

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Fig. 4.3 Old-age dependency ratio in china, 1982–2019 (Data Source National Bureau of Statistics of China)

pension and old-age care for urban and rural residents. In response to these growing concerns, the central government has shifted its reform rhetoric toward greater social protection for the elderly, while taking a few more concrete steps to reform the pension and old-age care system. At the national level, the NPC revised the Law on Protection of the Rights and Interests of the Elderly several times in 2009, 2012, 2015, and 2018.8 In addition to promising a “multi-layered” system to increase social protection for the elderly, the revised law also replaced family responsibility with an “old-age care at home” (jujia yanglao) model with state and societal support (National People’s Congress, 2018). More specifically, the law proposed a series of specific entitlements and welfare benefits for the elderly, such as pension, medical treatment, old-age care, special assistance for those affected by the one-child policy, and individual subsidies for those with financial difficulties. These revisions therefore produced long-standing impacts at both national and local levels, as the revised law became the guiding document for a series of central reforms in specific policy areas such as pension and old-age care. The looming aging crisis also began to challenge the fundamental assumptions of the current fragmented pension system in financing, and

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the de-facto two-pillar old-age care system in service delivery. Similar to the SARS crisis, it helped forge consensus and create new opportunities for reform advocates to push for more radical reforms in both pension and old-aged care. First, like healthcare reform, a few domestic and international think tanks were invited to propose competing plans for national pension reform since 2013. As two key bureaucratic agencies involved in implementation, MOF and MOHRSS each gathered and evaluated policy ideas from eight groups of policy experts. The internal debates evolved into two competing camps, even as the State Council has begun to roll out initial reform packages. The first camp represented by MOF supported a complete overhaul of the pension system and the adoption of a Swedish pension model where a notionally defined pay-as-you-go social pooling component is combined with fully funded individual accounts. By contrast, the other camp represented by MOHRSS favored smaller, incremental reforms and sought to maintain the dominance of the social pooling system. Both sides, nonetheless, agreed that it is time to end the dual track system and the non-contributory civil pension scheme to prevent a total financial collapse. The aging crisis thus brought opportunities for various bureaucratic actors to deliberate and contend competing ideas, and allowed the vested interests and reform advocates to reach a compromise. The final reform plan proposed a hybrid pension model, which was still built upon the World Bank multi-pillar model, but with significant adaptations as illustrated by Table 4.2. The adaptations reflect a compromise between the incremental steps proposed by MOHRSS with more radical MOF proposals based on the Swedish model.9 First, the central government expanded the employment-based UEBPI before finally integrating the civil servant scheme and ending the dualtrack system. According to NBS data, the number of urban employees enrolled in UEBPI increased significantly from 201.34 million in 2007 to 434.88 million in 2019, and the percentage of formal sector employees covered increased from 65.06% to 98.28% during the same period.10 The State Council then took a more decisive stance and announced that the civil servant scheme would be gradually integrated into UEBPI starting 2014 (State Council, 2015). This announcement surprised but was quickly welcomed by many policy experts, as it marked the first step to end the long-existing dual track system. Beyond the nominal integration, the reform also proposed to equalize employer and employee contribution levels for all new urban employees regardless of their occupations, and that benefits should be defined based on contribution levels

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Table 4.2 Overview of the new multi-pillar pension reform Coverage

Account types

Contribute rates

Urban Employee Basic Pension Insurance

All urban employees (mandatory)

Basic Pension Insurance for Urban and Rural Residents

All urban and rural residents (voluntary)

Occupational Pensions

Civil Servants and Public-Sector Employees (voluntary)

Enterprise Annuities

Firms and their employees (voluntary)

Personal Savings & Commercial Pension Insurance

Individuals (voluntary)

Social pooling Employer: 20% or less (social pooling) Individual Employee: 8% or Accounts less (individual (partially account) funded) Social pooling Tiers range from 100 to 2000 yuan Individual Matched by Accounts government (partially subsidies funded) Supplemented by collective unit subsidies and charity donations Individual Negotiated rates Accounts Employer: 8% or (fully funded) less Total: 12% or less Individual Negotiated rates Accounts Employer: 8% or (fully funded) less Total: 12% or less Individual Fully funded Accounts individual (fully funded) accounts Market determined rates

Benefit levels Moderate

Low

High with investment returns High with investment returns Varies based on market rates

Source Compiled by author

rather than administrative ranks. To avoid potential backlashes from civil servants and public sector employees, nonetheless, the central government promised to maintain current benefit levels for those who were covered by the civil servant scheme in the past. A grandfather clause, as well as, terms for salary increase were added to compensate for potential benefit losses. More controversially, the reform plans allowed the current employees covered in the civil servant scheme to use their employment

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years as contribution years. The contribution gap is therefore financed by fiscal subsidies. Despite the controversies in reforming the civil servant pension scheme, the most important step was the introduction of a residencebased pension scheme with the goal of achieving some basic universal coverage with less generosity. Between 2010 and 2011, the central government implemented the transitional New Rural Old-Age Insurance, which provided pension coverage for regular rural residents for the first time.11 The program quickly expanded in two years, with 102.77 million rural residents in 2010 and then 326.44 million in 2011 according to NBS data. Although the benefit level remains extremely low with an average monthly payment of 57.5 yuan to rural pensioners, the program still represented a major step toward a universal basic pension.12 Starting 2012, the central government directed local governments to integrate the transitional rural pension scheme with the urban resident pension scheme which was also under experiment. In 2014, the State Council officially introduced the new Urban Rural Basic Pension Insurance (URRBPI) for urban and rural residents who are uncovered by UEBPI, and mandated nationwide implementation. NBS data shows that the number of urban and rural residents covered the integrated scheme has steadily increased from 483.70 million in 2012 to 532.66 million in 2019. With the establishment of the URRBPI as well as expansion and integration of UEBPI, the party-state has finally established nearly universal coverage in pension. However, the rapid expansion in basic pension coverage is still overshadowed by persistent and even growing gaps in generosity across the schemes, as well as local disparities in implementation. First, the URRBPI scheme can be characterized by “low contribution, low payment”. Without employer contributions, it relies primarily on tiered individual contributions matched by government subsidies.13 The basic tiers for individual contributions range from 100 to 2000 yuan, although local governments are allowed to add tiers as they see necessary. For higher contribution tiers, local governments are required to match with higher fiscal subsidies, as the central government would only reimburse 50% of the costs to rich, coastal provinces and cities. Expectedly, local governments in these areas often lack incentives to increase the levels of contributions despite significant higher living expenses faced by their elderly population. Furthermore, the size of URRBPI funds remains significantly smaller despite its greater numbers in total coverage. In 2019, the URRBPI funds spent 311.4 billion yuan in expenditure with 824.9

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billion yuan in remaining balance, in comparison to the UEBPI which spent 4922.8 billion yuan in expenditure with 5462.3 billion yuan in remaining balance (National Bureau of Statistics China, n.d.). The per capita spending for the URRBPI was 1942 yuan per recipient, compared to 39990 yuan per recipient for UEBPI.14 The multi-pillar pension reform also introduced two supplementary pension pillars in addition to the basic pension pillars of UEBPI and URRBPI. The first supplemental pillar includes occupational pensions and enterprise annuities, which depend on the willingness of the employer to provide voluntary pension benefits to their employees.15 The second is the personal savings and commercial pension pillar, which relies on private insurers to compete and provide supplemental pension plans to individuals on the insurance market. Both pillars are managed by state-owned or private insurance companies and invested by professional fund management firms. In reality, however, these pillars are still underdeveloped with relatively low participation rates by firms and individuals outside of the state sector. In particular, there are significant uneven development between the occupation pensions and enterprise annuities. With the elimination of the civil servant scheme, the occupational pension was primarily used to compensate civil servants and public sector employees to ensure comparable levels of generosity. Although the enterprise annuity was designed to provide similar functions for other urban employees, in reality firms are often unwilling to participate due to its high costs. By 2018, less than 90,000 firms across the country have provided enterprise annuity to their employees, and the number of employees enrolled is 23.88 million or 5.5% of all urban employees (MOHRSS, 2019).In general, SOEs are more likely to participate in comparison to private firms. And the enrollment rates are higher in coastal provinces and urban areas in comparison to inland provinces and rural areas.16 Except for greater government support in URRBPI, the new pension reform lacks a clear pro-state or pro-market ideological orientation. The new pension reform was still built upon the multi-pillar pension model developed by the World Bank, with emphasis on pluralization of financing mechanisms and expansion of coverage with a guiding role of the state. The increased state responsibility primarily focused on maintaining the basic pension pillars including the UEBPI and URRBPI. Nonetheless, it still required individual contributions, and therefore did not qualify for the universal basic non-contributory “zero pillar” the World Bank promoted in its five-pillar model.17

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Furthermore, the party-state has consistently promoted the reform rhetoric of “state guidance, societal participation” instead of direct state responsibility in service delivery. With growing concerns over the aging crisis and its potential impact on the economy, the party-state has sought to expand marketization and socialization in old-age care rather than reducing them. Between 2011 and 2016, the central government published more than 10 policy documents in regard to further marketization and socialization in old-age care. The proposed reform measures include lowering barriers to entry for private and foreign firms as well as the voluntary sector, as well as providing policy incentives to pluralize service delivery, such as land use arrangements, and restricting government roles to regulation and purchasing of services rather than direct provision of care. For the previously underdeveloped pillar of nonprofit old-age care, PPP in the forms of coproduction or government purchase of social services have been increasingly prevalent across localities, though local governments retain discretionary power to define the nature of such partnerships. Promoting a community-based care model rather than direct state responsibility, MCA has championed the expansion of a communitybased service network not only for old-age care but also for other types of community-based social services to gradually reduce reliance on the institutionalized care model. As Fig. 4.4 demonstrates, the number of institutional old-age care beds first experienced a dramatical increase before early 2010s, then drastically declined since mid-2010s. By contrast, the number of community service facilities in urban areas increased dramatically from 152,941 to 461,735 units between 2010 and 2019 (National Bureau of Statistics China, n.d.). With some local variations in how service delivery is organized, the goal of “socialization” was finally achieved in old-age care with a new community-based care system incentivized by the state and provided by a mix of public, private and voluntary providers.

4.4

Local Agency in the New Era: What Have Changed and What Have not?

Should healthcare, housing, and old-age care be viewed as commodities or social rights? The review of national social policy reform trajectories in China reveals that there have been constant ideological and ideational contestations since 1979, which were often channeled by bureaucratic

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Fig. 4.4 Old-age care beds per 1000 people, 1982–2019 (Data Source National Bureau of Statistics of China)

interests at central level, as well as central-local interactions in policy experiments and implementations. A pro-market logic appeared to be dominant in first two decades of reform and the marketization processes were largely led by the state. During this period, the financing reforms were generally incomplete, fragmented, and stratified. Meanwhile, the service delivery reform was marked by varying degrees of persistent state sector dominance or participation, which at times crowded out the private and voluntary sectors. The “retreat of the state” was therefore selective, as the communist social contract was maintained for a prolonged period of time across all three sectors for political elites and selective urban employees. More recently, the party-state began to shift its rhetoric toward an entitlement approach to healthcare, housing, and old-age care. In each policy domain, the overall rhetoric is no longer “efficiency first” but “greater emphasis on social justice.” However, the entitlement approach does not equate to the “return of the state.” Rather, earlier reforms that called for greater government responsibility received significant pushbacks on the ground, resulting in reorientation toward “state guidance, societal participation” across all domains. In healthcare and old-age care, the government drastically reduced individual responsibility by introducing

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the contributory social insurance model for urban and rural residents. Although supported by fiscal subsidies, the new residence-based healthcare and pension schemes are often characterized by “low contribution, low payment”. The failure to integrate housing into the new social insurance framework or to pass a national housing law indicates that the commodification of housing is far more complete in comparison to other policy domains, and more difficult to reverse. In service delivery, the means-tested Medical Aid program and CRH program which required direct government intervention experienced significant policy drift on the ground. Both programs were then adjusted to emphasize “state guidance, societal participation” and allow for greater local discretions in how service delivery is organized. In old-age care, the reform focus continues to be “socialization of care” and reducing direct government provision, with new policies encouraging local governments to provide incentives for private and voluntary sector participation, in order to establish a community-based care system. Admittedly, policy recentralization has occurred to varying degrees across the three policy sectors as new consensus and coalitions are formed at central level to promote “top-level design”. Nonetheless, such recentralization is by far selective and often constrained by bureaucratic fragmentation, as well as the built-in logics of gradualism and experimentalism in reform programs. In healthcare, the restructuring of the MOH into NHC and the creation of NHSA have allowed for greater central-level policy coordination and reduced horizontal bureaucratic fragmentation. Still, MOF, MOHRSS and MCA remain powerful bureaucratic actors when it comes to healthcare financing in healthcare insurance programs and service delivery in the Medical Aid program. The creation of NHSA so far appeared to be an outlier rather than a new norm, and to some extent increased the horizontal bureaucratic fragmentation by taking away MOHRSS’s ability to oversee all the pillars in national social insurance programs. Furthermore, NHC’s healthcare service delivery reform has emphasized a decentralized approach of selecting “successful” local cases and promoting them at national level, rather than imposing top-down reforms nationwide. In the domain of affordable housing, MOHURD’s power to direct nationwide reform remains relatively weak due to significant decentralization in earlier reform era. Although HPF has been institutionalized, the administration and distribution of funds remain highly decentralized with varying institutional arrangements at local level. Despite central government mandates to reorient the ownership-based ECH program,

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local governments continue to support asset-based welfare in affordable housing, as it allows for significant flexibility to meet local development goals. Top-down reform programs such as the means-tested rental CRH program from MCA has experienced significant policy drift, and in turn MOHURD has adopted a more flexible stance in the new PRH program. Local governments are now granted greater flexibility in both financing and service delivery, on the condition that they will meet the quantitative target and improve transparency in reporting and public disclosure. Finally, the most recent reform in old-age care indicates that these patterns of ideational contestations as well as bureaucratic fragmentation will continue at central level despite some evidence for policy recentralization. The introduction of the new multi-pillar pension model was the result of bureaucratic bargaining and compromise between MOF and MOHRSS at central level as well as policy feedback from local experiments. While the residence-based pension scheme marked a major step toward universal coverage, local governments have resisted the central demands to provide greater generosity with fiscal support, resulting in “low contribution, low payment” in comparison to the employmentbased pillars. Consistent with the Medical Aid program, MCA in charge of the service delivery reform has promoted a decentralized model of socialization and marketization of old-age care, while redirecting the role of the state to purchasing of services and regulations. In general, recent shifts toward an entitlement approach across policies domains have fallen short of a full return of the state. At the same time, policy recentralization so far has been selective rather than comprehensive, fragmented across policy domains rather than coordinated, and at times inconsistent especially before and after the political leadership change in 2013. In recent years, greater top-down pressure seems to emerge in the healthcare sector while the previous emphasis on housing reform has subsided. A looming aging crisis may result in greater recentralization in the next decade. Notwithstanding these changing priorities at national level, the built-in logics of gradualism and experimentalism in China’s policy reform have always provided and will continue to create rooms for local agency.

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Notes 1. The National Bureau of Statistics China has published very limited data in regard to the Medical Aid program implementation, with only incomplete data between 2005 and 2015. 2. According to NHC data, in 2016 there are 2060 Tier-3 comprehensive public hospitals, and only 172 Tier-3 comprehensive private hospitals nationwide. The number of healthcare technicians in private hospitals is 0.26 million, in comparison to 1.41 million in public hospitals. 3. Following the gradual institutional change framework, I define policy layering as differential growth of different policies or pillars, and policy drift as neglect or delay in actual implementation (Streeck & Thelen, 2005). 4. According to John Doling and Richard Ronald, asset-based welfare can be defined as “rather than relying on state-managed social transfers to counter the risks of poverty, individuals accept greater responsibility for their own welfare needs by investing in financial products and property assets which augment in value over time”(Doling & Ronald, 2010, p. 165). 5. The Ministry of Land Resources later was renamed as Ministry of Natural Resources following the administrative reform under Xi Jinping’s leadership. 6. By contrast, China’s neighbor Vietnam was able to pass a comprehensive national housing law in 2014 due to more active role played by the National Assembly. 7. For married couples who are both the only child in their families, the high dependency ratio also brought about significant financial burden and further reduce the fertility intentions that cannot be immediately addressed by the loosening of family planning policies. 8. The original law was passed in 1996, which proposed greater responsibility by “the state and the society” to guarantee fundamental rights of the elderly, including old-age care, health, education, and other opportunities they want to pursue. At the same time, the law also stated that the primary responsibility lies with their families, reemphasizing family as the fundamental pillar with supplemental roles by the state and society. 9. The observations here are based upon interviews with the policy experts as well as a series of investigative news reports provided by Southern Weekly and China Business Network during this period. Some policy experts who participated in the reform process favored the more radical reform plans initially, but ultimately decided to support the more incremental plan. As one policy expert described, “it is better to support an incremental step towards the ultimate goal, rather than pursing a lofty plan that cannot be realized immediately” (Zhou, 2017).

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10. Nonetheless, the expansion of UEBPI coverage have limited impact on rural migrants because many are not formally employed, or their employers are unwilling to pay for UEBPI due to its higher contribution requirements. Instead, many rural migrants enrolled in the less generous residence-based basic pension scheme with “low contribution, low payment”. 11. Although there were earlier local experiments guided by MCA on selective rural areas, the institutional design focused on the individual account model without significant fiscal support. The lack of incentives resulted in lack of enthusiasm in participation by rural residents (He, 2018). These experiments were then suspended. In 2009, the State Council reproposed a new model of residence-based social insurance that covers both healthcare and pension that allows for direct government subsidies and social pooling in addition to the individual accounts. 12. The data on the experimental rural pension scheme was based on 2011 Social Insurance Fund Annual Report provided by MOF. 13. The central government also called for voluntary subsidies by collective units, which could come from collective economic institutions in rural areas as well as supplemental contributions from the charity and voluntary sectors in urban areas. 14. The pension data were collected from MOHRSS Annual Reports on Human Resources and Social Security. The per capita data are calculated by author using the total expenditure divided by the number of eligible recipients. 15. The enterprise annuities are set up by employers in collaboration with insurance companies and will be paid to pensioners when they retire. Most western developed democracies have established this system either as supplemental to a basic pension scheme, such as the 401(k) and 403(b) retirement plans in the U.S., or the Superannuation system in Australia. 16. The enterprise annuity data were collected from MOHRSS Annual Reports on Human Resources and Social Security and Annual Data Summaries on Enterprise Annuity Funds. The percentage is calculated by the author using the total enrollment number divided by the total number of urban employees in the annual data series provided by National Bureau of Statistics. 17. The World Bank’s new five-pillar model includes a non-contributory “zero pillar” for all citizens, a mandatory pay-as-you-go “first pillar”, a mandatory “second pillar” with individual accounts, a voluntary “third-pillar” that could be individual savings or employer-sponsored, and a nonfinancial “fourth pillar” that provides access to informal support, social programs, and other assets (World Bank, 2008).

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References China Newsweek. (2006). The way to determine our healthcare system. China Newsweek. Doling, J., & Ronald, R. (2010). Home ownership and asset-based welfare. Journal of Housing and the Built Environment, 25(2), 165–173. Fan, S. (2016). “Housing Law” was brought up the first time. The Paper. https://www.thepaper.cn/newsDetail_forward_1585638. He, W. (2018). 40 years after reform and open-up: Review of China’s pension insurance. Education and Research, 11. Hospital News. (2005). Marketization is not the orientation of healthcare reform. Hospital News. Li, T. (2017). More private hospitals than public hospitals, less quality. Economic Information Daily. Lifeweek. (2008). Ministry of health: Healthcare reform’s complicated paths. Lifeweek. MCA. (2013). Guidelines regarding strengthening the ties between medical aid and the charity sector. Ministry of Civil Affairs. Min, J. (2015). Focusing on 10 years after healthcare reform: The long debate between state versus market. China Newsweek. MOF, MOH, & MOLSS. (2003). Emergency notification on resolving the issue of SARS treatment fees properly. MOHRSS. (2019). National enterprise annuity data summary. MOHRSS. MOHURD. (2008). 2008 Cheap rental housing implementation plan. Ministry of Housing and Urban-Rural Development. MOHURD. (2010). Guidelines regarding expediating the development of public rental housing. Ministry of Housing and Urban-Rural Development. MOHURD. (2012). Administrative measures for public rental housing. Ministry of Housing and Urban-Rural Development. National Bureau of Statistics China. (n.d.). National data. National Bureau of Statistics China. http://data.stats.gov.cn/. National People’s Congress. (2018). Law on protection of the rights and interests of the elderly. National People’s Congress China. SCDRC. (2005). Evaluations and suggestions on China’s healthcare reform. State Council Development Research Center. State Council. (2007). Suggestions for solving housing difficulties of low-income households in cities and towns. State Council. State Council. (2009). Implementation plan for critical issues in healthcare system reform 2009–2011. State Council. http://www.gov.cn/zwgk/2009-04/07/ content_1279256.htm. State Council. (2015). Decisions about pension insurance reform for employees government agencies and public institutions. http://www.gov.cn/zhengce/ content/2015-01/14/content_9394.htm.

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Streeck, W., & Thelen, K. A. (2005). Beyond continuity: Institutional change in advanced political economies. Oxford University Press. World Bank. (2008). The World Bank pension conceptual framework (No. 45728). World Bank. https://documents.worldbank.org/en/publication/ documents-reports/documentdetail/716871468156888545/pension-sys tems-and-reform-conceptual-framework. Xinhua. (2008). New healthcare reform: More than 35,000 comments and suggestions were gathered. Xinhua News. http://politics.people.com.cn/ GB/1026/8346261.html. Xinhua. (2010). China will make basic Housing Security Laws. Xinhua. Zhou. (2017). Empty individual accounts have reached 4700 billion, Yellow light for pension expenditure. First Financial Weekly. https://www.yicai.com/ news/5275478.html.

CHAPTER 5

Limits of Fragmented Universalism: Local Agency in Healthcare

Healthcare reform in China experienced the most drastic reversal from earlier marketization era. At least rhetorically, the 2009 healthcare reform in China was highly consistent with what has been promoted by WHO, through which a strong central government can push for universal coverage and establish a community-based primary care system (WHO, 2019a, 2019b). However, a closer examination of national reforms in Chapter 4 shows that the party-state has not promised a complete “return of the state”. Rather, it has so far promoted a hybrid model of state guidance, market operations, and societal participation, building on policy feedback from earlier local experiments and compromises reached through bureaucratic bargaining at central level. As a result, the new model continues to depend on local governments to coordinate both financing and service delivery while delegating more central authority in some areas than others. This chapter examines the meaning of the emerging welfare mix model in the healthcare domain across local contexts. The chapter begins with an overview of local experiments and implementation results of the social insurance pillar UEBMI and URBMI, and the social assistance pillar exemplified by Medical Aid. In addition, the chapter reviews similarities as well as variations in service delivery reform across localities.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_5

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In general, local governments have regularly relied on pre-established state corporatist institutions to coordinate financing and service delivery in healthcare. At the same time, policy recentralization in recent years recognizably have placed greater constraints on local agency though to a varying degree across localities. In the case of Shanghai, the local government has managed to maintain a relatively coherent pro-growth logic in prioritizing UEBMI in financing and continued to promote its state-led service delivery model. Central–local policy coordination and feedback effects have been significant in earlier healthcare financing reforms at the national and local level, and more recently with the recognition of Shanghai’s service delivery reform by central ministries and the incorporation of its elements in the following national reform plans. Similar level of local agency can be seen in Shenzhen, which has over time developed a more integrated social insurance approach and a more pluralized service delivery model. Both cities have enjoyed greater fiscal capacity and autonomy to choose their own reform paths based on the nature of local political economy, while projecting strong bottom-up feedback effects on central policymaking. By contrast, Guangzhou and Nanjing have been more in line with central reform guidelines and provincial priorities, with some inclusive measures for rural migrants as well as increased fiscal spending for residence-based and Medical Aid programs more recently. Nonetheless, in both cases provincial and municipal party cadres as well as civil servants have formed a coalition of vested interests to successfully preserve their privileged access to healthcare, despite top-down pressure to end the dual-track system. While the growth logics are still evident in these two cases, they also present a picture of moderate or conditioned local agency, where political institutional factors impose stronger constraints in the development of coherent local models in healthcare financing and service delivery.

5.1

From LIS to UEBMI: The Dominance of Employment-Based Approach

A key similarity across the four cases was that the employment-based social insurance model has become dominant in healthcare financing during the reform era. However, a closer comparison of the four cases shows that some cases enjoy greater latitude of local agency and a stronger capacity to provide a coherent employment-based model than others.

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With greater autonomy and capacity, Shanghai and Shenzhen were able to design and implement their preferred local models prior to national reforms, then served as prototypes to the 1998 UEBMI reform at the national level. Policy recentralization in recent years has generated limited impacts on these two cases so far. By contrast, Guangzhou and Nanjing adopted more incremental and fragmented approaches in earlier reforms due to stronger resistance from historically dominant state sectors. In addition, these two cases are clearly more responsive to the changing provincial-level directives as well as top-down pressure from the central government. In Shanghai, pre-reform healthcare financing relied heavily on work units and rural communes rather than direct government or individual responsibility. The LIS scheme provided healthcare insurance coverage for employees in work units and collective enterprises other than those who were covered in Free Medical Care. It was however far from universal. In 1978, about 32.6% of the local population was covered in the scheme with a per capita expenditure of 54.90 yuan. By 1989, the coverage increased to 43.2% of the total population with a per capita expenditure of 282.97 yuan.1 The dramatic increase of per capita expenditure was partially the result of state-led marketization in service delivery. This soon challenged the financial sustainability of the LIS which at the time was solely financed by the work units. To reduce the increasing financial burdens, the work units worked with the municipal Labor Bureau and the designated hospitals to experiment “burden sharing” mechanisms, such as requiring individual employees to pay a portion of healthcare costs out-of-pocket or contribute to a healthcare insurance fund at firm level. By 1987, some SOEs or collective work units under the coordination of their supervisory district agencies began to establish special medical funds to collect firm and individual contributions, and transfer to designated hospitals. Building upon these firm-level and district-level experiments, Shanghai in 1990 required all firms to contribute 3% of employee salary to each district’s special funds, which permitted burden sharing at both firm and district levels (Shanghai Municipal Gazetteers Office, n.d.). These local experiments were designed to complement SOE reform and a growth model that prioritize state-led economic development and EOG. They provided the institutional foundation for an integrated prourban, employment-based social insurance model that was coordinated by the local governments and contributed by firms and employees in Shanghai in the next two decades. The introduction of UEBMI at the

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central level in 1998 offered Shanghai an opportunity to formally institutionalize the relatively mature model across the productive sectors of the local economy. In 1999, Shanghai quickly announced that it will integrate all employment-based social insurance into one centralized system at the municipal level, which covers employees in local SOEs as well as local subordinates of central SOEs, collective enterprises, private enterprises, and foreign investment firms.2 Furthermore, the municipal government began to promote the gradual integration of public sector employees, individual business owners as well as freelancers into UEBMI. For individual business owners and freelancers without employer contributions, the co-payment and out-of-pocket payment levels were often higher than regular employees. Meanwhile, the municipal government created a separate commercial insurance outside of UEBMI scheme for migrants without hukou or local residence. The Migrant Comprehensive Social Insurance Scheme was established as early as 2002, which was coordinated by the municipal government in collaboration with local state-owned insurance companies and commercial banks. This program expanded significantly in the following years, from 0.77 million in 2003 to more than 4 million rural migrants enrolled by 2010 (Shanghai Bureau of Statistics, n.d.). In 2011, the program was ended due to nationwide implementation of the Social Insurance Law which mandated local governments to include migrants into the UEBMI. Overall, the integration allowed for greater generosity levels for migrants, but with a few caveats. First, many firms were concerned about the financial burdens and less willing to participate, resulting in lower coverage in comparison to the previous migrant scheme. Second, the transition did not allow the migrants to count their previous contribution years in the migrant scheme, making many unqualified to receive social insurance benefits after retirement.3 The significant stratification in the employment-based social insurance model therefore provides greater protection for more high-skilled urban employees in the formal sector in comparison to the rest. The stratification effects coexisted with the rapid expansion of coverage. By 2018, more than 10.2 million urban employees including migrants contributed to UEBMI, with 5.04 million retirees entitled to receive UEBMI benefits (Shanghai Bureau of Statistics, n.d.). The employment-based social insurance model continues to be the dominant pillar in healthcare insurance in Shanghai. A comparison between Shanghai and Shenzhen demonstrates similar levels of local agency although significant variations in the reform

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measures themselves. In Shenzhen, a social pooling system was established in the pre-reform LIS scheme in 1983, which covered not only SOEs but also firms with mixed or foreign ownerships.4 In 1988, Shenzhen added a LIS track for “temporary workers” which allows retirees to receive medical subsidies. Next, an integrated employment-based social insurance model with multiple tiers was established in 1992, the earliest among all the cases. Most significantly, all urban employees with hukou were enrolled in one tier, while the urban unemployed as well as employees with temporary residence were enrolled in another tier with lower generosity.5 Shenzhen was also the first city to experiment with the individual account approach in 1996, through which employees with hukou were allowed to retain their individual contributions and accumulate the investment returns in their individual accounts. This combined model of social pooling and individual account became the prototype for the national UEBMI model in 1998. In contrast to Shanghai’s commercial insurance approach for migrants, Shenzhen in 2005 created a separate track named Labor Service Cooperative Medical Care in the social pooling system. With growing top-down pressure following the national healthcare reform and the introduction of the Social Insurance Law, the municipal Social Security Bureau responded with a “one system, multiple tiers” approach in which the formal sector employees with hukou were categorized as first tier, therefore maintaining their higher contribution rates as well as generosity levels. In contrast to Shanghai’s category-based approach and Shenzhen’s integrated but tiered approach, there has been persistent fragmentation in Guangzhou’s employment-based system for healthcare financing. The reform of employment-based healthcare insurance in Guangzhou followed a different trajectory. In Guangzhou, the pre-reform model was more stratified with varying levels of work unit contributions as well as generosity levels across sectors. Similar to other cities, economic reform and the resulting dramatic increase in healthcare expenditures forced work units to limit reimbursements based on age groups and types of diseases in early years. Beyond these firm-level and sectoral-level attempts, nonetheless, there were no significant reform measures at the municipal level to further integrate or reform the LIS model in the 1990s. Rather, the focus was to create some social pooling mechanisms on a sector-bysector basis to ensure financial sustainability, while maintaining the benefit levels of the pre-existing LIS healthcare scheme. When the 1998 national reform called for an integrated UEBMI model, the municipal government did not immediately follow. Instead, it took another three years for

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Guangzhou to introduce the implementation plan due to strong resistance from state-dominant economic sectors with higher generosity levels, as well work units administered directly by provincial bureaucracies which were unwilling to participate in city-level social pooling.6 In comparison to other policy domains, Guangzhou’s healthcare financing reform was significantly delayed. Pension reform began as early as 1986 and was fully installed in 1992. Similarly, local experimentation for HPF began in 1992 right after Shanghai’s initial reform in 1991. In healthcare financing, however, Guangzhou’s reform did not formally start until 2001. In 2001, Guangzhou finally published the Trial Procedures for Urban Employee Basic Medical Insurance in Guangzhou with approval by the provincial government. Although the reform plan proposed an integrated UEBMI, it also proposed tiers and divisions within UEBMI to accommodate the sectoral and geographic variations in coverage and generosity levels. While the reform plan promised to integrate the Free Medical Care, no concrete implementation steps were announced or taken. For urban employees with hukou, the new reform created three tiers with varying co-payment and reimbursement levels and set up five “districts” for social pooling, instead of establishing a general social pooling system at the municipal level. The fragmented system also created opportunities for certain SOEs to maintain their own work-unit level healthcare insurance policies and choose their own designated hospitals, rather than participating in the UEBMI.7 Meanwhile, the municipal government created a separate scheme for individuals with “flexibly employment” ( linhuo jiuye) out of UEBMI, which lower generosity level not covering outpatient services. For the rural migrants, the 2001 city-level reform plan explicitly excluded them from UEBMI by imposing strict eligibility criteria based on hukou status. No separate scheme was created for the migrants, leaving them unprotected in the next few years. Nonetheless, the situation began to change in 2007 as national and provincial top-down pressure for incorporating rural migrants increased. In late 2007, the municipal Labor and Social Security Bureau for the first time mentioned it was drafting new regulations for rural migrants as well as urban residents. In response to central mandates and hard targets, the provincial Department of Labor and Social Security of Guangdong organized a series of forums and invited policy experts as well as rural migrant representatives to participate.8 Under increasing central-level and provincial-level pressure, Guangzhou published reform plans to incorporate rural migrants into the UEBMI and

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the “Flexible Employment” schemes. Once implemented, Guangzhou’s reform plan provided more equitable access to rural migrants as they were integrated into existing schemes, rather than being covered under a separate scheme as in the case of Shanghai or Shenzhen. Most surprisingly, the city government created a “special category” in the existing schemes for rural migrants with a lower contribution rate yet the same or even greater generosity in comparison to regular employees.9 Regardless of initial delays in reform, the increasing top-down pressure from central and provincial governments have resulted in greater policy changes toward “social justice” goals in Guangzhou in comparison to Shanghai and Shenzhen. Interestingly, the case of Nanjing also demonstrated similar patterns of institutional fragmentation and selective reforms as in the case of Guangzhou. Although Nanjing announced social pooling for labor insurance as early as 1986, initial reforms focused more on pension and unemployment rather than healthcare. During the 1990s, local healthcare financing remained highly fragmented as similar to the case of Guangzhou, showing strong resistance to a historically dominant state sector and absence of provincial-level pressure on further reform. Following national reform in 1998, it took Nanjing another three years to formally began to transition to an employment-based healthcare insurance system that is “low generosity, broad coverage” (dishuiping, guangfugai) in 2001. Similar to Guangzhou, the integration of the Free Medical Care scheme was further delayed into the 2010s, while people with “flexible employment” were covered under a separate track with lower contribution and generosity levels. Although the initial reforms did not cover rural migrants, there was persistent provincial-level pressure to integrate migrants into UEBMI due to significant intra-province migrant inflows. As central-level top-down pressure intensified in 2006, the municipal Labor and Social Security Bureau in 2006 announced that it “no longer distinguishes between migrants and urban employees with hukou” in UEBMI and allow for voluntary contributions by migrants and their employers (Nanjing Labor and Social Security Bureau, 2006). In reality, however, because of its voluntary nature, the participation rate by firms and migrants are significantly lower in comparison to urban employees with hukou.

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5.2 The Vested Interests in the Party-State: From Free Medical Care to Supplemental Insurance Reforming the Free Medical Care system appeared to be the most difficult task due to strong vested interests in the state sector. As a newly established sub-provincial city with SEZ status, Shenzhen was the first to reform the Free Medical Care system as early as 1992 due to lack of strong vested interests in the state sector. Shanghai as a centrally administered municipality adopted a more incremental approach, by gradually decreasing the generosity of the program before finally integrating into the UEBMI scheme. With a large bureaucracy and added layer of provincial government, the reform of the Free Medical Care system was significantly delayed in cases of Guangzhou and Nanjing. In Guangzhou, reform attempts were blocked by the same vested interests and the national reform has been further delayed with no specific timetable by 2018. For Nanjing, the implementation of the national reform in 2014 was incomplete as party cadres and civil servants at provincial and city level continued to receive preferential treatments. In Shanghai, the municipal government adopted an incremental approach to reform the Free Medical Care system. During early years of reform, the municipal government continued to fiscally subsidize the Free Medical Care for political elites, civil servants and public sector employees, while imposing cost control measures and disincentives to prevent overspending at the same time. Between 1980 and 1990, the percentage of local population covered by the Free Medical Care increased from 4.3 to 6%, but still relatively small in comparison to the 43.2% of the total population that was covered by LIS (Shanghai Municipal Gazetteers Office, n.d.). The program therefore primarily protected the political elites themselves, although the reform-minded municipal officials were also interested in keeping the cost down. Since 1984, the municipal Health Bureau began to allow district-level bureaus, work units and hospitals to experiment with minor reforms that would allow some level of individual and employer responsibility in the Free Medical Care system. Such experiments included the introduction of individual co-payments, as well as the provision of fiscal incentives for work units and public hospitals to reduce overall healthcare expenditure. Without challenging the fundamental assumptions of the Free Medical Care system, the partial reforms served the cost control purposes as the per capital expenditure was significantly lower than the urban employee

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scheme. By 1990, the annual per capita expenditure for Free Medical Care was 198.38, lower than the 282.97 yuan for employment-based labor medical insurance (Shanghai Municipal Gazetteers Office, n.d.).10 Beyond these incremental measures, however, the municipal government did not attempt to overhaul the Free Medical Care system immediately, fearing it would cause backlashes from the political elites themselves. Rather, the municipal government continued to push for incremental reforms, such as requiring small amounts of individual contributions, imposing more cost control measures, and setting hard targets on expenditure growth.11 Starting 1999, some public sector employees began to transition to the UEBMI scheme, while party cadres and civil servants were required to contribute 1% of their salary to the municipal Medical Insurance Funds designated for civil servants. The contribution rate was then gradually increased to match those in the UEBMI. These incremental reform steps thus reduced the gaps in generosity levels between these two schemes significantly and long before the formal integration. Expectedly, the final integration faced much less opposition from the vested interests in the state sector.12 When the Free Medical Care system was finally integrated into UEBMI in 2003, the municipal government also provide temporary fiscal subsidies to those who were affected and promised to provide supplemental medical insurance to compensate their potential loss of benefits. In Guangzhou, on the other hand, the reform of the Free Medical Care has been stagnant for four decades because of strong opposition from the political elites themselves. To begin with, the pre-reform era government-financed medical care was more stratified because of its political administrative status as a provincial capital. For high-ranking party cadres at the provincial and municipal level, they were covered in the non-contributory Free Medical Care system. For regular civil servants and public sector employees, they were covered in a mandatory social insurance program that required a modest level of individual contributions. This tiered system remained mostly intact during the first two decades of the reform era. Although some districts experimented with cost control measures since 1990, very few measures were adopted at the municipal level. In the early 2000s, the municipal government for the first time proposed to integrate the Free Medical Care system into the new UEBMI. However, this reform proposal immediately received strong oppositions from party cadres, civil servants, and other public

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sector employees, thus were quickly shelved similar to central-level reform efforts. A key feature of Guangzhou’s Free Medical Care scheme is that it is non-contributory for the party cadres and civil servants, while the generosity level is about the same with the employee UEBMI and much higher than the resident URBMI.13 In recent years, government expenditure on healthcare for civil servants has continued to outgrow healthcare insurance expenditures for urban and rural residents. In 2012, the per capita government spending for municipal-level civil servants reached 7800 yuan, in comparison to the average URBMI reimbursement of 106.36 yuan (Guangzhou Municipal Finance Bureau, n.d.). In 2013, local People’s Congress delegates publicly criticized the reform deadlock and demanded the municipal government to provide a timetable for gradual integration. However, local labor and social security officials argued that such reforms would require provincial approval and that no concrete timetable could be set without provincial permission.14 Despite successful implementation of reforms in other provinces and cities, Guangzhou was the last city that still provides Free Medical Care to political elites as well as provincial and municipal civil servants in Guangdong province, making Guangdong also one of the few provinces that still retain this system following the 2014 national reform. Further comparison with the secondary cases of Shenzhen and Nanjing help identify similar patterns. Because Shenzhen was a new city established to model Hong Kong’s EOG model, the absence of strong vested interests in the public sectors at the beginning helped explain the absence of opposition in earlier local experiments. Shenzhen was also the first pilot city nationwide to announce a fully integrated social insurance scheme for all urban employees as early as 1992, which integrated party cadres and civil servants. Nonetheless, after four decades of rapid development, the size of bureaucracy has also grown significantly.15 Over time, the newly emerged political elite class began to demand greater generosity and some form of institutionalized preferential treatments. In 2012, the Shenzhen Social Security Bureau proposed new measures to provide supplemental medical insurance to civil servants with fiscal subsidies. Although the proposal was immediately criticized by local policy experts and unfavored by public opinion, the measure was eventually implemented as an administrative rule without deliberation or legislative approval by the local People’s Congress.16

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In Nanjing, the provincial capital of Jiangsu that is adjacent to Shanghai, the Free Medical Care for civil servants and public sector employees were kept intact until national reform in 2014. The city then finally announced it will integrate those who were covered in Free Medical Care into UEBMI, following the nationwide mandate from central government. Even then, the civil servants and public sector employees organized through their own labor unions and professional associations, and secretly lobbied the municipal government to demand a “grandfather clause” and additional measures to ensure similar generosity levels after reform. Eventually, the reform measures were accompanied by the “grandfather clause”, as well as fiscally subsidized supplemental medical insurance and secondary reimbursements which will financially compensate those who are not covered by the “grandfather clause”. With varying institutional designs, the political elites across the four cases continue to receive privileged access to healthcare and more generous healthcare benefits in comparison to regular employees and residents.

5.3

Medical Assistance for Whom? From URBMI to Medical Aid

The shared commitment to the employment-based healthcare insurance is in direct contract to the absence of local agency in developing a universalistic residence-based BMI scheme prior to the national introduction of NRCMI and URBMI. Across all four cases, the creation of residencebased programs with “low contribution, low payment” and further integration of urban and rural residents into the URRBMI scheme, were mainly results of top-down pressure accompanied by strengthened fiscal support from the central or provincial government.17 Prior to the introduction of such schemes, three out of the four cities experimented with some means-tested or category-based medical aid programs to selected disadvantaged groups that are far from universalistic. These local experiments preceded the nationwide implementation of the Medical Aid program by MCA in 2009. Interestingly, some programs later were promoted by MCA at the national level as it shifted its policy doctrine from direct government responsibility to “state guidance, societal participation”. Reflecting the greater flexibility and discretions in central policy guidelines, local governments across all four cases have developed their own models of financing and service delivery for the Medical Aid program.

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Complementing the dominant employment-based model, Shanghai provided some basic form of means-tested protection in urban areas based on the principle of “more individual responsibility for less critical illness” both before and after the introduction of the URRBMI scheme in 2007 (Shanghai Municipal Gazetteers Office, n.d.). Specifically, the municipal government promoted a Medical Aid system with “multiple layers, multiple channels” (duocengci duoqudao) and coordinate a state-led network for financing and service provision. First, a general means-tested social assistance program was established in 1997 and directly operated by the municipal and district-level Civil Affairs Bureaus. Under this program, individuals who met the eligibility criteria for the MLG were also qualified for one-time medical subsidies. Second, the municipal government worked with the state-sponsored Shanghai General Labor Union and employers to establish a mutual-aid program for urban employees as well as retirees with critical illnesses. Third, the state-sponsored Red Cross in coordination with the municipal Education and Health Commissions established mutual-aid Medicare Fund for Children in 1996 and then incorporated migrant children into the fund in 2004. This program was later promoted as a successful model by MCA at the national level and covers 95% of children in Shanghai by 2020.18 Finally, the state-sponsored Shanghai Charity Foundation administers a charity medical fund and provides charity medical services for seniors who are ineligible for UEBMI in coordination with local hospitals.19 Shanghai’s local experiments provided a template for nationwide implementation of the Medical Aid system in 2005. Nonetheless, the means-tested nature and strict category-based eligibility criteria of these programs has led to limited coverage for the “new urban poor”, especially for local residents who are above the poverty line but still unable to afford healthcare, as well as migrants who work in the informal sectors. Furthermore, only low-income local residents with hukou were eligible for direct subsidies and service provision by the Civil Affairs bureaus, while migrants on a selective basis could participate in the mutual-aid and charity programs that were coordinated by the government but without direct fiscal support. With a stratified Medical Aid system in place, the municipal government chose not to implement a universal residence-based medical insurance scheme before 2007. Instead, the residence-based schemes were formally announced in 2007, following the State Council’s mandate for nationwide implementation. The final introduction of residence-based BMI and the further integration between

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urban and rural areas helped to fill the gap between the employmentbased UEBMI and the means-tested Medical Aid system. Between 2010 and 2020, the number of urban and rural residents enrolled in the resident scheme increased moderately from 2.59 million to 3.42 million.20 Still, the total number of people covered in the resident and Medical Aid schemes remains relatively small in comparison to the 10 million urban employees who are covered under the more generous UEBMI. In Guangzhou, the Medical Aid program was created as a result of provincial top-down pressure in 1999. Almost ten years later, the resident BMI scheme was established in 2008 in response to the State Council’s mandate for nationwide implementation. For the resident schemes, Guangzhou’s moves closely followed national reform guidelines since 2008, from the introduction of separate rural and urban schemes to their integration in 2015. By contrast, local agency was more evident in the case of Medical Aid. Between 1999 and 2010, the Medical Aid program primarily targeted low-income households and individuals with disabilities with hukou. The municipal Civil Affairs Bureau provided direct fiscal subsidies, collaborated with the state-sponsored Guangzhou Charity Association to collect societal donations, and coordinated service delivery with the government-sponsored Guangzhou Charity Hospital. With greater top-down pressure to expand the Medical Aid program in the late 2000s, this state-led model was gradually replaced by a multipillar approach in Medical Aid. In 2010, Guangzhou institutionalized a second pillar of charity medical aid, through which local public or private charity organizations can independently collect charity donations and coordinated supplemental medical aid for low-income households as well as the migrant populations, including rural migrants and non-local college students. In addition, the municipal Civil Affairs Bureau established a Medical Aid Service Center to help coordinate the increasingly pluralized financing and service delivery mechanisms. In 2013, Guangzhou worked with a state-owned insurance company to develop a commercially insured medical aid system, where the government purchase commercial medical insurance at a subsidized rate for disadvantaged social groups. After seven years of local reforms and experiments, these incremental policies were formally institutionalized in 2016 by the issuance of the Measures for Medical Aid in Guangzhou, which identified four pillars in the Medical Aid system: government-oriented, commercial insurance, charity medical aid, and special programs. Guangzhou’s medical

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aid system coordinated a wide range of state, market and voluntary sector actors including the local civil affairs, social security, fiscal and health bureaus, healthcare providers, commercial insurance companies, the government-sponsored Guangzhou Charity Association, Disabled Persons’ Federation, as well as a network of service-oriented nongovernmental organizations (NGOs) and social workers. What is distinctive in Guangzhou’s model is its emphasis on an “enabling state” approach in comparison to the more hierarchical state-led model for financing and service delivery in Shanghai. This can be exemplified in the collaboration with insurance companies in purchasing commercial insurances, the greater reliance on stable charity donations rather than government finances, as well as the establishment of a “charity + social worker” model in service delivery. Further comparison between Shenzhen and Nanjing shows there are interesting parallels between the models of state-led and communitybased Medical Aid systems, as well as different attitudes toward migrant populations. In Nanjing, the Medical Aid program primarily targeted local low-income residents with hukou and provided through government fiscal subsidies. Nanjing also represented a significant outlier across the four cases, as no dedicated medical aid program was experimented at local level prior to the 2009 MCA mandate. Rather, limited medical assistance was delivered through existing welfare programs such as the MLG. Furthermore, the voluntary sector programs remain fragmented and uncoordinated, and are often defined based on illness categories. Local charity organizations are more likely to work with large public hospitals to establish in-house medical aid programs rather than through a common platform coordinated by the municipal government. Contrastingly, migrants constitute a large percentage of local population in Shenzhen, and the municipal government has been more willing to provide some protection through a “state guidance, societal participation” model. Although migrants have been excluded from the governmentoriented Medical Aid program for residents with hukou, the municipal government has worked closely with the voluntary sector to help migrants with critical illness or financial difficulties. In 2004, the municipal Red Cross set up the first medical aid fund that includes migrants as an eligible category.21 More recently, with support from the municipal agencies in civil affairs and healthcare, the Shenzhen Charity Federation announced a community-based platform program that seeks to facilitate collaboration

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across government, private sector, and community in providing medical aid for migrants.22

5.4 Articulating the Welfare Mixes: Comparing Local Healthcare Models Beyond the apparent commonality of a dominant UEBMI model, Table 5.1 summarizes the significant variations in how each locality articulate their welfare mix models for healthcare. First, the degrees of local agency and latitudes of local discretion vary. Specifically, Shanghai and Shenzhen have enjoyed greater fiscal capacity and policy autonomy due to their centrally administered municipality and SEZ statuses. They are more likely to be selected as pilot cities for national reform programs, and local successes and failures are more likely to produce feedback effects in national policymaking. By contrast, the greater top-down constraints especially from the provincial level were more evident in the cases of Nanjing and Guangzhou, resulting in more sporadic local experiments, as well as inconsistencies and delays in reform attempts. Secondly, the principle of “state guidance, societal participation” has been interpreted and implemented differently across the localities. Although all four cases relied on their existing state corporatist institutions in healthcare financing and service delivery, in reality Shanghai and Nanjing have prioritized participation by state actors while Shenzhen and Guangzhou have provided a more equalizing playing field for private and community actors. Finally, the four cases have illustrated that patterns of stratification can vary based on who are defined as “insiders” and “outsiders” by local governments. For the “new urban poor”, this means they are likely to face varying levels of healthcare access and choice based on where they reside. While Shanghai and Nanjing have significantly expanded coverage and generosity for low-income residents with hukou, Guangzhou and Shenzhen have adopted more inclusive approaches to improve healthcare access for rural migrants. The rest of this section provides a more detailed comparison between Shanghai and Guangzhou to illustrate the differences, followed by brief discussions on the cases of Nanjing and Shenzhen. In Shanghai, the local welfare mix relies on a dominant employmentbased social insurance approach in healthcare financing, and a state-led model in service delivery. Prior to the 1998 national reform, Shanghai had established a preliminary contributory social insurance framework

Source Compiled by author

Choice

Hierarchical coordination by state asset bureaucracy Urban formal sector employees with hukou > high-skill migrants and informal sector employees > residents > low-skill migrants

Preferential policies for large public hospitals

State-led

Political elites > urban public/SOE employees > private sector employees > residents with hukou and college students > low-skill migrants

Local policy processes often interrupted by provincial directives State-led with some pluralization elements Mixed signals for private, foreign and voluntary sector involvement

State-led policy network

Pluralization

Bureaucratic decision-making

State corporatist institutions channeling societal interests

Participation

Moderate local agency More top-down pressure

Nanjing

Strong local agency Greater local-central feedback

Shanghai

Comparing local welfare mixes in healthcare

Decentralization

Table 5.1

Political elites > urban public sector employees > other urban employees > informal sector employees and residents with hukou > migrants

Pluralized with state-led elements Bottom-up community-based care with private participation

Local policy processes often interrupted by provincial directives

Moderate local agency More top-down pressure

Guangzhou

Urban formal sector employees with hukou > informal sector employees and migrants > residents

Market-oriented model with incentives for both public and private institutions

Pluralized

Strong local agency Greater local-central feedback Stable corporatist institutions channeling societal interests Local People’s Congress

Shenzhen

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at the municipal level, with “categorized solutions” for specific social groups. Such a system nonetheless prioritized the dominant social blocs, which included the party cadres, civil servants, and urban employees in the formal sector. To push for further reform, the municipal government took steps to integrate the fragmented bureaucracy while provided institutionalized channels for societal inputs from the dominant social blocs in the policymaking processes. In 1996, the municipal government separated the healthcare insurance administration functions from the Municipal Labor and Social Security Bureau, then established a separate Medical Insurance Bureau to manage the various contributory healthcare insurance schemes gradually established at the municipal level.23 With the support of the municipal government, local policy communities held a series of research seminars with experts from Japan, Taiwan, Hong Kong, and Canada to explore possible directions of healthcare insurance reform. In addition, the municipal economic agencies helped conduct firm-level surveys and collect feedback from key firms and public hospitals annually, and the results were summarized in the annual Medical Insurance Implementation Evaluation Reports. While the 1998 national reform focused only on urban employees, the municipal government consulted with a variety of local stakeholders including employers, insurance companies, and government-sponsored professional organizations and labor unions, then proposed to develop a “multi-tiered medical insurance system” in 2000 (Shanghai Municipal Government, 2000). Without central guidelines at the time, the locally developed healthcare financing system is highly stratified. In addition to the employee UEBMI scheme, the municipal government developed supplemental medical insurance programs, employee mutual-aid programs, and options for participation in commercial insurance for urban employees. At the same time, Shanghai created a separate social insurance scheme for employees in suburban and rural counties, then worked with state-owned insurance companies to create a voluntary contributory program for rural residents and a commercial insurance scheme for migrants. All these programs required less contribution by individuals or their employers and minimum government support, and expectedly provided much lower generosity in comparison to the employee scheme. With a highly stratified but comprehensive system in place, the national healthcare financing reforms since 2000s produced limited effects on Shanghai’s existing institutions. For the first few years, the supplemental insurance, migrant comprehensive commercial insurance and the

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small-town schemes continued to coexist with the two national pillars. More recently, the municipal government has nominally integrated these schemes into UEBMI, though in practice their revenues and expenditures are still kept in separate tracks, resulting in persistent stratification in healthcare financing. Over the years, the municipal government gradually expanded the reimbursement standards across the tracks and the broader schemes, though individual and employer contribution rates were also adjusted to compensate the added costs. The relative stable policy institutions and the reliance on an employment-based social insurance model helped explain the consistently low level of direct governments pending in the healthcare sector. At the national level, government healthcare expenditure has fluctuated between 27 and 30% since the 2009 reform. In Shanghai, however, the government spending never exceeded 25% and has been maintained at a relatively low level of 18–21% in recent years.24 Meanwhile, the trajectory of service delivery reform in Shanghai has continued to show patterns of state sector dominance. Furthermore, the boundaries between state and market, as well as between for-profit and non-profit remain blurred. After 1949, the municipal government took over the private and foreign hospitals and transformed them into public hospitals and health centers.25 With relatively developed healthcare infrastructure and resources in the Republican era before the communist takeovers, many of these hospitals later become Tier-3 hospitals that are now dominant in Shanghai’s local healthcare delivery. Although early reforms encouraged private and foreign participation in the healthcare sector, the overall service delivery reform has continued to prioritize large comprehensive public hospitals.26 Whereas early state-led marketization measures have made public hospitals increasingly profit-seeking, they also continue to receive fiscal subsidies and preferential policies at local level, leading to increasing concentration of healthcare resources and crowding out effects on non-state sector participation. In 2016, the Director of Shanghai Health and Family Commission publicly acknowledged that the healthcare market in Shanghai has been highly uneven between the public and private sector (CBN Weekly, 2016). Although there have been a greater number of private healthcare institutions, service indicators show that public hospitals continue to dominate.27 In 2013, the share of inpatient and outpatient visits for public hospitals were 92.06 and 94.42%, respectively, in comparison to 7.94 and 5.58% for private institutions (Shanghai Health and Planning Commission, 2014).

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Despite the dominance of state actors in healthcare, more recent reforms have continued to focus on improving public hospital efficiency rather than further encouraging private and foreign participation. In particular, the municipal government has established the state-owned non-profit Shenkang Hospital Administration Center, which is directly supervised by the municipal State-Owned Assets Supervision and Administration Commission. While the new system has helped reduced bureaucratic fragmentation and regulatory overlap, it also helps strengthen state control in the decision-making structure of public hospitals, including the appointment of hospital administrators and external investment decisions (Economic Observer, 2009). More significantly, Liao Xinbo, a reformminded provincial health official in Guangdong, publicly criticized this model as “just separating the functions from one government institution to another government or quasi-government institution” (Liu, 2010). By 2016, most Tier-3 public hospitals were under the direct supervision of the Shenkang center, and the municipal government allocated fiscal subsidies of more than 2 billion yuan to local comprehensive public hospitals in that year alone (Shenkang Hospital Administration Center, 2017). At the same time, private and foreign-owned hospitals are encouraged to provide specialized care only, and none have so far registered as a Tier-3 hospital in Shanghai.28 The central government’s call for community-based care in recent years was responded to by the municipal government with a “conglomeration” approach to the healthcare industry. With strong support from the government, Shanghai’s public hospitals began to form horizontally and vertically integrated “medical consortiums” (yilianti) that resembles the SOE industrial conglomerates in economic sectors. Under this model, Shanghai has encouraged a state-led community-based care approach, where the Tier-3 public hospitals and help coordinate services at lowerranked district-level hospitals and community-level healthcare centers.29 Supplementing this approach, the municipal Health Commission introduced “family doctor” (jiating yisheng ) model that resembles the British gatekeeper system in 2011. Instead of going to a Tier-3 hospital of their choice directly, local residents now need to sign up in a “1+1+1” system, where they can choose a community health center, a district-level hospital, and a municipal-level Tier-3 hospital. By 2018, more than 30% of local residents with hukou have signed up for the system based on local news reports. While the “family doctor” approach has helped resolve the overcrowding issues in Tier-3 hospitals, it also complements the “medical

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consortium” approach to create a more oligarchic and hierarchical healthcare market with limited competition and continued crowding out of private institutions. Expectedly, these two models have been recognized and promoted by NHC at the national level, since NHC and its predecessor MOH has long favored the British gatekeeper system and has been a strong proponent of state-led marketization. In 2015 and 2017, the State council published the Guiding Opinions on Propelling the Building of a Hierarchical Diagnosis and Treatment System and the Guiding Opinions on Promoting the Development of Medical Consortiums to promote the use of general practitioners in the community-based care and the development of “medical consortiums” at regional and national levels (State Council, 2015, 2017). In Guangzhou, the added layer of provincial government and strong vested interests in the state sector have complicated the development of a coherent welfare mix at the local level. In contrast to Shanghai’s strong local agency in policymaking and ability to project national influence consistently, reform decisions and priorities in Guangzhou were more often constrained by provincial priorities and preferences, and at times more reactive rather than proactive to top-down pressure from the central government. For example, the provincial government of Guangdong in 1995 chose Guangzhou as a pilot city to achieve the goal of “universal healthcare by 2000” set up by the central government (Guangzhou Municipal Gazetteers Office, n.d.). Without autonomy and capacity to experiment new institutions, Guangzhou chose to focus on recovering the rural cooperative care system, while delaying more radical urban reform into the 2000s. While the civil servants maintained their privileges in the Free Medical Care system, institutional fragmentation remained a key feature of Guangzhou’s LIS scheme before the 2000s. In 1996, the Social Security Administration Bureau was formed, which oversaw pension, unemployment, work-related injury, and maternity insurance schemes. The bureau was also in charge of the Free Medical Care program. Rather than advocating for reforms, the Labor and Social Security Bureau and the Health Bureau in Guangzhou demonstrated persistent favoritism for provincial and city-level state interests and helped retain their privileges for a prolonged period of time. The strong vested interests in the state sector also hampered reforms for the Free Medical Care system, making Guangzhou one of the few cases that still retains the system after 40 years of reform. This resulted in widespread and persistent criticisms including from local People’s Congress delegates, but such societal demands were

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often ignored in face of a stronger coalition between the bureaucratic agencies and vested interests in the state. Interestingly, the Provincial Department of Labor and Social Security were more interested in promoting provincial-wide reforms in urban– rural integration as well as more inclusive policies for migrants from other parts of the province in Guangzhou. The provincial-level priorities over time resulted in the creation of a more generous scheme for migrants in the UEBMI scheme in comparison to Shanghai, which requires lower contribution but offers almost comparable reimbursements criteria to regular employees. The top-down pressure from central and provincial government therefore interacted to allow for a more inclusive approach for migrants in Guangzhou’s UEBMI scheme. More recently, the growing top-down pressure in incorporating migrants into the Medical Aid program has created another set of challenges for the municipal government to respond to. With limited fiscal and administrative capacity, the municipal government was unwilling to cover migrants in the government-oriented Medicaid program that requires strong fiscal support. Nonetheless, the thriving voluntary and private sectors provided another opportunity for Guangzhou to expand a more pluralized model in other policy domains into the Medical Aid program. To accommodate growing top-down pressure, the municipal government has embraced the principle of “state guidance, societal participation”, which can be characterized by government purchasing of commercial insurance and an enabling approach for the voluntary sector in providing means-tested services. Similar to Shanghai, Guangzhou’s public hospitals remain dominant throughout reform era. Nonetheless, greater policy support and at times fiscal incentives are provided to encourage private and foreign participation in the healthcare market. In Shanghai, private hospitals are often smaller in scale, lower in administrative ranks and perform less well. Private and foreign capital that seeks to establish more comprehensive Tier-3 hospitals often encounter significant policy and administrative barriers. In Guangzhou, nevertheless, there are significant private participation and more equalized policy support at municipal and district levels, and the barriers to entry have been gradually reduced. First, several Tier-3 hospitals in Guangzhou are private hospitals, including two private hospitals that specialize in cancer treatment and an eye care hospital that has over time developed into a well-performed medical group with operations nationwide.30 Second, the Guangdong provincial Department of

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Health, rather than the municipal Health Bureau, directly supervises these private hospitals and provide additional policy support such as allowing them to be affiliated with local universities as teaching hospitals. Third, with weaker fiscal capacity, the municipal government adopted a more open attitude toward the private and the voluntary sector participation in community-based care, especially in suburban and rural areas where large public hospitals are absent. While the private and voluntary sectors are considered complementary to the public hospitals, recent central reforms and policy inconsistencies have complicated the prospects of their development. Following the 2009 national healthcare reform during the Hu-Wen era, the provincial government followed the “state guidance, societal participation” principle, promoted the development of “community health centers” (shekang zhongxin), and encouraged private and foreign participation in both Guangzhou and Shenzhen.31 Nonetheless, recent central policy changes under Xi Jinping’s political leadership began to encourage a stateled model and restrict foreign capital in providing healthcare services. In particular, the State Council recommended all localities to follow the Shanghai model and adopt “medical consortiums” and “hierarchical diagnosis and treatment”, which encouraged similar patterns of “conglomeration” of Tier-3 public hospitals and more hierarchical coordination of healthcare services (State Council, 2015, 2017). To some extent, the new national policy guidelines negated the more communitybased and pluralized “Huadu Model” (huadu moshi) in Guangzhou that was previously promoted by both the provincial and municipal governments.32 In 2017, Guangzhou announced that it would now implement a “loosened medical consortium” approach, through which Tier-3 hospitals only provide technical, personnel, and administrative support but without complete control over the district-level hospitals and community health centers (Feng, 2017). At the same time, the municipal government specifically recognized that private hospitals can also form their own medical consortiums or participate in consortiums led by public hospitals (State Council, 2003). Further evidence from Shenzhen and Nanjing also helped show persistent variations across local cases. In Shenzhen, the lack of strong vested state interests coupled with high autonomy guaranteed by the SEZ status allowed more radical reforms in both healthcare financing and service delivery. This is illustrated by Shenzhen’s more integrated but

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tiered model in healthcare financing that provides the earliest integration of private sector and foreign firm employees, as well as migrants and those with “flexible employment”. Similar to Guangzhou, Shenzhen has adopted an “enabling state” approach to rely on the voluntary sector to provide means-tested protection for migrants and their families with financial difficulties or critical illnesses. Finally, service delivery reform in Shenzhen has encouraged even greater pluralization and a more leveled playing field from the start, while the “state guidance, societal participation” model was established much earlier than the other three cases. In general, there are no restrictions for private hospitals in Shenzhen in regard to the quantity, rank, the number of beds, the choice of location, or qualification for social insurance payments, which are more prevalent in Shanghai. Furthermore, the municipal government provides fiscal subsidies and rewards for private hospitals that help improve local healthcare system performance or increase healthcare access based on a variety of service indicators. In Nanjing, earlier reforms shared similar patterns with Guangzhou in terms of institutional fragmentation and delayed reforms. The healthcare financing system in Nanjing also provides greater government responsibility to the political elites and public sector employees, due to strong vested interests in the state sector. While high-skill migrants and college students have received more equalized access to social insurance, the picture is different for low-skill migrants, whose participation in social insurance is only voluntary and are often excluded from means-tested Medical Aid programs. On the other hand, service delivery reform has experienced significant inconsistencies due to changes in central and provincial priorities. In the early 2000s, Nanjing encouraged foreign and private participation in healthcare, with significant private investment and even ownership control of some Tier-3 and district-level hospitals. The policy environment however has changed in recent years. More recent reforms have prioritized the “tightened medical consortium” approach similar to Shanghai that allows greater vertical integration between Tier-3 public hospitals and lower-ranked healthcare institutions. While foreign and private hospitals are present in Nanjing, they often focused on highend and specialized care without equalized policy support or financial incentives. Overall, all four cities have developed a relatively comprehensive social insurance system for healthcare financing. Nonetheless, there are also significant variations in regard to coverage and generosity patterns

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across different social groups. In particular, Shenzhen and Guangzhou’s more inclusive approaches to low-skill migrants have resulted in greater healthcare insurance coverage in general as shown in Fig. 5.1.33 In the case of Shanghai, the municipal government provides almost university coverage to local residents with hukou and skilled migrants with permanent residence. By contrast, the municipal government offers very limited coverage for migrants with temporary residence. Although both Nanjing and Guangzhou are provincial capitals, Guangzhou’s healthcare insurance coverage is persistently higher than Nanjing, indicating the potential impact of its more inclusive policies toward migrants. On the other hand, earlier prioritization on community-based healthcare and pluralization of service delivery in Guangzhou and Shenzhen has resulted in more rapid expansion in healthcare access. As Fig. 5.2 shows, although Shanghai has the greatest fiscal capacity across all four cases, Shenzhen and Guangzhou have outperformed Shanghai in key service indicators such as the number of hospital beds per 10,000 people. Across all four cases, Nanjing has the smallest number of hospital beds per 10,000 people, though the number is still relatively high in comparison to the national average.

Fig. 5.1 Healthcare insurance coverage index by city, 2011–2018 (Data Source National Development Research Center China)

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Fig. 5.2 Number of hospital beds per 10000 people by city, 2000–2019 (Data Source National Development Research Center China)

5.5

Political Institutions, Growth Strategies and Subnational Healthcare Politics

This chapter has provided a detailed comparison of the healthcare reform trajectories as well as patterns of financing and service delivery across the four cases. The dismantling of the communist healthcare system has led to experimentation and institutionalization of varieties of welfare mix models, rather than a single model of healthcare. At the national level, incrementalism, inconsistencies, and more recently frequent changes in central policies have provided incentives and disincentives for local agency. However, as we can see from the case comparisons, local agency in coastal cities is far from monolithic. In general, the cases of Shanghai and Nanjing have prioritized urban employees with hukou and high-skill migrants in healthcare financing, while adopting a state-led model in service delivery. By contrast, the cases of Guangzhou and Shenzhen have preferred a more inclusive approach for low-skill migrants, and a more pluralized model for service delivery. Such patterns are largely consistent with patterns of local growth strategies, with a more state-led economic development in Shanghai and Nanjing in contrast to market-oriented growth models in Guangzhou and Shenzhen.

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Nonetheless, the cases also have shown that local governments have the varying capability to articulate a welfare mix compatible with local growth strategies. While increasing top-down pressure since the late 2000s have imposed greater constraints on local agency, such impact is stronger for Guangzhou and Nanjing in comparison to Shanghai and Shenzhen. Meanwhile, local governments have carefully balanced between top-down pressure and local goals such as economic development and social stability. Healthcare policies are therefore frequently implemented through existing and new forms of state corporatist institutions, with the purpose of reformulating authoritarian social contracts in accordance with top-down pressure and local growth strategies, while maintaining a stable dominant social bloc at local level. In this concluding section, I review the key actors, orientations, and capabilities in defining the interactions between political institutions and growth strategies, and therefore shaping national and subnational healthcare politics. First, who formulate healthcare policies? In a one-party state like China, the key actors in healthcare policymaking are the party leadership, central bureaucracies, subnational political entities such as provincial and municipal governments, and specific local agencies and bureaucrats in charge of policy implementation. At the central level, there are significant shifts in political rhetoric by each generation of party leadership in regard to healthcare, from “efficiency first” to “social justice” and more recently “healthcare for all”. These shifting priorities, in turn, open up windows of opportunity for bureaucratic and societal actors. Furthermore, bureaucratic fragmentation has been persistent and only moderately reduced recently, and reforms are often the result of bargaining and compromises, creating significant leeway for local discretions. In Shanghai and Shenzhen, local experiments prioritized different models of social insurance and service delivery that are compatible with local growth strategies of state-led or market-oriented models. Without significant top-down pressure before the 2010s, local models were institutionalized in the form of administrative rules at first followed by legislative approval. In Guangzhou and Nanjing, nonetheless, initial reforms were delayed or less radical due to strong vested interests in the state sector and at times competing priorities between municipal and provincial levels. In these two cases, the productivist logic of social insurance coexist with protection clauses for the state sector interests. In service delivery, these two cases were often selected by provincial government to conduct experiments such as the “Huadu model” or “Nanjing model” that

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reflected provincial rather than municipal-level policy priorities. Still, local governments have maintained a moderate level of agency by interpreting provincial priorities in their own terms, relying on existing state corporatist institutions to carry out reform, and making incremental changes to current policies rather than completely overhauling the existing system. More recently, the national healthcare reform, the restructuring of NHC and establishment of NHSA to some extent have helped outline a more concrete national reform plan, reduce bureaucratic fragmentation at the central level, while increasing vertical or hierarchical coordination with local agencies. At least nominally, all four cases have followed central mandates to create an integrated social insurance system. Still, local agency was evident in regard to how the new integrated model is articulated, such as creating tracks within the main scheme or provide addendums to specify protection clauses for specific social groups. More recently, the NHC and State Council mandates on the “medical consortiums” and “hierarchical diagnosis and treatment” promoted a specific national formula for service delivery reform. Nonetheless, local agency was again a significant factor, as shown in the distinction between the “tightened medical consortiums” in Shanghai and Nanjing, versus the “loosened medical consortiums” in Guangzhou and Shenzhen. These local interpretations soon provide feedback effects to central policymaking, as the State Council now recognizes different types can coexist under the general umbrella term. Second, who finance healthcare at the local level? Across all four cases, direct government responsibility remains low due to the clear productivist logic in prioritizing an employment-based social insurance approach. On a national average, the majority of urban and rural residents are enrolled in the URRBMI that is fiscally subsidized by the central government and local governments, rather than UEBMI which requires less direct government responsibility.34 The situation is reversed in the coastal provinces and cities examined in this book. In Shanghai and Guangzhou, for example, more than two-thirds of the population are enrolled in the employment-based scheme, compared to less than one-third of the population enrolled in the residence-based scheme. Instead of directly subsidizing individuals, local governments provide greater fiscal support for the employment-based scheme and encourage firms and individuals to enroll based on the “burden sharing” principle. At the same time, meanstested protection is provided only for local residents and selected migrants with financial difficulties or critical illness. The similarity in the dominance of the employment-based social insurance model therefore helps

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explain the lower shares of government expenditure in contrast to societal expenditure as percentages of total healthcare expenditure. Third, who provide healthcare? In the area of service delivery, communist legacies as well as MOH or NHC’s promotion of a state-led marketization model helped explain why public hospitals have maintained their dominance across all four cases. Nevertheless, there are important distinctions across the four cases in regard to the degree of favoritism they receive in terms of policy and financial support. For example, Shanghai and Shenzhen adopted distinctive approaches of state-led or more pluralized models. The hierarchical coordination by the Shenkang Center in Shanghai is in direct contrast with the community-based “Shekang” approach in Shenzhen. Furthermore, private sector and foreign participation beyond specialized or high-end care has been less encouraged in Shanghai, with strict restrictions on market access as well as preferential policy support for public hospitals. For Guangzhou and Nanjing, local service delivery reforms have produced mixed results with incoherent policies, due to frequent interruptions by different sets of top-down pressure from central and provincial governments. In Guangzhou, the “Huadu model” that emphasized service equalization between urban and rural areas was originally endorsed by provincial government to complement the “Luohu Model” in Shenzhen that focused on urban reform. In Nanjing, the provincial government promoted a “Nanjing model” that would reduce the profit-seeking behavior and potential corruption in large public hospitals along with two additional models in Suqian and Wuxi. Both however were later adapted to accommodate new central priorities on “medical consortiums” and “hierarchical diagnosis and treatment”. Finally, who has what access to healthcare? This question is critically important to our understanding of the local dominant social blocs, the “new urban poor”, and the constant reformulation of authoritarian social contracts. In general, all four cases have demonstrated consistent preferences for greater protection for the “productive sector”, which typically includes urban employees in the formal sector, and to a fewer extent employees with “flexible employment” and high-skill migrants. With a similar strategy in EOG during early reform years, all four cases have incorporated not only SOEs but also private and foreign firm employees into the employment-based scheme. However, beyond this productivist logic, each locality has developed different priorities in regard to which other social groups they seek to protect, and which they would exclude.

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The stronger vested political and economic interests in the state sector have contributed to continued preferential treatment of political elites and state sector employees in the cases of Guangzhou and Nanjing. Meanwhile, the “new urban poor” particularly low-skill rural migrants face various levels of protection as well as individual choice depending on where they reside. In the case of Shanghai, highly educated and skilled migrants with stable employment and long-term residence are treated preferentially due to their potential contribution to Shanghai’s prioritization of key strategic industries such as finance and high technology, as well as the emphasis on promoting a headquarter economy and global financial and trade center. Low-skill migrants however are often left out, resulting in forms of informality and insecurity. With similar productivist logic, Nanjing has provided greater protection for college students, with the hope that they would stay in Nanjing after graduation and contribute to local strategic industries such as high-technology manufacturing sectors.35 For low-skill and less educated migrants, nonetheless, Nanjing has allowed them to enroll in employment or residence-based schemes on a voluntary basis only, resulting in low participation rates due to lack of willingness by firms. In both cases, the means-tested government programs such as Medical Aid primarily target at low-income urban residents with hukou, while the size of voluntary sector programs for migrants remain relatively small. In Guangzhou and Shenzhen, earlier reforms have resulted in more inclusive measures toward migrants due to the significant reliance on migrants in supporting a manufacturing-based EOG strategy. A more inclusive attitude toward migrants is also consistent with its marketoriented growth model that encourages more equalized market access and competition among SOEs, private enterprises as well as foreign firms. Incorporating migrants can particularly contribute to the development of private sector firms and help them retain a stable workforce. Nonetheless, the two cases also have shown some differences in how migrants are included. In Shenzhen, migrants were included earlier in the integrated medical insurance, but they were initially covered in a separate track with lower contribution and generosity level. More recent reform has provided more choices, though the decision-making power is left to the employers based on their own preferences. In Guangzhou, the inclusion of migrants occurred more recently under provincial and central pressure, but with greater generosity level, which reflected provincial priorities of promoting urban–rural integration and public service equalization. In both cases,

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migrants with stable employment are eligible to receive a comparable level of healthcare insurance benefits with urban residents. Finally, the different tracks in the Medical Aid program allow local governments to provide stronger fiscal support for low-income residents with hukou, while relying on the voluntary and private sector to support migrants.

Notes 1. Data acquired from the Municipal Gazetteers Office of Shanghai. 2. NBS data shows that participation rate of formal sector employees increased significantly by 2000, with 3.64 million enrolled and another 2.04 million retirees eligible for benefits. 3. According to local social insurance regulations, employees are only eligible to receive social insurance benefits after retirement if they have contributed to social insurance consecutively for more than 10 years. 4. The 1983 Temporary Regulations on Social Labor Insurance in Shenzhen required SOEs and other types of state-operated work units to contribute 20% of salary, while firms with mixed or foreign ownerships would contribute 25% of salary. 5. The Shenzhen model included three tiers: the “comprehensive medical insurance” for urban employees with hukou, the “hospitalization medical insurance” for the unemployed and employees with temporary residence, and “special medical insurance” for retirees and selective veterans. Information acquired from the Municipal Gazetteers Office in Shenzhen. 6. Song Dongmei for example discussed how state sector firms and employees with higher benefit levels and better financial conditions were unwilling to participate in social pooling, which would result in greater costs and lower generosity in comparison to pre-reform levels (Song, 2002). 7. In addition to financing, some work units in highly profitable, SOEdominant sectors continue to provide their own healthcare services at designated hospitals with direct financing by the work units. Examples include the Railroad Group and the public hospitals themselves (Chen, 2013). 8. In 2008, the Ministry of Labor and Social Security mandated the Guangdong province to meet the hard target of covering 7 million rural migrants in healthcare insurance. Local news reports shows that less than half of rural migrants were covered in Guangdong province. Guangzhou in particular did not offer any protection for the rural migrants due to the hukou restrictions for UEBMI. 9. Specifically, there is no individual contribution required for rural migrants. For work units, their contribution rate is 40 yuan per employee per

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13. 14. 15.

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month, which is significantly lower than the 10% salary contribution for regular employees. The minimum payment standard is also 50% lower, making it easier of rural migrants to get reimbursements (Guangzhou Daily, 2008). Because of missing data, the per capita expenditure in 1989 was used as a proxy for 1990 per capita expenditure for labor insurance based on data acquired from municipal Gazetteers Office. The establishment of the Municipal Medical Insurance Bureau in 1996 reduced bureaucratic fragmentation and allowed for greater coordination in the administration of between various health insurance schemes. After its establishment, the bureau imposed stricter reimbursement criteria for the Free Medical Care because the greater fiscal support it demanded. In the cases of Nanjing and Guangzhou, the generosity level of the Free Medical Care was much higher than the regular urban employee scheme, making it more difficult to implement reforms without strong opposition from the vested interests. The Free Medical Care scheme does require small amount of individual contribution for family members, which is set at 10 yuan per month. The contentious exchanges between local delegates and government officials were widely reported by local news media outlets. According to National Development Research Center data, the number of public sector employees in Shenzhen increased dramatically from .94 million to 4.86 million between 2000 and 2018. According to local news reports, a public opinion survey conducted by Shenzhen university in 2012 shows that 89.9% of respondents were strongly opposed to the preferential treatment clause for civil servants. More than 97.6% of respondents felt unsatisfied because the proposed measures took the form of administrative regulations rather than legislation passed by the local People’s Congress (Shenzhen Wanbao, 2012). For the URBMI program, the central government provides 100% direct fiscal transfer to poorer, inland provinces, while sharing 50% of the fiscal burden in coastal provinces. Data provided by the municipal Red Cross. The Shanghai Charity Foundation was established in 1994 by the municipal Political Consultative Conference, the Civilization Office and the Civil Affairs Bureau. Data was retrieved from statistical yearbooks provided by the Municipal Bureau of Statistics Shanghai. Although the municipal government provides some startup funds, the operation of this fund relied more on societal donations (Hangzhou Daily, 2004). A core program at the Shenzhen Charity Federation is the Critical Illness Medical Aid Program or the Migrant Care Fund. This program helps

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collect societal donations and provides individualized services through community-based healthcare providers. Interestingly, central-level institutional reforms in recent years moved towards a similar direction, with the establishment an independent NHSA in 2018 and the creation of its local subordinates to oversee health insurance related issues. The numbers are calculated based on healthcare expenditure data provided by Shanghai Statistical Yearbooks and NBS China. For example, the Shanghai General Hospital was formally a nursing home created by a local Catholic Church, and the Ruijin Hospital was formally Hospital St. Marie and a teaching hospital for Aurora University (which was the predecessor of Fudan University). In 1981, local health officials at the municipal healthcare system work meeting publicly criticized the “leftist thoughts in local healthcare system” (Shanghai Municipal Gazetteers Office, n.d.). The first private healthcare clinic was established in 1984 and the first foreign investment was made in 1986. At the same time, public hospital reform focused on “independent accounting, self-financing, democratic administration, and distribution according to labor” (Suggestions about Shanghai Healthcare System Reform, 1986). The most recent data provided by the Shanghai Health and Planning Commission shows that in 2014 57% of healthcare institutions in Shanghai are private, in contrast to 43% that are public. In late 2000s, a Taiwanese medical group attempted to establish a foreignowned Tier-3 hospital in Shanghai. However, the plan was abandoned after 5 years of negotiation and bargaining with local health officials. In a 2012 interview, the medical group’s chief executive recognized that in Shanghai, “private participation has been proposed more than ten years ago, but resource allocations still favor public hospitals today” (Chen, 2012). Notably, this model also created spillover effects to nearby cities in YRD, resulting in continued dominance of Shanghai medical groups in healthcare delivery in the region. An interesting comparison is that the Tier-3 eye care chain in Guangzhou has set up a branch in Shanghai, but so far failed to register as Tier-3 hospital there. The reform in Shenzhen focused on public hospitals and urban areas and was labeled as “Luohu Model”, while the reforms in Guangzhou focused on community-based healthcare services in suburban and rural areas and was labeled as “Huadu Model”. In the locally developed model, private and voluntary sector participation was encouraged equally and particularly welcomed for community-based suburban and rural areas, while large public hospitals and other Tier-3

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private hospitals would focus on specialized care. The municipal government also created community-based health centers (shekang zhongxin) which can be operated by public, private or nonprofit healthcare institutions. 33. The healthcare insurance coverage index is calculated by the author based on the following formula: the number of enrollees in healthcare schemes in social security divided by the total residential population. The particularly high number of Shenzhen can be explained by its large share of non-residential population or migrants without permanent residence. 34. In 2019, approximately 329.25 million people in China participated in the employment-based UEBMI scheme, in comparison to 1024.83 million who participate in the residence-based scheme (NHSA, 2020). 35. Across all four cases, Nanjing has a more vibrant education sector and greater share of college students in the general population. According to National Development Research Center data, in 2015, Nanjing has 1.90 college students per 10,000 residents, in comparison to 0.25 in Shanghai, 1.42 in Guangzhou, and 0.72 in Shenzhen.

References CBN Weekly. (2016). Shanghai’s thirteenth five-year plan: Leveling the playing field for non-profit private hospitals and public hospitals. CBN Weekly. Chen, S. (2012). Competing high-end healthcare: The opening of the first Taiwan-owned hospital. 21th Century Business Herald. Chen, Y. (2013). Initial explorations on administration model of medical insurance in Guangzhou. Chinese Medicine: Modern Distance Education of China, 5(2), 135–136. Economic Observer. (2009). The coming public hospital reform: “Healthcare SASAC” suggests to take away investment rights by hospital directors. Economic Observer. Feng. (2017). Four types of medical consortium in Guangdong: Which one is best? Jinyangwang. Guangzhou Daily. (2008). Migrants in Guangzhou will enjoy low-barrier medical insurance. Guangzhou Daily. http://news.ifeng.com/mainland/200 801/0120_17_371607.shtml. Guangzhou Municipal Finance Bureau. (n.d.). Final accounts of 2012 fiscal budget of Guangzhou. Guangzhou Municipal Finance Bureau. Guangzhou Municipal Gazetteers Office. (n.d.). Guangzhou Municipal Gazetteer. Guangzhou Municipal Government. Hangzhou Daily. (2004). Shenzhen initiates medical aid fund. Hangzhou Daily. http://news.sina.com.cn/c/2004-12-03/02424418037s.shtml.

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Liu, G. (2010). The fate of public hospitals under Shenkang model. Oriental Outlook. Nanjing Labor and Social Security Bureau. (2006). Interim implementation measures for migrant worker critical illness medical insurance in Nanjing. Nanjing Labor and Social Security Bureau. NHSA. (2020). 2019 National medical insurance development statistical report. National Healthcare Security Administration. Shanghai Bureau of Statistics. (n.d.). Shanghai statistical yearbook. Shanghai Bureau of Statistics. Retrieved June 20, 2018, from http://www.stats-sh.gov. cn/html/sjfb/. Shanghai Health and Planning Commission. (2014). Shanghai health and family planning statistical yearbook. Shanghai Health and Planning Commission. Shanghai Municipal Gazetteers Office. (n.d.). Shanghai Municipal Gazetteers. Shanghai Municipal Government. Suggestions about Shanghai Healthcare System Reform. (1986). Testimony of Shanghai Municipal Government. Shanghai Municipal Government. (2000). Guidelines for promoting multi-layered medical insurance system. Shanghai Municipal Government. Shenkang Hospital Administration Center. (2017). 2016 Annual report. Shenkang Hospital Administration Center. Shenzhen Wanbao. (2012). Questioning special medical protection for civil servants in Shenzhen. Shenzhen Wanbao. http://finance.sina.com.cn/china/ 20120615/151712325190.shtml. Song, D. (2002). Preliminary discussions on urban employee basic medical insurance in Guangzhou. Entrepreneurs, 11. State Council. (2003). Circular on promoting continuous and healthy development of real estate market. State Council. State Council. (2015). Guiding opinions of the general office of the state council on propelling the building of a hierarchical diagnosis and treatment system. State Council. State Council. (2017). Guiding opinions on promoting the development of medical consortiums. State Council. WHO. (2019a). Health financing: What is universal coverage? World Health Organization. https://www.who.int/news-room/fact-sheets/detail/ universal-health-coverage-(uhc). WHO. (2019b). Primary health care. World Health Organization. https://www. who.int/news-room/fact-sheets/detail/primary-health-care.

CHAPTER 6

Asset-Based Welfare or Public Rental? Local Agency in Affordable Housing

Since housing was a non-productive sector prior to the 1978 reform, it was not possible to abandon the communist welfare housing model immediately. Rather, commodification and marketization reform in the housing domain took more than two decades to complete. Despite the initial delays, housing experienced the most drastic commodification and marketization in comparison to other policy domains. Some could argue that housing commodification in China resembled neoliberal reforms in post-communist contexts. Nonetheless, a couple of differences should be noted. On the one hand, the housing transition was led and heavily subsidized by the state. Before housing became a new growth engine, its transition from a non-productive welfare benefit to a productive economic good was strongly resisted. It therefore required the state to help “jumpstart” the housing boom by subsidizing initial commodification. On the other hand, housing commodification and the resulting affordability issues have generated strong societal backlashes, which in turn challenged the political legitimacy of the authoritarian party-state. The party-state therefore faces a new dilemma: Should housing continued to be viewed as a commodity, or as a right? Though it looks almost impossible to fully return to the communist welfare housing model, the party-state seems to increasingly favor a middle-ground approach: allowing commodity housing boom to continue while imposing stricter regulations on pricing © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_6

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and purchase, while providing more affordable housing to those who cannot afford. Local governments are facing a similar dilemma. First, many local governments including those in coastal cities rely heavily on a booming housing market for both economic development and their fiscal sustainability. After fiscal reform in 1990s, land transfer became a primary revenue source for local governments. In the four cases examined in this book, real estate sector investment contributes to between 10 and 20% of local GDP.1 On the other hand, an overheated housing market and increasing affordability issues could potentially undermine economic and social stability, and even jeopardize local officials’ political career. With incentives to keep housing affordable for the dominant social bloc and meet the increasing top-down pressure, local governments have resorted to the following policy instruments: the contributory HPF for the urban employees with a co-determination structure, the asset-based welfare program of ECH and its more recent variants, as well as the gradually evolved public rental approach from CRH to PRH. As discussed in Chapters 3 and 4, the implementation of these policy programs has been highly decentralized and hence allows for greater local agency in embedding the local welfare mix models. As a result, local governments often choose to prioritize some instruments over others or create adapted versions of these instruments to meet local priorities. The rest of this chapter reviews the significant disparities between central reform rhetoric and actual implementation outcomes on the ground. All four cases have adopted the contributory HPF with codetermination structure, although Shenzhen has significantly delayed its adoption until 2010s. Two of the cases, Shanghai and Nanjing, have consistently preferred the asset-based welfare programs over public rental programs and prioritized SOEs in affordable housing provision. Still, Nanjing’s overall policy framework is more pro-poor and more inclusive for low-skill migrants in comparison to Shanghai given its greater provincial level constraints. For the cases of Shenzhen and Guangzhou, the prioritization of public rental programs come with more inclusive though stratified policies for migrants. While Shenzhen has prioritized support for high-skill migrants through public rental programs, Guangzhou has continued to use the program to provide more privileged access to state sector institutions and their employees.

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6.1 Housing Monetization: The Employment-Based Housing Provident Fund A distinctive feature of the housing domain was the absence of an alternative financing mechanism in pre-reform era beyond direct physical provision by the state. Before 1978, most urban residents lived in work unit housing or public housing provided by central or local governments. Meanwhile, the LIS scheme for urban workers covers healthcare and pension but not housing. The absence of a pre-reform institution turned out to be both a blessing and a curse. Without a communist legacy institution to be modified from, initial reforms were delayed until the 1990s. By then, the bottom-up experiment in Shanghai was built upon the Singaporean experience and provided a template for a potential national model for social insurance in housing. Although soon welcomed by many local governments, the implementation of HPF has been persistently decentralized and institutionally incompatible with other social insurance schemes. These features later produced long-term ramifications for more comprehensive reforms at the national level. Jiang Zemin and Zhu Rongji, the two Shanghai mayors who later became national political leaders, played key roles in promoting housing commodification and the institutionalization of HPF in Shanghai and later nationwide.2 Due to the absence of a housing pillar in LIS, the municipal officials naturally looked for foreign models that would resemble a social insurance approach for housing, which could be more financially sustainable and cover most if not all urban employees. In 1990, then Shanghai mayor Zhu Rongji visited Hong Kong and Singapore and spoke about learning from these two cities to promote similar development in Shanghai. Following the visits, the municipal government invited more than 250 policy experts and work unit representatives to deliberate possible options, then eventually decided to borrow from the housing pillar in the Singaporean One Provident Fund (Shanghai Municipal Gazetteers Office, n.d.). The plan was then submitted to the local People’s Congress and published by a local newspaper to invite societal inputs. In 1991, the Interim Measures for Housing Provident Fund was formally approved by the municipal People’s Congress and formally included in the Shanghai Housing System Reform Implementation Plan. Similar to the individual account approach in social insurance, HPF in Shanghai took the form of a mandatory savings program and initially

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required 5% of individual salary contribution, matched by 5% contribution by employers (Shanghai Municipal Government, 1991). The rate was later adjusted annually based on local economic development and the growth of individual income. To administer the HPF funds, a municipal level HPF Administration Center was created, along with an HPF Administration Committee that followed the co-determination model originated from Singapore’s Central Provident Fund Board. According to the committee charter, one-third of committee members are government officials and policy experts in economic, fiscal and banking sectors, one-third are employer representatives, and another one-third are labor union and employee representatives (Shanghai Housing Provident Fund, 2004). In practice, most of the employer representatives are from the state sector, with some limited presentation from private or foreign firms. The labor union representatives are nominated by the government-sponsored Shanghai Federation of Trade Unions, while the employee representatives are selected and approved by the municipal government.3 This co-determination structure therefore exemplifies state corporatism at the local level and help provide institutionalized channels for policy feedback within the dominant social bloc. The successful installation of HPF in Shanghai was quickly followed by other cities that were eager to reduce their fiscal burden and promote housing commodification. Between 1992 and 1993, 131 or 60% of cities have established HPF (Chen & Wu, 2020). Local governments therefore were the primary agents in learning, diffusing, and transferring the HPF model, which occurred mostly prior to central government endorsement and nationwide implementation. As Jiang Zemin and Zhu Rongji became central political leaders, HPF was first endorsed by the central government in 1994 and formally institutionalized in 1999. From the beginning, the HPF implementation was decentralized yet with a very specific formula for decision-making and administration, which includes a state-led tripartite co-determination structure and a contributory mandatory savings program managed by the government. With the official central endorsement, HPF in Shanghai experienced two waves of expansions. The first wave occurred between 1990s and 2000s, as HPF was gradually expanded to cover not only SOEs but also private and foreign firms, as well as employees without hukou who work in the formal sector.4 Beyond the basic mandatory pillar, employers were also encouraged to contribute supplementary HPF to provide greater generosity (SHPFAC, 1997). However, only employees with hukou were

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eligible for the supplementary pillar, while employees without hukou were only qualified for the basic pillar. Another wave of expansion occurred in the 2010s with increasing top-down pressure to further expand HPF coverage, in which case the HPF Administration Center announced it would expand coverage to foreigners in Shanghai in 2015, and then small business owners and freelancers in 2016. Despite the significant expansion, HPF remains limited in its coverage in comparison to other social insurance schemes such as healthcare and pension schemes given the absence of a comparable residence-based scheme. In 2018, more than 15.73 million and 15.35 million local residents in Shanghai are enrolled in various pension and healthcare insurance schemes, in comparison to only 8.82 million who are enrolled in HPF.5 In Guangzhou, the municipal government has relied on HPF as a basic social insurance pillar for all employees, while supplying direct fiscal subsidies and maintaining work-unit-level housing funds to provide extra support for the state sector employees.6 HPF was first mentioned in 1991 when the municipal government published the Ten-Year Plan for housing reform, then invited policy experts from local universities to discuss the implementation plan for HPF. The adoption of HPF therefore predated the central government’s recommendation in 1994. In 1992, Guangzhou formally established HPF first among the work units in the state sector, one year after Shanghai’s institutionalization of HPF through local legislations. At first, Guangzhou followed the Shanghai model closely, by creating the HPF administration center, forming a codetermination committee, as well as setting an initial contributing rate of 5% for both employers and employees. Nonetheless, local agency soon became evident as the municipal government sought to increase contribution rates and redistribute HPF funds for other purposes. The contribution rate was soon increased to 7% in 1998 to help raise more HPF funds. A significant portion of the funds was then reappropriated by the municipal government to support local affordable housing projects.7 By 2000, Guangzhou has 1.06 million employees contributing to HPF, about one-fifth of which have extracted their HPF for various purposes such as purchasing commodity housing, paying rents or renovating their flats (Guangzhou Municipal Gazetteers Office, n.d.). Starting early 2000s, Guangzhou gradually expanded HPF to private and foreign investment firms. By 2019, more than 68.74% of contributing employees are from these two categories, in comparison to

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23.67% from the state sectors (GHPFAC, n.d.). However, such expansion remains limited in its scope due to the employment-based nature of HPF. In 2018, there are 461.53 million local residents who are covered in HPF, in comparison to 751.95 million and 783.52 million covered in healthcare and pension insurance, respectively.8 Guangzhou’s reform trajectory has demonstrated a few key adaptations from Shanghai’s original model. Firstly, Guangzhou’s HPF funds are frequently reappropriated by the municipal government to support other affordable housing projects due to its weaker fiscal capacity, resulting in a lower balance in individual savings and increased difficulties for personal extractions. Secondly, Guangzhou’s HPF co-determination structure is less state dominant with greater representation from private firms, foreign investment firms, as well as local universities, in comparison to Shanghai where the decision-making process is dominated by interests within the state sectors.9 Thirdly, despite greater private and foreign firm participation, the state sector continues to enjoy privileged access in a few ways. For instance, the mandatory minimum employer contribution ratio is higher for government agencies and public institutions at 7% in comparison to 5% for other types of employers (GHPFAC, 2006). In addition, for SOEs and private sector firms, the individual and employer contribution ratio can be between 5 and 20% before 2016 (GHPFAC, 2006).10 Although the cap was adjusted down to 12% following central mandate in 2016, in practice the state sector work units often choose higher contribution ratios and use them as supplementary insurance for its employees.11 Finally, reform measures on “monetized housing allocation” (zhufang huobi fenpei) in Guangzhou allows state sector work units to retain profits from sales of legacy work unit housing units and provide subsidies to their employees. When these housing funds are insufficient, the municipal government provides direct fiscal subsidies to individuals. In 2008, the municipal government proposed to further increase the subsidy level to 18% of civil servants’ salary. This measure was widely reported by local newspapers and criticized as helping those who were already privileged. By 2014, more than 435,000 state sector employees have used a combination of HPF loans and housing subsidies to purchase commodity housing (Guangzhou Municipal Gazetteers Office, n.d.).12 Further comparison between Nanjing and Shenzhen helps demonstrate how local political economy shapes distinctive trajectories of HPF implementation. In Nanjing, preferential treatment of state sector employees

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coexisted with pro-poor policies that allow for greater extraction for those with financial difficulties or critical illnesses. HPF implementation began as early as 1992, similar to Guangzhou and one year following Shanghai. Nonetheless, HPF administration was highly fragmented and prioritized the state sector initially, and the municipal level administration center was only set up in 2003 after the central government published more concrete guidelines in 2002. In 2006, the local People’s Congress standing committee passed the Nanjing Housing Provident Fund Administration Rules, which specified rules for extraction above limits including for employees below the poverty line, employees and their families with critical illness, and those who are unemployed for more than two years. In addition, the new rules expanded HPF coverage to small business owners, freelancers as well as migrants but only on a voluntary basis. For the “new urban poor”, the local model therefore prioritized low-income residents with hukou over migrants. In 2013, a mandatory contribution for migrants as well as cross-region extraction clauses were finally added following central government mandates. In 2019, 18.93% of contributing employees are from government agencies and public institutions, with another 15.36% from SOEs and collective enterprises (NHPFAC, n.d.). Both numbers are the highest among all four cases. At the same time, the share of high-income employees is only 5.4%, which is the lowest across the cases and closest to the national average of 4.59%.13 Intriguingly, Shenzhen’s reform trajectory for housing monetization deviated from the other cases in a few significant ways. For pension and healthcare, Shenzhen was among the first cities to experiment and institutionalize an individual account approach for pension and healthcare insurance, which in theory would be highly compatible with HPF’s mandatory savings program.14 Rather than following Shanghai’s approach for municipal-level administration, nonetheless, Shenzhen chose to implement a decentralized individual account approach at the firm level and allowed firms to directly transfer HPF funds to their employees for personal use. Because HPF was not mandatory and covered only employees with hukou at the time, the participation rate was relatively low. By 2000, only roughly 38,000 were still contributing, indicating HPF was used as a temporary measure for housing monetization in Shenzhen.15 Despite central government mandates in 1999 and 2002, Shenzhen did not fully establish similar municipal-level HPF institutions until 2010s, during which time Shenzhen’s housing price skyrocketed. In

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2010, the municipal government finally published the Interim Measures for Housing Provident Fund, establishing a HPF Administration Center and mandate HPF for all urban employees including migrants. Regardless of its late installation, HPF in Shenzhen rapidly expanded in the follow years and reached 6.48 million enrollees by 2019 (SZHPFAC, n.d.). The inclusion of migrants has produced a significantly impact on the distributions of HPF extractions, resulting in greater rental support for people who cannot afford ownership. In 2019, 36.41% extractions are used to pay rents in comparison to only 26.83% for principal and interest payments of home loans. By contrast, in all other three cases, 11–12% are for rent payments in comparison to 53–68% for home loans.16 To some extent, the policy recentralization in 2010s has produced some significant effects on HPF reform at the local level. First, the central government mandated local governments to cover migrants as well as people with “flexible employment”, resulting in conditional expansion of HPF to the informal sectors in urban areas. Second, the central government promoted “broad coverage, low generosity” approach for HPF and require all localities to keep a 12% cap for their HPF contributions. As a result of the top-down pressure, Guangzhou for example had to adjust its original cap of 20–12%, and Shanghai reduced its overall cap from 15 to 12%. Lastly, the central government strengthened the mandatory reporting requirements which allowed for greater transparency of the administration and utilization of funds at the local level. As a result of this mandatory reporting requirement, data availability and consistency were significantly improved in the annual HPF reports across localities.17 These policies therefore somewhat reduced the potential wiggle room for local discretion in HPF implementation. Nonetheless, local agency is evident in the willingness to adopt the HPF model without top-down pressure, and in Shenzhen’s case delaying the full implementation until 2010s. Despite greater policy recentralization in recent years, there is still evidence for varying levels of coverage and generosity across different categories of local employees. With the absence of a national housing law or a housing pillar in the national Social Insurance Law, local governments are able to retain significant discretionary power in HPF implementation. The lack of hard targets and fiscal support also explains why the overall coverage of HPF remains limited. Meanwhile, recent top-down mandates for higher extraction limits are often ignored by the coastal cities due to concerns for greater fiscal responsibility and financial sustainability.

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Figure 6.1 provides a cross-case comparison for the distribution of HPF contributing employees by employer types in 2019. The national average is also provided as a reference point. In general, the two provincial capitals have greater shares of public sector participation but differs significantly in the share of SOEs and collective enterprises. Roughly 18.93 and 16.88% of participating employees work for government agencies or public institutions in Nanjing and Guangzhou, respectively, in comparison to a lower share of 8% in Shanghai and the lowest of 3.86% in Shenzhen. This can be explained by the greater size of provincial and municipal bureaucracy in the two provincial capitals. For SOEs and collective enterprises, nonetheless, their share in Guangzhou is significantly lower with 6.69% share in comparison to 13–15% in other cases. Overall, the shares of state sectors across all four cases are well below the national average of 50.96%.18 HPF participation by non-state sector employees are considerably higher across all four cases in comparison to national average, showing the shared commitment to employment-centered social insurance similar to patterns in healthcare and pension insurance.19

Fig. 6.1 Distribution of contributing employees by employer types, 2019 (Data Source National and local annual HPF reports)

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6.2 Who Are Entitled to Own? The Local Variants of Asset-Based Welfare As the name suggests, asset-based welfare is defined by the promotion of home ownership through affordable housing policies by government, at times in coordination with other state or non-state actors such as real estate developers and property management companies. While HPF extraction patterns show prioritization of home ownership in most cases, HPF as a policy institution can also be used to prioritize public rental programs as shown in the case of Shenzhen. By contrast, programs such as ECH and its local variants can be categorized as asset-based welfare because they require the government to support home ownership through either physical provision or fiscal subsidies, while allowing the recipients to resell as long as certain conditions are met. In China, the concept of housing ownership was a new invention during the reform era. Prior to the 1980s, most urban residents lived in public housing provided by their work units or directly by the government. While the construction costs were shared between the government and work units, the issue of housing shortage was widespread. In Shanghai, for example, the average of living space per person was 6.6 square meters by 1990, with many have less than 2 square meters of living space (Shanghai Municipal Gazetteers Office, n.d.). Housing ownership was first proposed by Deng Xiaoping, the third generation CCP leader, in his 1980 speech in regard to the construction and residential housing sectors. In the next two decades, however, assetbased welfare was primarily used as a temporary mechanism to provide housing protection for state sector employees during market transition. The 1997 Asian Financial Crisis provided a window of opportunity for more comprehensive national reform, with the introduction of ECH and its implementation nationwide. Nonetheless, case comparisons in this section shows that local governments have resisted the call to expand ECH for all middle- and low-income families. Rather, the ECH program was frequently adapted to meet a variety of local goals such as urban renewal, social protection for those with hukou, or retention of high-skill migrants. By the late 2010s, ECH has been gradually replaced by new asset-based welfare programs that require less direct government responsibility and allow a more flexible “state guidance, societal participation” approach.

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Deng Xiaoping’s call in the 1980s was soon actively responded by local governments in coastal cities. In Shanghai, Jiang Zemin, then Shanghai mayor and the next party secretary-general, stressed that housing should be treated as a commodity and that “everyone should be equal in front of a commodity” (Shanghai Municipal Gazetteers Office, n.d.). In 1984, the municipal government published the Interim Measures for Public-Aided Commodity Housing. Shanghai therefore became the first city to propose a tripartite “burden sharing” principle between government, work units, and employees to promote housing commodification. This program therefore provided a venue for low-income employees to purchase commodity housing at below-market price and accumulate their assets without paying back to the government or their work units. In exchange, the municipal government acquired their full support for its housing commodification agenda. Although the program was later promoted by the central government and praised by the United Nations, it was means-tested by nature and only covered roughly 120,000 households by 1999 (Li, 2011; Pang, 2004). Beyond the temporary means-tested program, however, Shanghai did not fully embrace an asset-based welfare approach until the late 2000s. Instead, the municipal government focused on providing means-tested protection through public rental programs for extremely low-income families, which will be discussed in the next section. The program that was closest to asset-based welfare was the “demolition and relocation housing” (DRH, dongqian anzhifang ), which was implemented first in 1999 and primarily designed to support urban renewal processes in the “central districts” (zhongxinqu). Starting 2002, Shanghai announced that it would initiate multiple rounds of new commodity housing in suburban areas to complement “critical projects” (zhongda gongcheng ) in “central districts”, with a significant portion targeted at relocated urban residents (Shanghai Municipal Gazetteers Office, n.d.). The number grew exponentially in the following years, with an average of 4–5 million square meter every year between 2003 and 2010 according to the municipal Bureau of Statistics. This local program was a significant departure from the central government’s original asset-based welfare ECH model that was solely based on the criteria of income. Under the asset-based welfare program in Shanghai, residents who lived in old public housing in “central districts” would accept cash compensation to purchase commodity housing on the market or receive physical compensation by relocating to newly constructed commodity housing units in suburban areas. Because many

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residents who lived in legacy public housing were low-income residents with hukou, this program provides an opportunity for improving their living conditions as long as they are willing to support the municipal government’s urban renewal plans. In suburban areas where the new housing units are constructed, district-level housing bureaus first expropriate land from rural residents with hukou, then ask them to move out of their self-constructed housing and into the newly constructed flats. In exchange for their support, these rural residents would receive the same compensation as the relocated urban residents. The district bureaus work with local real estate developers, often state-owned, to construct the new housing projects. DRH units are then provided to the relocated urban residents and the land-expropriated rural residents based on costplus pricing, which is often significantly below market value, and with no condition on when they can resell on the market. Since 2003, the central government began to impose stronger topdown pressure to address significant distortions in the implementation of asset-based welfare for middle- and low-income families. It soon appeared that the loose income criteria in Shanghai’s local asset-based welfare program would make it ineligible to meet the new central government’s hard targets on affordable housing. In response to the growing topdown pressure, Shanghai experimented another set of asset-based welfare program named “joint-property rights housing” (JPRH, gongyou chanquan zhufang) targeted at low-income residents with hukou. First piloted in Huaian, a city in the nearby Jiangsu Province, this program is based on the “burden sharing” principle where the municipal government would share part of the costs when low-income residents purchase commodity housing. Although Shanghai at first categorizes JPRH as part of the ECH program to meet the central government targets, there are significant differences between JPRH and the original central-level ECH program. In ECH, the recipient would enjoy full ownership after five years, which means the local government was expected to provide direct fiscal subsidies with no return. By contrast, the JPRH treats the government expenses as shared investment in the value of the property. It therefore requires the recipient to repay the government with both the original investment and potential returns, when the property is sold on the market after five years. By adopting the JPRH model, the Shanghai municipal government reduces its fiscal burden while still meeting the central targets.

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A significant feature of Shanghai’s asset-based welfare programs is that they all primarily target local residents with hukou. In the case of demolition and relocation housing, the program covers both the relocated urban residents and the land-expropriated rural residents. The municipal government used asset-based welfare as an incentive to persuade them to support state-led urban renewal processes. For the JPRH program, it was originally designed to supply local low-income residents with hukou only. Because many JPRH flats are also newly constructed in suburban areas, and those who are eligible are often low-income residents who live in the “central districts”, there are significant overlaps between these two programs for the eligible populations. In 2020, Shanghai finally announced that it would loosen the eligibility criteria for JPRH to allow for selective migrant groups to apply. Nonetheless, the new rule also imposed new restrictions, such as residence certificate and cumulative points, social security contribution years, marriage status, and income status.20 In reality, only married and highly educated migrants who have worked and lived in Shanghai for more than five years can qualify for the program. The asset-based welfare model in Shanghai therefore continues to prioritize local residents and more conditionally the skilled migrants. In Guangzhou, earlier reform in 1990s focused on “resolving housing difficulties” (zhufang jiekun) for work unit employees in the state sector. Work units were allowed to sell their legacy public housing units and borrow from the newly established HPF to support new constructions of housing units. Most notably, the sales of public housing by work units were based on cost pricing, which allowed work unit employees purchase the public housing units at extremely low price. In 1995, however, the central government published new directions on housing monetization reform and “comfortable housing project” (anju gongcheng ), requiring localities to construct new commodity housing on a massive scale, while suspending direct sales of public housing by work units to their employees. In the same year, Guangzhou began to construct new housing communities that targeted at urban residents with housing difficulties and provide them as rental properties to selective disadvantaged social groups. By 1997, the municipal government began to allow pre-sale of “resolving difficulties housing” (jiekunfang ) and “comfortable housing” (anjufang ) (Guangzhou Municipal Gazetteers Office, n.d.). Targeting at households with extremely limited living space and middle- and low-income families, these two programs therefore became prototypes of asset-based welfare in Guangzhou.

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Between late 1990s and early 2000s, there were two de facto tracks in Guangzhou’s asset-based welfare ECH program. The first track is means-tested or category-based, designed for local low-income residents with housing difficulties as well selected disadvantaged social groups such as people with disabilities, all with local hukou. For this group, the municipal government provided newly constructed housing in suburban areas, and recipients have to meet both the income and the living space criteria in order to be eligible. The second track was ECH for state sector employees. Coordinated by sectoral government agencies, these “comfortable housing” projects were provided specifically for sectoral employees based on their seniority and family conditions, similar to communist era work unit housing allocation. The second track therefore indicated that some communist legacies were retained in Guangzhou, and asset-based welfare was used to provide privileged access for political elites. Similar to Shanghai, these local adaptations soon faced stronger top-down pressure in early and mid-2000s, as central government sought to address the distortions of ECH implementation on the ground.21 Although the municipal government promised to strengthen ECH regulations in 2003, the new regulations were not finalized until 2008 due to strong opposition from the state sector. In practice, the dual tracks were maintained until the late 2000s. Before then, Guangzhou extended the public sector track to cover not only municipal-level government agencies and public institutions, but also work units directly controlled by central and provincial governments as well as SOEs.22 Following the tightening of ECH regulations at central level, Guangzhou sought to develop new affordable housing programs that would allow for less direct government responsibility and continued coverage for the urban middle class. In 2007, Guangzhou’s Land and Housing bureaus jointly announced that it would promote a new type of “capped-price housing” (xianjiafang ) for middle-income families. Borrowing from similar policies in Hong Kong, the municipal government lowered the land transfer fees to real estate developers and allowed the latter to construct these housing units at lower costs. Upon completion, the real estate developers were then required to sell these units at 70% of market price or lower to eligible recipients, who are typically middle-income first-time home buyers.23 While the recipients could resell after five years as similar to ECH, they would also need to return part of their profits to compensate the municipal government for the

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original land transfer discounts. This approach therefore requires less fiscal responsibility by the municipal government and allows a “shared investment” approach similar to Shanghai’s JPRH. This program was soon under harsh criticism for two primary reasons. First, the hukou restriction and the loose income eligibility criteria illustrated that this program primarily provided housing support for the dominant social bloc rather than the “new urban poor.” Second, the program was frequently used to support urban renewal processes in old city center as similar to DRH in Shanghai.24 By 2020, the municipal government began to gradually phase out this program and replaced it with the Shanghai’s JPRH model, which just gained new traction at central policy reforms. As a provincial capital adjacent to Shanghai, Nanjing’s asset-based welfare approach shares some significant similarities with both Shanghai and Guangzhou. Earlier reforms focused on “resolving housing difficulties” and provide means-tested protection, for low-income work unit employees and residents who cannot afford commodity housing. When the central government announced the ECH program in 1998, local housing officials in Nanjing did a series of local research and surveys and found that the majority of Nanjing residents would qualify as ECH recipients based on the central government eligibility criteria. With limited fiscal capacity and hard targets in economic development, local officials decided to adapt the ECH program to support housing commodification and urban renewal processes. In 2004, Nanjing completely suspended the ECH program that was targeted at low-income urban residents. Instead, the municipal government worked with state sector work units to provide targeted ECH housing to their employees. Meanwhile, most of municipal-level ECH housing were provided to relocated urban residents and land-expropriated rural residents resembling similar patterns in Shanghai. In the 11th Development Plan, Nanjing promised to expand ECH supply and provide “middle- and low- price commodity housing” that would resemble the “capped-price” approach in Guangzhou (Xinhua Daily, 2007). After Shanghai adopted JPRH housing, nonetheless, Nanjing quickly followed in the early 2010s and gradually replaced the ECH program with JPRH. In Shenzhen, local agency was evident in designing an asset-based welfare that provides not only means-tested protection to residents with hukou but also attracts and retains skilled migrants. With a large migrant population, Shenzhen has in general prioritized public rental programs over asset-based welfare programs. The ECH program in Shenzhen

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was named “comfortable housing” (anjufang ) with the goal to provide housing protection for local residents with hukou during economic transition. Between the late 1990s and early 2000s, the municipal government adopted a tiered approach in the asset-based welfare program, including the “welfare housing” (fulifang ) track for civil servants and public sector employees directly provided by the government, “quasi-cost pricing housing” (zhunchengbenfang ) and “low profit margin commodity housing” (weilifang ) for primarily SOE employees (Zhang, 2019).25 Following increasing central top-down pressure since 2000s, Shenzhen adjusted the target population for asset-based welfare from state sector employees to low-income residents with hukou, as well as high-skill migrants who are recruited and officially recognized as “talents” by the municipal government. In 2010 and 2014, Shenzhen issued rules and regulations in regard to “comfortable housing for talents”, officially establishing a standalone policy instrument for high-skill migrants. In addition to access to assetbased welfare through direct government subsidies, high-skill migrants are also much more likely to acquire local hukou with preferential policies set by the municipal government.26 The case comparisons therefore help demonstrate how local governments seek to maintain tacit agreements with local residents with hukou and at times high-skill migrants, using asset-based welfare programs during housing marketization. Across all cases, fiscal and administrative capacity considerations were also significant factors in shaping local governments’ choices of specific policy instruments, as well as explaining their resistance to top-down pressure in ECH implementation. In Guangzhou and Nanjing, earlier programs sought to retain some communist legacies and prioritized the state sector employees. More recently, asset-based welfare was viewed as a privilege for the urban residents with hukou or formal sector employees, especially those who are willing to support urban renewal in the central city. In Shanghai, the local government prioritized housing commodification and urban renewal, while providing means-tested protection for low-income residents with hukou. More recently, Shanghai adopted a “shared investment” approach in asset-based welfare which allows less government responsibility, and finally began to supply asset-based welfare for high-skill migrants with more strict eligibility criteria. As a city with a large migrant population, Shenzhen’s asset-based welfare involves less restrictions on hukou status,

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but more stratification based on education and skill level. The “comfortable housing for talents” program has been prioritized to retain skilled labor and promote local economic development.

6.3 Housing Assistance for Whom? Embedding Public Rental Programs The public rental approach in affordable housing provides an alternative to the home ownership approach of asset-based welfare. In general, the public rental approach is more pro-poor because the income level of eligible recipients is often lower than asset-based welfare programs. At the same time, such programs are often means-tested by nature and require greater direct government responsibility. Expectedly, local governments often undersupply public rental when it is strictly defined for low-income residents. Initially targeted at extremely low-income urban residents with hukou, the strictly defined CRH program experienced significant policy drift in local implementation. More recently, the central government rebranded CRH to the PRH program with the goal of expanding coverage to the “new urban poor” and “sandwiched households”. As discussed in Chapter 4, the new PRH program provided strong fiscal support from central level, while granting greater local agency in defining eligibility as well as articulating the principle of “state guidance, societal participation”. Heavily influenced by Hong Kong’s model, Guangzhou and Shenzhen have welcomed and prioritized the public rental approach in affordable housing. By contrast, Shanghai and Nanjing have continued to prioritize asset-based welfare over public rental, showing their strong preference for residents with hukou. In all four cities, nonetheless, local governments have adapted public rental programs for local development goals while meeting quantitative targets set by the central government. In Shanghai, the implementation of the means-tested CRH began in 2000 following central government mandate in 1998. Interestingly, the almost immediate implementation of CRH in Shanghai contrasted other major cities where local governments decided to prioritize asset-based welfare. Another distinctive feature of Shanghai’s original model was its emphasis on providing fiscal subsidies for commodity rental rather than direct physical provision by the government. This approach complemented the development of the commodity rental housing market in Shanghai and requires less administrative burden for the local government. In retrospect, central government leadership with Shanghai background played key roles in explaining greater central-local coordination

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as well as the market-oriented approach in CRH prior to 2003. Still, the eligibility criteria for CRH recipients were very strict from the beginning, covering only local residents with hukou with “twin difficulties” of extremely low income and extremely limited living space. Although the municipal government has gradually loosened the income criteria between 2006 and 2012, CRH coverage remained very limited. Between 2000 and 2015, Shanghai had roughly 110,000 households received either physical provision or rental subsidies under the CRH program (Shanghai Municipal Government, 2017). The 2010 State Council guidelines on the new PRH program were quickly welcomed by local officials in Shanghai. In the same year, Shanghai published the implementation plan and, specified the local eligibility criteria for the new PRH program. In comparison to the CRH program which was only limited to households with “twin difficulties” who have hukou, PRH was more significant because it was the first local affordable housing program that allows migrants to apply. Nonetheless, Shanghai’s implementation plan imposed stricter criteria for migrants in comparison to the national guidelines, limiting PRH access to those who have received the residence certificate for more than two years, currently hold a labor contract with a local firm for more than one year, and have contributed to local social insurance funds for more than one year. For local residents with hukou, by contrast, the municipal government imposed very loose eligibility criteria of no current property and have an average living space of less than 15 square meters. In practice, this created two tiers in Shanghai’s PRH program. One is “Work Unit Rental Housing” (danwei zulinfang ) designed for migrants who have stable employment and deemed as contributive to the local economy. The other is the means-tested PRH program targeting local residents with hukou, which over time also integrated the original CRH program. With significant expansion of coverage, the municipal government announced plans to adopt hierarchical coordination model of “supported by state, operated by institutions” (zhengfu zhichi, jigou yunzuo) for PRH (Shanghai Municipal Gazetteers Office, n.d.). At district level, the municipal government established PRH operation institutions that coordinate service provision for eligible recipients especially local residents with hukou. In addition, the municipal and district-level housing bureaus coordinate with local high-technology and industrial parks as well as employers to develop “work unit rental housing”, such as “talent

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apartments” (rencai gongyu) for highly educated and skilled migrants and “migrant worker dormitories” (wugong renyuan jiti sushe) for less skilled rural migrants. Between 2011 and 2015, the PRH program provided coverage to 136,000 local resident and migrant households, more than the 110,000 households covered in the means-tested CRH program since 2000 (Shanghai Municipal Government, 2017). Despite the expanded coverage, the total number of beneficiaries for the public rental programs remain significant smaller than those of the asset-based welfare programs.27 In Guangzhou, implementation of CRH initially focused on physical provision rather than the rental subsidy approach preferred in Shanghai. The initial coverage of the program was also extremely small, as the municipal government chose to limit eligibility to households with “twin difficulties”. The income threshold in the early 2000s was 300 yuan per person, and the living space threshold was 5 square meters, both were harsher in comparison to Shanghai’s 500 yuan and 7 square meters thresholds.28 The strict eligibility criteria resulted in significant undersupply of CRH in comparison to the asset-based welfare programs. Between 1998 and 2004, the municipal government purchased 1500 commodity housing flats and physically provided them to 1041 households (Guangzhou Municipal Gazetteers Office, n.d.). By 2005, the municipal housing bureau revised the initial policy to include the rental subsidy approach, then expanded the program coverage to households with an average living space of less than 10 square meters. Although some eligible households received rental subsidies, the primary provision mechanism for CRH in Guangzhou was still government purchasing and physical provision. To cover the rest of households with “twin difficulties”, the municipal government developed one of the biggest CRH community in Jin Shazhou, a relatively remote island in Baiyun district. Originally developed by a local private real estate developer for “capped-priced housing”, the municipal government purchased the properties with land transfer revenues and direct fiscal expenditure. After the purchase is complete, the municipal government also asked the real estate developer to revise the original floor plans and design supporting facilities such as grocery store and schools. By 2008, 7000 households moved into the community. Nonetheless, the project was soon criticized for its spatial segregation of disadvantaged populations (Yu & Liu, 2018). Despite such criticisms, the municipal government continued to develop new affordable housing communities in suburban

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areas with a mixture of asset-based welfare and public rental units. By 2017, Guangzhou has seven large affordable housing communities that are co-developed with either local SOEs or private real estate developers, all located in suburban areas. While the criticisms continue, the municipal government announced that all families with “twin difficulties” have been covered in the CRH program. The implementation of PRH in Guangzhou demonstrated a mixture of provincial and municipal-level agency in defining access and articulating service provision. After the central government mandate in 2010, the Guangdong provincial government immediately published a series of concrete guidelines on how the program should be implemented in each locality in the Circular on Expediating the Development of Public Rental Housing, showing strengthened provincial constraints on lower level of governments. While the provincial government recommended local governments to include other types of migrants, discretions were allowed in regard to when and how they would be covered.29 Following the provincial guidelines, Guangzhou in the first five years supplied PRH to local low-income residents with hukou only. Although there were discussions to include migrants, no concrete measures were issued until after the provincial government imposed new guidelines in 2016. Following the new provincial mandate, the Guangzhou municipal government issued two separate guidelines for new employees without housing and migrant workers. Unlike Shanghai where migrants are only eligible for PRH units provided by their employers, Guangzhou has allowed migrants to apply for municipal-level PRH units without employer sponsorship. However, this is only provided for those who have “talent green card” and meet additional criteria for education and skill level, as well as certain years of social insurance contribution.30 For the rest of the migrants, their choices are still limited to PRH units supplied by their employers. In general, PRH allocation in Guangzhou provides more choice for local residents with hukou, new employees in the state sector as well migrants who qualify as “talents”.31 Further comparisons with the secondary cases help exemplify significant subnational variations in CRH and PRH implementations. In Nanjing, the implementation of means-tested CRH was initially delayed but quickly expanded following increased central- and provincial-level top-down pressure. Between 2001 and 2006, Nanjing only provided 1000 CRH units with 500 eligible households were granted access. From 2007 to 2008, the number of CRH recipients grew exponentially

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from 10,200 households to 72,300 households due to increasing topdown pressure (Zhang, 2009). Similar to Shanghai, Nanjing adopted a “broad coverage, low generosity” approach for low-income residents that combines rent subsidies, physical provision, and rent reduction. While only the lowest income households are eligible for physical provision, the rest are eligible for moderate level of housing subsidies if they rent on the commodity housing market, or for rent reduction if they live in legacy public housing directly administered by the municipal government (Nanjing Municipal Government, 2008). Resembling provincial constraints in Guangzhou, the Jiangsu provincial government played key roles in defining the parameters for local implementation of PRH in Nanjing since 2010, especially in regard to the early inclusion of migrants in PRH. In actual implementation, nonetheless, Nanjing adopted a similar approach to Shanghai, in which municipal government offers direct government responsibility for low-income residents with hukou, while coverage for new employees and migrants are provided by employers in coordination with real estate developers (Nanjing Municipal Government, 2011). In addition, only local lowincome residents are eligible for renting complete PRH units or independent flats, while new employees and migrants can only apply for dormitories or shared units. Private real estate companies can partner with SOEs in PRH management and operations, though they cannot operate independently because the municipal government has granted SOEs exclusive market access for PRH land acquisition and initial development.32 In Shenzhen, policy drift was most significant in the implementation of the means-tested CRH program, while the PRH program targeted at high-skill migrants was initiated earlier than national reform. Although CRH implementation nominally began in 2001, only 30 units were provided to residents with “twin difficulties” in 2001 and another 60 in 2003 (Shenzhen Municipal Government, n.d.). The policy orientation soon shifted to addressing housing needs for high-skill migrants rather than low-income residents with hukou. In 2003, Shenzhen for the first time proposed to establish “talent apartments” for high-skill migrants, in addition to incorporating them into asset-based welfare programs. By contrast, the city provided a total of 2000 units of affordable housing to local low-income residents between 2001 and 2005, and only a small fraction were CRH units (Zhang, 2019). By 2010, a mix of top-down and bottom-up factors contributed to the institutionalization of the PRH program as well as the revival of the CRH program in Shenzhen.33 In 2013, the municipal government proposed to

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integrate CRH and PRH, while for the first time promising “guarantee for all those who qualify for help” (yinbao jinbao) (Shenzhen Municipal Government, n.d.). Under the new integrated PRH program, the municipal government uses a combination of physical provision and rental subsidies to address the housing needs of high-skill migrants and lowincome residents with hukou. In comparison to other cities, Shenzhen adopted less strict eligibility criteria for migrants and covers a variety of migrants such as “talents” recognized by the municipal government, new employees, as well as migrant workers in “leading manufacturing industries” and public service sectors.34 Although the central government has prioritized the inclusion of “sandwiched households” and migrant workers in the new PRH program, local variations are still significant in regard to how they balance between the housing needs of local residents with hukou versus migrants, as well as the scope of direct government responsibility versus “government guidance, societal participation”. In the cases of Shanghai and Nanjing, direct government responsibility was evident for low-income residents and to a less extent high-skill migrants, while the inclusion and coverage of other migrants largely depend on the willingness and capacity of their employers or the industrial parks where they are located. In Shenzhen, broader coverage is provided to migrants, although with significant stratification based on education, skill level and other qualifications. Finally, the early model of physical provision and stronger direct government responsibility has imposed significant constraints on PRH implementation in Guangzhou, resulting in delayed inclusion of migrants and continued preferential treatments for low-income residents and new state sector employees.

6.4 Articulating the Welfare Mixes: Local Models of Affordable Housing Compared to healthcare, local agency in general is stronger in housing domain due to highly decentralized policy processes in early reforms and the absence of comprehensive national reform in recent years. Still, policy recentralization in selective programs such as PRH has produced some significant effects on the articulations of welfare mix at local level. Table 6.1 provides a brief overview of the four local models. First, policy recentralization has greater effects on Nanjing and Guangzhou, due to stronger provincial-level constraints. By contrast, Shanghai and Shenzhen

Urban formal sector employees with hukou > local residents with hukou > high-skill migrants > low-skill migrants

Hierarchical coordination

Prioritizing SOEs

State-led

HPF co-determination favoring state sector

Local People’s Congress

Source Compiled by author

Choice

Pluralization

Participation

Strong local agency Greater local-central feedback State corporatism

Shanghai

Bureaucratic decision-making

Moderate local agency More top-down pressure

Guangzhou

More provincial constraints Local processes often Local processes often interrupted interrupted HPF co-determination in More pluralized HPF name co-determination State-led with pluralized Pluralized with state-led elements elements Prioritizing SOEs Both state and private participation Limited participation by Government purchasing private actors of services Formal sector employees > State sector employees > residents with hukou > new residents with hukou > employees and high-skill high-skill migrants > migrants > low-skill low-skill migrants migrants

More provincial constraints

Bureaucratic decision-making

Moderate local agency More top-down pressure

Nanjing

Comparing local welfare mixes in affordable housing

Decentralization

Table 6.1

Formal sector employees with hukou and high skill migrants > low-income urban residents and other migrants

Pluralized with state-led elements “Multiple entities, multiple channels”

Co-determination absent until 2010s

Strong local agency Greater local-central feedback Bureaucratic decision-making → state corporatism Local People’s Congress

Shenzhen

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have demonstrated persistent willingness and capability to defy or adapt central orders when they are deemed incompatible with local priorities. Second, the principle of “state guidance, societal participation” again has been articulated differently across the cases in affordable housing provision similar to the case of healthcare service delivery. The state-led models in Shanghai and to a less extent in Nanjing is in contrast with more pluralized models in Shenzhen and Guangzhou. Finally, the layering between public rental and asset-based welfare programs has profound implications for the “new urban poor”. In Shanghai and Nanjing, asset-based welfare programs are prioritized because they are highly compatible with the goals of developing real estate as a strategic industry and supporting urban renewal, while still providing means-tested protection for lowincome residents with hukou. In Shenzhen and to a less degree in Guangzhou, the prioritization of public rental programs provides greater opportunities for inclusion of migrants and possible equal access to public services, although such inclusion can be stratified based on factors such as education and skill levels. In the housing domain, Shanghai was the earliest to adopt a social insurance approach in housing and has promoted a state-led model in the provision of asset-based welfare and public rental programs. The greater local agency in Shanghai is demonstrated not only in its ability to generate and maintain distinctive local models but also its ability to project national-level influence across political, economic, and social domains. Between 1981 and 1991, Shanghai conducted a series of local as well as international research to collect ideas about how to commodify housing. Domestically, the municipal government convened a research group consisting of local government officials and policy experts, to conduct municipal level surveys and analysis as well as provide policy recommendations. In addition, Zhu Rongji as then mayor led the research group’s visit to Hong Kong and Singapore, before formulating a comprehensive housing reform plan in the early 1990s. Similar to healthcare reform, the municipal government created a standalone Housing Commission at the municipal level to hierarchically coordinate policymaking, regulation and supervision functions. Within the commission, the decision-making structure is collective based on a group of committee members which often include not only key officials in housing, but also other municipallevel bureaucratic agencies, retired party cadres as well as social elites in Shanghai (Shanghai Municipal Gazetteers Office, n.d.). In the domain

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of housing financing, the HPF Administration Center and the Administration Committee play key roles in not only managing HPF funds but also coordinating with local banks as well as supporting municipallevel affordable housing projects financially. The HPF co-determination structure resembles state corporatist institutions in the economic sector, allowing greater coordination among local bureaucracy and collect inputs from primarily SOEs and local state-sponsored labor unions. Over time, Shanghai has developed a stable “four pillars” framework in affordable housing provision with significant institutional stability at local level despite changing policies at central level. The four pillars include two asset-based welfare programs and two public rental programs, each aiming at distinctive target populations. Knowingly departed from central guidelines, Shanghai’s demolition and relocation housing provides assetaccumulation venues for local residents with hukou who are willing to support the urban renewal processes. More recently, Shanghai has introduced the JPRH program that uses a “shared investment” approach rather than direct government responsibility, a model that has been promoted nationwide in recent years. For both programs, there is a strong economic logic in supporting urban renewal and commodity housing development, in addition to the social protection logic for local residents with hukou. For households with “twin difficulties”, the means-tested CRH program provides direct government responsibility through more generous rental subsidies and at times physical provision. Finally, PRH primary targets the “sandwiched households” including low-income local residents and migrants, although direct government responsibility is more evident for the former group. Between 2011 and 2015, the demolition and relocation housing program provided 427,600 units or 61.85% of total affordable housing units, in contrast to 66,000 units or 9.55% in JPRH, 110,000 units or 15.91% in CRH, and 87,700 or 12.69% in PRH.35 This shows that although promising a “four pillars” model, in reality Shanghai continues to prioritize urban renewal goal and utilizes affordable housing as an instrument to support this goal. On the supply side, a key characteristic of Shanghai’s affordable housing provision is the reliance on local SOEs in the real estate sector and state-led public rental companies, illustrating a state-led model in service delivery with strong hierarchical coordination. The real estate sector has been identified as a “pillar industry” as early as the early 2000s, and the municipal government explicitly support large SOEs in not only leading local housing marketization but also affordable housing

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development. At municipal level, the Housing Commission heavily depends on large state-owned real estate developers, such as the Shanghai Municipal Investment Corporation (SMIC) and Shanghai Land Group, to plan, develop and manage key asset-based and public rental programs. Since 2000s, SMIC has helped develop ten major housing communities in accordance with local housing development plans, all in suburban areas with a focus on asset-based welfare programs such as demolition and relocation housing as well as JPRH. In addition to affordable housing construction, the Shanghai Land Group has also established PRH management companies to help coordinate public rental program operations between the government, industrial parks, and employers. On financing side, local state-owned banks such as the Shanghai Bank also play key roles in providing additional financing to affordable housing projects while channeling HPF funds. At the district level, housing bureaus rely heavily on SOEs within individual districts to supply affordable housing and meeting the targets set by the municipal government.36 Whereas Shanghai has developed a highly coherent model of employment-based HPF and state-led service delivery, Guangzhou’s affordable housing regimes present a more mixed picture, due to the presence of provincial-level constraints and strong vested interests in the state sector. In comparison to healthcare, provincial-level constraints appeared to be weaker during the early reform era, yet significantly increased more recently in correspondence with growing central government top-down pressure. In particular, the provincial government has determinedly promoted the public rental over asset-based welfare, considering the persistent intra-provincial migration flows. Furthermore, “public service equalization” (gonggong fuwu jundenghua) has become a key policy doctrine promoted by both the provincial government and central government. The provincial guidelines for PRH in 2010s for example were very specific in recommending and later mandating inclusion of migrants, in contrast to lack of clear guidance in early reform years. Meanwhile, the size of state sector in Guangzhou, especially government bureaucracy and public institutions, helps explain persistent preferential policies for state sector employees as part of the dominant social bloc in various affordable housing regimes. For HPF, this can be illustrated by stronger participation by the government bureaucracy in contributing employees, as well as a higher employer contribution cap that allows for consistently higher generosity. In asset-based welfare, this

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resulted in the creation of a separate track in ECH implementation designated for state sector employees. In PRH, the municipal government continues to provide greater allocations to government agencies, public institutions and SOEs. Nonetheless, there is also some evidence of greater “societal participation” in both financing and service delivery in Guangzhou. The HPF co-determination structure in Guangzhou has consistent private and foreign firm representation, showing a strong commitment by the municipal government to consider inputs from non-state sector employers. Although the municipal government has adopted a more centralized approach in coordinating affordable housing provision, both SOEs and private sector firms have been involved in the development of large affordable housing communities. In comparison to the dominance of SOEs in Shanghai, at least half of top ten real estate developers in Guangzhou are private or foreign-owned, which helps explain why the municipal government has chosen a more pluralized service delivery model. In contrast to Shanghai’s more hierarchical coordination and state-led model in service delivery, Guangzhou’s affordable housing development has relied on the municipal government to provide land and financing while state-owned and private real estate developers compete in obtaining government contracts. The quasi-market structure therefore coexists with a high level of state intervention in policy coordination and direct financing, which differs from the dominance of SOEs in affordable housing provision with support by the municipal government of Shanghai. In comparison to Shanghai’s prioritization of asset-based welfare, Guangzhou’s affordable housing programs in recent years have shown a more balanced approach between public rental and asset-based welfare. Between 2011 and 2015, Guangzhou provided approximately 99,000 public rental units, in comparison to 67,800 various asset-based welfare housing units such as capped-price housing and ECH (Guangzhou Municipal Government, 2017). In 2016, Guangzhou has roughly 39,000 PRH units in comparison to 45,000 asset-based welfare housing units (Guangzhou Municipal Gazetteers Office, n.d.).37 With provincial government support, Guangzhou became the first city in China to announce “same rights for tenants and homeowners” (zushou tongquan) and that “children of qualified rental tenants will enjoy the same right of school enrollment as those of home owners” in 2017 (Guangzhou, 2017). In addition, the municipal government also encouraged “the new urban poor” to participate in both HPF and PRH programs at the same

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time, by granting priority enrollment if they are also enrolled in HPF. This “Guangzhou model” was quickly commended by MOHURD, followed by a MOHURD circular in the same year promoting this model at national level (MOHURD, 2017). Between the two secondary cases, Shenzhen has demonstrated stronger local agency in developing a more coherent welfare mix model at local level, though that occurred only very recently. While other cases adopted Shanghai’s HPF model immediately, Shenzhen decided to shelve HPF despite central government guidelines in the late 1998s. Instead, Shenzhen focused on developing “comfortable housing” to provide protection for state sector employees during housing commodification. With the absence of HPF and the undersupply of means-tested CRH, Shenzhen’s “new urban poor” was left unprotected during a period when local housing price skyrocketed. This resulted in consistent societal backlashes and frequent calls for further housing reforms in Shenzhen. Entering into 2010s, new central government guidelines created a window of opportunity for local policy change. In 2011, Shenzhen became the first across all four cases to pass a comprehensive affordable housing law at the local level, calling for the development of a multi-pillar model in housing that would provide greater protection for all social groups.38 With a sizable migrant population, Shenzhen’s local affordable housing provision continues to prioritize public rental over asset-based welfare, while emphasizing “same rights for rental tenants as homeowners” similar to Guangzhou. Between 2011 and 2015, Shenzhen provided 66,626 PRH units, in comparison to a total of 43,085 housing units for asset-based welfare programs.39 At the same time, the municipal government has promoted “multiple supply entities, multiple channels of protection” in affordable housing provision (Shenzhen Housing and Construction Bureau, 2016). Specifically, the municipal government and district housing bureaus have prioritized direct government responsibility for “talented persons,” while a “state guidance, societal participation” model has been promoted in the provision of other asset-based welfare and public rental programs. Service delivery in Shenzhen therefore is mostly pluralized, even though it contains a state-led component that prioritizes talent attraction and retention for local economic growth. For the case of Nanjing, significant similarities can be found with Shanghai in using affordable housing to support urban renewal and greater reliance on SOEs in affordable housing provision. Meanwhile, Nanjing also resembles Guangzhou in how local agency is constrained

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by both provincial-level constraints and a more dominant state sector. In comparison to greater societal inputs in the cases of Shanghai and Shenzhen, Nanjing’s local policymaking is highly bureaucratic.40 With strong vested interests in the state sector, Nanjing’s early housing reform focused on providing protection to work unit employees during housing commodification. HPF contribution patterns overtime show strong and consistently higher state sector participation in comparison to all other cases. On the other hand, Nanjing has distinctively developed a pro-poor focus in local affordable housing policies, which can be shown in greater policy support for low-income residents and to a fewer extent migrants across HPF, asset-based welfare and public rental programs.41 Finally, service delivery patterns in Nanjing is primarily state-led, although less dominated by SOEs in comparison to Shanghai. In addition to work with the Municipal Investment Corporation and other SOEs in developing large affordable housing communities in suburban areas, Nanjing has allowed private companies to form partnerships with SOEs to participate in PRH operations. Figures 6.2 and 6.3 provide a further comparison in terms of HPF coverage and affordable housing provision by tenure type across the four

Fig. 6.2 Housing Provident Fund coverage index by city, 2012–2018 (Data Source NDRC city database and local annual HPF reports)

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Fig. 6.3 Affordable housing by program type, 2011–2015 (Data Source Municipal housing development plans 2011–2015)

cases.42 At first sight, Shenzhen stands out in its broadest coverage of HPF despite late installment in 2010s, and the highest share of public rental in comparison to asset-based welfare due to its strong emphasis on attracting migrants especially high-skill “talented persons”. By contrast, Shanghai’s HPF coverage has consistently focused on employees with hukou and high-skill migrants in the formal sector, resulting in significantly lower coverage in comparison to Shenzhen, despite its early establishment in 1991. Furthermore, Shanghai’s affordable housing provision has steadily prioritized asset-based welfare to support the “pillar industry” of real estate and urban renewal processes. While both Nanjing and Guangzhou provide limited HPF coverage, the two cities have chosen diverging paths in affordable housing provision. As Nanjing has continued to prioritize asset-based welfare for urban renewal and residents with hukou, Guangzhou has highlighted the public rental program in accordance with provincial government priorities.

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6.5 Political Institutions, Growth Strategies and Subnational Housing Politics Of all three policy domains, housing experienced the most radical transition from a non-productive to a productive sector in the economy. Although initially delayed, the state-led housing commodification and marketization has been largely completed and hardly reversible by early 2000s. Local governments have developed strong vested interests in keeping the housing boom to support both local economic development and fiscal sustainability. Nonetheless, increasing affordability issues can also undermine the authoritarian social contracts at both central and local level, and therefore jeopardize regime legitimacy and political stability. Between the late 2000s and early 2010s, the central government under the Hu-Wen leadership pushed for a greater supply of affordable housing and expansion of coverage in HPF. The case comparisons however have demonstrated mixed effects of this round of top-down reform. The quantitative growth in affordable housing has not always resulted in greater support for the “new urban poor” and the “sandwiched households”. Instead, local governments have continued to adapt central reforms to local initiatives within the boundaries of authoritarian political institutions. For Shanghai and Shenzhen, stronger local agency has contributed to the development of relatively coherent models of welfare mix at the local level, aside from ability to project national influence. For the provincial capitals, nonetheless, local agency is rather moderate due to stronger provincial level-constraints, resulting in less coherent logic between economic and social sector reforms. Although all four cases have demonstrated strong economic rationalities in their affordable housing policies, variations in local growth strategies as well as state-market relations can help explain significant disparities in local affordable housing regimes. Figure 6.4 compares the share of real estate investment as a percentage of GDP across the cases. Across all four cases, Nanjing relies most heavily on real estate investment, followed by Shanghai and Guangzhou, with Shenzhen being the least dependent.43 Furthermore, a state-led growth model in the real estate sector has produced spillover effects into affordable housing provision in Shanghai and to a less extent in Nanjing. This also helps explain why assetbased welfare has been prioritized to support urban renewal. In Shenzhen and somewhat in Guangzhou, the priority is to attract skilled migrants to support local strategic sectors such as finance, high-technology and

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Fig. 6.4 Real estate investment as percentage of local GDP, 2000–2018 (Data Source National development research center China)

“advanced manufacturing sectors”. A public rental approach is therefore favored over asset-based welfare. Additionally, affordable housing provision in both these two cases is more pluralized in comparison to the state-led model in Shanghai and Nanjing with stronger societal participation. The rest of the section reviews the key actors, orientations and capabilities in local affordable housing regimes, and how political institutions and growth strategies have interacted to shape subnational affordable housing politics. First, who formulate affordable housing policies? At central level, the party leadership has played key roles in determining the overall reform orientations, especially the shifting discourses from housing as commodity to housing as entitlement. The affordable housing boom between late 2000s and early 2010s was the direct result of this changing rhetoric and increasing top-down pressure, though the effects appeared to be shortlived. Beyond the rhetorical commitment, MOHURD plays a key role in coordinating central level policies with other central bureaucracies such as MOF, Ministry of Natural Resources and PBOC. Compared to the healthcare domain, horizontal bureaucratic fragmentation appears to be less of an issue in the housing domain. Nonetheless,

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MOHURD alone seemed to lack sufficient authority and capacity to push through key housing reforms. Between late 2000s and late 2010s, several efforts by MOHURD to propose comprehensive housing law at the national level have failed to deliver any meaningful results. As discussed in Chapter 4, a possible explanation for such failure is the significant decentralization and vertical fragmentation in implementation of affordable housing policies. With the absence of a pre-reform financing mechanism similar to the Labor Insurance Scheme, local governments quickly adopted Shanghai’s HPF model in early 1990s, which was borrowed from the city-state of Singapore. The institutions of HPF therefore are decentralized by nature, and there is no alternative model to be considered when the central government attempts to recentralize. Vertical fragmentation is also manifested in affordable housing provision. The central government’s attempt in late 1990s to create a stratified model of housing that would include “high-end” commodity housing, “middle-end” ECH, and means-tested CRH largely failed. In practice, local government have prioritized the commodity housing pillar that is more consistent with local development goals and their own fiscal sustainability, adapted the ECH program to create various local versions, while undersupplying the means-tested CRH by imposing strict eligibility criteria. More recently, growing top-down pressure toward greater support for “the new urban poor” and “sandwiched households” through the public rental approach has resulted in mixed responses by local governments, showing persistent local agency in adapting central reform initiatives toward local goals. At the local level, the housing bureaus are in charge of coordinating both financing and provision of affordable housing. There is also some evidence for societal inputs and policy feedback, though such processes frequently occur within established or new state corporatist institutions. Affordable housing policies at local level often initially take the form of interim administrative measures following central or provincial mandates, and some over time become institutionalized as legislation passed by the local People’s Congress. In Nanjing and Guangzhou, provincial-level constraints frequently interrupt local policy processes, resulting in less coherent policy framework and less evident societal inputs. By contrast, greater societal inputs seemed to be evident in the cases of Shanghai and Shenzhen, although there appears to be more harmony of interest in Shanghai due to the dominance of state actors. In Shanghai, the state sector interests are well represented in the municipal Housing

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Commission, the HPF co-determination committee, as well as affordable housing policy networks coordinated by district-level housing bureaus. In Shenzhen, the bureaucratic agencies at times can receive more harsh criticisms, while top-down pressure can be utilized as opportunities by societal groups to exert some policy influence through the local People’s Congress. In the case of Shenzhen’s 2011 housing law, for example, it was passed one year after central government guidelines on expanding affordable housing coverage. Furthermore, the overall rhetoric of the local legislation is considerably pro-poor, which seems to be at odds with the municipal bureaucracy’s prioritization of “talent housing project”. Still, many were surprised that Shenzhen was able to pass a local affordable housing law when similar attempts at the national level led by MOHURD and the National People’s Congress have failed. Second, who finance affordable housing at local level? Although HPF is highly institutionalized at local level, it provides imperfect coverage for individual extractions on the demand side, and limited financing for affordable housing provision on the supply side. Meanwhile, limited central government fiscal incentives have largely focused on the public rental programs only. Expectedly, local governments have sought various ways to reduce direct government responsibility in affordable housing. First, local governments often undersupply the programs that require most direct government responsibility such as the meanstested CRH program, by either imposing strict eligibility criteria or lower the generosity level for broader coverage. Second, rather than direct state provision, local governments have used land transfer discounts and other non-fiscal incentives as tools to encourage real estate developers to participate in affordable housing construction, then allowing them to still maintain some profit margin within caps set by the local governments. Third, asset-based welfare programs can be a “win-win” for local governments and local residents if they are used to support urban renewal processes in the city center, allowing local governments to obtain more land transfer revenues over time. Finally, there is the “shared investment” approach as seen in Shanghai’s JPRH and Guangzhou’s “capped price housing”, where local governments are able to get their “investment” and even “returns” back when the recipient resell on the private market. Third, who provides affordable housing? Across all four cases, Shanghai and Nanjing have clearly favored a state-led model, in comparison to more pluralized provision in Guangzhou and Shenzhen. In this regard,

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state–market relations in the real estate sector as well as the state corporatist institutions in economic domains play key roles in shaping patterns of affordable housing provision at local level. In Shanghai, the municipal government has relied heavily on large SOEs to physically construct, develop, and then manage affordable housing programs. SOEs also play important roles in coordinating with district-level housing bureaus, industrial parks, and employers in PRH operations. Similar patterns were evident in affordable housing in Nanjing, where the municipal government provides preferential policies for SOEs to lead affordable housing provision, then at times allows private firms to participate as junior partners. By contrast, affordable housing provision in Guangzhou and Shenzhen is more pluralized. Whereas Guangzhou has encouraged both SOEs and private real estate developers to bid for municipal projects, Shenzhen has relied more heavily on “state guidance, societal participation” for means-tested programs, while providing strong fiscal support for “talented persons” or skilled migrants. This pattern in Shenzhen is in direct contrast with Shanghai and Nanjing, where direct state responsibility is primarily preserved for local residents with hukou. Finally, who have access to affordable housing? In general, the formal sector employees with hukou and stable employment are well protected across all four cases through the HPF program. Local residents with hukou at large are assured means-tested protection if they are unable to afford themselves. High-skill migrants are often guaranteed greater access to local affordable housing programs, if they are deemed valuable to local economy. Beyond these similarities, however, there are also discrepancies across the cases. In Shanghai, the prioritization of urban renewal has led to the creation of a tacit agreement between the municipal government and local residents. While high skill migrants are increasingly included in the public rental programs, they also face strict eligibility criteria and limited access to the asset-based welfare programs. For low-skill migrants, they are only eligible for PRH programs if they have stable employment, and if their employer is willing to participate. In comparison to highskill migrants, the low-skill migrants are often placed in dormitories in industrial parks, resulting in more spatial segregations. For Guangzhou, state sector employees enjoyed preferential access to asset-based welfare during earlier transition, and new employees in the state sector continue to receive stronger government support through the PRH program. Local low-income residents and other disadvantaged social groups are fully covered in means-tested protection, although such

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programs also led to spatial segregation of these groups and at times contestations with richer neighbor communities and residents. Finally, the inclusion of low-skill migrants in PRH was largely the result of provincial government mandates, and only those with “talent green card” can have access to asset-based welfare programs as local residents with hukou. In Nanjing, local residents are covered in more generous asset-based welfare if they are willing to support urban renewal, or receive meanstested rental protection under the less generous CRH or PRH program. Among migrant groups, college graduates have received more preferential treatments, due to a larger higher education sector and greater share of college students in the general population. Housing support for college students is also consistent with the local government’s “talent retention” strategy. At the same time, provincial pressure has resulted in greater coverage for migrants in the formal sector without additional conditions such as education and skill level. Across all four cases, Shenzhen provides the least coverage and generosity for local low-income residents until recently. In comparison to other cases, direct government responsibility in Shenzhen is only promised for selective skilled migrants who are recognized as “talents”. Although migrants have been granted early access to local affordable housing programs, such access is highly stratified based on education, skill level, and whether they work in strategic industries identified by the municipal government. Shenzhen therefore has presented the strongest and consistent productivist logic across all four cases.

Notes 1. Calculated based on data from National Development Research Center (NDRC). 2. In a 1988 housing reform meeting, then mayor Jiang Zemin proposed that housing should be treated as a commodity and that “everyone is equal before a commodity”. And he said that the municipal government should “strengthen propaganda to transform the welfare, class, and provision ideas related to housing” (Shanghai Municipal Gazetteers Office, n.d.). 3. In recent years, the committee is often formed by top government officials as well as SOE representatives. 4. The 1991 original policy explicitly defined HPF’s eligible population as employees with hukou and excluded “temporary workers” and foreign

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workers. Similarly, the 1997 rule on supplementary HPF also only covers employees with hukou. The expansion in other social sectors were the results of greater top-down pressure to add residence-based pillars in those policy areas. Although Shanghai also provides housing subsidies during monetization to civil servants, the subsidies were lower in volume and were directly transferred to their HPF accounts prior to 2008. More recently, there has been some local news reports that some government agencies also provide generous lumpsum compensations to civil servants when they purchase commodity housing. Still, there is no formally institutionalized municipal level policies as in the case of Guangzhou. In 1990s, the major affordable housing projects in Guangzhou included “resolving housing difficulties” (zhufang jiekun) and “comfortable housing project” (anju gongcheng ) (Guangzhou Municipal Gazetteers Office, n.d.). Data compiled based on Guangzhou HPF Administration Center annual reports and city-level health and pension insurance coverage data provided by the National Development Research Center. Committee member lists acquired from Guangzhou HPF Administration Center shows that there are two private firm representatives as well as and one foreign investment form representative in the 30-member committee. In Shanghai, the basic HPF contribution ratio was 5–7% and supplemental is 1–8% with a total of no more than 15% according to the HPF Administration Center website. Local news reports show that although with some variations in the state sector, most government agencies and public institutions provide more than 10% of employer match and many provide the full 20% at the maximum cap. Although civil servants in Shanghai are also eligible for housing subsidies, in Guangzhou the housing subsidies for civil servants are more generous based on comparison of rates in local news reports. Prior to 2008, Shanghai’s housing subsidy for civil servants was 5% or a minimum of 100 yuan per month. By contrast, in the same year the share of high-income employees is 12.7% in Guangzhou and 9.03% in Shanghai. Data acquired from local annual HPF reports. No data is available for Shenzhen. Initially, HPF once was considered an integral part of Shenzhen’s comprehensive social insurance reform. The 1992 Temporary Measures for Social Insurance explicitly recognized housing as a pillar in social insurance reform. However, in reality HPF was not fully institutionalized until 2010s.

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15. This number excludes employees who receive direct employer match to their individual accounts after purchasing commodity housing (Shenzhen Municipal Government, n.d.). 16. Data compiled by author from local HPF annual reports. 17. This also allows easier comparison between local data as well as tracking of any potential disparities in local implementation. 18. Data compiled by author based on annual reports from local HPF administration centers. 19. For Shanghai and Shenzhen, more than 70% of participating employees came from private and foreign firms in 2019. In Nanjing and Guangzhou, the numbers are slightly lower but still considerably higher than national average of 40.99%. Data compiled by author based on annual reports from local HPF administration centers. 20. Specifically, an eligible migrant applicant has to hold the Shanghai Residence Certificate with 120 points or higher, being married, and have contributed to local social security and income tax for more than five years (Shanghai Municipal Government, 2020). The points-based residence system was designed by the municipal government to determine who are eligible for what kinds of public services. 21. In particular, the central government stressed that stricter income-based eligibility criteria should be imposed on all ECH programs, including those that are provided by government in collaboration with work units (State Council, 2003). 22. In 2006, the municipal government announced that new investment plans were made to provide a total of 516,000 square meter ECH for centrally directly controlled as well as the military work units (Guangzhou Municipal Gazetteers Office, n.d.). 23. Specifically, the “fixed-priced housing” requires recipients to meet the following eligibility criteria: as residents with hukou, married, no property, 25 years or older for male recipient, 23 years old for female recipient. The income caps are quite high, with pre-tax income of 100,000 per year per person or 200,000 per year per couple. 24. By 2014, the municipal government began to use the terms “demolition and relocation housing” and “capped-price housing” interchangeably, adding new confusions to program objectives and target populations. 25. The target population was originally married couple working in the state sector, but gradually expanded to all married couples with at least one side being local resident with hukou. 26. Between 2011 and 2015, Shenzhen’s residential population with hukou increased by 1.04 million. 85% of new residents with hukou are high-skill migrants recognized by the municipal government (Shenzhen Housing and Construction Bureau, 2016).

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27. Between 2011 and 2015, more than 500,000 households benefited from the asset-based welfare programs. The number is calculated based on data in the Thirteenth Plan for Housing Development in Shanghai. 28. Data acquired from local housing bureaus and gazetteer offices. 29. The provincial guidelines changed again in 2015, asking local governments to provide coverage for at least new college graduates and migrants with permanent residence without hukou. 30. The “talent green card” in Guangzhou is similar to the “residence certificate” in Shanghai, which is provided to migrants who meet a specific set of criteria or receive a total number of set points based on education, skill level, years of residence, years of employment, etc. 31. Although there are very limited data, local news reports show that the coverage for migrants remains relatively small in practice. In 2015, 10% of PRH units were provided to migrants in comparison to 90% provided to local residents with hukou. In 2017, 1000 PRH units were provided to migrants, while state sector work units were allocated more than 10,000 PRH units to provide to their new employees, which are predominantly local residents with hukou. 32. An example of this type of public-private partnership was between the local SOE Northeast Group and the local subsidiary of the private real estate developer Vanke Group. In 2018, the Northeast Group signed a partnership memorandum with Vanke. According to local news reports, the Northeast Group acquire land from the municipal government and develop the “talent apartments”. Once construction is completed, Vanke is primarily responsible for management and operation of the PRH units (Xinhua Daily, 2018). 33. At central level, the State Council issued the Guidelines regarding Expediating the Development of Public Rental Housing to call for expansion of public rental to “sandwiched households” and migrants. In the same year, MOHURD issued the Circular on Strengthening Administration of Cheap Rental Housing in 2010, addressing significant distortion and undersupply issues in local implementation. Locally, the municipal People’s Congress passed the Shenzhen Affordable Housing Regulations in the same year, requiring local housing bureaus to prioritize both CRH and PRH. 34. The municipal government passed respective rules for “comfortable housing for talented persons” in 2015 and developing a new housing security system with “multiple supply entities”, “multiple channels for security” and “encouragement of both housing purchase and renting” in 2018 (Shenzhen Municipal Government, 2015, 2018). 35. Percentages calculated based on data provided in the Thirteenth Plan for Housing Development in Shanghai (Shanghai Municipal Government, 2017). Although the number looks larger, the means tested CRH

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program is cumulative, meaning it counts all CRH units provided since the establishment of the program in 2000. For example, the Luodian Affordable Housing Community was developed by the district-level SOE Baosteel, which was originally a steel industry SOE but over time developed a real estate branch. Within the asset-based welfare program, only less than half are ECH units for low-income residents as defined by central government. Intriguingly, Shenzhen’s 2011 housing law has strongly promoted the public rental programs while de-emphasizing HPF, even though the municipal bureaucracy was seeking to reestablish and expand HPF for both local residents and migrants at the time. Calculated based on data from the Thirteenth Housing Security Development Plan 2011–2015 (Shenzhen Housing and Construction Bureau, 2016). While there is a HPF co-determination structure, it is unclear how much role the committee plays in actual policymaking. According to staff at the HPF Administration Center, the committee is not a standing or permanent body. For example, Nanjing has the lowest share in contribution share of highincome groups and provide broadest coverage for low-income residents in means tested CRH program. For migrants, Nanjing is the only city that provide mandatory coverage in HPF and has set less restrictive eligibility criteria for migrant workers in the PRH program. The coverage index is calculated based on the following formula: total number of housing provident fund contributing employees (actual) divided by residential population. Data were collected from annual HPF reports from MOHURD and HPF administrator centers at each locality. Because the number only include actual contributors, it does not include those who are participating in the first time. The actual coverage might be slightly higher as a result. According to NDRC data, in 2019, the real estate sector as percentage of GDP is highest in Nanjing with 18.36% in 2019, followed by 12.34% Shanghai, 11.81% in Guangzhou, and 10.90% in Shenzhen.

References Chen, J., & Wu, Y. (2020). Coordination between China housing provident fund and economic and social development. SJTU Housing Observer, 3. GHPFAC. (n.d.). Annual housing provident fund reports. Guangzhou Housing Provident Fund Administration Center. GHPFAC. (2006). Notice on adjusting contribution base and ratio of housing provident fund. Guangzhou Housing Provident Fund Administration Center.

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Guangzhou Municipal Gazetteers Office. (n.d.). Guangzhou municipal gazetteer. Guangzhou Municipal Government. Guangzhou Municipal Government. (2017). Thirteenth development plan for urban and rural development. Guangzhou Municipal Government. Guangzhou, M. G. of. (2017). Implementation plan for expediting rental housing market. Guangzhou Municipal Government. Li, D. (2011). A brief analysis on the development of housing security system in Shanghai. Modern Architecture, 4, 16–19. MOHURD. (2017). Notice on expediting rental housing market in major cities with net migrant inflows. Ministry of Housing and Urban– Rural Development. http://www.ndrc.gov.cn/zcfb/zcfbqt/201707/t20170 720_855084.html. Nanjing Municipal Government. (2008). Implementation rules for cheap rental housing. Nanjing Municipal Government. Nanjing Municipal Government. (2011). Administrative rules for public rental housing. Nanjing Municipal Government. NHPFAC. (n.d.). Annual housing provident fund reports. Nanjing Housing Provident Fund Administration Center. Pang, Y. (2004). Thinking and practice on building housing security system in Shanghai. Journal of Shanghai Polytechnic College of Urban Management, 4, 26–28. Shanghai Housing Provident Fund. (2004). Charter of Shanghai municipal housing provident fund administration committee. Shanghai Housing Provident Fund. http://www.shgjj.com/html/xxgk/jgzn/73919.html. Shanghai Municipal Gazetteers Office. (n.d.). Shanghai municipal gazetteers. Shanghai Municipal Government. Shanghai Municipal Government. (1991). Interim measures for the housing provident fund. Shanghai Municipal Government. Shanghai Municipal Government. (2017). Thirteenth plan for housing development in Shanghai. Shanghai Municipal Government. Shanghai Municipal Government. (2020). Administrative rules for joint property rights housing in Shanghai. Shanghai Municipal Government. Shenzhen Housing and Construction Bureau. (2016). Thirteenth plan for housing security development in Shenzhen. Shenzhen Municipal Government. Shenzhen Municipal Government. (n.d.). Shenzhen municipal gazetteers. Shenzhen Municipal Government. Shenzhen Municipal Government. (2015). Regulations on comfortable housing for talented people. Shenzhen Municipal Government. Shenzhen Municipal Government. (2018). Deepening housing reform and expediting the development of housing supply and security system. Shenzhen Municipal Government.

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SHPFAC. (1997). Interim measures on supplementary housing provident fund in Shanghai. Shanghai Housing Provident Fund Administration Center. State Council. (2003). Circular on promoting continuous and healthy development of real estate market. State Council. SZHPFAC. (n.d.). Annual housing provident fund reports. Shenzhen Housing Provident Fund Administration Center. Xinhua Daily. (2007). Nanjing will focus on resolving housing difficulties of lowincome households. http://www.gov.cn/govweb/fwxx/sh/2007-08/30/con tent_731507.htm. Xinhua Daily. (2018). Collaboration between government platform and private firms in developing Nanjing’s long-term rental market. Xinhua Daily. http://www.zgjssw.gov.cn/shixianchuanzhen/nanjing/201805/t20180525_ 5412247.shtml. Yu, J., & Liu, Y. (2018). Satisfaction surveys on affordable housing in Guangzhou: Empirical studies of two ideal-typical cases. Journal of Guangzhou University, 17 (2), 67–73. Zhang, J. (2009). Review of low-income affordable housing policies in Nanjing: An analysis of problems and solutions. Economic Research Guide, 70. Zhang, S. (2019). Reinitiating Shenzhen’s housing reform. Caijing. http:// www.cxsz.org/index.php/View/view_detail/id/75.html.

CHAPTER 7

Local Agency in Old-Age Care: Articulating State, Society, and Family

China is now facing a potential aging crisis due to its growingly aging population, low fertility rates, as well as waning pace of rural-to-urban and inland-to-coastal migration. At national level, the old-age dependency ratio is rapidly increasing and reached 17.8% in 2019. Rich coastal regions in particular are dealing with rapidly growing old-age dependency ratio especially among the residential population with hukou. As Chapter 4 suggested, this in turn has challenged the financial sustainability of local pension schemes and the insufficient old-age care systems. Similar to neoliberal reforms in the west, earlier reform in China sought to reduce direct state intervention in financing and service delivery. The promarket reforms however were often met by strong resistance and policy drift at local level. In pension, a dual-track system was maintained in many localities, resulting in diverging patterns between the urban employee and civil servant pension schemes. In service delivery, a system of lowcost, means-tested public old-age care system coexists with private supply of “high-end” care. Together, they cover a small portion of the senior population while the majority still rely on family support. Responding to these challenges, both national and local governments have taken a more proactive stance in reforming pension and old-age care systems. Pension reform at central level led by MOHRSS and MOF has accelerated since late 2000s, which includes expansion of the © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_7

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employment-based scheme, integration of the civil servant scheme to end the dual-track system, and most importantly the introduction of a residence-based pension scheme. Supplementary pillars of occupational pension, enterprise annuities, and commercial insurance are designed to provide additional support based on willingness and capacity of employers and individuals. Some of these reform measures that came along with new incentives were welcomed by local governments, such as the introduction of the residence-based scheme with greater central fiscal support. Similar to healthcare financing, reforming the civil servant pension scheme has been more difficult across localities due to strong opposition from vested interests in the state sector. With years of bargaining at both central and local level, the final reform plans have accommodated these vested interests by creating grandfather clauses for retirees and current employees, while promising generous occupational pensions for new civil servants. Across all pillars, the employment-based pension pillar remains dominant across localities, particularly in Shanghai and Shenzhen where highly mature local models were developed as early as 1990s. More recently, a new senior allowance program that resembles a universal non-contributory pension in the World Bank’s multi-pillar model has been promoted by MCA, but without concrete guidelines or mandatory implementation. Expectedly, local governments have responded with various interpretations of the new doctrine and inconsistent eligibility requirements based on age and hukou status. In service delivery, MCA has promoted the “socialized care” model in line with the principle of “state-guidance, societal participation,” while gradually shifting the emphasis from “family care” (jiating shanyang ) and “institutionalized care” (jigou yanglao) to “old-age care at home” (jujia yanglao) and “community-based care” (shequ yanglao). The new models are built upon years of local experiments and policy feedback and provided significant built-in flexibilities in local implementation. Local governments in turn have embraced the highly flexible new old-age care models, viewing them as opportunities to reduce direct state responsibility while expanding coverage. In particular, the home care and community-based care models allow for various articulations of both “state guidance” and “societal participation.” Whereas Shanghai and Nanjing have preferred a state-led model with hierarchical coordination and prioritization of state sector participation, in Guangzhou and Shenzhen a more pluralized service delivery model has emerged in strong coordination with Hong Kong.

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7.1 From LIS to UEBPI: The Dominance of Employment-Based Social Pension Employment-based pension reforms at local level began long before the national introduction of UEBPI in 1998. Across all four cases, local governments actively adopted social pooling or individual account approaches in establishing a social pension system to replace the LIS pension pillar. In Shanghai, the new employment-based social pension focused on a “categorized solutions” approach with significant stratification across employer types and hukou status. This contrasted with Shenzhen’s “integrated but tiered” approach which primarily distinguishes between urban employees with hukou and migrants with equal coverage but different generosity levels. For Nanjing and Guangzhou, provincial priorities coupled with local financial considerations have motivated earlier integration of migrants, though preferential treatments have been preserved for the state sector employees through various means. Prior to reform, Shanghai’s pension system was divided by dual tracks of civil servant and urban employee schemes similar to other localities. Pension generosity ranges from 60 to 90% of salary, depending on employment types and years. This fixed pension system however was soon challenged in 1980s, when economic reform resulted in stagnant wage levels and significant price volatility. Although national pension reform was initially delayed, in Shanghai local reform started as early as 1986. A social pooling system was introduced to work units including SOEs and collective enterprises to relieve their increasing welfare burdens. In this new mechanism, the municipal Labor Bureau collected work unit contributions based on a fixed rate at 25.5% of workers’ salary, then allocated the funds to work units based on how much they need to pay to pensioners in a given year. Although individual contributions were not required initially, it was soon mandated in 1994 due to financial sustainability issues. A preliminary form of employment-based social insurance with municipal-level social pooling was then established. While national level reforms across different policy domains appeared to be fragmented and uncoordinated, in Shanghai there was strong coordination across policy domains, with synchronized reform measures to establish an employment-based pension model along with healthcare insurance and housing provident fund. Similar to other policy areas, local pension reform was based on a combination of policy learning from existing models elsewhere, as well as local experimentation and feedback

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(Dai, 2008). By 1993, the municipal government created the Social Security Administration Bureau to manage pension funds, and then officially introduced the Procedures of Shanghai Urban Employee Pension Insurance in 1994. Most notably, Shanghai’s civil servant pension scheme was integrated into the social pooling system in this year, which departed from national-level trajectory of delayed reform.1 With a booming economy prioritizing state-led EOG, Shanghai quickly expanded pension insurance to employees in emerging private and foreign firms in 1995. By 1997, 4.16 million current employees and 2.01 million retirees participated in the employment-based urban pension scheme, which means UEBPI covered 98% of all urban employees in the formal sector (Shanghai Municipal Gazetteers Office, n.d.). Moreover, Shanghai’s local experiments combined the social pooling and individual account models. This combined approach was favored by central bureaucracies in the bureaucratic bargaining processes, and later was adopted by the central government and promoted to other localities. The 1998 national reform therefore helped to further institutionalize local reforms rather than interrupting local processes. Following the new national guidelines, the municipal government announced that Shanghai’s local reforms are consistent with national reforms in “basic principles, basic model, and primary components” (Shanghai Municipal Gazetteers Office, n.d.).2 In addition to the urban employee scheme, Shanghai invented a “categorized solutions” approach for suburban and rural employees as well as migrants similar to the case of healthcare financing. Together with the urban employee scheme, the social insurance system has produced strong stratification effects with varying contribution rates and generosity levels. In suburban areas, rural employees and land-expropriated residents were enrolled in the “Small Cities and Towns Social Pension Scheme” (xiaochengzhen yanglao baoxian), which has a smaller contribution base of 60% of salary and higher employer contribution rate of 25%. This scheme was still administered by the Municipal Social Security Administration but separated from the urban employee scheme. Meanwhile, migrants were required to enroll in the Migrant Comprehensive Social Insurance, which included pension and medical insurance pillars. Most notably, the migrant pension scheme was operated and managed by commercial insurance companies. Marked by “low contribution, low payment”, the pension insurance for migrants fell under the commercial insurance pillar rather than the state-led basic contributory pension

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pillar. Shanghai’s employment-based pension system therefore was categorized by local experts as “broad coverage, basic protection, categorized and tiered,” with potential negative impacts on labor mobility across tracks and financial sustainability of some tracks (Dai, 2008; Y. Xiao, 2009). Over time, Shanghai’s stratified employment-based model became at odds with the central reform in late 2000s and early 2010s, which called for expansion, integration, as well as equalization of benefits across different categories of employees. Under increasing top-down pressure and following the passage of the national Social Insurance Law in 2010, the municipal government set a transition period allowing for gradual adjustments of contribution base and rates to eventually integrate suburban and rural employees into UEBPI. In 2017, the municipal Social Security Bureau announced that it would adopt the principle of “parallel generosity” (daiyu pingyi), which means the annual adjustments will be equalized but not the current pension payments (Shanghai Municipal Government Press Office, 2017). Unsatisfied with this reform plan, some suburban and rural employees organized protests at the municipal Social Security Bureau in the same year, demanding for “real urban scheme not fake urban scheme.”3 Meanwhile, the selective inclusion of migrants based on additional conditions have raised questions about who have truly benefited from the integration. Initially, the municipal social security bureau also imposed additional eligibility criteria based on labor contract status, age, skill level, consent of employer, etc. The conditions were slightly loosened in 2012, but new distinctions were made between migrants who are from another urban areas versus those who are from rural areas.4 For eligible migrants, the municipal Social Security Bureau announced that their previous contribution years toward the migrant comprehensive insurance cannot be counted because it was a commercial insurance scheme. Meanwhile, news reports found that the migrant scheme funds were injected into the new integrated urban employee pension scheme.5 Following the injection, balance of the urban employee pension scheme has immediately turned from negative to positive, allowing the municipal government lower contribution rates as mandated by central government without further increasing its fiscal burden. Compared to delayed reform in healthcare financing, pension reform in Guangzhou initiated in early 1980s, showing more active local agency

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during early reform years. The dramatic increase in pension and retirement expenditures across the state sector contributed to the early introduction of social pooling in pension across counties, districts, and bureaus in Guangzhou as early as 1983. In 1985, the municipal government established the standalone Guangzhou Social Labor Insurance Company, which later evolved into the Municipal Social Security Administration Bureau in 1996. By 1986, all work units are required to contribute 14% of employee salaries, which was later increased to 21.5% in 1988 (Guangzhou Municipal Gazetteers Office, n.d.). In addition to formal employees in the state sector, the municipal government also expanded the LIS scheme to contracted workers in the state sector, then set up separate labor insurance funds for joint ventures. In 1992, Guangzhou formally introduced the new tripartite social pension insurance system based on the “burden sharing” principle among the state, firms, and employees. Beyond formal state sector employees, the new social pension scheme in Guangzhou also incorporated contract and temporary workers, which was the first among Chinese cities. Guangzhou therefore completed the transition from communist LIS to an employment-based social pooling system in pension prior to national reform in 1998. The early success was in direct contrast with delayed reform in healthcare financing, where pre-existing institutional fragmentation contributed to strong resistance in establishing municipal-level social pooling. In 2002, annual pension contributions reached 5233.27 million yuan, in comparison to only 1887.30 million yuan for medical insurance in the same social insurance system (Guangzhou Municipal Gazetteers Office, n.d.). Nevertheless, the reform was far from complete. First, contrary to Shanghai’s early integration of civil servants, in Guangzhou the civil servant pension scheme was left intact until 2010s. Second, Guangzhou’s new pension model relied solely on social pooling without individual account. As national reform called for a combination of social pooling with individual account in 1998, Guangzhou had to adjust its local model by creating individual accounts for employees. Finally, the employment-based model only mandated employer contributions by SOEs and collective enterprises at the time, without specific guidelines for other types of employers and their employees. Although Guangzhou had to make significant policy changes at local level following the national reform, the outcome of Guangzhou’s second reform turned out to be less stratified and more inclusive for migrants in comparison to Shanghai. Starting 1998, Guangzhou began to provide full

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mandatory coverage for private sector employees, small business owners as well as those who are self-employed. Between 2001 and 2007, the Social Security Bureau divided the integrated employment-scheme into two tracks, with 20% employer contribution rates for SOEs, collective enterprises, as well as firms with mixed and foreign ownerships. For private firm and small business employees, as well as migrants and rural residents with hukou who work in urban areas, the employer contribution rate was set at 12%. This policy was adjusted again in 2007 to maintain the two tracks but only based on employer types but no longer hukou status. Despite some level of stratification, Guangzhou’s integrated UEBPI approach allowed for greater inclusion of migrants as well as rural residents who work in urban areas. This approach was at least partially the result of stronger agency of the provincial government, which has favored “public service equalization” within the Guangdong province as well as greater urban–rural integration. In Shanghai, the “categorized solutions” approach meant only urban and suburban employees with hukou were covered in the basic pension pillar, while rural residents and migrants were covered in the non-mandatory commercial insurance pillar. By contrast, Guangzhou’s integrated employment-based pension model covers all employees who work in urban areas regardless of their hukou status. In 2009, the provincial government announced further measures not only to equalize the UEBPI contribution base and rates across localities, but also strengthen the provincial capacity to adjust and pool local funds as needed (Provincial Government of Guangdong, 2009). In the case of Nanjing, pension reform began as early as 1987, though early reforms were more fragmented in comparison to the other cases. Following the national reform in 1998, Nanjing quickly took the opportunity to integrate all urban employee schemes and expand coverage, although again with notable exceptions for civil servants and public sector employees. Before the national reform, Nanjing created a tiered and fragmented system of socialized pension due to strong vested interests from state sectors.6 First, Nanjing’s pension model was more fragmented based on not only types of firms but also where the firm is located. Social pooling at municipal level covered only SOEs and municipal or district-level collective enterprises but excluded government bureaucracy and public institutions. Secondly, fragmented sectoral social pooling as well as non-participation were prevalent in economic sectors monopolized or dominated by the state, such as power, railroad, mail service,

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construction, and civil affairs. Thirdly, although Nanjing included certain migrants in the social pension system from the beginning, such coverage was limited to migrants with urban hukou only. Rural migrants as well as the rest of urban and rural residents who were not employed in the formal sector remained uncovered. The 1998 national reform coupled with massive local SOE layoffs created another opportunity to expand employment-based pension coverage. With a large state sector and significant number of urban employees losing their jobs, Nanjing became one of the earliest cities to expand coverage to those with “flexible employment” and classified laidoff SOE workers into this category (Nanjing Daily, 2018). Meanwhile, the provincial government of Jiangsu published new guidelines to require local governments to cover all employees regardless of their hukou status (Provincial Government of Jiangsu, 1998). By 2002, the municipal Social Security Bureau announced that Nanjing would allow all urban employees participate in UEBPI based on the “three regardless” (sanbu) principle, which means there was no longer distinctions based on employer type, hukou status, and form of employment. Beyond destratification within the pension scheme, Nanjing also proposed to integrate different categories of employment-based social insurance, which would allow more centralized collection and administration of social insurance funds across pension, medical unemployment, work injury, and maternity insurance schemes. Recognized as the “Nanjing model” by then Ministry of Labor and Social Security, Nanjing’s pension reform demonstrated stronger local agency as well as greater local-central feedback in comparison to other social domains. With similar level of local agency to Shanghai, Shenzhen adopted a “integrated but tiered” approach in pension which is consistent with the local model in healthcare financing. While other cities’ initial pension reforms started from the state sector, Shenzhen’s social pension experiments began in joint ventures and among contracted workers in 1982. The measure was then expanded to new contract workers at government agencies and public institutions. By 1992, Shenzhen have applied the employment-based social pension to all contracted and temporary workers across all employer types. As discussed in the healthcare chapter, Shenzhen was also the first city to adopt an individual account approach for both pension and medical insurance. The 1998 national reform integrated elements from Shanghai’s model as well as Shenzhen’s, in particular of its individual account approach and a multi-pillar pension system of

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basic, supplemental, and personal savings pillars. Within the basic pillar, Shenzhen adopted an integrated but tiered approach similar to medical insurance, which provided greater generosity for local employees with hukou but still incorporate all migrants with no distinction on their original hukou status.7 This model therefore differed significantly from Shanghai’s “categorized solutions” model and other cities’ prioritization of social pooling. Although the individual account approach provided more benefits to individual employees, in practice it became increasingly challenging for Shenzhen to practice this model alone, while other localities continued to prioritize a pay-as-you-go system of social pooling. In 2006, Shenzhen’s local People’s Congress revised and passed the new local pension insurance regulations, moving away from the individual account approach and reprioritizating of social pooling similar to other cities. The new approach benefited the financial sustainability of local pension funds, yet it also created more barriers for migrants to maintain or extract employer contributions. Before national policies allowed for inter-provincial transfers in 2010s, most migrants would choose to terminate their account and extract the individual account portions only. The remaining employer contributions were often reallocated to the general pension funds and benefited the local residents with hukou. In comparison to other policy domains, local governments apparently have adopted more inclusive attitudes toward migrants in employmentbased pension reforms. Such moves however were well driven by selfinterested reasons, given the disparities in age distribution between migrants and local residents with hukou. For local governments, the aging local populations have significantly challenged the financial sustainability of their pension systems. Incorporating migrants into local pension schemes therefore can help alleviate the problem at least partially. For the same reason, local governments also at times impose restrictions when migrants attempt to terminate or transfer their pension contributions when they leave the city. The fragmented pension system at national level contributed to persistent difficulties for migrant workers to receive pension benefits after retirement, especially when they leave the city they originally worked in and return to their rural homes. Expectedly, migrants have shown persistent distrust in urban social insurance systems despite early inclusion in some cases, and many opted to terminate their social insurance when they leave the city. In 2009, a new national policy sought to address the issue of pension transferability especially for those who

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have rural hukou but work in urban areas.8 While the policy was wellintentioned, it also allowed local governments to set greater barriers for migrants who want to terminate their social insurance and extract the remaining amount in their individual accounts. The announcement of such restrictions in Guangzhou and Shenzhen generated a wave of terminations before the deadline, as many migrants feared they would not be able to terminate after the measure.9 While the 2010 and 2016 national reforms have improved inter-provincial pension transferability and moved one step closer to the ultimate goal of national-level social pooling, such reform is far from complete.

7.2 From Civil Servant Scheme to Occupational Pension: The Vested Interests within the Party-State A shared characteristic between pension and healthcare financing reform was how they were shaped by the communist legacy of a dual-track system. In healthcare, the strong vested interests within the party-state have undermined central and local attempts to end the Free Medical Care system for party cadres, civil servants, and other public sector employees. Similarly, the reform of the civil servant pension scheme was often strongly resisted by the vested interests within the state sector, resulting in de facto maintenance of the dual-track system until 2010s. The increasing top-own pressure in 2010s have resulted in nominal integration of civil servant pension scheme into UEBPI across localities. However, the new central reform was much less radical than originally intended, thus could be viewed at best as a compromise between reform advocates and the vested interests. Embracing the new incremental and moderate approach, local governments have promised to preserve or restore old privileges through grandfather clauses or provide new forms of privileges through occupational pensions or enterprise annuities. In Shanghai, the incremental reform of the civil servant pension scheme started early but remained incomplete before national reforms in 2010s. In 1993, the municipal government announced measures for municipal-level pooling of pension funds for civil servants, requiring all government agencies and public institutions to contribute 20.5% of their employee salary to the municipal Social Security Bureau (Shanghai Municipal Government, 1993).10 Contrary to the UEBPI, nonetheless,

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the reform measure did not require any individual employee contributions. Meanwhile, the employer contributions were budgeted into annual expenditures of specific agencies or institutions, and indirectly financed by local fiscal revenue. Although the reform measure was implemented without significant opposition, it also maintained the dual-track system without challenging its fundamental assumptions. The municipal government continued to provide indirect fiscal support to the civil servant scheme based on fixed pensions that were periodically inflationadjusted.11 This partial reform resulted in nominal integration of civil servants into municipal-level social pooling. Nonetheless, it created opportunities for the municipal government to tap in the UEBPI funds when the civil servant track funds were insufficient. Instead of pushing for complete overhaul of the communist legacy system, the municipal government maintained its fiscal support for the civil servant pension scheme and increased its generosity levels between 2000 and early 2010s. A 2010 study showed that in comparison to Beijing or other cities where civil servant pension reform was delayed, Shanghai’s integrated system were under consistent financial pressure due to high pension payments to civil servants (Yang et al., 2010). No further reform measures were announced until 2015, when the central reform measures finally helped push forward more radical reforms on the ground. The 2015 reform called for both employer and employee contributions and integration of civil servants into UEBPI. The municipal government quickly followed, yet immediately announced a few measures to provide additional compensations during and after the transition as permitted by the central government. Following the national guidelines, the overall principle in Shanghai was “old people old rule, new people new system, and gradual transition for those in the middle” (Shanghai Municial Government, 2015). For those who retired before the transition, the generosity level is maintained. The new employees on the other hand will follow the “more contribution, more payment” model in UEBPI. For those who are already employed but will not retire after the transition, they will be provided “transitional pensions” (guodu yanglaojin) that allows for significant increase in generosity levels. In addition, the municipal government quickly adopted the occupational pension model for civil servants, which requires employees to contribute 4% with employer match of 8%. Although the dual-track system has been finally abolished, new

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measures have been introduced to maintain greater generosity for civil servants. The absence of local agency in pension reform was more obvious in Guangzhou. A review of policies between 1990 and 2010s demonstrated that most significant reform measures were published by the provincial government, and even at provincial level there were strong resistance and persistent bargaining within the provincial and municipal bureaucracy. The provincial government first proposed an integrated employmentbased social insurance including civil servants in 1993 in the Interim Measures for Employee Pension Insurance. Nonetheless, the provincial implementation guidelines in the same year only covered SOEs and collective enterprises. In 1998, the provincial People’s Congress passed the provincial Regulations on Pension Insurance Guangdong Province, which covered contracted employees in government agencies and public institutions. Nonetheless, the provincial statute also added an exceptional clause for fiscally financed agencies and institutions, for which “the provincial government will make alternative measures” (People’s Congress of Guangdong Province, 1998). The “alternative measures” however were not announced until 2010s. In Shanghai, partial reforms in 1990s resulted in the establishment of nominal social pooling at municipal level and the transfer of administrative authority from the Fiscal Bureau to the Social Security Bureau. In Guangzhou, by contrast, such transition did not occur in the absence of provincial and municipal agency. Instead, the civil servant pension scheme continued to be administered by the Fiscal Bureau and directly financed by local fiscal revenue. The 2015 national reform surprised many local civil servants in Guangzhou.12 With a large bureaucracy with provincial-and municipallevel party cadres, civil servants, and other public employees, the new reform was estimated to impact more than 300,000 people in Guangzhou alone (South Metropolis Daily, 2015). In 2013, the Guangdong province had announced a gradual integration plan without a specified timeline, five years after it was selected as a pilot province for integration in 2008.13 Contradicting the provincial guidelines, the 2015 national reform did not permit any transition period but rather mandated immediate implementation, illustrating greater policy recentralization under Xi Jinping’s political leadership. Following the national reform, the provincial and municipal government quickly published implementation guidelines that resembled Shanghai’s plan in many ways.14 The key difference however was how the municipal funds are managed. While the 2016 reform for the first

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time established municipal-level pooling, Guangzhou’s municipal government also made clear that the nominal integration would not result in de facto integration of funds at municipal level or with the UEBPI scheme. Rather, the civil servant pension funds would be managed separately under the municipal fiscal account, with separate accounting for municipal and district-level agencies and institutions. Meanwhile, the reform plan also assured civil servants that fiscal subsidies would still serve as the “last resort” when pooled funds were insufficient (Guangzhou Human Resource and Social Securty Bureau, 2016). The Guangzhou reform therefore retained more legacies from the civil servant pension scheme. Further comparison between Shenzhen and Guangzhou helps demonstrate some disparities between the two cases even though both are under the Guangdong provincial government. In Shenzhen, local agency was more evident due to its relative autonomy from the provincial government, as well as weaker vested interests in the state sector. As discussed previously, Shenzhen introduced the integrated social insurance model as early as 1992. Nonetheless, the pension pillar only covered contracted employees in the state sector initially, while civil servants were technically still covered by the “iron rice bowl” and enjoy the civil servant pension scheme at no individual cost. The next round of reform began in 2007, when Shenzhen experimented new measures to break the “iron rice bowl” for civil servants and establish formal contracts with new employees. The experiment was gradually expanded to include all new employees in government agencies and public institutions by 2010. Complementing this reform, new civil servants were required to contribute to UEBPI at the same rates as other urban employees. The Shenzhen model also was the first to experiment occupational pension for civil servants, by requiring 8% of employer contribution, while individual contribution was not required and was directly financed by fiscal budgets. The overall effects of Shenzhen’s model however were widely debated at the time. While some have praised Shenzhen’s reform for “breaking the ice” and being “steady and effective,” others argued that it was a “halfway reform” that was incomplete (Outlook Weekly, 2015; Yong Xiao, 2012). Regardless of these debates, Shenzhen’s reform was recognized by MOHRSS minister in 2012 at a Press Conference during the 2012 People’s Congress Annual Meeting. With lack of progress in other national pilot programs across the five pilot provinces

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and cities, Shenzhen’s local reform helped paved the way for the adoption of the principle of “new people new rule” and occupational pension at national level. In Nanjing, initial reforms of the civil servant pension scheme began as early as 1994, although the reform scope was limited to selective public institutions and contracted employees. The 1994 Opinions on Pension Insurance Reform of Government Agencies and Public Institutions served as the guiding document at local level based on the principle of “planning with pooling, implementation by steps” (tongchu guihua, fenbu shishi) (Nanjing Municipal Government, 1994). To minimize potential opposition, the initial reform proposed 23% of employer contribution that would be fiscally financed, and a nominal 1% individual contribution for public sector employees affected. Between 1994 and 2006, individual contribution rate was gradually raised from 1 to 5%, although still lower than the 8% in UEBPI. Nominally, the incremental reform plan also promised to establish a social pooling system for all those who covered in the civil servant scheme with no exceptions. In reality, however, civil servants with “iron rice bowl” in fully fiscally funded government agencies and public institutions were allowed to maintain their privileges without making any individual contributions. In 2012, the municipal government announced that it would expand the reform to all public institutions no matter if they are self- or fiscally financed. Nonetheless, civil servants in government agencies were again excluded from the actual reform plan, showing strong resistance within the bureaucracy in giving up their privileges. Those who worked in other public institutions also internally lobbied to retain their generosity levels. In 2017, two years after the national reform, Nanjing finally announced that all public sector employees, including the civil servants in government agencies, would need to contribute 8% of their salary similar to all other urban employees. Like other cases, nonetheless, the new reform has retained a separate track for civil servants and maintained indirect fiscal support for employer contributions in basic and occupational pensions. The comparison of the four cases therefore demonstrated strong and persistent resistance to pension reform within the party-state. To some extent, such resistance was even stronger in pension in comparison to healthcare financing. In contrast to more active local agency in transitioning the employment-based pension scheme, local governments were clearly less enthusiastic in ending the dual-track system. Rather, most

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localities sought to at least partially preserve the fiscally financed pension privileges for party cadres, civil servants, and other public institution employees. In this regard, local agency was more evident in adapting, or even neglecting central and provincial-level reform guidelines. At national level, the 2015 reform plan was more radical than previous measures, showing stronger policy recentralization under Xi Jinping’s leadership. Still, the final reform plan should be viewed as a compromise following years of resistance and bargaining at both central and local level. In particular, the adoption of the principle of “old people old rule, new people new system, and gradual transition for those in the middle,” as well as the introduction of occupational pensions, were welcomed by local governments to reduce potential opposition from local vested interests. Furthermore, the reform was far from complete. Many public employees especially party cadres and civil servants are still covered under a separate scheme or track with fiscal guarantee. The partial reform has maintained old privileges for those who have retired, while providing new advantages such as the transitional compensations and occupational pensions for those who are currently or newly employed.

7.3 Social Assistance for the Elderly: From Means Testing to Universalism? Like healthcare, the absence of local agency was clear in the development of a universalistic residence-based pension scheme. Nonetheless, a more imminent aging crisis across coastal cities have prompted local governments to embrace new central initiatives or adapt them to local priorities. Prior to national reforms in late 2000s and early 2010s, local governments have opted to provide some category-based or means-tested protection for the elderly. For low-income residents with hukou, local governments have provided direct subsidies targeting those aged 60 or above either inside or outside of the MLG program. Local government also provided greater direct state responsibility for urban retirees who worked in the state sector. At times, selective local groups such as land-expropriated rural residents are provided pension benefits for their “contribution” to urban renewal and local economic development. Meanwhile, voluntary social pension programs or commercial insurance could be offered without significant impact on fiscal expenditure. Most significantly, however, none of the local reforms promised any kind of elderly

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protection for migrants who work in the informal sectors and are not qualified for UEBPI. The reorientation toward social justice and greater policy recentralization at national level have reduced the scope of local discretions and provided new incentives for more universalistic elderly protection since late 2000s. The introduction of an integrated residence-based pension scheme URRBPI provided some basic pension coverage for local residents with hukou who are not covered in UEBPI. Without employer contributions, the program requires some moderate individual contributions and primarily co-financed by central and local government fiscal subsidies. Most local governments have used the subsidies to encourage resident participation, although often with a tiered approach of “more contributions, more subsidies.” In 2011, MCA proposed a new policy doctrine of “senior allowance” and recommended local governments to experiment the model based on local conditions. While some localities have chosen to establish “senior allowance” programs for seniors based on a single age criterion, others have provided service and long-term care subsidies, and some only offered more targeted programs for seniors with financial difficulties. As this program is rapidly expanding, it remains nonmandatory, highly flexible, and less defined at national level. Unlike the Medical Aid program, there are no clear national guidelines in regard to eligibility criteria and generosity levels. As the case comparisons below illustrate, local discretions are still persistent in defining who are eligible for the new elderly subsidies as well as the generosity levels. In Shanghai, elderly protection has been a key theme since the beginning of reform as local officials announced Shanghai became the first “aging city” in China in early 1980s (Shanghai Municipal Gazetteers Office, n.d.). After consultation with the local policy communities, the municipal People’s Congress in 1988 passed the Regulations on Elderly Protection, a guiding document that promised protection of legal rights of the elderly population, and defined the shared responsibilities among state, society, family, and individuals in abstract terms. Direct state responsibility however remained limited in terms of both coverage and generosity, and not all elderly residents were seen equal. Instead, Shanghai focused on providing “categorized solutions” with strong stratification effects. For urban retirees, the municipal government supplemented basic pension with inflation-adjusted subsidies beyond regular pension payments, and established mutual-aid organizations to help retirees with financial difficulties. For elderly residents without family or income

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support, the municipal government provided monthly financial reliefs and food assistance through the MLG program in urban areas, while offering direct support for rural residents covered by the Five Guarantees (wubao) program. For regular rural residents with hukou, they could voluntarily enroll in the Rural Social Pension Scheme, which was contracted by the municipal government to the county or district governments, with shared responsibility between towns and villages and individuals themselves.15 As a form of compensation, Shanghai also allowed land-expropriated rural residents to participate in the suburban employee pension scheme, which was administered by the municipal Social Security Bureau along with UEBPI though with lower contribution and generosity levels. Shanghai’s local model before 2010s was therefore not universal but rather highly stratified based on employment and hukou status. For the “new urban poor,” state responsibility was promised only if they have urban hukou and meet the means-tested criteria, or if they are land-expropriated rural residents who lost the only means to support themselves. Amid greater top-down pressure since late 2000s, the pension components in the “categorized solutions” model were soon challenged by the logics of universalism and urban–rural integration in national reforms. The introduction of the Social Insurance Law at national level in 2010 facilitated the final integration of migrants and suburban employees into UEBPI, as well as the establishment of an integrated URRBPI for urban and rural residents.16 Together these two programs provided more universalistic pension coverage to local residents who are not employed in the formal sector. Yet URRBPI has no significant effects on migrants because the eligibility criteria remain limited to those with hukou. Furthermore, employmentbased UEBPI is still the dominant pillar in elderly protection, though the rest of the urban and rural residents will also qualify for at least one type of elderly protection. In 2018, more than 4 million elderly residents or 80% are covered under UEBPI, in comparison to less than half million or 9.7% covered in the URBPI. Another 137,000 or 2.7% rural residents are covered in the land-expropriated elderly subsidy program, and 30,200 or 0.6% covered under the newly integrated urban–rural MLG program that is means-tested(Shanghai Research Center on Aging, 2019). As other cities are still preparing for a coming aging crisis, in Shanghai the crisis has become a reality. From 2006 to 2019, the share of local residents with hukou who are aged 60 or above increased from 20.1 to 35.2% according to local Bureau of Statistics. In 2019, more than 24.6% of local

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residents with hukou are aged 65 or above, passing the international standard of 20% for “super-aging society.”17 With increasing societal demands for more comprehensive old-age care, the municipal government has made elderly protection as a top priority on its policy agenda. In 2016, Shanghai announced that it would provide “comprehensive elderly allowances” (laonian zonghe jintie) marking a significant step toward more universal elderly protection beyond basic pension. Furthermore, the announcement of the new program was part of a more comprehensive reform package introduced in the new Regulations on Protecting the Rights and Interests of the Elderly, which promised a multi-pillar approach for old-aged care. Specifically, the comprehensive allowance program is fiscally financed by the municipal government and administered by the municipal Civil Affairs Bureau. While Shanghai was among many cities that announced similar programs based on MCA recommendations, it offers broadest program coverage for all residents with hukou who are aged 65 or above, rather than the MCA guideline of 80 or above. Local agency therefore was significant in this case by voluntarily expanding coverage based on a national guideline that was never mandatory in the first place. Interestingly, Shanghai’s eligibility criteria closely followed Hong Kong’s “Old Age Living Allowance,” the model which MCA’s proposal was based upon and also limited to permanent residents who are aged 65 above. However, the generosity level of Shanghai’s program is much lower compared to the original Hong Kong model. Divided by age groups, local residents with hukou in Shanghai are eligible for allowances ranging from 75 to 600 yuan per month (Shanghai Municial Civil Affairs Bureau, 2016). While the program generosity is quite small, it still demonstrated increased commitment for direct state responsibility to the elderly residents with hukou. With a younger population than Shanghai, Guangzhou’s aging problem was less of an urgent issue prior to 2000s. Between 2000 and 2019, nonetheless, Guangzhou’s share of elderly population defined by those aged 60 or above increased from 12 to 18.4%.18 In 2001, the municipal government first established the Measures for Preferential Treatments for the Elderly and published the first development plan for old-age care. In comparison to Shanghai’s more detailed legislations, nonetheless, Guangzhou’s measures took the form of administrative rules and were primarily built upon the 1996 national law on elderly protection rather

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than local societal inputs. Beyond the UEBPI scheme, the new regulations and development plans in 2001 provided limited protection plans for the elderly. Before late 2000s, Guangzhou’s local elderly protection system was primarily means-tested rather than universal. In rural areas, the municipal government encouraged a rural old-age care system with “land security, family responsibility, and societal support” (Guangzhou Municipal Government, 2001). In urban areas, the municipal government promised means-tested protection for elderly with “special difficulties” (tekun) that combined government assistance with societal mutual-aid. In general, urban low-income elderly residents were supported by financial subsidies through the means-tested MLG program while the rural residents were covered in the category-based “Five Guarantees” (wubao) program. In addition, the municipal government established special funds to provide temporary economic assistance for elderly residence with emergency situations. Finally, the municipal government also provided home care service subsidies to senior residents who aged 80 or above, although the program was funded by the municipal welfare lottery charity funds rather than fiscal expenditure. As central and provincial top-down pressure increased in late 2000s, nonetheless, Guangzhou began to experiment new social pension schemes while expanding coverage for existing means-tested and category-based elderly assistance programs. In 2008, Guangzhou announced several category-based pension schemes with the ultimate goal of universal coverage.19 These category-based programs were soon integrated into the new URRBPI scheme. Still, the disparities in generosity remain significant between those who covered in the UEBPI and the rest who are covered under URRBPI or MLG. By 2010, Guangzhou’s new URRBPI provided an average of 450 yuan per month to resident pensioners, in comparison to 2229 yuan for employee pensioners. For elderly population who are covered under MLG, the municipal government provided direct fiscal subsidies of 398 yuan for urban residents and 303 yuan for rural residents (Guangzhou Municial Government, 2011). Following the MCA proposal for senior allowance, Guangzhou abandoned the local home care subsidy program and adopted the MCA recommendation. Still, local discretions were evident in choosing the pace of reform as well as determining eligibility criteria. Although initially followed MCA’s eligibility criteria of 80 or above, Guangzhou quickly expanded the program coverage to local residents who are aged 70 or

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above in 2012.20 In 2018, 683,500 or 40% of elderly residents received the senior allowance in Guangzhou, which was less than Shanghai’s 68% due to slightly stricter age criteria.21 Meanwhile, the expansionary effects and associated fiscal implications of URRBPI adoption was more significant in Guangzhou in comparison to Shanghai, where a relatively mature employment-based model has covered most urban residents. In 2018, 42.3% of local elderly residents received pension benefits from the employment-based UEBPI program in Guangzhou, in comparison to Shanghai’s 80% of elderly residents. Meanwhile, 25.5% were receiving pensions from the resident URBPI program in Guangzhou, in comparison to only 9.7% in Shanghai. Whereas Shanghai has continued to prioritize its employment-based model, Guangzhou’s policies have promised greater support for local low-income residents through URRBPI. Further comparison between Nanjing and Shenzhen help demonstrate persistent local disparities despite common top-down pressure. Interestingly, Nanjing’s local agency on elderly protection has been less evident than Guangzhou, even though Nanjing has a larger share of elderly population.22 In Guangzhou, local elderly protection policies were passed in 2001, followed by provincial legislations in 2005. In Nanjing, nonetheless, provincial government of Jiangsu rather than the municipal government took a more active approach in addressing issues of elderly protection and old-age assistance.23 The provincial People’s Congress passed the Regulations on Protecting Rights and Benefits of the Elderly in 2011. Beyond legal rights protections, the most significant move in the 2011 provincial law was its mandate on implementation of the senior allowance recommended by MCA. In addition to setting a minimum standard, the provincial government also recommended localities to expand coverage based on local economic and social conditions. Despite provincial recommendations, nevertheless, Nanjing has opted not to expand the program and kept coverage limited to those who are aged 80 or above. In 2020, the first local elderly protection legislation Regulations on Old-Age Care Service was passed by the municipal People’s Congress in 2020, which prioritized service delivery over rights protection or financial support. Other than meeting the central government and provincial government mandates on URBPI and senior allowance, the municipal government of Nanjing provides an elderly assistance program based on strict means-tested and category-based criteria such as income, age, family status, and ability to self-care. For eligible elderly residents, the districtlevel civil affairs bureaus offer direct fiscal subsidies and help coordinate

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subsidized care. Nonetheless, the program coverage remains extremely small and service coordination remains fragmented at district rather than municipal level. Among all the four cases, Shenzhen has the lowest share of residential elderly population of 6.67% in 2018, which is in sharp contrast with 35.2% in Shanghai. However, the aging problem has become increasingly noteworthy as Shenzhen has a large migrant population, many of whom are aged 60 or above. In 2018, Shenzhen had a total of 1.14 million elderly population, of which only less than one third were local residents with hukou.24 In 2020, Shenzhen’s municipal People’s Congress passed the Regulations on Old-Age Care, representing the first local legislative attempt to provide more comprehensive elderly protection. Although Shenzhen can be considered as a late starter, the new law has demonstrated more commitment to universalistic elderly protection and greater inclusion for migrants. In the proposed model, local residents with hukou enjoy greater means-tested protection through a combination of financial and physical support such as MLG coverage, financial difficulty subsidies, home care, medical treatment, and long-term care. Elderly who are migrants can enjoy the same access as local residents in receiving senior allowance and a variety of local public services designed for the elderly. The elderly migrants nevertheless are not qualified for URBPI if they have migrated to Shenzhen after 60 years old. Shenzhen’s policies therefore still promise greater social protection for local residents with hukou, although the senior allowance and other public service programs can provide more universalistic protection for both local residents and migrants. The comparison of residence-based pension and elderly assistance programs across the four cases have demonstrated bifurcating trends. With a clear central-level framework, the MOHRSS-led URRBPI model has resulted in more consistent local implementations across the four cases. Still, local agency was clear in delaying the incorporation of migrants with stable local residence despite MOHRSS recommendations since 2016. None of the four cases have provided URRBPI coverage to migrants in the informal sector by 2020, showing their greater commitment of government responsibility to local residents with hukou. For migrants who are not covered by the employment-based UEBPI, the only option is to enroll in URRBPI based on the location of their original hukou rather than where they reside.

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With less specific and non-mandatory central guidelines, local implementations of the MCA senior allowance program have typified strong local discretions in local policy priorities as well as coverage and generosity. Although Shanghai has experienced the most serious aging crisis, it has continued to prioritize the employment-based pension over the resident pillar, while providing limited direct subsidies in the form of senior allowance for local residents with hukou only. In Shenzhen, a more inclusive approach for migrants have emerged along with the introduction of universal senior allowance for the whole elderly population. Although Nanjing and Guangzhou are both provincial capitals, Guangzhou’s local agency is more evident with early passage of local elderly protection laws as well as more active expansion of coverage in the senior allowance program. By contrast, Nanjing’s local reforms began much later despite having a larger share of elderly residents, and its coverage for the senior allowance program remains extremely limited.

7.4 Articulating the Welfare Mixes: Comparing Local Models of Old-Age Care Similar to healthcare and affordable housing, there are persistent variations in how local governments articulate their welfare mix models as Table 7.1 summarizes. Beyond demographic factors, both Shanghai and Shenzhen have articulated more coherent models in employment-based pension in comparison to the other two cases. Both cities have greater fiscal and administrative capacity, therefore explains their willingness to provide more universalistic senior allowance. The key difference between the two cases however is how migrants are considered. In this regard, Shanghai has consistently adopted more exclusively policies and demonstrated strong preference for local residents with hukou. For the two provincial capitals, local pension and elderly protection policies can be better viewed as bargaining outcomes or compromises between municipal and provincial government, and to a less significant degree local societal demands. In service delivery, Shanghai and to a less extent Nanjing have continued to favor a state-led approach, either through preferential policies for SOEs and public facilities, or in Nanjing’s case hierarchical coordination of service networks through state corporatist institutions. By contrast, Guangzhou and Shenzhen have opted for a more pluralized model for old-age care, minimizing barriers to entry for private,

Prioritizing public facilities and SOE participation Profit-seeking behavior of state actors Civil servants > other urban employees > migrants covered by UEBPI, land-expropriated rural residents, all other local residents > migrants

State corporatist institutions for aging research and policymaking State-led Model

Local People’s Congress

Source Compiled by author

Choice

Pluralization

Participation

Strong local agency Greater local-central feedback State corporatism

Shanghai

State-led with pluralized elements Government purchasing of services Hierarchical coordination of service delivery Civil servants > other urban employees > migrants covered by UEBPI, residents with hukou > other migrants

Bureaucratic decision-making Stronger Provincial-level constraints

Moderate local agency More top-down pressure

Nanjing

Comparing local welfare mixes in old-age care

Decentralization

Table 7.1

Civil servants > other urban employees > migrants covered by UEBPI, residents with hukou > other migrants

Pluralized with state-led elements Public facilities prioritizing social welfare functions Minimum barriers to entry

Policy coordination with Hong Kong

Bureaucratic decision-making Stronger Provincial-level constraints

Moderate local agency More top-down pressure

Guangzhou

Pluralized with state-led elements Community-based care + social work Minimum barriers to entry Civil Servants > formal sector employees with hukou and migrants covered by UEBPI > low-income urban residents and other migrants

Greater legislative power by local People’s Congress Policy coordination with Hong Kong

Strong local agency Greater local-central feedback State corporatism

Shenzhen

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foreign, and voluntary sector participation. Across all four cases, Shanghai’s welfare mix model is the most embedded and more coherent with other social policy domains given its highly coordinated local policy processes. By contrast, all three other cities have chosen to borrow or adapt extensively from existing models elsewhere, such as from Shanghai or Hong Kong. Local agency is more evident in carefully adapting these existing models to meet local priorities while still meeting growing top-down pressure or frequent provincial directives. In Shanghai, local agency was most significant in carrying out a coherent employment-based social insurance model across all three policy domains synchronously, demonstrating strong local state capacity as well as a more embedded model of local policymaking. The municipal government began to explore ways to deal with the emerging aging problem as early as 1980s. Local universities and policy experts were invited to formulate alternative reform plans, and new research centers were created in collaboration with the municipal government. A direct result of this wave of local pension and old-age care research coordinated by the local state was the passage of the local elderly protection law in 1988 followed by several major revisions in the next two decades. By contrast, national elderly protection laws were first established in 1996, eight years after Shanghai’s local legislation. In general, there is consistently high level of state-led coordination in Shanghai’s local policy network. On the bureaucratic side, an OldAge Interagency Joint Meeting led by the mayor was established in 1995 to coordinate policy planning. Local agencies participating in the coordination mechanism included the Bureau of Retired Veteran Cadres, Social Security Administration, Civil Affairs, as well as the state-sponsored Municipal Federation of Labor Unions. In 1993, the municipal government integrated the local informal policy research community and formed the Shanghai Research Center for Aging (SRCA), which has consistently played key roles in collecting data and conducting analysis on issues of pension and old-age care. In addition to locally based research, the center also plays instrumental roles in engaging with the broader international epistemic communities on issues of pension and old-age care, holding series of research seminars in Shanghai as well as organizing research trips abroad. Pension reforms in earlier years was based on a combination of policy learning from existing foreign models, as well as experimentation and feedback in collaboration with local employers. The 1993 reform plan

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was passed by the municipal People’s Congress in the form of local legislation with broad consultations with local employers and societal groups, therefore providing more channels for societal input under the state corporatism framework. The Social Security Administration Bureau was established in the same year to be in charge of administering the new social pensions that are now pooled at municipal level. During early years of reform, there was also strong evidence for frequent central-local interactions and greater policy coordination between the two levels due to strong representation of local political elites in the central government. Prior to the announcement of local model, there was consensus among policymakers and local experts that Shanghai needed a reform model that “can be promoted nationwide, otherwise we will see it to be soon reversed” (Dai, 2008; Y. Xiao, 2009). The pension reform package that combined social pooling and individual account was the product of central-local bargaining with “constant discussions and debates with 11 central ministries and agencies” (Dai, 2008). Between 1993 and 2011, Shanghai’s pension model remains primarily employment based and highly stratified. This category-based model soon was under increased top-down pressure for both integration and expansion. New pension reforms in Shanghai in 2010s have implied significant tensions between the central reform plans and local priorities. The announced reform measures often take the form of local interpretations of central reform guidelines, which covered nominal integration of all employment-based schemes, as well as the expansion of the voluntary social pension to all urban and rural residents with hukou. Within the new “integrated” UEBPI, nevertheless, the municipal government also established separate tracks for the pre-existing categories. Meanwhile, local government in Shanghai has continued to prioritize UEBPI rather than the newly introduced residence based URRBPI, which requires greater direct government responsibility. The service delivery reform was also based on extensive research provided by the SRCA as well as local societal inputs. Since 1998, SRCA has conducted municipal-wide surveys on the local elderly population every two to five years.25 Although earlier reform prioritized institutionalized care, the surveys conducted in 1998 and 2003 showed that most elderly residents with hukou preferred “home care” (Shanghai Research Center for Aging, 2003). Based on the survey results, the local government adopted a “9073” model for old-age care in 2005, which meant “90% taken care by families, 7% by community-support home care, and

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3% by institutionalized care” (Shanghai Municipal Government, 2005). This model later became a template for other localities to adapt from, such as “9055” in Wuhan, “9028” in Fuzhou, and “9064” models in Beijing and Guangzhou. It also produced strong feedback effects to central policymaking. By early 2010s, MCA has officially recognized that home care would be primary service delivery model for old-age care, which was then incorporated into the revised national elderly protection laws. At local level, the meaning of “home care” has changed over time, indicating shifting local objectives under the same concept. The original assumption was that most elderly population would still rely on their families for primary support, which corresponds to the 90% in the “9073” model. The demographic changes soon began to challenge the model’s core assumptions, resulting in increasing calls by policy experts for socialization of care. Some local policy experts also recommended to change the articulation of “9073” model, such as to “85105” to increase the share of community-based and institutionalized care (Tao & Han, 2011). In 2015, the municipal government in the Thirteenth Development Plan for Old-Age Care proposed a more flexible old-age care model with “multiple layers, pluralized supply” to bridge the gaps between the original model and changing societal demands (Shanghai Municipal Government, 2015). Similar to healthcare and affordable housing, nonetheless, the municipal government has continued to provide stronger fiscal support and policy incentives for SOEs and public institutions, while limiting the capacity and scope of private and voluntary sector participation. In the field of institutionalized care, private and foreign participation has significantly increased over time, yet most have focused on “high-end” retirement homes targeting wealthy seniors. The voluntary sector participation in “basic” care has also expanded moderately but many are located more remotely and struggling financially.26 Counterintuitively, public facilities are often larger and more expensive, and those operated by district bureaus tend to impose strict eligibility criteria based on hukou and local residence status. From the demand side, most local residents still prefer public facilities, which are often larger, well-equipped, and closer to city center. With long waitlists of public facilities and the financial struggles of private facilities, some have criticized the profit-seeking behavior of public facilities and the resulting distortions to the welfare functions of “basic care” (Tao & Han, 2011).

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In addition to preferential policies for public facilities in “basic care,” local government in Shanghai has also encouraged SOE participation in the rapidly expanding home care and community-based old-age care network. In response to the municipal government’s call, local SOEs have actively expanding these areas as their “new primary business” (xinzhuye) and part of their strategy for “mixed ownership reform” (hunhe suoyouzhi gaige) (Wang, 2018). Local SOEs in real estate and insurance realms have collaborated with private and nonprofit partners to form mixed-ownership old-age care management companies. The municipal and district-level agencies have endorsed this model of PPP. A prominent example of this model is the SY Old-Age Care Corporation, which was jointly formed by a local SOE real estate group, a public university, and a private real estate developer with national reputations. Since its establishment in 2015, the SY Corp has rapidly expanded, running more than 30 facilities covering institutionalized care, daycare, and rehabilitation centers across local districts. In contrast to Shanghai’s highly coordinated state-led approach, Guangzhou’s local welfare mix has demonstrated a mixed picture of local agency that are often interrupted by changing central policy doctrines as well as significant provincial-level constraints. At local level, the municipal People’s Congress played limited roles in pension and old-care policymaking. In part, this was because local legislations also require approval from the provincial People’s Congress. To bypass provinciallevel constraints, the municipal government often prefers to issue reform measures in the form of administrative rules, and later institutionalize the more successful ones through local legislations. Earlier pension reform in 1980s was accompanied by institutional reform measures especially the formation of the Guangzhou Social Labor Insurance Company in 1985, which evolved into the Guangzhou Municipal Social Insurance Administration Center. Guangzhou was therefore the first city to establish a dedicated agency to managing social security, preceding both Shanghai and Shenzhen. By 1990, the new social pension model has covered not only SOEs but also municipal-level collective enterprises, as well as both permanent and contracted employees. After the initial success in pension reform in the state sector, the municipal government worked with the local People’s Congress to revise the reform plans and the Guangzhou Municipal Social Security Regulations was finally passed in 1994. With less representation in the central government political leadership and less coordination with central bureaucracies, Guangzhou’s local

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model was soon challenged by the national reforms in 1990s. In particular, Guangzhou’s social pension model involved only social pooling, covered only state sector firms, and required higher contribution level by the work units and lower contributions by the individuals. The national reform thus forced Guangzhou to make a series of adjustments to the local system, including introducing individual accounts, allowing private and foreign firm employee participation, lowering employer contributions as well as increasing individual contributions. The subsequent reform plans demonstrated stronger consistencies with central reform guidelines, in part due to stronger constraints imposed by the provincial government over time. In particular, the provincial priority of “public service equalization” played key roles to the early introduction or URRBPI, as well as the incorporation of migrants in UEBPI. Nonetheless, not all provincial directives were fully implemented at local level, and some were even reversed following extensive bargaining, showing moderate but persistent local agency. Following the provincial mandate to create URRBPI, Guangzhou also created separate tracks for agricultural and non-agricultural residents, then maintained the tracks until further central-level top-down pressure. Another notable example was the delay of civil servant pension reform. A provincial-level reform plan was introduced first in 1993, but strongly opposed by local civil servants and public institution employees during a provincial-level forum. Following the meeting, a significant portion of the reform plan was reversed or changed, resulting in the incomplete reform plan passed by the provincial People’s Congress in 1998, which covered only contracted employees. The civil servant pension scheme remained largely intact until 2010s as a result. The service delivery reform in Guangzhou has followed a different trajectory from Shanghai’s as well. Before mid-2000s, the reform aimed at establishing a network of socialized care for retirees in the state sector. The program was later expanded to cover retirees in the private sector. In 1989, the municipal government created the Retiree Administration Commission (RAC) under the labor bureau. However, work units remained the primary service providers at the time similar to the prereform era. By late 1990s, the expansion of the private and foreign sectors as well as the massive SOE layoffs created significant pressure for old-age care reform. In 1994, the municipal government began to allow work units to transfer their retirees to RACs by paying one-time service fee of 3000 yuan per worker (Guangzhou Municipal Gazetteers Office, n.d.).

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Guangzhou therefore started early in “socialization of care” for retirees based on the principle of “two tiers of government, three tiers of administration, four tiers of service” (Guangzhou Municipal Gazetteers Office, n.d.). By early 2000s, the municipal government began to provide more community-based services to retired employees across state and non-state sectors if they had participated in UEBMI and UEBPI. The program rapidly expanded between 2001 and 2005, as coverage increased from 5 to 95% within five years (Guangzhou Municipal Gazetteers Office, n.d.). Although most elderly residents still relied on family support at the time, a significant feature of Guangzhou’s model was that it prioritized a community-based model from the beginning, in contrast to Shanghai’s initial focus on institutionalized care and medical care for elderlies. In Guangzhou, RACs played more active roles in service coordination and their coverage were soon extended to private and foreign firm employees as well as SOE employees. Of the 95% of retirees covered by RACs in 2005, 60.2% of them were covered by community-based service centers (Guangzhou Municipal Gazetteers Office, n.d.). By 2008, more than 98.5% of retirees are administered at community level. The municipal government began to expand the socialized care model, by encouraging community and elderly mutual-aid organizations to partner with RACs, building upon the existing community-based framework for retirees, and extending them to the rest of elderly residents. The development of the “9073” model in Shanghai produced some diffusion effects across Chinese cities including Guangzhou. By early 2010s, Guangzhou followed suit to develop a “9064” model as a response to a looming aging crisis, with the goal of providing 90% home care, 6% community-based care, and 4% institutionalized care. For institutionalized care, only one third of the service providers are public. In 2018, Guangzhou has 237 private or nonprofit old-age care facilities, in comparison to 117 public facilities based on data provided by the municipal Civil Affairs Bureau. In addition to the greater number of private facilities, the disparities between public and private facilities in terms of size and location are less obvious in comparison to Shanghai. Public facilities in Guangzhou are more dispersed, with only 29 large public facilities in urban areas, and another 84 smaller facilities in suburban and rural areas providing means-tested old-age care.27 Meanwhile, about half of the private facilities are nonprofit, and they tend to charge higher onetime fee in addition to monthly charges. Whereas in Shanghai the primary issue is profit-seeking behavior of public service providers, in Guangzhou

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the issues involve the shortage of supply by public providers, affordability issues in private or non-profit care, and less convenient locations for most old-age care facilities. Although the municipal government has increased fiscal support for various service providers in recent years and followed a Hong Kong model to create a centralized waitlist system, local residents are increasingly unwilling to move to suburban areas. As a result, there has been increasing societal demand for home care and community-based care pillars. For these emerging pillars, the municipal Civil Affairs Bureau has adopted an “enabling” approach, prioritized government purchasing of social services for the elderlies, and encouraged private and foreign participation with minimum barriers to entry. The “Guangzhou model” of social services is based on the principle of “state guidance, societal coordination, project operation, professional service” and has been promoted by MCA at national level in recent years (Guangzhou Municipal Gazetteers Office, n.d.). According to data provided by the municipal Civil Affairs Bureau, 73% of aged-care beds were provided by private or nonprofit service providers, and only 14.5% of home care service providers were state-owned or public in 2020. In addition to engaging domestic firms and service providers, Guangzhou has also encouraged foreign investment by promising equal treatment with domestic firms, while strengthening policy and service delivery coordination with Hong Kong. Beyond municipal-level collaboration between Guangzhou’s Social Security and Civil Affairs agencies and Hong Kong’s Social Welfare Bureau, Hong Kong’s local religious and community organizations, such as the Sheng Kung Hui and the Neighborhood Advice-Action Council, have also worked closely with local service providers. Resembling Guangzhou, local pension and old-age policies in Nanjing are frequently the results of extensive bargaining or compromise with the provincial government. Political institutional constraints therefore are stronger in comparison to Shanghai or Shenzhen. Meanwhile, local agency is still evident in developing pillars of pension and old-age care that are consistent with local economic development and social protection priorities. In pension reform, the municipal government was able to accommodate the provincial demand of incorporating migrants with its own priority of providing protection for laid-off workers from SOEs. The resulting “three regardless” principle was welcomed by MOHRSS and became recognized as the “Nanjing Model” at national level. In the case of provincially mandated senior allowance program, Nanjing adopted

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the strictest eligibility criteria for implementation, while still prioritizing existing local means-tested programs. In service delivery, Nanjing has proposed a state-led hierarchical coordination model similar to Shanghai yet with some pluralized elements. The Civil Affairs Bureau is the primary agency in coordinating services as well as regulating the service providers. Nanjing’s model also highlights the roles of existing state corporatist institutions in coordinating services, such as the state-sponsored Federation of Trade Unions, the Communist Youth League, the Disabled Persons Federation, the Women’s Federation, and the Red Cross. On the demand side, the district-level governments work with these state corporatist institutions to identify specific needs of the elderly residents. On the supply side, the municipal government has promoted a distinctive PPP model of “publicly constructed, privately operated” similar to service delivery in public rental housing programs. Other than these standard three pillars, Nanjing has also introduced a new mutual-aid system of “time bank” where volunteers who aged 60 or above can provide service in exchange for credits for future oldage care services they receive. In addition to provide insurance and administrative support, the municipal government has partnered with the state-sponsored Nanjing Benevolent General Association to administer the volunteer network through “one management, one standard, one platform” (Nanjing Civil Affairs Bureau, 2019).28 As a young city with steady migrant inflows, Shenzhen’s pension and old-age care systems are under much less pressure in comparison to the other cases. Still, local agency has been increasingly strong with a policy rhetoric of “save for a rainy day” (weiyu choumou) or “make hay while the sun shines” in recent years. In pension reform, Shenzhen resembles Shanghai in its prioritization of the employment-based model, although there has been less stratification and greater inclusion of migrants. In service delivery, there is significant policy learning and diffusion between Shenzhen, Guangzhou and Hong Kong due to geographic proximity, similarity in growth models, and their experience with aging. For example, Shenzhen followed Guangzhou’s model of “socialization of care” for retirees, formed mutual-aid groups for elderly residents, and established a community-based network as early as 2005. Similar to Guangzhou, Shenzhen also removes barriers to entry for private, foreign, and voluntary sector participation, while encouraging PPPs to improve service quality of public facilities.

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More recently, Shenzhen has strengthened its policy coordination with Hong Kong, and established a community-based care model that emphasize greater roles of social workers in assisting home care and community-based care. Local officials frequently visit Hong Kong to study their social welfare system, and the municipal government has also sponsored a network of domestic and foreign experts to provide recommendations for policymaking (Shenzhen Municipal Government, n.d.). In addition to policy borrowing from other cities and emphasis on evidence-based policy research, Shenzhen’s model is also distinctively productivist, with the strategy of hiring and training low-income and unemployed local residents to provide old-age care. The municipal Civil Affairs Bureau has described it as “win-win” strategy for both reducing unemployment, reducing reliance on means-tested social protection, while addressing the issue of insufficient old-age care workforce. Often considered as a late bloomer, the “Shenzhen model” has been frequently praised nationally by MCA in recent years for both the social work and productivist elements. Figures 7.1 and 7.2 compare the four cases in terms of pension coverage, the percentage of elderly population, and the number of old-age care beds per 1000 elderly people in 2015.29 As Fig. 7.1 shows, Shenzhen provides the highest pension coverage because of its more inclusive measures for migrants. Of the two provincial capitals, Guangzhou has greater pension coverage in comparison to Nanjing due to its earlier establishment of a pension system as well as greater inclusion of migrants in UEBPI. By contrast, Nanjing has the lowest coverage in pension insurance, which is consistent with its relatively low coverage in other social insurance schemes in healthcare and housing. Intriguingly, Nanjing also has the highest number of old-aged-care beds across all four cases, demonstrating greater service capacity in institutionalized care in comparison to other cases. The slight increase in Shanghai’s pension coverage since 2016 was the result of greater integration of selective migrant groups, but the effect is very small given continued prioritization on local employees with hukou. Meanwhile, the data shows that Shanghai’s oldage care system is under significant strain, as Shanghai has the lowest old-aged-care beds per 1000 people and the highest share of elderly population.

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Fig. 7.1 Pension insurance coverage by city, 2012–2018 (Data Source National Development Research Center China)

Fig. 7.2 Percentage of elderly population and old-age care beds by city in 2015 (Data Source Municipal Bureaus of Statistics)

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7.5 Political Institutions, Growth Strategies, and Subnational Politics of Aging If all three policy domains are placed on a continuum measured by commodification or marketization, old-age care can be placed somewhere between housing and healthcare. At the bottom, the government still provides means-tested protection for low-income residents who are unable to afford care by themselves. At the top, the government has promoted the concept of “silver economy” and continued to push for greater marketization. For those in the middle, however, the boundaries between state, market, society, and family in both financing and service delivery are less clearly defined and even increasingly blurred. Since earlier years of reform, the concept of “socialization” has been frequently used in both pension and old-age care. Nonetheless, the connotations associated with this concept has significantly shifted over time. Prior to 2000s, “socialization” was closely associated with reducing welfare burden for government and work units and increasing family and individual responsibility. After 2000s, however, the meaning of “socialization” has changed to “burden sharing” in social pension and “state guidance, societal participation” in old-age care. These changing reform orientations and the resulting shifts in policy doctrines have not always reduced the scope of local government agency. Instead, local governments have constantly sought to reinterpret or adapt new central guidelines, and balance between growing top-down pressure and local priorities. Similar to other policy domains, I argue that political institutional factors have interacted with local growth strategies in shaping varying reform trajectories and embedding welfare mix models. On the one hand, Shanghai and Shenzhen have demonstrated greater willingness and capacity to carry out reform programs that are highly consistent with local growth models. In both cases, a dominant employment-based social pension model was established, however with differential definitions of who are considered “productive” or “contributive” to local economy. Reflecting the disparities, the two cities also differ in their senior allowance programs especially on whether migrants should be included. In service delivery, the state-led model in Shanghai in favor of SOEs and public facilities contrasts with the more pluralized model in Shenzhen that seeks to minimize barriers to entry for non-state service providers. On the other hand, the two provincial capitals have demonstrated stronger effects of political institutional constraints, with frequent

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bargaining and compromises made between provincial and local governments. Local models appear to be less coherent with mixed patterns in pension schemes and elderly assistance. Still, both cases have demonstrated at least some attempts to complement old-age care with local growth models. For Nanjing, service delivery has remained hierarchical coordinated, with a mixture of preferential policies for SOEs and public providers as well as selective incorporation of private and nonprofit providers. By contrast, in Guangzhou hierarchical coordination has gradually given away to a more pluralized, community-based old-age care model. The rest of this chapter provides a review of the key actors, orientations, and capabilities in central and local policy processes of pension and old-age care. Firstly, who formulate pension and old-age care policies? At central level, political leadership changes contributed to the ideological shift from prioritization of the family pillar and individual responsibility before 2000s, to an entitlement approach to pension and old-age care in late 2000s and early 2010s. However, there was not a clear consensus at the central level in regard to how radical the reform needed to be. As Chapter 4 discussed, the bureaucratic bargaining processes between MOHRSS and MOF have resulted in a compromised and incremental approach to end the dual-track system and to introduce a truly multi-pillar model in pension. The final consensus reached by central bureaucracies was able to produce direct effects on local policies with more consistent and concrete central guidelines on how pension reform should be carried out at local level. This in turn has reduced the room for local discretions. For local governments such as Shanghai who have resisted earlier central government calls for an integrated pension model, significant local adjustments had to follow. The effects of policy recentralization therefore were clear in the case of pension reform. Beyond pension reform, nonetheless, local agency appears to be either persistent or even stronger for other central policy initiatives, especially those carried out by MCA. In the case of the senior allowance program, the built-in flexibilities and ambiguities have resulted in a variety of eligibility criteria and generosity levels across localities. Meanwhile, the “state guidance, societal participation” in old-age care is subjected to varying interpretations across localities, resulting in a variety of service delivery models that are either state-led or more pluralized. With reduced top-down pressure, nonetheless, there have been increased evidence for provincial-municipal bargaining as well as local societal inputs, resulting in

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greater coherence of local welfare mix models. In Shanghai and Shenzhen, local People’s Congress have played active roles in passing local legislations in elderly protection or old-age care. In Nanjing and Guangzhou, by contrast, policies are often made in the form of administrative rules due to significant provincial-level constraints. In Shanghai and Nanjing, the municipal governments relied heavily on a state-led model and hierarchically coordinated policy networks to make policy recommendations or coordinate service delivery. In Guangzhou and Shenzhen, by contrast, local policy and service delivery networks appeared to be more pluralized, as shown by greater participation of the private and voluntary sectors, as well as significant policy learning from and service delivery coordination with Hong Kong. Secondly, who finance pension at local level? With the gradual expansion and integration of employment-based UEBPI and the establishment of the residence-based URRBPI, most employees and residents are now covered with some basic form of socialized pension. With the reform of the civil servant pension scheme, the “burden sharing” principle is finally applied to all participants of social pension schemes. This is a drastic shift from direct state responsibility in the pre-reform era, when central and local governments and work units provided pension and old-age care as welfare benefits. For both programs, the social pooling funds use the pay-as-you-go system and help sustain pension payments, while individual accounts allow for personal extractions once the enrollee meet the age requirement. In comparison to UEBPI which relies mostly on employer contribution and to a less extent individual contributions, URBPI requires greater fiscal support as local governments are required to provide matching contributions for residents as if they are employer. To incentivize resident participation and meet central targets, most local governments have adopted the “more contributions, more subsidies” principle. Beyond the socialized pensions, direct government support for the elderly is also available through the means-tested programs such as MLG and category-based elderly assistance, or the more universalistic senior allowance. While the senior allowance approach somewhat resembles basic non-contributory pension pillar in the World Bank’s new multipillar model, the lack of clear central guidelines has resulted in mixed local implementation results, with varying eligibility criteria based on age and hukou status. Other than these state-sponsored pillars, the occupational pensions and enterprise annuities could provide additional levels

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of protection, although they could also result in a new “dual track” system for civil servants, public employees, and selective SOE employees. Thirdly, who provide old-age care? Similar to healthcare and affordable housing, Shanghai and Nanjing have favored the state-led model, whereas Guangzhou and Shenzhen have preferred the more pluralized model with less hierarchical coordination and lower barriers for non-state actors. Across all four cases, high-end care remains more market-oriented, while means-tested old-age care stays primarily government supported. For the bulk of old-age care services that fall between these two categories, the new central doctrine of “state guidance, societal participation” principle is knowingly ambiguous. With significant local discretionary power, state-market relations as well as institutions of state corporatism have produced strong spillover effects to the domain of old-age care. In Shanghai, the municipal government has provided preferential policies for large public facilities in institutionalized care, and more recently encouraged SOEs to expand to home care and community-based care as their new “primary businesses.” Private, foreign, and voluntary sector participation are selectively incorporated if they are deemed complementary to the state-led model. In Nanjing, service delivery remains hierarchically coordinated through the state corporatist institutions, and PPPs have encouraged greater dependence of private and nonprofit providers on their state partners. By contrast, service delivery has been significantly pluralized in Guangzhou and Shenzhen, due to a more vibrant private and voluntary sector, as well as greater policy learning and coordination with Hong Kong’s social welfare agencies and service delivery networks. Lastly, who have access to pension and old-age care? Similar to healthcare and affordable housing, pension and old-age care are frequently viewed as instruments for local governments to maintain authoritarian social contracts with local dominant social bloc. Across the four cases, the political elites, civil servants and to a less extent other public sector employees have enjoyed significant privileges in both pension and old-age care, as seen in the maintenance of the dual-track system, the creation of the new occupational pension, as well as more mature, governmentsponsored network of retiree administration in service delivery. This is particularly evident in the case of Guangzhou, where the civil servant pension scheme reform is still incomplete. The urban employees with hukou are also favored across the four cases, because they are considered the core group in the productive local economy, with more generous employment-based pension benefits as well as greater access to a wide

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range of old-age care services. Stratification effects remain when local government attempt to maintain separate tracks within an integrated model, as seen in the case of Shanghai and to a less extent Shenzhen. By contrast, a more integrated and less stratified approach was apparent in Nanjing and Guangzhou as the result of provincial-municipal bargaining. How about the “new urban poor”? In comparison to UEBMI or HPF, local governments have been more open to incorporate migrants who work in the formal sector into UEBPI schemes, viewing it as a move that could contribute to the financial sustainability of social pension while meeting growing top-down pressure for inclusion. However, the inclusion of migrants is still selective as they do not have the same access to residence-based schemes, means-tested programs, or the more recent senior allowance program which require greater direct government responsibility. To some extent, Shenzhen has adopted more friendly policies toward migrants, though their choices remain limited to UEBPI, senior allowance, and private old-age care facilities. For other localities, local low-income residents continue to enjoy a much wider range of choices in comparison to migrants.

Notes 1. As discussed in the next section, such integration was complemented by compensation measures especially for those civil servants and public institution employees already in the legacy system. 2. A few minor adjustments were made such as increasing the contribution rate from 4 to 5% of salary and establishment of a second pillar or supplementary pension insurance. 3. The protests were not reported by local news media but by labor rights organizations. The protests were also joined by land-expropriated rural residents. 4. Only migrants from urban areas are eligible to participate in the urban employee scheme, while migrants from rural areas are only eligible to participate in the residence scheme. 5. The finding was first reported by the twenty-first Century Business Herald, a national financial newspaper based in Guangzhou. Despite low participation among rural migrants, the migrant comprehensive insurance has enjoyed greater cumulative balance in comparison to other schemes, due to the large size of the migrant population as well as their relatively young age in comparison to rural residents with hukou. Rural migrants are also less likely to receive payments when they retire, given that many of them lack information access and have returned to their rural homes.

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6. In the more fragmented Nanjing model, the first tier with municipal-level social pooling covered SOEs, municipal and district-level collective enterprises, and foreign investment firms. The second tier was district-level social pooling for smaller collective enterprises, which was also administered by the municipal social security bureau. The third tier involved sectoral social pooling such as in construction and civil affairs. The fourth tier covered rural residents who work in urban areas, temporary or seasonal workers without annual contracts, as well as other types of migrant workers. Finally, certain economic sectors that were monopolized by the state such as the power and railroad industries, were left out of the social pension scheme (Nanjing Social Security Bureau, 1992). 7. The first tier covered local employees with hukou and provided greatest generosity. This tier required 12% employee contribution and 5% individual contribution, with 6% allocated to social pooling funds and 11% into individual accounts. For migrants, the employer and employee contributions were 10% and 7%, respectively, with 3% allocated to social pooling funds and 7% allocated to individual account. A third tier covered migrants who are older without sufficient contributions by retirement and provides the lowest generosity (Shenzhen Municipal Government, n.d.). 8. Titled Interim Measures for Transferability and Continuity of Urban Enterprise Employee Basic Pension Relations, the new policy specified terms for inter-provincial transfers of pension benefits and the continuity of contribution years. Following the measure, many localities revised their policies to allow for transfers, but also imposed more strict criteria for transfers as well as termination of social insurance. MOHRSS published revisions to this policy in 2017 to address some of the implementation issues. 9. In Shenzhen, for example the municipal Human Resource and Social Security Bureau published the Warning Notice on Social Insurance Termination in 2011, recognizing the widespread “early termination” issue and advised against such practice. The bureau director also publicly recognized the issue in interviews with local journalists. 10. The measure also established a transition period of three years for work units to transfer their funds. 11. The only exceptions were government agencies and public institutions that were transformed into enterprises as economic reform deepened in late 1990s. For these institutions, the municipal government adopted the “old people old rule, new people new rule” principle since 1998. Whereas previous retirees were still covered in the civil servant scheme, the employees who retire after the transition would be covered in the urban employee scheme. 12. Local news reports in 2015 showed that before formal implementation measures were announced, many civil servants internally distributed and

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18. 19.

20.

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discussed the reform documents. Most were surprised by the lack of a transition period but were not surprised by the integration itself. The other four provinces and cities were Shanghai, Chongqing, Shanxi, and Zhejiang, none of which took significant actions despite being selected as pilot cities or provinces, demonstrating strong resistance from local vested interests. Following the central mandates, individual contributions are now required for those who were covered in the civil servant pension scheme. To compensate the salary loss, the provincial and municipal government announced plans to increase salaries prior to reform implementation. Similar to Shanghai, the local reforms followed the “old people old rule, new people new system, and gradual transition for those in the middle,” and set up occupational pensions for all civil servants. Social pooling for the rural pension scheme occurred at county- or district-level and remained separate from the urban and suburban employee schemes. Before the reform, the rural social pension was voluntary and only pooled at district or county level, while an urban resident scheme was never established in the first place. After the reform, the municipal government provided direct government subsidies to residents with hukou to incentivize their participation based on the principle of “more individual contributions, more subsidies.”. Data was compiled by author from annual data series of Shanghai Elderly Population and Old-Age Care Statistical Information provided by the Shanghai Research Center for Aging, which is co-sponsored by the municipal Civil Affairs, the Old-Age Care Committee, and the municipal Bureau of Statistics. Data acquired from municipal gazetteers and statistical yearbooks. The category-based programs covered land-expropriated peasants, elderly urban residents, rural social pension scheme, and indigenous population on farming and forest land. The generosity level is similar. The allowances range from 200 to 500 yuan for three age groups of 80–89, 90–99, and those who are aged 100 or above. The percentages are calculated based on local annual reports on old-age care provided by Shanghai Research Center for Aging and the municipal Civil Affairs Bureau of Guangzhou. In 2018, 1.47 million or 21.07% of local residents with hukou are aged 60 or above in Nanjing, in comparison to 18.4% in Guangzhou according to local statistical yearbooks. Within Jiangsu province, cities located in the Southeast that are more adjacent to Shanghai have a more pressing aging problem in comparison to Nanjing. By contrast, Nanjing has benefited from persistent migration

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inflows based on a combination of a vibrant higher education sector and more inclusive hukou policies. Data acquired from 2018 annual statistical yearbook provided by the Shenzhen Municipal Bureau of Statistics. The survey questions cover a wide range of topics, including but not limited to income, living condition, quality of life indicators, as well as preferences for service delivery models. According to a list provided by local Civil Affairs Bureau in 2018, there were 348 registered “basic care” institutions, of which 308 are public and only 40 are private. Among the public facilities, 200 are operated directly by sub-district-level agencies, while the rest 108 are operated by private or community partners through public–private partnership. Numbers calculated by author based on a list of old-age care service providers issued by the municipal Civil Affairs Bureau in Guangzhou. The “time bank” concept was first developed by Switzerland. Although Shanghai has experimented this model at district level, Nanjing was the first city to expand the model to all districts and centrally administered it at municipal level. The data here are compiled and calculated by author based on local statistical yearbooks and the local thirteenth old-age care development plans published in 2016–2017. While more recent data is available in selective localities, the data use different statistical standards and are less comparable. Percentage of elderly population is calculated based on elderly population of aged 60 or above divided by total residential population with hukou. The service indicator of old-age care beds per 1000 is based on the total number of aged-care beds divided by total elderly population times 1000.

References Dai, L. (2008). Shanghai’s three-step reform of pension insurance. China Social Security, 12. Guangzhou Human Resource and Social Security Bureau. (2016). Circular on implementing state council’s decision on reforming pension insurance system for employees at government and public institutions. Guangzhou Municipal Government. Guangzhou Municipal Gazetteers Office. (n.d.). Guangzhou municipal gazetteer. Guangzhou Municipal Government. Guangzhou Municipal Government. (2001). Planning outline for old-age care 2002–2005. Guangzhou Municipal Government. Guangzhou Municial Government. (2011). Twelfth five-year plan for old-age care. Guangzhou Municipal Government.

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Nanjing Civil Affairs Bureau. (2019). Implementation plan for time bank of oldage care service. Nanjing Municipal Government. Nanjing Daily. (2018). Social insurance in Nanjing: From reform-generated to full-scale pooling. Nanjing Daily. http://www.njdaily.cn/2018/1031/173 3326.shtml. Nanjing Municipal Government. (1994). Opinions on pension insurance reform of government agencies and public institutions. Nanjing Municipal Government. Nanjing Social Security Bureau. (1992). Nanjing is on track towards socialization of pension insurance. Nanjing Municipal Government. Outlook Weekly. (2015). Shenzhen’s pension reform: Steady and effective. Outlook Weekly. http://www.reformdata.org/2015/0225/25447.shtml. People’s Congress of Guangdong Province. (1998). Regulations on social pension insurance in Guangdong Providence. People’s Congress of Guangdong Province. Provincial Government of Guangdong. (2009). Implementation plan for provincial pooling of enterprise employee basic pension insurance. Provincial Government of Guangdong. Provincial Government of Jiangsu. (1998). Regulations on urban enterprise employee pension insurance. Provinciall Government of Jiangsu. Shanghai Municial Civil Affairs Bureau. (2016). Notice regarding establishing the old-age comprehensive allowance system. Shanghai Municipal Government. Shanghai Municial Government. (2015). Implementation measures regarding pension insurance reform for government agencies and public institution employees. Shanghai Municipal Government. Shanghai Municipal Gazetteers Office. (n.d.). Shanghai municipal gazetteers. Shanghai Municipal Government. Shanghai Municipal Government. (1993). Interim measures for pooling of basic pension insurance for government agencies and public institutions. Shanghai Municipal Government. Shanghai Municipal Government. (2005). Eleventh five-year plan for civil affairs. Shanghai Municipal Government. Shanghai Municipal Government. (2015). Shanghai thirteenth five-year plan for old-age care. Shanghai Municipal Government. Shanghai Municipal Government Press Office. (2017). Municipal government press conference. Shanghai Municipal Government. http://www.shio.gov.cn/ sh/xwb/n790/n792/u1ai13157.html. Shanghai Research Center for Aging. (2003). 2003 survey on status and expectations of the elderly population. Shanghai Research Center for Aging. Shanghai Research Center on Aging. (2019). 2018 Shanghai elderly population and old-age care statistical information. Shanghai Municipal Government. Shenzhen Municipal Government. (n.d.). Shenzhen municipal gazetteers. Shenzhen Municipal Government.

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South Metropolis Daily. (2015). Pension integration in Guangzhou: More than 300,000 people affected. South Metropolis Daily. http://news.sohu.com/201 50203/n408372117.shtml. Tao, Y., & Han, Z. (2011). Suggestions on improving Shanghai’s elderly care model. China Elderly Science Research Center. http://www.crca.cn/llzl/ 2011-08-18/537.html. Wang, X. (2018). An ideal “Mixed-Ownership Reform” sample: Initial results for Soe explorations in elderly care. China Times. Xiao, Y. (2009). Reform trajectories and policy choices for Shanghai pension insurance system. Shanghai Economic Review, 5. Xiao, Yong. (2012). Shenzhen’s integration reform is “Plug One’s Years While Stealing a Bell’’. Opinion China. http://opinion.china.com.cn/opinion_60_5 4960.html. Yang, C., Feng, G., & Sun, J. (2010). Operations of urban basic pension insurance: A comparison between Shanghai and Beijing and implications for public institutions pension reform. Social Security Research, 3.

CHAPTER 8

State Responsibility or Societal Participation? The Future of Authoritarian Social Policies

Social policy reform in China can be roughly divided into two phases. Between 1980s and early 2000s, China gradually dismantled the communist welfare state, replaced it with a pro-growth employment-based social insurance system, and adopted a pro-market approach with residual state responsibility in service delivery. During this phase, social policy reform was largely reactive, designed to complement economic reform and to reduce the welfare burdens of the state and employers, rather than providing social protection or improving equity or social justice. Starting 2000s, however, the party-state has reversed the reform rhetoric, take a more proactive stance, recognized the importance of social policy in promoting people’s social rights, and promised a guiding role of the state to provide better quality of life for all its citizens. The rhetorical shifts first occurred during the Hu-Wen era with the political slogan of “harmonious society” (hexie shehui) and “scientific development” (kexue fazhanguan). Xi Jinping, who has become the new political leader since 2013, has also committed to a “Chinese dream” (zhongguo meng ) to “ensure people’s access to childcare, education, employment, medical services, old-age care, housing, and social assistance” (Xi Jinping, 2017). The changing rhetoric was also embodied in

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4_8

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the development of social policy pillars in the twelfth and thirteenth development plan, and the introduction of a more comprehensive “basic public service equalization” framework across social policy domains (State Council, 2017). Beyond the rhetorical shifts, nonetheless, the new reforms since late 2000s lacks a clear commitment to the return of the state. As the empirical chapters demonstrated, the new reforms have strengthened “top-level design” in selected areas only, while granting significant institutional flexibilities and local discretions in others. Instead of a full return of the state, the new social policy reform has promised “strengthening of interactive cooperation between central and local, and between government and society” rather than recentralization, “state guidance, societal participation” and “pluralized supply mechanisms” (duoyuan gongji jizhi) instead of direct state intervention, and “equalization of opportunities” (jihui jundeng ) in lieu of “equalization of outcomes” (pingjunhua) (State Council, 2017). Why is this the case? And why has the central government not imposed more radical top-down reform toward an unconditional reform of universalism, or mandated greater government responsibility at national level, as recommended by some policy experts and often demanded by the public? In this book, I argue that the emerging “state guidance, societal participation” framework and the resulting subnational variations was an outcome of a domestic multilevel game, in which various state and nonstate actors are competing for influence at both central and local level. Resembling the trend of “hybridization” in postcommunist countries, China’s new social policy framework involves significant policy learning from existing models in both Western and Eastern contexts, including but not limited to Bismarckian and Beveridge models of social insurance, the British gatekeeper system in healthcare, Hong Kong’s public rental housing and senior allowance, the Singaporean provident fund approach for housing, and the World Bank’s multi-pillar pension framework.1 At central level, a variety of bureaucratic agencies have contributed to the internalization of foreign models, though often with strong ideational contestations and bureaucratic bargaining. In some cases, the absence of central reform directives may allow greater room for local agency, as shown in the case of Shanghai’s adaptation of the Singaporean model into the HPF. Even after a model is institutionalized, there can be still back and forth between central and local actors during the processes of implementation, resulting in further bargaining and compromises made at multiple levels. In other word, the processes of “hybridization” and

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the new “state guidance, societal participation” framework remains deeply embedded in China’s decentralized authoritarian political institutions on the one hand, and increasingly diversified regional and local political economies on the other. So far, the book has provided some initial answers for how to explore the continued evolution of China’s social policy reform, and how to understand the role of local agency in these processes. What have been observed can also offer insights into how China’s social policy reform will look like in the next few decades. The rest of this concluding chapter hence reviews the core arguments and empirical findings through the subnational comparisons, addresses some potential limitations, and offers some directions for future research.

8.1

Political Institutions, Growth Strategies, and Local Agency

In previous chapters, I provided detailed comparison of central social reform trajectories and emerging local welfare mix models in three social domains of healthcare, affordable housing, and old-age care across four major cities in China. Although these coastal cities are often perceived to be highly similar, the cross-case comparisons demonstrated noteworthy differences in earlier reform trajectories across these policy domains. Furthermore, the varying local responses to common top-down pressure since late 2000s indicate that local agency can vary and evolve. In each policy area, I traced local reform processes across these cities in key areas of social insurance, social assistance, and then provided further comparison of their welfare mix models measured by key dimensions of decentralization, competition, participation, and choice. The primary finding is that despite the perceived similarities as well as common top-down pressure, there are persistent variations across these cases. Furthermore, the latitude of local agency as well as articulations of welfare mixes are often conditioned by interactions between political institutions and growth models. Table 8.1 summarizes some of the key findings in the subnational case comparisons. In Shanghai and Shenzhen, local policy processes have been more coordinated through the state corporatist institutions, with significant institutional complementarity between local growth models and social policy reforms. Productivist elements of earlier pro-market reforms have been preserved or even amplified, privileging those who are considered “contributive” to the local economy over the rest in social insurance. In addition, state-market relations in economic domains have produced

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Table 8.1 Political institutions, growth strategies and welfare mixes Political institutional constraints

Growth strategies

State-led

Low

High

Shanghai Centralized but stratified financing models State-led service delivery with pluralization elements

Nanjing Fragmented financing models

Coherent welfare mix Market-oriented

Shenzhen Integrated financing models with tiers Pluralized service delivery with state-led elements Coherent welfare mix

State-led service delivery with pluralization elements Incoherent welfare mix Guangzhou Fragmented financing models Pluralized service delivery with certain state-led elements Incoherent welfare mix

Source Compiled by author

spillover effects in social domains, resulting in bifurcating trends between state-led and more pluralized models in service delivery. In Guangzhou and Nanjing, the provincial-level constraints have frequently interrupted local policy processes, resulting in greater bureaucratic bargaining and less local-level policy coordination and societal inputs. With considerable topdown pressure, reforms of social insurance and social assistance as a result often are less coherent with local growth logics. By contrast, local agency is more noticable in the domain of service delivery where more flexible or even ambiguous central and provincial directives have allowed for various interpretations. As a centrally administered municipality, Shanghai helps present the case that it is possible for local government to develop a highly coherent local welfare mix model across all three policy domains, when political institutional factors are most favorable. Beside greater autonomy and capacity provided by its administrative status, Shanghai also developed a more symbiotic relationship with the central government with significant central-local interactions in earlier years of reform. Benefiting

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from national political leaders with local experience in Shanghai, the national reform of employment-based social insurance in 1990s in large part was modeled after Shanghai’s local experiments while incorporating selective elements from other localities. Although Shanghai’s ability to project national influence waned during the Hu-Wen era, it seems to pick up again under Xi Jinping’s political leadership. The introduction of residence-based social insurance programs during Hu-Wen years was clearly inconsistent with local priorities. As a result, local implementation was often more passive and reactive. In recent years, however, there has been greater synergy between Shanghai’s local welfare mix models and national social policy reforms under Xi Jinping. The clear preference for a state-led model in service delivery is also in line with the “state guidance” that Xi Jinping has been emphasizing in his political rhetoric. A noticeable example was the development of “medical consortiums” that are led by large public hospitals, which was later adopted as a template for national reform and quickly enacted in other localities. Beyond the political institutional factors, there is also strong evidence for institutional complementarity between local growth model and the welfare mix in the case of Shanghai. The successful development of an employment-based social insurance model exemplified strong local agency in fostering economic growth during earlier reform years. For both healthcare and pension, the focus was to transition from the communist legacy LIS schemes to a new social pooling model. With a state-led EOG economy, Shanghai quickly expanded the new model to private and foreign firms. Because the LIS model did not have a housing pillar, Shanghai engaged in active policy learning from Singapore and established the HPF at local level which was soon followed by other cities. The pro-growth logics were also observable in the social assistance programs, such as asset-based welfare programs for local residents who were “contributive” to urban renewal, public rental programs for migrants based on their employment, as well as using pension benefits to compensate land-expropriated rural residents. Finally, the municipal government has consistently preferred a state-led model in service delivery, by providing preferential policies for large public hospitals, SOEs, and other public service providers and imposing various restrictions on private, foreign, and voluntary sector participation. As the capital of Guangdong province, Guangzhou’s interactions with the center are often indirect and filtered by the provincial government. Still, the city remains at the forefront of economic and social policy reform

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in China. The provincial government of Guangdong has closely interacted with central bureaucracies in developing local pilot programs, while more actively following central directives even when it involves significant adjustments in local models. The local agency of Guangzhou is therefore both derived from and constrained by the provincial government. On the one hand, the provincial government has often put Guangzhou in charge of key pilot programs that are consistent with provincial and central priorities such as urban–rural integration and public service equalization. On the other hand, local policy processes at times can be interrupted by top-down pressure when they are deemed inconsistent with central or provincial priorities. The intra-provincial fiscal transfers have also weakened local fiscal capacity in comparison to Shanghai or Shenzhen. Such weakened capacity however can also be viewed as a “bless,” as direct state intervention over time has given away to more pluralized service delivery patterns. With greater political institutional constraints, Guangzhou’s welfare mix model appears to be less coherent in comparison to Shanghai. Although Guangzhou also prioritized the employment-based social insurance approach in early reforms, it has also been more responsive to central and provincial calls to develop residence-based social insurance schemes. The implementation of social assistance programs such as Medical Aid, public rental housing and senior allowance programs are also more in line with central and provincial priorities. In cases where such top-down pressure is absent, nonetheless, the logics of local growth model are more apparent. The absence of a housing pillar in national Social Insurance Law and lack of clear reform direction at central or provincial level have contributed to the prioritization of employment-based HPF. Building upon a productivist logic, there are still many restrictions in place in regard to how migrants can be included based on education and skill level. With a more vibrant private sector and a market-oriented growth model, Guangzhou has adopted an “enabling state” approach that encourages more competition and choice in the local welfare mix. Government purchasing of private and voluntary social services has become a guiding principle in Guangzhou, with less barriers to entry for private and voluntary sector participation in comparison to Shanghai. The distinctive nature of local and regional political economy has contributed to the emergence of this model, as the result of Guangzhou’s vibrant private and voluntary sectors, as well as long-term policy learning and service delivery coordination between Guangzhou and Hong Kong.

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The two secondary cases help further illustrate the interaction effects between political institutions and growth models. In Nanjing, local welfare mix has appeared to be less coherent due to higher political institutional constraints parallel to those in Guangzhou. The municipal government has adopted a more inclusive attitude toward migrants in employment-based social insurance schemes, though less inclined to do so in other residence-based social insurance schemes. Where central or provincial top-down pressure is absent, the social assistance programs have expanded over time, but remain means-tested nature and cover only residents with hukou. Meanwhile, service delivery is more hierarchical coordinated through the bureaucratic agencies and state corporatist institutions. Finally, SOEs, public hospitals, and other public service providers are often encouraged to become “leading partners” in PPPs. As a city with SEZ status and adjacent to Hong Kong, Shenzhen provides the most inclusive measures for migrants with less preferential treatments to local residents with hukou. This was reflected in early inclusion of migrants in its social insurance and assistance programs when top-down pressure has not arrived yet. Still, many of Shenzhen’s policy programs are distinctively productivist, as their social policy programs often serve the purpose of “talent retention” rather than social protection. In service delivery, Shenzhen’s model mirrors the more pluralized models in Guangzhou, with a more inviting attitude toward private, foreign, and voluntary sector participation. Together, these four cases help present a more nuanced understanding of local agency both before and during the new era of policy recentralization. Once local welfare mix models are established, local governments have strong interests in keeping the existing models in place, even when they are inconsistent with new central or provincial directives. When these new directives are incompatible with existing local models, local governments would attempt to delay, reinterpret, or adapt central mandates to local priorities. Such actions may also produce feedback effects at central level, as reform programs are constantly revised to reflect the bargaining outcomes between central bureaucracies and local governments. The institutions of the authoritarian party-state therefore define the boundaries of local agency, and changes of the authoritarian political institutions may also re-mark these boundaries. On the one hand, the central government has sought to impose new types of formal constraints on local agency through fiscal recentralization and adjustments of responsibility targets. On the other hand, the case comparisons

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showed that compatibility between central, provincial, and local reform priorities helps increase the salience of local agency, while incompatibility may potentially undermine the long-term sustainability of local models. In all four cases, local agency was most evident when local political leaders were promoted to the center, when there is close coordination between central bureaucracies and local governments, or when local priorities were highly consistent with national or provincial priorities.

8.2 Theorizing Welfare Mix in Decentralized Authoritarian Regimes Instead of restoring the communist color, China’s recent social policy reform is marked by increasing “hybridization” and the development of a new “state guidance, societal participation” doctrine. The reorientation of social policy reform and the new “public service equalization” framework have contributed to significant expansion of coverage in social insurance and social assistance, along with more participation of societal actors in service delivery. Nonetheless, the new reform has not committed to either unconditional universalism or complete pluralization of service delivery. Rather, the reform has carefully balanced between economic development and social protection goals at both central and local levels. Although the central government has stressed “top-level design”, policy recentralization is manifested in selective policy programs more than others. Furthermore, the central government has frequently modified its directives based on policy feedback from local implementation outcomes. At local level, the welfare mix models continue to evolve, reflecting both shifting top-down pressure and changing local political economy. It is therefore appropriate to characterize the new social policy reform as a multiple-level game in which “top-level design” is frequently being fine-tuned and local agency is constantly recalibrated. Table 8.2 provides a brief summary of actors, orientations, and capabilities who are involved in the new social policy reform at central level and supplying the welfare mix at local level. While this new model appears to be highly flexible and still evolving, there are still some inherent tensions that could jeopardize its stability and sustainability. The first tension exists between decentralization and recentralization. The emergence of welfare mix in the western context is often associated with devolution and political decentralization. In China, earlier decentralization has encouraged

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Table 8.2 Supplying the welfare mix: actors, orientations, and capabilities Orientations Political leadership

Central bureaucracies

Provincial government

Municipal government

Employers

Service providers

Capabilities

Regime legitimacy; popular support; gradual shift from pro-growth to pro-poor rhetoric

Define the ideological orientations reform programs; approval of policy doctrines; adjustments of responsibility targets Formulation of concrete Competing bureaucratic policies, implementation of interests; policymaking as responsibility targets (hard negotiation and compromise; greater centralization under Xi and soft), fiscal transfer, unfunded mandates Jinping but still fragmented Provincial policy priorities Central policy interpretation, such as more even responsibility targets (hard development across localities and soft), fiscal transfer, and between urban and rural unfunded mandates, policy areas; cadre promotions to the feedback central government Balancing between economic Central and provincial policy development, social stability interpretation; and political goals; fiscal implementation of policies; concerns; cadre promotions to carrying out pilot programs; the provincial government; conducting local experiments; top-down pressure versus providing policy feedback; societal demands coordination of local policy networks; policy learning from other local governments Profit-seeking; workforce Matching employee retention; seeking incentives contributions; provision of and policy support from local supplemental insurance; governments bargaining/negotiation with local governments Competing for government Mixed motives such as contracts; informal profit-seeking and social responsibility; public providers negotiations and influence; coordination of service seeking preferential policies; delivery; partnership with private and voluntary providers seeking fair rules or other service providers equal competition

Source Compiled by author

local agency in fostering economic development and welfare provision, but also led to growing disparities in economic and social development. Prior to recent recentralization, many have questioned whether a coherent national welfare model can work. Earlier pro-growth reforms and the

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absence of strong central guidelines have motivated local governments in wealthy coastal regions to develop their own definitions of welfare mixes that can be compatible with local production regimes. The increasing emphasis on “top-level design” in recent years has somehow created a dilemma for both national and subnational actors. Whereas central directives that are inconsistent with local priorities frequently experienced drifts and distortions during local implementation, emerging institutional complementarity at local level can also be interrupted by changing central directives. Although the principle of “state guidance, societal participation” has allowed for some local discretions so far, it remains uncertain whether this can change. The authoritarian party-state retains tight control over state actors such as local party cadres, SOEs, and other public service providers. For non-state actors in the voluntary sector, they are under strict supervision and often dependent on the state. Even if such controls were less tight in the private sector during early years of economic reform, the level of control appears to be increasing under Xi Jinping’s political leadership. The “state guidance” appears to be strengthened under policy recentralization and tightening political control, which may result in more frequent interruptions on local policy processes and less coherent welfare mix models on the ground. The second tension is embedded in the opposing ideologies of state dominance versus pluralization and competition. In the new social policy reform, the role of SOEs, public hospitals, and other public service providers remain ambiguous, as they are often charged with conflicting goals of political tasks, profit-maximization, and social responsibilities. The comparison across the four cases have shown that high degree of direct state intervention or hierarchical coordination can lead to greater distortions in the quasi-market mechanisms, causing unequal competition between public and private service providers, and producing potential crowding out effects on the latter. The case of Shanghai for example illustrates that when public providers are treated preferentially, they are more likely to engage in self-interested behavior and less likely to serve the intended social welfare functions. On the other hand, the restrictions and exclusions of private and voluntary sector providers can result in undersupply of the welfare mix to populations who are in need. The third tension is rooted in the competing logics of political authoritarianism versus participation and accountability. Social policy processes in China differ fundamentally from democratic contexts, where a variety of institutionalized channels facilitate citizen participation at multiple levels

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and in turn produce strong feedback effects between state and society. Traditional forms of citizen participation, such as electoral politics, legislative politics, and labor unions, have played minimal or limited roles in Chinese authoritarian context. At national level, elite and bureaucratic politics are central despite some evidence for greater legislative influence during Hu-Wen era. Even then, the agenda setting power remained controlled by the party-state, through the State Council, the central ministries, and the NPC standing committee. The state-controlled labor unions and other social organizations, such as the All-China Federations of Trade Unions, the China Charity Federations, and the Red Cross Society of China often serve the interests of the state rather than channeling societal demands. While expert opinions and public comments have been more frequently incorporated into policy formulation, they are often intermediated and internalized by bureaucratic agents, with lack of clear institutionalized channels for open deliberations and debates. At local level, local governments continued to rely on existing state corporatist institutions in local policy processes, including but not limited to the local People’s Congress, the government-sponsored labor unions, and other social organizations, as well as domain-specific institutions such as the HPF co-determination structure. In cases of Shanghai and Shenzhen, less interrupted local policy processes can provide more channels for societal inputs from insiders of local political economy. The dominant social bloc, which often includes the state sector and to a varying extent the formal private sector, enjoy greater access to local policy processes. The insider advantage also provides them opportunities to protect their vested interests while seeking new privileges. By contrast, the “new urban poor,” although being the primary target population of the new social policy reform, are often considered as “outsiders” of local political economy with few inputs into local policy processes. Their access and choice are therefore primarily defined by the local governments, with considerations to local economic growth and social stability. As Table 8.3 summarizes, this explains why local welfare mix models continue to provide greater access and choice to the dominant social blocs, despite prioritization of the “new urban poor” in the new reform rhetoric. Local governments are much more concerned with maintaining a tacit agreement with the dominant social bloc, while welfare provision to the “new urban poor” is based less on needs but more on local governments’ willingness. Contrary to the entitlement approach in the national reform rhetoric, greater inclusion for the “new urban poor” are

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Table 8.3 Demanding the welfare mix: actors, orientations, and capabilities

The dominant social bloc

The “new urban poor”

Orientations

Capabilities

Supporting reform measures that provide preferential treatment or compensation; opposing reform measures that would result in loss of privileges or with insufficient compensation Preferring greater social protection; supporting reform measures that would increase their overall welfare

“Insider” advantage through corporatist institutions; stronger inputs into local policy processes; greater access to and more choice in the welfare mix Often considered “outsiders”; less inputs into local policy processes; access and choice vary based on hukou status, education and skill level

Source Compiled by author

often driven by economic and political necessity rather than accountability to disadvantaged social groups. Neither should we expect increased representation of these groups in local and central policy processes, or empowerment of these groups beyond the basic needs.

8.3 Studying the Evolving Authoritarian Social Policies What have we learned about the local agency in social policy reform in China? Building on local successes and failures, the subnational welfare mix models have become attractive alternatives for the central government, in comparison to the “loftier” foreign models promoted by international institutions, central bureaucracies, and some policy experts. Such local agency can provide important feedback effects into central policymaking even in the era of recentralization, as indicated by the incorporation of selective components from various local models in national social policy reforms. Whilst the central government has played key roles in reorienting the ideological directions and mandating expanded coverage and generosity, a central feature of the new social policy reform in China remains the significant built-in flexibilities and local discretions. As a result, we can expect such patterns of subnational variations to

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endure, and that the evolving local welfare mix models will continue to shape future trajectories of national reforms in social policy. The comparison of local welfare mixes in China in this book provides an analytical framework to examine how “hybridization” may work in decentralized authoritarian context, and how we can study the internalization processes at central and local levels using within-case comparison and processes tracing approaches. Given the time and resource constraints, some interesting empirical patterns and new puzzles have emerged during the research process and could be explored further. Firstly, the full effects of Xi Jinping’s political leadership in China’s social policy reform can be more systematically explored. Most importantly, there seems to be both continuities and discontinuities between the pro-poor and pro-rural focus in social policy reform during the Hu-Wen era, illustrated by the prioritization of poverty reduction and “Chinese dream” under Xi Jinping’s leadership. In comparison to the clear commitment to greater government responsibility for both the “new urban poor” and rural residents in the former case, the party-state under Xi has somewhat stepped back from the more universal commitment to government responsibility. Instead, the focuses have been means-tested poverty reduction, the “state guidance, societal participation” in both financing and service delivery, and the promotion of “basic public service equalization” which focuses on equalization of opportunities but not outcomes. Meanwhile, the greater degree of political recentralization in recent years has produced some unintended effects on the more pluralized policy processes that emerged during the Hu-Wen era. The tightened control of the party on state institutions, as well as the permeation of party institutions into economic and social spheres may produce long-term effects on central social policy reforms and local welfare mix models in the coming decades. Secondly, the emergence of new community-based service delivery reforms, various forms of PPPs, as well as their relation to local state corporatism are worth further exploration. Can we continue to find systematic subnational variations when we attempt to categorize the relationship between local governments and the societal actors? If we find sufficient variations, can we categorize all of them as state corporatism, or are there some cases where we can find evidence for societal corporatism or even non-corporatist institutions? The literature of local state corporatism in China is rapidly expanding as discussed in Chapter 2, though more systematic investigation can be offered in regard to the roles and types of local state-society and state-market relations in social policy

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reforms. Building upon the case studies in this book, it is possible to survey broader patterns across more policy domains, more regional clusters, and whether there are any forms of subregional variations. Other than various political-administrative levels, further research at organizational level may provide greater insights into the dyadic relationship between state and societal actors. Thirdly, this book has provided potential theoretical foundation and empirical data for further cross-national comparison between China and other authoritarian states, especially those sharing similar communist legacies such as Russia and Vietnam. While it might be too ambitious to compare all social policy domains, cross-national comparison on a particular policy domain can contribute to our understanding of authoritarian social policies and potential subnational variations by controlling the shared communist legacies. For instance, Vietnam can be considered as a more “successful” case when it comes to housing reform, with stronger roles played by the national legislature and influence of international institutions. In Russia, pension reform has always been a controversial topic, and at times challenge political legitimacy of central or local political leaders. It is therefore worth examining whether the conceptual and theoretical frameworks in this book can be extended elsewhere.

Note 1. The Bismarckian social insurance model is often defined by its focus on employment-based social security and defined contributions through wages or salaries (Ifo Institut, 2008). In China it can be exemplified by the employment-based social insurance schemes such as UEBMI, HPF, and UEBPI. The Beveridge system, by contrast, is more universal and often financed by the state with uniform contributions with an emphasis on providing minimum standard of living (Ifo Institut, 2008). In China, the closest systems are the residence based URRBMI and URRBPI.

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References Ifo Institut. (2008). Bismarck versus Beveridge: A comparison of social insurance systems in Europe. Universität München. State Council. (2017). Notice on publishing the 13th five year plan on basic public service equalization. http://www.gov.cn/zhengce/content/2017-03/ 01/content_5172013.htm. Xi Jinping. (2017). Secure a decisive victory in building a moderately prosperous society in all respects and strive for the great success of socialism with Chinese characteristics for a new era. In 19th National Congress of the Communist Party of China.

Index

A accountability, 18, 105, 250, 252 “accumulated points system”, 40 actor constellations, orientations, and capabilities, 9, 52 affordable housing policies, 71, 106, 164, 183, 185–188 aging crisis, 17, 86, 91, 92, 107–109, 113, 116, 197, 211, 213, 218, 225 Asian Financial Crisis, 5, 33, 49, 77, 164 asset-accumulation, 179 asset-based welfare, 16, 104, 107, 116, 117, 156, 164–171, 173–175, 178–186, 188–190, 193, 194, 245 authoritarian political institutions, 4, 7, 18, 30, 35, 38, 40, 42, 45, 185, 243, 247 authoritarian social contracts, 12, 26, 37, 42, 53, 70, 146, 148, 185, 233

B “barefoot doctors”, 72, 73 bargaining, 11, 17, 91, 100, 146, 152, 198, 208, 211, 218, 221, 224, 226, 231, 234, 242, 247 “basic public service equalization”, 7, 242, 253 Beijing Consensus, 32, 35 Bismarckian (contributory) social insurance, 30, 95, 242, 254 bottom-up experiment, 157 British gatekeeper system, 139, 140, 242 “burden sharing”, 123, 147, 165, 166, 202, 230, 232 bureaucratic bargaining, 82, 100, 116, 121, 200, 231, 242, 244 bureaucratic fragmentation, 16, 43, 79, 86, 100, 101, 115, 116, 139, 146, 147, 151 bureaucratic politics, 29, 30, 54, 251

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 X. She, Understanding Local Agency in China’s Policy Reform, Politics and Development of Contemporary China, https://doi.org/10.1007/978-3-030-76212-4

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INDEX

C cadre management system, 43, 56 cadre responsibility system, 9, 18, 46, 48 cadre selection and promotion system, 9 “capped-price housing”, 168, 188 category-based (social assistance), 5, 6, 36, 49, 72 Central and Eastern European countries (CEECs), 30, 31, 36 central-local coordination, 171 centrally administered municipality, 38, 128, 135, 244 charity funds, 215 Cheap Rental Housing (CRH), 77–79, 88, 101, 102, 104, 115, 116, 156, 171–176, 179, 182, 187, 188, 190, 193, 194 “Chinese dream”, 2, 6, 241, 253 Chinese Communist Party (CCP), 2, 94, 101, 164 Chinese People’s Political Consultative Conference (CPPCC), 19, 53 civil servant pension scheme, 81, 83, 84, 111, 197, 198, 200, 202, 206–210, 224, 232, 233, 236 co-determination, 156, 158–160, 179, 181, 188, 194, 251 collective enterprises, 4, 35, 81, 82, 123, 124, 161, 163, 199, 202, 203, 208, 223, 235 college students, 133, 143, 149, 153, 190 “comfortable housing project”, 167, 191 commercial insurance, 124, 125, 133, 134, 137, 141, 198, 200, 201, 203, 211 commercial pension, 112 commodification, 8, 69, 70, 72, 80, 86, 115, 155, 230

commodity housing boom, 71, 155 communist legacies, 2, 8, 13, 18, 30, 31, 34, 39, 40, 47, 49, 57, 70, 72, 73, 80, 86, 91, 148, 157, 168, 170, 206, 207, 245, 254 “community health centers”, 142 community-based, 71, 72, 88, 95, 96, 98, 113, 115, 121, 134, 139, 140, 142, 148, 152, 153, 198, 222, 223, 225–228, 231, 233 community-based healthcare, 95, 98, 144, 152 community-based service, 113, 225, 253 competition, 101, 140, 149, 243, 246, 250 compromise, 17, 53, 91–93, 95, 100, 109, 116, 121, 146, 206, 211, 218, 226, 231, 242 conglomeration, 139, 142 contracted workers, 202, 204 co-payments, 126, 128 cost control, 128, 129 cost-plus pricing, 166 crowding out effects, 70, 98, 138, 250 D decentralization, 8, 9, 13, 18, 37, 56, 79, 115, 187, 243, 248 decentralized authoritarian regimes, 248 decommodification, 27–29, 71 “demolition and relocation housing” (DRH), 165 Deng Xiaoping, 2, 76, 164, 165 direct government expenditure, 72, 73, 87, 97 disadvantaged populations, 36, 42, 49, 72, 76, 173 dominant social blocs, 12, 15, 26, 36, 39, 40, 42, 47, 48, 77, 137, 146,

INDEX

148, 156, 158, 169, 180, 233, 251 dual-track systems, 81, 84, 86, 109, 122, 197, 198, 206, 207, 210, 231, 233 E Economic and Comfortable Housing (ECH), 77–79, 101, 102, 107, 115, 156, 164–166, 168–170, 181, 187, 192, 194 economic logics, 14, 26, 29, 33, 179 economics matters, 32 employers, 6, 18, 27, 35, 39, 73, 83, 84, 87, 100, 104, 107, 109, 111, 112, 118, 124, 127, 128, 132, 137, 138, 149, 158–160, 163, 172, 174–176, 180, 181, 189, 191, 192, 198–205, 207, 209, 210, 212, 220, 221, 224, 232, 235, 241 employment-based social insurance, 11, 29, 41, 87, 122–125, 135, 138, 147, 199, 204, 208, 220, 241, 245–247, 254 “empty accounts”, 83 enabling state, 37, 134, 143, 246 enterprise annuities, 112, 118, 198, 206, 232 experimentalism, 13, 42, 69, 115, 116 expert opinions, 251 export-oriented growth (EOG), 2, 5, 29, 32, 43–45, 123, 130, 148, 149, 200, 245 F “family doctor”, 139 family support, 197, 225 fertility rates, 92, 107, 197 financial sustainability, 123, 125, 162, 197, 199, 205, 234

259

financing, 9, 11, 13, 16, 17, 36–39, 46, 52, 53, 69, 71–75, 77, 79, 81, 93, 95, 96, 99, 105– 108, 112, 114–116, 121–123, 125–127, 131–135, 137, 138, 142, 143, 145, 150, 152, 157, 179–181, 187, 188, 197, 198, 200–202, 204, 206, 210, 230, 253 fiscal and administrative capacity, 11, 31, 39, 43, 141, 170, 218 fiscal capacity, 11, 14, 38, 39, 51, 122, 135, 142, 144, 160, 169, 246 fiscal decentralization, 10, 86 fiscal federalism, 10 fiscal incentives, 6, 87, 103, 128, 141, 188 fiscal transfer, 4, 11, 38, 44, 96, 97, 151, 246 “Five Guarantees”, 215 “flexible employment”, 127, 143, 148, 162, 204 foreign direct investment (FDI), 44, 45 formality, 37 fragmentation, 8, 83, 96, 125 fragmented authoritarianism, 30, 33, 55, 92 Free Medical Care (FMC), 72, 73, 81, 93, 123, 126–131, 140, 151, 206 G GDP per capita, 51 Global Financial Crisis, 6, 18, 49, 80, 91, 92, 102, 103 government purchasing, 141, 173, 226, 246 gradual institutional change, 27, 53, 117 gradualism, 13, 42, 69, 115, 116

260

INDEX

grandfather clause, 110, 131, 198, 206 “grasping the large, letting go the small”, 75 growth strategies, 2, 4, 10–14, 26, 28, 29, 31, 34, 35, 39, 44, 45, 49, 52, 145, 146, 185, 186, 230 “Guangzhou model”, 182, 226 Guangzhou Charity Association, 133, 134 Guangzhou Charity Hospital, 133 H hard targets, 18, 46, 102, 103, 126, 129, 150, 162, 166, 169 “harmonious society”, 2, 6, 241 harmony of interests, 47, 187 “healthcare for all”, 146 “hierarchical diagnosis and treatment”, 142, 147, 148 hierarchical coordination, 17, 142, 147, 148, 172, 179, 181, 198, 218, 227, 231, 233, 250 high-skill migrants, 143, 145, 148, 156, 164, 170, 175, 176, 184, 189, 192 Hong Kong, 17, 29, 45, 50, 78, 130, 137, 157, 168, 171, 178, 198, 214, 220, 226–228, 232, 233, 242, 246, 247 horizontal bureaucratic fragmentation, 79, 92, 115, 186 household registration (hukou), 2, 40 housing commodification, 75, 76, 79, 101, 155, 157, 158, 165, 169, 170, 182, 183, 185 housing ownership, 164 Housing Provident Fund (HPF), 16, 77–79, 87, 105, 107, 115, 126, 156–164, 167, 179–185, 187–192, 194, 199, 234, 242, 245, 246, 251, 254

housing shortage, 164 “Huadu Model”, 142, 146, 148, 152 hukou, 5, 17, 40, 104, 107, 124–127, 132–135, 139, 144, 145, 149, 150, 158, 159, 161, 164, 166– 172, 174–176, 178, 179, 184, 189–193, 197–199, 203–206, 211–214, 217, 218, 221, 222, 228, 232–237, 247 the Hu-Wen era, 3, 6, 38, 46, 54, 55, 91, 95, 100, 101, 142, 241, 245, 253 hybridization, 3, 13, 17, 28, 30, 31, 242, 248, 253 hybrid pension model, 109 I ideational contestations, 113, 116, 242 inclusion, 6, 16, 17, 41, 149, 162, 175, 176, 178, 180, 190, 201, 203, 205, 217, 227, 228, 234, 247, 251 individual account, 82, 83, 86, 88, 109, 118, 125, 157, 161, 192, 199, 200, 202, 204–206, 221, 224, 232, 235 informality, 3–5, 9, 19, 33, 37, 149 informal sectors, 5, 132, 162, 212, 217 informal security, 29 insecurity, 3–5, 9, 19, 26, 28, 33, 37, 54, 149 institutional complementarity, 11, 27, 28, 34, 35, 39, 47, 53, 243, 245, 250 institutional flexibilities, 9, 242 institutional fragmentation, 127, 140, 143, 202 institutionalized care, 113, 198, 221–223, 225, 233 internalization, 17, 242, 253

INDEX

“iron rice bowl”, 5, 8, 209, 210 J Jiang Zemin, 157, 158, 165, 190 L labor contract, 82, 172, 201 Labor Contract Law, 6 Labor Insurance Scheme (LIS), 72, 81, 82, 84, 122, 123, 125, 128, 140, 157, 187, 199, 202, 245 labor unions, 13, 131, 137, 158, 179, 220, 251 land-expropriated rural residents, 106, 166, 167, 169, 211, 213, 234, 245 “leading partners”, 247 Li Keqiang, 106 local agency, 4, 7, 10, 16, 18, 26, 34–38, 42, 43, 48, 49, 52, 69, 70, 82, 86, 87, 91, 93, 96, 116, 122, 124, 131, 133, 135, 140, 145–147, 156, 159, 162, 169, 171, 176, 178, 182, 185, 187, 201, 204, 208–211, 214, 216–218, 220, 223, 224, 226, 227, 231, 242–249, 252 local discretions, 9, 42, 77, 79, 83, 92, 104, 115, 135, 146, 162, 212, 215, 218, 231, 242, 250, 252 local state authoritarianism, 14 local state corporatism, 14, 253 local state entrepreneurialism, 14, 33 “loosened medical consortium”, 142 “low contribution, low payment”, 111, 115, 116, 118, 131, 200 “low generosity, broad coverage”, 127 low-income residents, 12, 40, 102, 104, 134, 135, 150, 161, 166–168, 170, 171, 174–176,

261

178, 183, 189, 190, 194, 211, 216, 230, 234 “Luohu Model”, 148, 152

M mandatory savings, 87, 88, 157, 158, 161 market-oriented economy, 39 market-oriented model, 45, 46, 51, 146 market-oriented reform, 3, 13, 46, 70, 71, 79, 94 means-tested (social assistance), 5, 6, 8, 12, 16, 17, 25, 34, 36, 48, 49, 73, 77–79, 85, 87, 88, 96, 101, 102, 104, 115, 116, 131–133, 141, 143, 147, 149, 165, 168–175, 178, 179, 182, 187–190, 193, 194, 197, 211, 213, 215–217, 225, 227, 228, 230, 232–234, 247, 253 “medical consortiums”, 139, 140, 142, 147, 148, 245 Medical Aid, 16, 73, 96, 97, 100, 115–117, 121, 122, 131–135, 141, 143, 149–151, 212, 246 Migrant Comprehensive Social Insurance, 124, 200 migrants, 2, 5, 8, 12, 16, 17, 40, 41, 71, 73, 104, 107, 118, 122, 124–127, 132–135, 137, 141, 143–145, 147, 149–151, 153, 156, 161, 162, 167, 169, 170, 172–176, 178–180, 182–184, 189, 190, 192–194, 199–206, 212, 213, 217, 218, 224, 226–228, 230, 234, 235, 245–247 migration inflow, 107 Mill’s “method of difference”, 51

262

INDEX

Minimum Livelihood Guarantee (MLG), 34, 132, 134, 211, 213, 215, 217, 232 Ministry of Civil Affairs (MCA), 79, 85, 88, 96–98, 101, 113, 115, 116, 118, 131, 132, 134, 198, 212, 214–216, 218, 222, 226, 228, 231 Ministry of Finance (MOF), 79, 92, 94, 95, 100, 102, 104, 109, 115, 116, 118, 186, 197, 231 Ministry of Health (MOH), 74, 75, 93–96, 98, 101, 115, 140, 148 Ministry of Housing and Urban-Rural Development (MOHURD), 79, 102, 104–106, 115, 116, 182, 186–188, 193, 194 Ministry of Human Resources and Social Security (MOHRSS), 82, 92, 95, 96, 100, 105, 109, 112, 115, 116, 118, 197, 209, 217, 226, 231, 235 mixed economy, 4, 45, 55 “9073” model, 221, 222, 225 “monetized housing allocation”, 160 most similar system design, 51 multi-level game, 18, 242 multi-pillar pension, 93, 112, 116, 204, 242 mutual-aid, 215, 227 N “Nanjing model”, 146, 148, 204, 226 National Development and Reform Commission (NDRC), 82, 102, 104, 194 National Healthcare Security Administration (NHSA), 100, 101, 115, 147, 152, 153 National Health Commission (NHC), 98, 100, 101, 115, 117, 140, 147, 148

National Health Service Model, 95 national housing law, 16, 105, 115, 117, 162 National People’s Congress (NPC), 6, 19, 53, 57, 105, 106, 108, 251 “new urban poor”, 2, 8, 16, 17, 40, 42, 47, 53 new construction, 101, 103, 167 New Rural Cooperative Medical Insurance (NRCMI), 73, 93, 131 New Rural Old-Age (Care) Insurance, 111 non-contributory, 88, 109, 112, 118, 129, 130, 232

O occupational pension, 112, 198, 206, 207, 209–211, 232, 233, 236 “old-age care at home”, 108, 198 old-age dependency ratio, 107, 197 one-child policy, 92, 107, 108 out-of-pocket expenditure, 73, 99, 100 “over-marketization”, 7, 94

P “parameter reforms”, 84 participation, 7, 18, 39, 41, 42, 47, 57, 73, 79, 85, 88, 96–98, 101, 104, 107, 112, 114, 115, 118, 121, 127, 135, 137–139, 141–143, 148–150, 152, 160, 161, 163, 176, 180, 181, 183, 186, 198, 212, 220, 222–224, 226, 227, 232–234, 236, 243, 245–248, 250, 251 party-state, 1–5, 7–9, 11, 14, 15, 18, 28, 29, 32, 33, 35, 37, 38, 40, 42, 43, 48, 54–56, 70, 72–76, 86, 94, 96, 100, 105, 107, 111,

INDEX

113, 114, 146, 155, 206, 210, 241, 247, 250, 251, 253 pay-as-you-go, 82, 83, 88, 109, 118, 205, 232 pension transferability, 205, 206 People’s Bank of China (PBOC), 104, 186 People’s Congress, 130, 140, 151, 157, 161, 187, 188, 193, 205, 208, 209, 212, 216, 217, 221, 223, 224, 232, 251 personal savings, 112, 205 physical provision, 102, 157, 164, 171–173, 175, 176, 179 pluralization, 17, 18, 37, 38, 53, 55, 91, 112, 143, 144, 248, 250 pluralized model, 16, 101, 141, 145, 148, 178, 218, 230, 233, 244, 247 pluralized service delivery, 16, 17, 122, 181, 198, 246 policy autonomy, 11, 39, 51, 135 policy communities, 137, 212 policy drift, 83, 97, 115–117, 171, 175, 197 policy entrepreneurs, 4, 34, 43, 74 policy experts, 2, 43, 52, 94, 95, 105, 106, 109, 117, 126, 130, 157–159, 178, 220, 222, 242, 252 policy learning, 28, 29, 199, 220, 227, 232, 233, 242, 245, 246 policy learning, diffusion and transfer, 12 policy recentralization, 4, 69, 91, 93, 100, 105, 115, 116, 122, 123, 162, 176, 208, 211, 212, 231, 247, 248, 250 political administrative status, 11, 12, 38, 43, 48, 49, 51, 129 political administrative structure, 43

263

political authoritarianism, 18, 32, 37, 250 political economy, 10, 11, 14, 25, 26, 36, 40, 42, 44, 46, 48, 49, 57, 122, 160, 243, 246, 248, 251 political elite, 34, 70, 71, 73, 74, 81, 83, 93, 94, 114, 128–131, 143, 149, 168, 221, 233 political institutional constraints, 11, 14, 42, 44, 46, 52, 226, 230, 246, 247 political institutions, 4, 10, 11, 13–15, 26, 28, 30–32, 34, 37, 39, 47, 48, 52, 53, 146, 186, 243, 247 political recentralization, 3, 38, 41, 42, 55, 253 politics matters, 3, 31–33, 35 poverty alleviation, 8 power resources, 3, 9, 26–29 primary cases, 12, 50 private hospitals, 98, 117, 141–143, 153 private sector, 11, 46, 51, 73, 81, 85, 100, 107, 135, 138, 141, 143, 148–150, 160, 181, 203, 224, 246, 250, 251 productive workforce, 12, 41 productivist welfare capitalism, 3, 28–30 pro-growth, 15, 16, 29, 33, 52, 69, 86, 91, 122, 241, 245, 249 pro-market, 32, 34, 75, 79, 85, 88, 93, 94, 96, 102, 112, 114, 197, 241, 243 pro-market advocates, 94, 95 pro-poor, 28, 96, 156, 161, 171, 183, 188, 253 provincial capital(s), 51, 129, 131, 144, 163, 169, 185, 218, 228, 230 provincial government, 11, 38, 41, 43, 51, 126–128, 131, 140–142,

264

INDEX

146, 148, 168, 174, 175, 180, 181, 184, 190, 203, 204, 208, 209, 216, 218, 224, 226, 245, 246 provincial-level constraints, 18, 39, 50, 51, 176, 180, 183, 187, 223, 232, 244 provincial priorities, 16, 122, 140, 143, 147, 149, 199, 224, 246, 248 public comments, 19, 53, 57, 95, 106, 251 public hospitals, 35, 49, 70, 74, 75, 79, 94–96, 98, 99, 101, 117, 128, 134, 137–139, 141–143, 148, 150, 152, 245, 247, 250 public opinion, 130, 151 public-private partnership (PPP), 7, 85, 113, 223, 227, 233, 247, 253 public rental approach, 17, 156, 171, 186, 187 Public Rental Housing (PRH), 80, 87, 88, 104, 105, 107, 116, 156, 171–176, 179–183, 189, 190, 193, 194, 227, 242, 246 public service providers, 35, 225, 245, 247, 250

Q quantitative targets, 92, 104, 105, 116, 171 quasi-market, 181, 250

R recentralization, 3, 4, 9, 12, 16, 18, 38, 101, 115, 116, 242, 247–249, 252 Red Cross, 132, 134, 151, 227, 251 reform deadlock, 84, 130

rental subsidies, 102, 172, 173, 176, 179 rental support, 162 “residence certificate”, 40, 107, 193 residual category, 13, 25 “resolving housing difficulties”, 167, 169, 191 responsibility targets, 46, 93, 247 Retiree Administration Commission (RAC), 224, 225 retreat of the state, 5, 32, 71, 76, 85, 107, 114 Rural Cooperative Medical Care, 72, 81

S “same rights for rental tenants as homeowners”, 182 “sandwiched households”, 102, 103, 106, 171, 176, 179, 185, 187, 193 secondary cases, 12, 50, 130, 174, 182, 247 secondary reimbursements, 131 selective privatization, 49, 98 senior allowance, 198, 212, 215–218, 226, 230–232, 234, 242, 246 service center, 133 service delivery, 9, 13, 16, 17, 19, 36–39, 52, 53, 69–72, 74, 77, 79, 84, 85, 87, 92, 93, 96, 98, 101, 105, 106, 109, 113–116, 121–123, 131, 133–135, 138, 142–148, 178–183, 197, 198, 216, 218, 221, 222, 224, 227, 230–233, 237, 241, 244, 245, 247, 248, 253 service delivery coordination, 226, 232, 246 service indicators, 138, 143, 144, 237 service subsidies, 215

INDEX

Severe Acute Respiratory Syndhrome (SARS), 5, 16, 33, 49, 70, 71, 73, 86, 91–94, 96, 101, 109 Shanghai Charity Foundation, 132, 151 Shanghai Federation of Trade Unions, 158 Shanghai General Labor Union, 132 shared investment, 166, 169, 170, 179, 188 Sheng Kung Hui, 226 Shenkang Hospital Administration Center, 139 Shenzhen Charity Federation, 134, 151 “silver economy”, 230 Singapore, 29, 78, 157, 158, 178, 187, 245 Singaporean, 77, 82, 87, 157, 242 skilled migrants, 12, 40, 106, 149, 167, 169, 173, 185, 189, 190 social assistance, 3, 6, 13, 33, 36, 40, 47, 49, 121, 132, 241, 243–248 social insurance, 3, 6, 13, 16, 33, 34, 36, 40, 41, 47–49, 72, 73, 77, 78, 86, 87, 96, 99, 100, 105, 115, 118, 121, 122, 124, 129, 130, 135, 137, 143, 146, 147, 150, 157, 159, 163, 172, 174, 178, 191, 200, 202, 204–206, 209, 223, 228, 235, 242–248 Social Insurance Law, 6, 16, 40, 87, 96, 105, 124, 125, 162, 201, 213, 246 “socialist insecurity”, 71 socialization, 70, 85, 86, 88, 113, 115, 116, 222, 225, 227, 230 “socialization of social welfare”, 85 socialized old-age care, 85 social organizations, 251 social policy, 3–18, 25, 26, 28, 29, 31–37, 40–44, 48, 51–54, 69,

265

70, 86, 87, 91, 101, 106, 113, 220, 241–243, 245, 247, 248, 250–254 social pooling, 82, 86, 109, 118, 125–127, 150, 199, 200, 202, 203, 205–208, 210, 221, 224, 232, 235, 236, 245 social protection, 2, 6–8, 15, 29, 36, 44, 46, 54, 87, 88, 106, 108, 164, 179, 217, 226, 228, 241, 247, 248 societal corporatism, 44, 253 societal expenditure, 73, 87, 99, 100, 148 societal inputs, 10, 19, 43, 52, 53, 95, 137, 157, 183, 187, 215, 221, 231, 244, 251 solidarity, 31, 55 spatial segregation, 173, 189, 190 Special Economic Zone (SEZ), 43, 45, 51, 128, 135, 142, 247 spillover effects, 152, 185, 233, 244 “state guidance, societal participation”, 4, 10, 12, 18, 38, 93, 113–115, 131, 134, 135, 141–143, 164, 171, 178, 182, 189, 230, 231, 233, 242, 243, 248, 250, 253 “state-business amity”, 44 state corporatism, 15, 26, 44–46, 48, 52, 55, 158, 221, 233, 253 state corporatist institutions, 11, 17, 39, 48, 53, 122, 146, 147, 179, 187, 189, 218, 227, 233, 243, 247, 251 State Council, 2, 6, 7, 38, 74–77, 83, 85, 88, 94, 96, 98, 101, 102, 104, 106, 109, 111, 118, 132, 133, 140, 142, 147, 172, 192, 193, 242, 251 State Council Office for Restructuring of the Economic Systems (SCORES), 82, 83

266

INDEX

state dominance, 18, 37, 250 state guidance, 4, 121, 245, 250 state-guided welfare mix, 39 state-led, 2, 15–17, 29, 30, 34, 35, 39, 41, 45, 51, 54, 74, 86, 87, 122, 123, 132, 134, 139, 145, 146, 148, 158, 167, 179, 180, 182, 183, 185, 200, 218, 220, 223, 227, 231, 244, 245 state-led growth model, 15, 39, 46, 185 state-led marketization, 49, 70, 75, 79, 84, 86, 95, 98, 123, 138, 140, 148 state-led model, 16, 45, 46, 101, 133–135, 142, 145, 178, 179, 181, 186, 188, 198, 230, 232, 233, 245 state-market relations, 35, 44, 45, 48, 185, 189, 233, 243, 253 state-owned enterprise (SOE), 2, 4, 5, 8, 11, 17, 33, 35, 37–40, 45–47, 51, 70, 73, 75, 77, 79, 81, 86, 112, 123–126, 139, 148–150, 156, 158, 160, 161, 163, 168, 170, 174, 175, 179–183, 189, 190, 193, 194, 199, 202–204, 208, 218, 222–226, 230, 231, 233, 235, 245, 247, 250 state sector, 17, 40, 47, 73, 81, 83, 84, 112, 114, 123, 127–129, 140, 143, 146, 149, 150, 156, 158–161, 163, 164, 167–170, 174, 176, 180–183, 187, 189, 191–193, 198, 199, 202–204, 206, 209, 211, 223–225, 251 state-society relations, 10, 30, 35, 36, 55 strategic industries, 45, 46, 51, 149, 178, 190 strategic sectors, 11, 44, 86, 185

stratification, 2, 5, 6, 8, 15, 16, 28, 40, 69, 71, 72, 80, 86, 92, 101, 124, 135, 138, 171, 176, 199, 200, 203, 212, 227, 234 “structural reforms”, 84 structured comparison, 12, 15, 26, 49 subnational variations, 6, 9, 10, 12–15, 17, 19, 26, 31, 34–36, 49, 52, 174, 242, 252–254 subnational welfare politics, 42 sub-provincial city, 43, 50, 51, 128 “super-ministries”, 100 supplemental medical insurance, 129–131, 137 Swedish pension model, 109

T “talent apartments”, 173, 175, 193 “talent green card”, 174, 190, 193 talent retention, 190, 247 “talents”, 12, 170, 174, 176, 190 third sector, 37, 39, 54 Tier-3 hospital, 138, 139, 141, 142, 152 “tightened medical consortium”, 143 “time bank”, 227, 237 “top-level design”, 3, 9, 48, 69, 106, 115, 242, 248, 250 top-down pressure, 3, 4, 7, 10–12, 14, 16–18, 33, 38, 40–42, 47–49, 52, 56, 93, 116, 122, 123, 125–127, 131, 133, 140, 141, 146, 148, 156, 159, 162, 166, 168, 170, 174, 180, 186–188, 191, 201, 213, 215, 216, 220, 221, 224, 230, 231, 234, 243, 244, 246–248 “transitional pensions”, 207 “twin difficulties”, 172–175, 179

INDEX

U uneven development, 112 universal coverage, 95, 111, 116, 121, 215 universalism, 15, 31, 34, 40, 42, 54, 121, 211, 213, 242, 248 urban–rural integration, 203, 213, 246 Urban Employee Basic Medical Insurance Scheme (UEBMI), 72, 73, 81, 93, 100, 121–133, 135, 137, 138, 141, 147, 150, 153, 225, 234, 254 Urban Employee Basic Pension Insurance Scheme (UEBPI), 81–84, 109, 111, 112, 118, 199–201, 203, 204, 206, 207, 209, 210, 212, 213, 215–217, 221, 224, 225, 228, 232, 234, 254, 81–84, 109, 111, 112, 118, 199–201, 203, 204, 206, 207, 209, 210, 212, 213, 215–217, 221, 224, 225, 228, 232, 234, 254 urban renewal, 77, 102, 105, 164– 167, 169, 170, 178, 179, 182, 184, 185, 188–190, 211, 245 Urban Resident Basic Medical Insurance (URBMI), 73, 93, 121, 130, 131, 151 urban-rural divide, 2, 72, 74 urban-rural integration, 141, 149

V varieties of capitalism, 9, 14, 27, 53, 56 vertical bargaining, 92 vertical fragmentation, 187 vested interests, 81, 84, 109, 122, 128–130, 140, 141, 143, 146,

267

151, 180, 183, 185, 198, 203, 206, 209, 211, 236, 251 voluntary sector, 37–39, 49, 85, 98, 113–115, 118, 134, 141–143, 149, 152, 220, 222, 227, 232, 233, 246, 247, 250 W Washington Consensus, 15, 32 welfare capitalism, 3, 9, 27 welfare expansion, 3, 8, 40, 47, 49 welfare mix, 4, 9–16, 18, 19, 26, 36–42, 46–49, 52–54, 121, 135, 140, 145, 146, 156, 176, 182, 185, 218, 220, 223, 230, 232, 243–248, 250–253 welfare pluralism, 37, 39, 54 welfare regimes, 4, 7, 13, 29, 30, 35, 43, 54, 57 welfare state, 9, 13–15, 19, 26–28, 30, 33, 34, 39, 241 “win-win”, 188, 228 window of opportunity, 102, 164, 182 “Work Unit Rental Housing”, 172 World Bank, 30, 54, 75, 82, 86, 88, 95, 109, 112, 118, 198, 232, 242 World Health Organization (WHO), 71, 87, 95, 121 X Xi Jinping, 1, 3, 6, 9, 16, 18, 42, 55, 56, 91, 100, 117, 142, 208, 211, 241, 245, 250, 253 Z “zero pillar”, 112, 118 Zhu Rongji, 77, 79, 157, 158, 178