News this week. Group Discussion. Rising Inequality: Gini Coefficient. U.C.L.A. Suspends 3 Players; They Admitted to Shoplifting in China

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1 News this week U.C.L.A. Suspends 3 Players; They Admitted to Shoplifting in China Social and Spatial Inequality Fire Kills at Least 19 in Beijing Apartment Building These stories reveal inequality Group Discussion There are many winners and losers during the market transition. Who do you think are the winners, and who are the losers? Winners: Officials (political capital) Professionals (human capital) Entrepreneurs (market rewards + political connection) Losers: Migrants (new poor) Urban residents: laid-off workers, seniors/disabled/displaced (new poor) Farmers rural areas (traditional poor) Rising Inequality: Gini Coefficient 1

2 Inequality in perspective Rising inequality Lower than many LDCs Similar to the U.S. Happened with rising income for all groups Income increase varies by groups With significant poverty reduction China accounts for nearly all the world s reduction in poverty 65% in % in 2004, more than 500 M The Maoist Era Egalitarianism Reduce spatial inequalities Urban vs. rural (e.g. migration control) Coastal vs. inland (e.g. Third Front ) Reduce social inequalities Socialist Transformation Nationalization; collectivization Work-unit system Relative social and spatial equality The Reform Era: Undo Maoism Rural: HRS, de-collectivization Urban: privatization, marketization Open-door policy: spatially biased Dismantle iron rice bowl laid-off workers : pro-urban development model present: pro-rural, pro-poor Let some get rich first rising inequality 2

3 Urban-rural per capita income ratio Inequality of opportunity vs. outcomes Which is more concerning? Institutional inequality Institutional inequality The most important contributor to overall inequality (1/3-70% vs. <25% in other LDCs) Hukou system Double divide: urban vs. rural; migrants vs. urban residents Inequalities within cities Inequalities within rural areas (higher) China Rises: City of Dreams Not One Less Institutional inequality Regional Inter-provincial Inter-city Within city: neighborhoods Institutional inequality Open door policy rising regional inequality Fiscal decentralization rising regional inequality Trade liberalization Local state corporatism inter-city inequality Residential mobility intra-city inequality 3

4 Institutional inequality Employment based inequality Work unit system Ownership, sector, administrative rank status of work units in the national economy Government resource allocation Work unit provision of welfare and benefits Institutional inequality Employment based inequality Housing inequality Privatization Winners in the socialist era are better off Marketization The rich become richer Neoliberalization Withdrawal of the state in low-income housing provision Institutional inequality Employment based inequality Housing inequality Political status Party members benefit in both socialist and reform era Social inequality: Gender Education Female Participation in Education Women in the Political Process Gender Equality and Women's Development in China,

5 Women in the Political Process CCP set targets for minimum numbers of women in government positions State Sponsored Feminism Cycles of advancement and retreat in women s gains depending on Party priorities In 2009, only 20% of CCP members were women Little participation by rural women in political leadership Women s Work and Family Planning Explaining Inequality Rising inequality is a result of economic growth Kuznets curve: Inverted U-curve All-China Women s Federation NGO or Party mouthpiece? Explaining Inequality Rising inequality is a result of economic growth Kuznets curve: Inverted U-curve The reward system changes with economic growth; people are rewarded differently rising inequality Rising inequality is a social process/ restratification Market transition theory; Debate Different stages of market transition, with diff. inequality Decline, increase, then decline again Institutional changes leads to changing patterns of inequality Institutional groups/categories are important Ownership, sector, location, work units, gender, seniority. Group-based inequality Group Activity Very complex inequality Social Spatial Group-based/institutional What are the social political implications? Is China sitting at the top of a social volcano that may erupt at any time? Policy responses Changing development philosophy Getting rich is glorious ; Let some get rich first (Deng, Jiang) Building a harmonious society, scientific development perspective, people-centered reform (Hu), 2005 Chinese Dream (Xi) Policy responses Changing development philosophy Aim to reduce poverty, narrow income gap Pro-rural policies: abolish agricultural taxes and fees Abolish all school fees in rural compulsory education Poverty reduction policies Increase poverty line; Increase poverty reduction fund Dibao: minimum income guarantee system; expanded significantly Minimum wage system Establish a social security system, covering the whole nation. Western Development Strategy 5

6 Group Activity What are your policy recommendations to the Chinese government to reduce social inequality? 6

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