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International Conference on China


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Title: International Conference on China

International Conference on Chinas Social Policy
Reform Challenges and Direction, Jointly
organised by East Asian Institute, National
University of Singapore Research Department of
Social Development, Development Research Centre
of the State Council, China  
  • Title The Evolving East Asian Welfare Regimes
    The Case of China
  • Wong, Chack Kie PhD
  • Professor, Social Work Department,
  • Associate Director, Hong Kong Institute of
    Asia-Pacific Studies,
  • The Chinese University of Hong Kong

  • The paper uses a tripartite framework to study
    the change of the welfare regime in China.
  • It suggests that the prevalent Western welfare
    theories are inadequate in explaining the
    development of Chinas welfare regime because it
    has different institutional logic.
  • It also incorporates the developmental state
    theory and the experiences of welfare
    developmentalism in some East Asian welfare
    regimes in the analysis of the institutional
    dynamic in Chinas welfare development.

Western welfare state theories and concepts
  • The welfare state is located at the interface of
    two sets of rights, or rules of the game
    (Gintis and Bowles, 1982, pp. 341-345)
  • citizen rights underlying the democratic
    institutions of society, and property rights
    underlying the capitalist market system.
  • They are in constant and persistent
  • According to the neo-Marxist theorists, the
    contradictions underlying the welfare state are
    functional to the very existence of capitalism
    because they legitimize the accumulation function
    of capital (OConnors, 1973 Gough, 1979 Offe,

  • The welfare systems in East Asian societies where
    the underlying institutional arrangements are
    different from Western welfare states
  • The democratic institution and the capitalist
    economy were or are absent
  • Some of them may have different rules of the
    game or their institutional logic may take time
    to mature,
  • such as the market economy in reform China and
    political democracy in Maoist and reform China,
  • or rudimentary democracy in many East Asian
  • In other words, from the standard set by Western
    welfare capitalism, East Asian welfare systems
    can be described as evolving or immature (Kim,
    2001 Tang, 2000).

The concept of regime
  • The concept of regime in a welfare regime denotes
    the complex socio-political, legal and
    organizational features that are systematically
    interwoven in the relationship between the state
    and the economy as well as between the state and
    society (Esping-Andersen, 1990, p. 2 Walker and
    Wong, 2005, p. 6) and class coalitions of power
    resources account for the regime types in the
    form of social settlements among capital, labour
    and state actors (Esping-Andersen, 1990).
  • In this light, the concept of the welfare regime
    looks more powerful and explains the outcome of
    social settlements, i.e., welfare arrangements as
    major components between regime types.

The concept of globalisation
  • According to Mishra (19993-4)
  • Globalisation refers to a process through which
    national economies are becoming more open and
    thus more subject to supranational economic
    influences and less amenable to national control
  • Internationalisation the principal economic
    units remain national although international
    aspects of the economy, e.g., trade, foreign
    direct investment and multinational enterprises
    assume increasing importance.

  • It is assumed that globalisation exerts a
    downward pressure on social protection and
    weakens national governments choice due to
    fiscal constraints increase in taxation will
    reduce competitiveness in attracting foreign
  • It is also suggested that globalisation has come
    to conflict with democratic politics -
    constraints of national government to use
    expansionary policies to enhance welfare

A brief review of welfare theories and concepts
in the study of East Asian welfare systems
  • Inform us
  • First, East Asian welfare systems have and/or
    prefer a greater use of society in the
    distribution of welfare and social costs.
  • Second, they may have different institutional
    logics underlying their economic and political
  • Third, class coalitions of power resources,
    primarily a society-led theory, explain the
    welfare regime types in the form of social
    settlements among capital, labour and state may
    not be able to explain welfare development in
    East Asian welfare regimes.

  • In fact, neither capitalism nor democracy is
    necessary for constituting a welfare state or
    explaining its development (Walker and Wong,
    1996, 2004).
  • Former Soviet bloc countries and Maoist China had
    many essential welfare services and provisions on
    par with those in Western welfare capitalism.
  • In other words, welfare development is driven not
    only by the institutional logics of capitalism
    and democracy
  • The driving force of welfare development in
    non-capitalist and non-democratic societies is
    often motivated by the need for political
    legitimacy of the authoritarian rule over society
    (Walker and Wong, 2005, p. 5).

The tripartite framework
  • Walker and Wong (2009) use a tripartite framework
    to analyze the relationship between economic
    policy and social policy in a comparative
    analysis of social policy as a public burden in
    the West and China
  • The three dimensions are
  • 1. Institutional, e.g., the neo-Marxist
    macro-institutional logic underlying welfare
    capitalism capitalist welfare state the set of
    citizen rights as rule of the game underlying the
    democratic institution of society
  • 2. Ideological, e.g., values and traditional
    beliefs about welfare
  • 3. Developmental, e.g. national wealth and fiscal
    resources for welfare development (i.e.,
    modernisation theory for welfare development)

Developmental state and East Asian welfare regimes
  • Developmental state theory
  • In order to catch up with advanced nations,
    developing countries need to use their state
    capacity to direct the economy and the society to
    accomplish national economic development
    (Leftwich, 1995, p. 401).
  • According to Johnson (1982), a developmental
    state is a coalition consisting of government
    ministers and state bureaucrats that prioritizes
    economic growth over all else.
  • In essence, it is a combination of political
    power and economic expertise that give the
    developmental state much transformative power
    (Weiss, 2000).

  • Ironically, the success of the developmental
    state may pave the way for its own demise,
  • As these countries achieve their economic growth,
    a clientelistic state evolves into a citizen-led
    state over time and the developmental elite has
    to make room for new autonomous institutions as
    well as popular interests (Barro, 1997 Lijphart,
  • Pang (2000) talks about the end of the East Asian
    developmental states due to two major factors
  • democracy self-confident civil society
    confronts the authoritarian developmental elite
  • financial globalization the domestic
    capitalists no longer need the financial
    subsidies from the state to grow
  • According, the developmental states in East Asia,
    Taiwan, South Korea, and Japan ultimately lose
    their power over the economy and society, except
  • Globalisation is also context-bounded, i.e.,
    affected by regime type class coalition, e.g.
    Singapore is still state-led

  • The exception of Singapore due to two reasons
  • First, Singapores government does not
    collaborate with domestic capitalists, but
    transnational ones.
  • Therefore, the domestic capitalist class has not
    developed into an autonomous and powerful social
    agent with the capacity to challenge the
    authority of the developmental elite.
  • Second, because of a weak and subordinated civil
    society largely due to effective governance
  • Singapores working class enjoys the fruit of the
    developmental state and its trade unions are
    tightly controlled by the state.
  • Political democracy and a global economy explain
    the recent divergent national development of East
    Asian societies.

  • The application of developmental state in welfare
    development in East Asian welfare regimes
  • Welfare developmentalism and productivism are
    similar concepts, that suggests that the state
    subordinates welfare development to economic
  • Government intervention and policies are used
    extensively to promote industrialization by
    investing heavily in the education and health of
    the workforce to enhance the legitimacy of the
    government and to pacify labour (Aspalter, 2006
    Kwon, 2002 Tang, 2000).

  • So, how could welfare developmentalism become
    inclusive welfare or universal welfare such as
    the extension of the decommodified welfare
  • Political democracy seems to be the answer in
    view of the recent experiences in South Korea and
    Taiwan (Ahn Lee, 2005 Croissant, 2004 Back,
    2005 Hill Hwang, 2005 Hort Kuhnle, 2000
    Kwon, 2002 Yasuhiro, 2005).
  • In the case of Koreas change to inclusive
    coverage, according to Kwons account (2002, pp.
    30-32), the development of universal health
    insurance was a long process fuelled by
  • In the case of Taiwans expansion of its
    decommodified welfare programme, both Kuomintang
    and the Democratic Progressive Party applied a
    strategy of promising social welfare policies in
    highly competitive elections during the process
    of democratization (Aspalter, 2002, 2006 Ku,
    2002 Wong, 2005).

  • Two models as concluded on the experiences of a
    few East Asian welfare regimes
  • The first model, seen in Korea and Taiwan, is the
    shift from state-led welfare development to
    society-led after the democratic institution of
    society dominates.
  • In the second model, seen in Singapore, the
    developmental elite hold its power even in
    economic affluence due to its deliberate polices
    and exercise political control over trade unions.

The case of China as an evolving Welfare Regime
  • The application of the tripartite framework
  • Institutional China lacks a democratic
    institution of society but it adopts market
    mechanism and principles in economic reform
  • The need to address the structural contradiction
    imposed from the logic of capital accumulation
    (state-led factors)
  • Also the constraint imposed by globalisation
  • Ideological to look at trait of ideological
    shift relevant to welfare development.
  • Developmental to see whether the new social
    resources from economic growth are turned into
    fiscal support for welfare development

  • Four types of statistical data are presented as
    empirical evidence for our tripartite analysis of
    Chinas evolving welfare regime they are
  • 1. the share of social expenditure as a
    percentage of GDP
  • - to indicate the commitment of the state to
    citizen rights
  • 2. the share of SOE employment as a percentage
    of total urban employment
  • - to indicate the extent of the need for
    redistribution by the welfare state
  • 3. health care expenses
  • - to see whether welfare development as
    depicted by macro-level data of social
    spending matches that of the microlevel specific
    policy area
  • 4. the division of expenditure and revenue of
    central government and local governments.
  • - to see whether China has commanded the required
    social resources for redistribution.

The institutional dimension
  • Table 1 reveals the social expenditure patterns
    of China during economic reform and its different
    institutional arrangements of welfare.
  • In the pre-reform period, China spent very little
    of its national wealth for social expenditure (a
    broader definition to include education and even
    cultural activities due to inseparable official
  • 3.61 percent of GDP in 1978, when Deng Xiao-ping
    started the reform process. That share increased
    to 9.48 percent in 1985 because we include 5.62
    percent of GDP as subsidies to loss-making
    enterprises in the social expenditure budget.
  • Up to 3.84 of GDP in 2002 during the last year
    of Jiang Zemin, and before Hu Jintao became the
    party chief secretary
  • This reveals the low level of social expenditure
  • E.g., OECD countries spend on average 20 of GDP
    in social protection
  • This is why Chinas welfare regime is immature

(No Transcript)
  • Table 2 is the share of employment of SOEs as a
    percentage of total urban employment. In 1978
    when Deng Xiao-ping initiated economic reform,
    SOEs had 78.3 percent of total urban employment,
    but that figure declined to 35 percent in 2000,
    one year before China was admitted into the World
    Trade Organization.
  • The share of SOE employment declined to 21.3
    percent in 2008.

(No Transcript)
  • This gradual decline of employment of SOEs as a
    percentage of total urban employment had an
    important implication to the welfare regime of
    China, a need for the state to intervene to
    alleviate the capital accumulation function due
    to the following reasons
  • 1. Foreign direct investment comes to China to
    lower cost of production
  • 2. Private-sectors do not enjoy financial
    subsidies from the state
  • 3. Disquiet organized labour and subordinated
    civil society are not in favour of labour

  • Therefore, despite the introduction of a
    capitalist market system, the protection of
    labour is at the mercy of the developmental elite
    because of inadequate citizen rights.
  • If structural factors do not favour non-state
    sector employees in primary distribution, it is
    necessary to look at secondary distribution that
    is, redistribution by the state in Chinas
    welfare regime.
  • Table 1 also reveals substantial increases
  • Social expenditure as a share of GDP rose from
    3.83 percent in 2005 to 4.04 percent in 2006,
    6.19 percent in 2007, and 6.66 percent in 2008,
    substantial increases in a short time.
  • In absolute terms, spending on culture, education
    and health care jumped from 610 billion?in 2005
    to 1,286 billion?in 2008, an increase of 210
    percent over four years.
  • The corresponding rise in social expenditure on
    pension and social welfare was even more
    impressive, from 71.6 billion?in 2005 to 680.4
    billion?in 2008, a jump of 950 percent in four
  • See Table 1

  • It can be concluded that redistribution in China
    is at a pretty low level but there have been
    impressive increases recently.
  • Judging from the evidence available, the present
    level of social resource redistribution seems
    unlikely to legitimize the accumulation function
    of capital
  • Empirical evidence of social discontent
  • E.g. inadequate redistribution resulted in social
    miseries is paraphrased in terms of the Three
    Mountains facing peopleschooling, medical
    consultation, and housing are not affordable.
  • E.g., a stability maintenance office was set up
    in 2006 in different tiers of the government to
    oversee social unrest and propose initiatives to
    maintain social stability.

  • Look at health care expenses data
  • Urban health care system is reformed to
    facilitate the marketisation of the economy
  • In 1998, the reform of two traditional health
    insurance systems
  • labour insurance and government insurance into
    the basic health insurance system for urban
    employees, included private-sector employees
  • The following data illustrates that it was about
    a shift of source of finance to social insurance,
    whilst individual self-payment remained at a
    similar in five years time

Source Wong, Tang Lo, 2006
(No Transcript)
  • Inclusion of private-sector employees in cities
    did not lessen the affordability issue
  • Therefore, it does not help in terms of political
  • Affordability of medical consultation is still
    one of the Three Mountains in public discourse
    about their hardship in daily life.
  • Two examples illustrate the tension due to the
    application of market mechanism into the
    operation of public hospitals in China
  • Public hospital doctors were called white
    wolves by patients in some reports
  • Some public hospitals had to ask police to be
    stationed in hospitals due to poor relations with

  • The underlying factor of the bad relationship
    between public hospital doctors and their
    patients can be traced back to the early 1980s
    when the central government began to freeze its
    subsidies to public hospitals (Zheng Hillier,
  • This forced hospitals to rely upon profits from
    two sources
  • Charges on the use of high-end medical equipment
    and the sale of medicine.
  • This started the decline of the subsidies from
    government as a share of the total income of
    public hospitals, e.g. only 7-8 from financial
    subsidies of governments in comprehensive public
    hospitals in 2008.
  • But recent increases in government health
    expenses as a percent of total health care
    expenses was correlated with the decline of
    individual health care expenses as a share of
    total health care expenses

Ideological shift
  • When Deng Xiao-ping launched economic reform in
    1978, he followed the developmental state theory
    by using market forces to catch up with advanced
    countries in national development.
  • In ideological terms, it is a shift from Mao
    Ze-dongs egalitarianism to market socialism,
    i.e., an ideology emphasizing growth first
    development and the subordination of social
    welfare and social development to economic
    development (Chau Yu, 1999 Walker Wong,

  • Deng Xiao-pings goal of building a xiao-kang
    society was modified to the building of a
    comprehensive xiao-kang society in 2002 by the
    Chinese Communist Party under the leadership of
    Jiang Ze-min (2002)
  • Not only economic development was targeted, but
    also higher levels of democracy, culture, science
    and education, social harmony, and peoples
    standard of living.
  • However, Jiangs major ideological advancement
    was the Three Represents, which includes the
    capitalist class as people, and not an
    ideological shift with direct implication on
    welfare development.

  • In late 2002, Hu Jin-tao became the party chief
    secretary and the concept of social harmony was
    put forward.
  • Among the six essential components of the concept
    of social harmony, the component of fairness and
    justice implies the reconciliation of the
    interests and relations of all parties concerned,
    under which peoples internal and other social
    conflicts are properly settled and social equity
    and justice were implemented (Hu, 2005).
  • This is also evident in the discourse of the
    Five Co-ordinations (Hu, 2003)
  • With seemingly direct implications on welfare
    development are the coordination of rural and
    urban development, regional development, economic
    and social development

  • Both constructing a harmonious society and the
    Five Co-ordinations indicate a shift from the
    trickle-down neo-liberal ideology of markets
    unequal distributiona few get rich first
  • to striking a proper balance between economic
    growth and social development and an emphasis on
    getting rich both in either the markets
    primary distribution or the welfare states
    secondary distribution.

Developmental dimension
  • Development means more resources available for
  • In 2009, Chinas GDP was equivalent to US4.985
    trillion, making China the third largest economy
    in the world after the U.S. and Japan (Wall
    Street Journal, July 2, 2010).
  • China, with 1.3 billion people, is still a
    developing lower-medium income nation at best
  • Nevertheless, the sustained growth rate of up to
    8 percent-10 percent per year over a period of
    thirty years is phenomenal and has enabled the
    country to accumulate sufficient wealth for
  • This was especially the case after 1994 when the
    central government reformed the tax system and
    allowed the central government to have a greater
    share of tax money for redistribution.

  • In this light, when Hu Jin-tao came to power, the
    ratio of central-local government in fiscal
    expenses declined from a 30.1/69.9 pattern in
    2003 to a 21.3/78.7 pattern in 2008.
  • Table 4
  • This indicates that more social resources are
    available from Chinas growth state for the use
    of the local government
  • The GDP in 2003 was 2,171.53 billion ?.
  • In 2008, it jumped to 6,133.04 billion ?, an
    enormous rise of 282 percent (Table 1)

(No Transcript)
  • Chinas welfare regime is characterized by the
    domination of the developmental elite in the
    distribution of benefits and costs.
  • Prevalent Western welfare theories are inadequate
    to explain welfare development in China it has
    different institutional logic
  • China is expanding its welfare, e.g., social
    expenditure despite it increases the exposure to
    international capital in terms of foreign direct
  • It seems that internationalisation is more
    appropriate on Chinas exposure to international
    economy its SOEs still not expose to
    supranational economic influences and still
    amendable to national control
  • Globalisation seems not a key factor in Chinas
    evolving welfare regime
  • Its low social expenditure as a share of its
    national wealth is a clear indicator of its
  • The increasing share of non-SOE employment
    suggests that a larger share of urban employees
    receive second-class remuneration and welfare
    packages compared to their SOE counterparts.
  • In principle, their poor conditions in primary
    distribution should be compensated by secondary
    distribution in welfare for the sake of the
    political legitimization of the state.
  • On the contrary, welfare reform is found to shift
    the financial cost of state welfare to society as
    in the case of the basic health insurance for
    urban employment

  • The new leadership of Hu Jin-tao, with the new
    discourse of constructing social harmony and the
    Five Co-ordinations, departs from the
    growth-first developmental strategy and
    trickle-down neo-liberal ideology.
  • The ideological shift to a fine balance between
    economic development and social development
    coincided with a slow but continuous process of a
    rise in social expenditures in general and
    government health care expenses in particular.
  • The recent increases in social expenditures were
    substantial and a greater share of national
    revenue was channelled to local governments for
    redistribution after Hu Jin-tao took office in
    2003. In other words, the developmental factor,
    i.e., resources, is also important.

  • To conclude, Chinas welfare regime is still
  • As a typical developmental state, welfare
    development in China and the well-being of its
    citizens depend very much on the ruling ideology
    and the transformative power of the developmental
  • Specifically, whether the political elite,
    experts and bureaucrats are able to design social
    settlements that are fair to the labour and
    common people.
  • In this regard, abandoning the use of
    marketization in Chinas welfare reform is
    significant in enhancing the political
    legitimization function of the state.

  • At last, if China wants to lessen the social
    miseries resulted from capital accumulation and
    to enhance its political legitimacy, the
    Singapore model seems a viable alternative.
  • Of course, it will be a challenging task to
    manage rising expectation of its people fuelled
    by economic affluence and the moral driving force
    of the democratic institution of society.
  • In other word, the challenge is not only about
    material resources, but also institutional and
  • Thank you.

Selected key references
  • Esping-Andersen, G. (1990) The Three Worlds of
    Welfare Capitalism. Cambridge Polity Press.
  • Johnson, C. (1982) MITI and the Japanese Miracle,
    The Growth of Industrial Policy, 1925-1975.
    Stanford Stanford University Press.
  • Leftwich, A. (1995) Bringing Politics Back In
    Towards a Model of the Developmental State, The
    Journal of Developmental Studies, 31(3), 400-427
  • Pang, Eul-Soo (2000) The financial crisis of
    1997-98 and the end of the Asian Development
    State, Contemporary Southeast Asia, 22 (3)
  • Tang, K.L. (2000) Social Welfare Development in
    East Asia, Hampshire Palgrave
  • Walker, A. and Wong, C.K. (2005) East Welfare
    Regimes in Transition, From Confucianism to
    Globalization, Bristol Policy Press
  •  Walker, A. and Wong, C.K. (2009) The
    relationship between social policy and economic
    policy Constructing the public burden of welfare
    in China and the West, Development and Society,
    38(1) pp.1-26.
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