China?s brand of capitalism in a socialist cloak has led to many unresolved contradictions. One is the deathly blow to the notion of welfare entitlements or social welfare deeply rooted in a hovering legacy of state socialism. China?s citizens are a pragmatic lot?while they have easily embraced the capitalist leg like ?fish to water?, they still expect the state to perform a social role. China?s changing demographics and increasing mass incidents (protests, demonstrations that crossed from 10,000 incidents in 1994 to 125,000 in 2010) have made the issue of social welfare tricky?but entirely unavoidable. Given that the Communist Party derives its legitimacy, not from an electoral mandate but playing the role of ?moderniser par excellence?, this includes carrying the rising expectations of a disparate population. Forestalling unrest has necessitated populist policies. But social welfare reform, as the noted Sinologist Gordon White had aptly observed, is ?technically complex, institutionally tangled, socially sensitive and politically charged?.
Why is social welfare reform so complex? China?s welfare package is segmented into two separate sub-systems?urban and rural?with different benefits. The urban system is further segmented according to the ownership status of the work unit (or danwei). In publicly owned organisations, employees have typically been a more privileged lot–somewhat like government servants in India, they have access to benefits such as lifetime employment, pension, free health care, free housing (which is changing) and even highly subsidised food in the work unit canteens. Employees of both state-owned enterprises (SOEs) and lower-in-status collectively-owned enterprises (COEs) benefit from this. But there are an increasing number of people who fall ?out of plan? who are self-employed, or take up jobs in the dynamic private sector.
In comparison, provision for rural areas has always been sparse and variable. This stemmed from the (earlier) egalitarian distribution of land, whereby land was the minimum guarantee. Besides, rural residents were privy to the ?five guarantees? (wu bao)?an extension of roti, kapda aur makan?which, also included health care and a funeral. Today, land has turned into a bone of contention, with the much-chronicled forcible land appropriations and wu bao in disarray.
In urban areas, a social welfare package called dibao (minimum guarantee or DB) in colloquial Chinese has been in operation since 1993. According to the World Bank, this is one of the largest cash-transfers in the developing world. The aim of this programme is to close the gap between a recipient?s income and the local DB line, so that a minimum income is guaranteed. But stringent eligibility criteria, bureaucratic hurdles and shoestring benefits have made it a limited success. In rural areas, the New Rural Cooperative Medical Service System has been in place since 2002, a financial pool against serious disease led by the government, with funds coming from the government, collectives and beneficiaries. China is seeking to establish a basic pension system in urban areas by 2012, whereby residents over 60 years can receive a monthly stipend; the same is to be applicable in rural areas by 2020. According to official statistics, the pension system covered 60% of rural counties by 2011?a long shot by any standards.
While these institutional mechanisms exist, there have been dramatic changes in the post-reform China that have added to a growing disconnect, complicating the approach to social welfare. Like India, China has an invisible chain of social security?whereby ageing grandparents and parents turn to immediate family (child) or extended family for support that arises from the strong notion of filial piety. Chinese parents, much like Indian parents, are roped in to look after grandchildren, as the parents play breadwinners. But, as in India, this has been dented due to a number of reasons. The implications are, however, graver in China, which has long fostered a one-child policy.
Much has been said about China?s ?Little Emperor? syndrome. But this works both ways. While the six-pocket syndrome works?with the only child (because of the one-child policy) privy to the pockets of two parents and two sets of grandparents, conversely in old age, the child bears more social responsibilities. Shrinking family size, decreasing fertility rates, eroding filial piety, increasing nuclear families, urbanisation, migration, unemployment and changing mores have led to a weakening of the family as a social security mechanism. This is said to be China?s demographic time-bomb?and, unlike any other developed country, makes China become old before it becomes rich.
Thanks to improved healthcare, the elderly in China now need support for a longer period. Social care facilities are rudimentary still?and at present institutions, support only a small fraction of elders. There is a small category of the ?Three Nos? elderly?who lack social support (no children), have no income and lack the ability to work. Old age support has thus become a societal welfare problem?not just a simple family affair.
In China, the retirement age for women is 50 and men 55, and increasing the retirement age leads to questions as to how to accommodate the large numbers of young graduates being churned out by China?s universities. The number of workers to retirees is posed to steadily narrow from 10:1 to 2:1 in 2050. The number of elderly (above age 65) is expected to hit 430 million, or about a third of the population in 2051?a colossal load on a system that is still to be born.
Social care facilities are rudimentary still?and at present institutions support only a small fraction of elders. Social welfare remained the top concern in recent online polls in China.
The 12th Five Year Plan (2010-2015) promises to establish a social care system with ?home based care as the foundation, backed up by community based services and supported by institutional care? and an amendment to a law to make parental neglect punishable, similar to India. The Party has also coined the slogan ?Socialising Social Welfare?, seeking active participation of non-governmental organisations that are slowly taking root. On the flip side, growing the social welfare sector also provides a huge opportunity to move the economy from export-led growth to one led by domestic consumption?in this case, by expanding the service (i.e. social) sector. With the recession of 2008 and the ongoing economic slowdown in China?s markets abroad, boosting domestic consumption has become an area that the Party has started to focus on. Getting this right will be one of the key crucibles that will determine if China can grow rich as or before it grows old.
The author is a Singapore-based sinologist and is currently visiting fellow, Institute of Chinese Studies, Delhi. Views are personal