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JPA331Y1 Lecture Notes - Rust Belt, Discovery Digital Networks, State-Owned Assets Supervision And Administration Commission Of The State Council

Political Science
Course Code
Lynette Ong

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Jan 14 2014
State- Urban Workers Relations
JPA 331 Y
Collectivist pre-reform period reforms implemented in early 70’s late 80’s.
Danwei (work system):
- Function? Political institution that extends party’s influence to grass roots level
- It’s also a production unit and economy producer profits handed to the state
- Provides social welfare (housing, health care, pensions)
- Uncommon to switch between Danweis
- This impedes labour mobility, as life time employment hinges on the system
2 nd
period, 1978-1992
Dual Pricing System:
- State owned enterprises have quotas to fulfill, and after fulfilling SOE’s (state owned
enterprises) can sell the excess at market prices
- As a result, decline in proportion of goods. Market outgrew the state
- 1987 govt introduced variety of contracts under contract responsibility system
(equivalent is household responsibility system: agricultural reform individual
households are responsible for the inputs and outputs unlike collectivization
- Fiscal system decentralized in 80’s central govt decentralized to various local govts
(previous lecture)
- Before 80’s, central gov’t would provide direct fiscal subsidies to SOE’s. But after fiscal
decent, fiscal capacity of central government diminished and so couldn’t afford this
anymore. As a result Banks (state owned) popped up at this time.
- In the beginning each bank had a specific purpose.
- Banks at the time are not banks in the modern sense, in a communist country the banks
are just tools of the state. They are not there to make a profit, but they are there to
allocate resources/ money in specific areas
- They were mainly set up to finance state owned enterprises.
- Loans were soft loans in the 80s.
- Where do the banks get money?--> ordinary households
- SOE’s subsidized by the people via the banks.
- At this time, incentives were also introduced without ownership reforms moreover:
- Township and village enterprises (very small) began to rise exponentially around China
3 rd
period 1993-2003
- Agricultural reform encountered least political opposition
- SOE’S reform however is more difficult, employs thousands of people, and ministries
and bureaucracies depend on SOE for revenue. People may get laid off, infrastructure
would suffer.
- Company law was enacted in 1993. Provided legal underpinning for company
ownership, compared to SOE’s.
- This division laid the foundation for privatization
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