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JPA331Y1 (32)

Jan 14 2014 Lecture

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Political Science
Lynette Ong

Jan 14 2014 State- Urban Workers Relations JPA 331 Y Phases: 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 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 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 - Downsizing and reconstruction of SOE’s in 1997 allowing the constitutions to recognize role of private institutions due to SOE reforms, therefore a lot of private enterprises had to be allowed and set up - 15 communist party congress “focus on the large, let go of the small”. - policy introduced to policy makers, focused on larger enterprises (controlled by central government) - Party willing to let go of small state enterprises in townships and prov. Govt’s. - This coincides with different levels of ownership - All the enterprises in china owned by the state and this was a huge burden. However in 1997 due to letting go of smaller state owned enterprises, it was easier. - This resulted in a lot of layoffs as well - State used to employ a lot of people and now its share has
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