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 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
- 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
- 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
- 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