The shift of the welfare approach since the economic reform, especially with the emphasis on personal responsibility and the involvement of multiple sectors in sharing the welfare responsibilities, are discussed in this section.
The sustainability of the work unit-based system with location of welfare responsibility in the work units themselves, lifetime employment, low occupational mobility and high level of entitlements to non-contributory benefits had been called into question (Selden and You, 1997; White, 1998). This was further aggravated by population ageing which led to a rapid increase in welfare expenditure on pensions and medical care (Gu, 2001). These made the government believe that economic reform was required to develop the economy and restore
67 the people’s confidence in the Communist Party (Mok and Liu, 1999). The economic reform was formally endorsed in the Third Plenum of the 11th Communist Party Congress under the new leadership of Deng Xiaoping in 1978, signifying the transformation from a planned economy into a market-oriented economy (Wong, 1998). To pursue economic growth, the government advocated the principles of ‘efficiency first; equity second’ and ‘letting some people get rich first’ in order to promote work enthusiasm and to stimulate production (Mok and Liu, 1999; Ngok and Huang, 2014). At the start of the market reform, the Chinese leader Deng stressed that ‘letting some people get rich first’ should be allowed initially before ‘everyone getting rich together’ as the ultimate goal and by that time, the whole population can share the economic benefits and get rich together (Chen, J., 2009).
To get rid of the dependency culture of ‘all eating from the same bowl’ during the socialist era, the government reiterated that maintaining a high level of welfare would encourage dependence and weaken the competitive economic power, which meant that the state should limit the expectation of the people towards welfare provision (Zheng, 2013). Moreover, the message that China should not become a welfare state has been repeatedly stressed for fear that welfare provision would become a financial burden on the government, hamper economic growth, erode the family function and create disincentives to work (Saich, 2008; Zhang and Xu, 2010). Welfare should be expanded only if there is economic growth (Li and Fang, 2014). The stress on personal responsibility for one’s welfare is compatible with the market economy ideology which emphasises efficiency and self-reliance instead of reliance on the state (Zhang and Xu, 2010). The logic of the Chinese welfare reform is similar to those in the East Asian developmental welfare states, where welfare programmes are used to support the economic goals and seek political legitimacy, with the state deciding on who the beneficiaries are rather than on the basis of the greatest personal need (Kwon, 2005).
Under the market reform, the work unit-based system has been phased out through measures such as replacement of lifetime employment by the contract worker system, and the implementation of bankruptcy law and laws on lay-offs or termination of contracts (Leung, 2005). This represents a shift from a socialist model of state responsibility for welfare to a model in which quality and quantity of welfare entitlement are determined by the
68 performance of individuals and enterprises (Li, 1999; Saunders and Shang, 2001). It means that the amount of welfare benefits depends on how much an individual earns and how much profit the enterprise generates. The current resource allocation is based on personal efforts rather than one’s needs, and efficiency receives priority over equality (Leung, 2005). Baehler and Bersharov (2013) saw that the transition from the socialist era to the market economy era has witnessed a shift of responsibility from the state to shared responsibility by the state, the employer and the employee in providing welfare benefits for workers. Apparently, the values of equality, egalitarianism and collectivism of the pre-reform era were replaced by the new emphasis on wealth accumulation and personal responsibility (White, 1998). The focus on economic growth has relegated welfare development to a subsidiary role but the economic gains are not put into welfare shared by the general population (Pei, 2009). Instead of extending its welfare role, the state limits its responsibility to mainly looking after the deprived groups while the family is still looked upon as the key source of social protection for its members (Zhang and Xu, 2010).
Since the late 1980s, the Chinese government adopted a policy approach of ‘small government and big society’, aiming at encouraging non-state funding and provision in the welfare services (Lei and Walker, 2013). This approach reflects that the state embraces the neo-liberal approach of stressing the importance of the market and minimise the role of the state in welfare (Wong, 2001; Chan, Ngok and Phillips, 2008). Under this policy direction, the MCA adopted the policy of ‘socialisation of social welfare’, which meant a shift from a welfare model predominantly provided and funded by the state to one that relied on multiple sources funded by the government and money from donations and fees and charges, while at the same time the provision should involve the family, the community, the NGOs, the state and the market (Xu and Chow, 2011; Wong and Leung, 2012).
As noted earlier, the work units were responsible for welfare service delivery, rendering the NGOs or the market no role in welfare responsibility (Leung, 2005). In the early years of market reform, the NGOs were seen as organisations opposed to the government and a challenge to the state authority (Gao and Xia, 2016). The first document relating to the regulation of NGOs issued by the State Council in 1988 has used the dual registration
69 requirement to tighten its establishment (Ma, 2016). Wong (2016) explained that the MCA requires each NGO to find a government unit to act as sponsor before it can proceed to register with the MCA. He further explained that except for those NGOs with government connection, it was very difficult for the NGOs to seek a sponsoring body which is willing to undertake the political risk that may be involved.
The key driving force behind the NGO development is the emergence of the social problems caused by the breakdown of the state’s work-unit based system (Wong, 2016). To cope with the social problems arising from the market reform, the government enacted a regulation which allowed the non-state sector to provide non-profit-making social services in 1998 (Wong and Leung, 2012). Since then, the government changed its direction by encouraging the establishment of NGOs to provide services to meet the social needs arising in the transitional economy (White, 1998). The NGOs are perceived as the collaborators in the provision of social services (Gao and Xia, 2016). Another important policy development is the government’s procurement of social services from the NGOs which has transformed the system of the social service delivery (Ma, 2016). Through such a measure, the role of the state has changed from a service provider in the socialist era to a funder, facilitator or monitoring body in the market economy era (Leung and Xu, 2015). The MCA has enacted several regulations including ‘Notice on the promotion of the development of non- governmental social work organisations’ (2009), ‘Opinions on speeding up the development of services for older people’ (2012) and the ‘Guiding opinion on the Government Purchase of Social Work Services’ (2012) (Leung and Xu, 2015). In March 2013, the National People’s Congress meetings announced new national regulations allowing for direct registration of NGOs (Teets and Jagusztyn, 2016). All these measures have encouraged the setting up of the NGOs to obtain the state’s funding contract.
According to the various official documents, namely ‘Regulations for the registration and management of social organisations’ and ‘Temporary regulation for the registration and management of NGNCEs (Non-government and non-commercial enterprises)’ in 1998 and ‘Regulations on the management of Foundations’ in 2004, the term NGO includes all organisations and institutions which are outside the state system and are non-profit-making
70 (Ma, 2006). Ren (2013) noted that there are mainly three types of NGOs in terms of its organisational origin. It includes the government-operated NGOs (GONGOs) which are sponsored by the government and work as extensions of the state, those set up by the local people which are not directly affiliated with any state organisation and those founded by the service recipients themselves such as migrant workers. The NGOs in this thesis mean those organisations which are established and registered with the MCA to obtain the service funding contract to provide services for older people in the locality.
Apart from encouraging the NGOs in service provision for older people, the State Council issued the directive on the ‘Opinions on speeding up the development of old-age care services’ in 2013 encouraging the local government to give more support to the market to develop a range of home-care services for older people in the community (CNCA, 2013a). Concerning the support given to the private sector, it is mainly through providing subsidies to enterprises so that they can render services such as laundry, hair-cutting or household cleaning to the older people or disabled adults at a lower cost (Wong and Leung, 2012). Also, the local government provides preferential policies such as allocation of land and premises, reduction of utility charges or tax incentives to encourage the private sector to operate the residential service for older people (Leung and Xu, 2015).
Since the economic reform, the financial conditions of the people have improved, which has led to a demand for a better quality and a diversified form of service, and this brings about the emergence of the market in service provision, such as private residential homes for older people (Wong, 1998; Chen, 2003). Relying on market resources for the provision of welfare services would mean that a certain section of the people would be excluded if they cannot afford the fees. The slogan of ‘letting some people get rich first’, as advocated by Deng Xiaoping, might end up with ‘letting the poor remain poor’ for a longer time (Wong, 1998; Mok and Liu, 1999). The ability to pay has become a new selection criterion for service entitlements. If there is an increasing privatisation of the social services, older people are likely to be in a more vulnerable position since they now live longer and may need a longer period of paid services for the home-care support or residential care. During the pre-reform era, whenever older people encountered life problems, they approached their work units for
71 help. Since the market reform, older people can still receive pensions or health insurance benefits from their former employers but no longer obtain other kinds of support as in the past (Du, 2013). Rather, older people’s personal responsibility to plan for old age has been stressed (Chen, J., 2009).
Concerning the older people’s readiness to use market services, Mr Wu Yushao, Deputy Director of the CNCA noted that there existed a wide variation of the acceptance level among older people to resort to services in the market to meet their home-care needs (Chen, 2014). He pointed out that in cities such as Beijing and Shanghai with high level of economic development, only about 45% of the older people indicated their acceptance of the market services, while in Chengdu, the major city in western China, only 24% preferred this means (Chen, 2014). Moreover, a nationwide survey of private residential homes in 2015 revealed that only 9% of them could earn profit, 40% could break even and 51% were in deficit for a long period of time (Xinhua News, 2015b). There is a possibility that some of these private homes will cease operation sooner or later if the business continues to incur losses. Those enterprises operating top-grade residential services might be in a better position to generate profit, but a majority of older people can hardly afford them, as opined by Leung and Xu (2015). Though the market reform has brought a rise in the living standard of the population, there are still a certain proportion of older people who find difficulty in affording the market service on a long-term basis (Qian, 2015).
Apart from the changing mix of welfare responsibility, the economic reform also altered the distribution of power between the central and the local government in service planning and welfare responsibility (White, 1998). Guan and Xu (2011) noted that prior to the economic reform, the central government was responsible for planning almost all social policies, which were then implemented locally. At present, although the local government cannot refuse the implementation of state policy, it has been given greater autonomy to adapt the policies to suit the local situations, such as on the timing, scope, levels of benefits and the allocation of budget (Guan and Xu, 2011). Although this brings flexibility to the design of the services to meet the local needs, the central government finds it difficult to monitor the implementation at the local level (White, 1998). The provincial and district governments have retreated from
72 their welfare responsibilities while the local government has to take up a greater welfare role (Xu and Chow, 2006). However, as there is no regulation concerning the financial commitment of the central government to the local government which has to shoulder the welfare expenditure, some local governments are not enthusiastic to implement the welfare programmes until they receive financial commitment from the central government to the project concerned (Guan and Xu, 2011). Moreover, the performance of the local government is also measured by its economic growth which makes it reluctant to direct resources to the social service development (Ngok, 2016). In order to raise money for welfare development, the local government has to generate income through various means such as selling welfare lotteries, appealing for donations, charging fees on social services and developing profit- making businesses to support the welfare activities (Mok and Liu, 1999). As a result, whether or not the local government would deliver the service has to depend on its financial capacity as well as the enthusiasm of the local officers. This explains the variations in the quality and quantity of welfare services provided in different communities, sub-districts or even districts in the same city (Leung and Wong, 2002). As noted by Leung and Xu (2015), the government has been known for having idealistic policy directions, but failures in the policy implementation have led to unsatisfactory outcome. This has the implication that the service provision has become more random in nature. Whether older people can receive the services relies on the economic performance of the district or sub-district they reside in.
Since the economic reform, the state believed that economic growth is the ultimate solution to poverty and inequality which are the necessary evils in a transitional economy (Zhang and Xu, 2010). Having no well-organised or comprehensive policies for tackling the negative social consequences brought by the market reform, those who have suffered loss in the process, such as the laid-off workers, have resorted to protest to express their grievances (Ngok, 2014). It is only when the growing disparity in wealth and income becomes almost uncontrollable and threatens social stability that the government recognises economic growth cannot solve all the social problems (Zhang and Xu, 2010; Heberer and Gobel, 2011). The number of collective actions such as petitions, protests, demonstrations or riots reached 57,000 in 2005, a tenfold increase in ten years’ time (Li, B., 2012). Under the new generation of political leadership led by Hu Jintao and Wen Jiabao in 2003, slogans like ‘putting people
73 first’, ‘harmonious society’ and ‘service-oriented government’ were the catchwords and the government took a step forward in social policy development (Ngok, 2014). The new welfare programmes included the extension of the social assistance scheme to rural areas, provision of urban social insurance schemes for migrant workers, and the enhancement of other social insurance schemes such as pensions, unemployment benefits and medical insurance for retirees and workers from those state-owned enterprises which are mostly affected by the economic reform (Ngok, 2014).
The underlying purpose of the welfare expansion is to seek political and social stability rather than improving the well-being of the population. This is to say that providing welfare is considered a political strategy to alleviate the discontent of the people and to seek legitimacy for the authoritarian government. Li, B. (2012) noted that the most immediate social policy response followed the protestors with the loudest public outcries. In other words, those groups who are thought to be a threat to social stability are given more attention by having measures to pacify them. Even if some older people become more vocal but perceived to have no threat to the government, their growing needs, though widely reported in the media, are not given enough attention.
Although the market reform was initially economic, it has changed the balance of the state- society welfare responsibility (Wong, 2001). The welfare development in the market economy era bears characteristics such as priority of economic efficiency over social equality, delegation of welfare responsibility from the central to the local level without adequate financial commitment, emphasis on personal responsibility and sharing of welfare responsibilities among different sectors. As will be discussed in the section below, there is, in some way, an extension of the state’s welfare responsibility through the service provisions in the community. Yet, the family is still expected to play a key responsibility for the care of older people.
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