per cent of retail goods, and 35 per cent of the ‘social retailing goods’ were sold at listed prices (Chen, 1984b).
In November 1984, a drastic m easure - the a b a n d o n m e n t of the subsidized coupon system for the five basic necessities (staple foodstuffs, oil, pork, coal and vegetables) - was u n dertaken bv the Shenzhen governm ent to reform the price system. Instead of purchasing these goods at fixed q u a n titie s and at subsidized rates, the abolition of coupons m ea n t t h a t residents had to purchase th em a t negotiated prices. As shown in Table 5.14, prices rose. T he price rise for peanut oil was the highest (116 per cent) whereas the lowest was briquet (14 per cent). Also, the prices for e n te rta in m e n t fees, newspapers, magazines, medicines and fuel increased markedly (S h e n zh e n Special E c o n o m ic Zone Yearbook 1985:552).
T a b le 5-14: Prices of Five Basic Goods Before and After the Price A d ju stm e n t on 1 November 1984
G o o d s U n i t of M e a s u r e m e n t B e f o r e Adj u s t m e n t R m b P r i c e A f t e r Adj u s t m e n t R m b I n crease Rate Per cent R i c e a) N o . 3, p r e c i s i o n 93 c a t t y 0 . 1 5 0 . 2 9 9 8 . 6 b) No. 3, p r e c i s i o n 88 c a t t y 0 . 1 8 0 . 3 2 81.8 P e a n u t oil c a t t y 0 . 9 3 2 . 0 0 115.1 P o r k D an* 10 6 . 3 4 16 0 . 0 0 50.5 a) p o r k w i t h fat c a t t y 1.40 2 . 1 0 50.0 b) l ean p o r k c a t t y 2 . 4 0 3 . 2 0 33.3 Gas B o t t l e (15 kg) 9 . 4 0 12.00 27.7 B r i q u e t P i e c e 0 . 0 2 5 0 . 0 6 140.0
Note: * One dan equals 50 kg.
Source: S h e n zh e n Special E co n o m ic Zone Yearbook 1985:552.
C onsequently, the average price index rose by 16 per cent betw een October and December 1984 - a sharp rise com pared with the 3 per cent increase rate between J a n u a r y and Septem ber. Accordingly, the m onthly costs of living had risen to Rm b 66 in November and Rm b 72 in December (S h e n zh e n Special E co n o m ic Zone Yearbook
1985:551). Indeed, the average m onthly living costs in 1984 reached Rm b 58, which were com parable to the highest recorded price in 1981 (Table 5.15).
T a b le 5-15: Changes in M onthly Basic Living Costs and Real M onthly Income, 1979-1984
Year Living Costs Money Wages Real wages Rural Real Income
Per Capita
Increase Increase
Rmb Index* Rmb Rmb Per cent Rmb Per cent
1979 4 0 . 9 1 0 0 . 0 6 4 . 9 6 4 . 9 1 2 . 7 1980 4 9 . 8 1 2 1 . 8 8 3 . 2 6 8 . 3 5 . 2 1 4 . 3 1 2 . 6 1981 5 8 . 0 1 4 1 . 8 9 8 . 4 6 9 . 4 ' 1 . 6 1 3 . 5 5 . 6 1982 5 0 . 1 1 2 2 . 5 1 0 3 . 2 8 4 . 2 2 1 . 3 2 6 . 8 9 8 . 5 1983 5 1 . 1 1 2 4 . 9 1 0 5 . 6 8 4 . 5 0 . 4 3 1 . 3 1 6 . 8 1984 5 7 . 8 1 4 1 . 3 1 6 5 . 1 1 1 6 . 8 3 8 . 2 3 8 . 7 2 3 . 6
Note: * The base year is 1979.
Source: Based on S h e n zh e n Special E co n o m ic Zone Yearbook 1985:551, 586, 606-7; G uangdong J in g ji Tequ Yaolan 1982:75-78; Chen (1984b:311).
Nonetheless, the volume of fresh agricultural products continued to expand in 1 9 8 4 . ^ Indeed, Shenzhen enjoyed the best supply of non-staple foods. As well, the average price of 53 ‘sideline' agricu ltural products decreased by 5 per cent (S h e n zh en Special E co n o m ic Zone Yearbook 1985:548). Fresh ag ricu ltural p roducts in the Shenzhen m arke t, however, also a tt r a c t e d external customers. Lower prices and the availab ility of some delicacies banned in the Hong Kong m ark e t (e.g. pangolin and m asked civet) a tt r a c t e d housewives to shop in Shenzhen. Although the num ber of ex te rn al shoppers was unrecorded, their presence raised the prices of, and dem and for, goods in Shenzhen’s free m ark e t (Fieldwork, 1984).
Hence, living costs in Shenzhen increased by 81 per cent betw een 1978 and 1981 because of the lack of price controls. Since 1982, however, th e in tro d uction of several effective measures increased the supply of goods and regulated prices, which deflated prices and facilitated stability until October 1984. Meanwhile, the influence of the free m a rk e t on prices had widened, resulting in a higher proportion of goods purchased by
12. F or example, vegetables increased by 96 per cent, aquatic products by 17 per cent, poultry by more th a n onefold, and pork by more th an twofold.
n egotiation. The removal of subsidies on the five basic goods in November 1984, however, has reinforced inflation. Nevertheless, the rise was a n tic ip a ted and wages were revised prior to the price reform. T hus, we need to compare wage fluctuations with price v ariations to determ ine the real income and the purchasing power of Shenzhen's population.
R e a l I n c o m e a n d P u r c h a s in g P o w e r
Both wage levels and living costs in Shenzhen have escalated, but at different rates. Hence, money wages have to be adjusted for inflation so t h a t the real wage levels can be ascertained. The pro p ortio n of income spent on basic living costs also has to be exam ined to assess the p o p u latio n 's ability to purchase tertia ry and luxury goods. A c o m p a rativ e study between sectors is also necessary for identifying the d istribution of real income.
R e a l in c o m e . The inflation rate in Shenzhen, as shown in Table 5.15, was consistently higher th an 20 per cent betw een 1980 and 1984; it reached 41 per cent in both 1981 and 1984. The rise in money wages, however, was able to com bat high inflation. Nevertheless, real wage increases wrere negligible in 1981 and 1983: 1.6 and 0.4 per cent respectively. In c o n tra s t, the increase was considerable in 1982 and 1984, p articularly in the latte r year, when a 38 per cent increase was recorded. Whereas the high ra te in 1982 was a ttr ib u t a b l e to effective price control, t h a t of 1984 was due to a s u b s ta n tia l wage increase.
V ariations existed, however, between different types of enterprises. As illustrated by T able 5.16, the real wage levels of state-ow ned enterprises and institutions rose continually between 1980 and 1984. Paralleling the general tre n d of wage rises, growth in 1981 and 1983 was very low (0.9 per cent and 0.6 per cent respectively), but the increase in 1982 and 1984 was su b s ta n tia l, particularly in the la tte r year when real wages rose by 51 per cent. Conversely, real wages in collectively-owned enterprises dropped from Rm b 110 in 1982 to Rm b 81 in 1983. Although a 20 per cent rise occurred in 1984, the wages w'ere still below the 1982 levels. Workers in foreign-related firms enjoyed the highest wage level in 1983 (R m b 109), but received the lowest in 1984 - the result of a 20 per cent decline in real wages. If the higher wage level (R m b 148) quoted by S h e n z h e n Special Zone D a ily (16 April 1984) is ado pted, however, the real wages was R m b 105, showing only a slight decrease of 3.7 per cent.
F u r th e r differentiation am o n g sectors can be identified w ithin the state-owned enterprises (Table 5.17). A ltho u gh basic living costs only increased by 2.4 per cent between 1982 and 1983, owing to a decline in money wages, real wages diminished in the sectors of c o nstruction and resource exploration (24 per cent), finance and insurance (14
T a b le 5 -16: Changes in Real Wages in Enterprises of Different Ownership, 1979-1984
Year Real Wages of Different Enterprises
State-owned Collective Foreign-related
Amount T?mh Increase Rate Per Cent Amount Rmh Increase Rate Per Cent Amount Rmb Increase Rate Per Cent 1979 64.0 1980 69.6 8.8 - - - - 1981 70.2 0.9 - - - - 1982 82.1 17.0 109.6 - - - 1983 82.6 0.6 80.5 -26.6 108.8 - 1984 124.7 51.0 96.2 19.5 86.9 -20.1
Note: The base year is 1979.
Source: Based on S h e n zh e n Special E c o n o m ic Zone Yearbook 1985:606-7.
per cent), industry (9 per cent), and s ta t e and mass organizations (5 per cent). On the oth er hand, su b sta n tia l rises in real wages were evident in all oth er sectors, particularly e d ucation, health and social welfare (47 per cent), urban public facilities (47 per cent), and a griculture, forestry, w ater and meteorology (36 per cent). Nevertheless, the situ a tio n was alm ost reversed in 1984. Wage increases were found in all sectors t h a t experienced a decline in wages during 1983. The extent of increase ranged from: 117 per cent for construction and resource exploration: 59 per cent for sta te and mass organizations; 48 per cent for industry; to 45 per cent for finance and insurance. In add itio n, wage levels in the science and research sector and the commerce and services sector continued to rise a t the rates of 106 per cent and 53 per cent respectively. Conversely, only m arginal rises were experienced in sectors which enjoyed substantial wage increases in 1983. T he agriculture, forestry, w ater and meteorology sector, and education, health and social welfare sector, in particu lar, suffered losses in real wages - 16 per cent for the former and 7 per cent for the latter. Hence, it seems t h a t the Shenzhen governm ent a tt e m p t e d to regulate real wage differences between sectors by a lte rn a tin g massive wage rises with m eager increm ents or even wage reductions, and vice versa. By 1984, workers and staff in the science and research sector constituted the highest income group (R m b 139), whereas those in the commerce and services sector ranked second (R m b 137). In c o n tra s t, workers in agriculture, forestry, water and meteorology were the poorest paid (R m b 83). T hus, five years of reforms and regulation have produced high income groups comprised of s ta te workers and staff in the science and research sector, and the commerce and services sector.
T a b l e 5-17: Changes in Real Monthly Wages in S ta te Enterprises by Sector, 1982-1984 S e c t o r Real 1982 R m b M o n t h l y 1983 R m b W a g e s 1984 Rmb R a t e of Wage 1 9 8 2 - 8 3 P e r cent I n c r e a s e 1 9 8 3 - 8 4 P e r c ent I n d u s t r y 89.2 81.1 120.3 -9.1 4 8 . 3 C o n s t r u c t i o n and r e s o u r c e e x p l o r a t i o n 78.9 6 0 . 3 130.6 - 23.7 1 1 6 . 6 A g r i c u l t u r e , f o r e s t r y , a n d w a t e r a n d m e t e o r o l o g y 7 2.6 9 8 . 9 8 3.0 3 6 . 2 -16.1 T r a n s p o r t , m a i l a nd t e l e c o m m u n i c a t i o n s 9 0 . 1 9 7 . 8 104.1 8.5 6 . 4 C o m m e r c e a n d s e r v i c e s 8 3.3 89.8 137.2 7.8 5 2 . 8 U r b a n p u b l i c f a c i l i t i e s 8 7.5 1 28.6 130.6 4 7 . 0 1.6 S c i e n c e a n d r e s e a r c h 4 7 . 6 6 7 . 4 138.6 4 1 . 6 10 5 . 6 E d u c a t i o n , h e a l t h and s o c i a l w e l f a r e 8 5 . 4 125.7 116.6 4 7 . 2 -7.2 F i n a n c e a n d i n s u r a n c e 9 4 . 6 81.1 118.2 -14.3 4 5 . 7 S t a t e a n d m a s s o r g a n i z a t i o n 7 0.3 6 7 . 1 106.5 -4.6 5 8 . 7
Source: S h e n z h e n Special E c o n o m ic Zone Yearbook 1985:606-8.
C om p ariso n of u rban and rural real income is problem atical because of differential living costs (rural living cost is lower due to the general practice of subsistence farming and p riv a te housing), exacerbated by a lack of d a t a on rural living costs and rural earnings on a per worker basis. Nevertheless, by com paring the rates of change, it is possible to in dicate the relative affluence of these two population aggregates. As can be observed from T a b le 5.15, rural real income expanded annually between 1980 and 1984 despite high inflation rates. T he g row th was rem arkable in 1982 - achieving alm ost a 100 per cent increase. T he rates of increase, with the exception of 1984, were often m arkedly higher th a n those exhibited by the u rban sector. T hus, th e im provem ent in the s ta n d a r d of living was far more significant for the rural population th a n the u rb a n ite s until 1983. T he wage reforms introduced in 1984 reversed the situ ation - real
u rb a n wages expanded bv 38 per cent and rural income by only 24 per cent. Nevertheless, the rural rate of growth was still greater th a n t h a t managed by the collectively-owned and foreign related enterprises (T able 5.16).
R a t io o f L iv in g C o s ts to I n c o m e
Having com pared the changes in income levels with price inflation, the p rop ortion of income spent on basic living costs shall be ascertained to indicate the p o p u la tio n ’s p u rchasing power for te rtia ry and luxury goods. During the 1984 wage and price reforms, the Shenzhen governm ent forecast t h a t a sum of Rm b 48 was necessary to cover the basic living costs and accordingly raised the average m onthly wages to R m b 189 (S h e n z h e n Special E co n o m ic Zone Yearbook 1985:550-1). In other words, only 25 per cent of money wages was expected to be spent on basic living costs. Table 5.18 shows t h a t this sta n d a rd had never been achieved a lthough the ratio of living costs to wages had diminished by alm ost half between 1979 and 1984. The decline in the ratio from 0.6:1 in 1979 to 0.4:1 in 1984, implies t h a t the purchasing power of S henzhen’s pop ulation on te rtia ry and luxury goods had been expanding overall. Indeed, visits to their homes confirmed t h a t recently acquired electrical household appliances, such as rice cookers, tape recorders, refrigerators, stereo sets and television sets, were common. Gold o rn a m e n ts in the two newly-opened jewellery shops were always out of stock since they were sold out quickly, indicating the purchasing power of the residents (Fieldwork,
1984).
T a b le 5-18: Ratio of Basic Living Costs and M onthly Wages in Shenzhen Special Economic Zone, 1979-1984
Year Living Costs/Average
Monthly Wages
Living Costs/Monthly Wages by Enterprise Ownership
State Collective Foreign-related
1979 0.63 0.64 1980 0.60 0.59 - - 1981 0.60 0.58 - - 1982 0.49 0.50 0.37 - 1983 0.48 0.50 0.51 0.38 1984 0.35 0.33 0.41 0.47
Source: Based on S h e n z h e n Special E c o n o m ic Zone Yearbook 1985:551, 586.
the state-ow ned enterprises declined slightly faster th a n the overall average - from 0.6 in 1979 to 0.3 in 1984 (Table 5.18). In c o n tra st, it fluctuated for those employed in collective enterprises - increasing from 0.4 in 1982 to 0.5 in 1983, and then declining to 0.4 in 1984. For those employed in foreign-related Firms, it increased from a low of 0.4 in 1983 to 0.5 in 1984 (S h e n z h e n Special E co n o m ic Zone Yearbook 1985:551, 586). The ratio rem ained s ta tic , however, if the wage levels provided by S h e n zh e n Special Zone D a ily (16 April 1984) are adopted. T hus, on the whole, s ta te workers enjoyed a steady im provem ent in their s ta n d a rd of living while those in the collective andToreign-related firms experienced little or no grow th in their power to purchase tertia ry and luxury goods.
Table 5.19 provides further detail on the distribution of purchasing power between employees in different sectors. In 1982, workers in the finance and insurance sector devoted the lowest proportion (43 per cent) of their wages to basic necessities whereas those in science and research had to spend a m ajor p a rt of their income on basic living costs (86 per cent) - a difference of 43 per cent between the two sectors. Conversely, workers of oth er sectors had to spend a b o u t half of their wages on basic living costs. T he p a tte rn changed in 1983. W orkers in the sectors of u rb an public facilities and education, health and social welfare devoted 32 per cent of their wages to basic living whereas construction and resource exploration workers devoted 68 per cent, and those in science and research, and s ta te and mass organizations spent 61 per cent of their wages on basic goods. T he purchasing power of Shenzhen's p opulation, therefore, had improved. Differences between the highest and lowest ratios had diminished marginally to 36 per cent, and workers in most sectors spent less th a n half of their wages on basic living costs. F u r th e r advances were m ade in 1984. On average, workers spent only 35 per cent of their income on basic goods. The gap between groups with the highest and lowest ratios had been reduced to 0.2 (0.3 for the sectors of commerce and service, and science and research, and 0.5 for the sectors of agriculture, forestry, w ater and meteorology).
Between 1982 and 1984, the decline in the ratio of living costs to basic wages was