Comment on “The Social Protection System in Ageing China”

Abstract

China started to test an open market policy and economic reform 35 years ago, and decided to build a market-oriented economy 20 years ago. There are still a lot of problems with the very Chinese economic reforms. The Chinese government in the Deng Xiaoping era postponed many difficult reforms, such as political reform and financial reform. Many people doubt whether the Chinese economy is sustainable. Theoretically, it is considered that the Chinese economy is going to slow down because of the decline of the population and the dynamic ageing problem. China's leaders have emphasized many times the necessity to create an effective and equal social protection system in China. But the social protection system is still very poor, unequal, and not enough to cover all of the people in China. China does not have an integrated pool for different groups, for example government officials, residents in urban areas, and residents in rural areas. Institutionally, officials are protected perfectly by the special pool, but the residents in rural areas are in a terrible situation, many of them are not protected by any social protection system, especially the residents of inland China like Guizhou, Guangxi, Qinghai, and Gansu. So how to build an integrated social protection system is an urgent problem for China, otherwise China cannot stabilize its society. Cai and Du (2015) point out the problem of the integration of the social protection system. It is a very important point in their paper, but this integration does not only mean the integration of the pools for residents in urban and rural areas, it also means the integration of the pools for officials and non-officials. In China, the officials are a privileged class. Another point here is how to overcome the ageing problem. China enforced a one child policy about 40 years ago. This policy was aimed at controlling the increasing population because the Chinese population increased rapidly in Mao Zedong era. As a result, China faced the problem of serious food shortage. The dynamism of the population was changed by the one child policy. According to some studies in China, the one child policy reduced the population by 400 million people over the past three decades. The policy helped China overcome the food shortage and also supported economic growth. But the legacy of the policy is the ageing problem. The problem is how to care for so many old people while the social protection system does not function effectively. The Chinese government decided to deregulate the one child policy, and has promised that the couples where the husband and the wife are both from one child families will be allowed to have a second child. The reform is aimed at changing the dynamism of the population. It is better to deregulate the policy, but I have to say it seems too late. China is going to face a very serious aged time. In urban areas, more and more young people are deciding to enjoy their life instead of having children, so the decision to deregulate maybe cannot increase the population. In traditional Chinese society, the large family played a very important role, with members caring for each other thus providing social protection. But the tradition was broken by the government during the culture revolution (1966–1976). Large families have become nuclear families. The young generation does not care for the aged generation. Of course, officials do not need to be concerned about the social protection problem because they are a privileged class and are protected perfectly by the institutions. The social protection problem is both a social and a political problem. According to China's state statistical bureau, the Gini coefficient has reached 0.475. The government needs to make more effort to stabilize the society. The income gap is a problem that will damage the social stability. Meanwhile, it is also a problem to build an efficient and equal social protection system as soon as possible. The Chinese government promised to build a dibao system (basic protection) to care for the poor people not only in rural areas, but also in urban areas. The dibao system is better than the situation where there is no protection, but it is not enough obviously. Chinese political leaders and policymakers usually emphasize that China is still a developing country, so that a poor protection system is reasonable. China is an emerging economy, but this does not mean that China is not capable of building an integrated and effective social protection system to care for every citizen in the country. China is capable enough of building such a social protection system. The problem is not capability; the problem is the political system. The priority given to strengthening the social protection function in policymaking is too low. It is difficult to consider that an integrated efficient social protection system could be built under a monopoly political system, such as that in China. China must reform the political system to build a democratic system first; otherwise we cannot expect that China can really build a protection system to care for its citizens. Finally the problem is clear. The political leaders also understand how important it is to rebuild an integrated social protection system as soon as possible. But the conflict of different classes in China, such as officials and non-officials and the people in rural areas and urban areas, creates difficulties for the integration. Even the deregulation of one child policy is facing difficulties from the government. Here, the most important point is the leadership of the political leaders.