Socialist Insecurity

Socialist Insecurity: Pensions and the Politics of Uneven Development in China

Copyright Date: 2010
Edition: 1
Published by: Cornell University Press
Pages: 224
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  • Book Info
    Socialist Insecurity
    Book Description:

    Over the past two decades, China has rapidly increased its spending on its public pension programs, to the point that pension funding is one of the government's largest expenditures. Despite this, only about fifty million citizens-one-third of the country's population above the age of sixty-receive pensions. Combined with the growing and increasingly violent unrest over inequalities brought about by China's reform model, the escalating costs of an aging society have brought the Chinese political leadership to a critical juncture in its economic and social policies.

    In Socialist Insecurity, Mark W. Frazier explores pension policy in the People's Republic of China, arguing that the government's push to expand pension and health insurance coverage to urban residents and rural migrants has not reduced, but rather reproduced, economic inequalities. He explains this apparent paradox by analyzing the decisions of the political actors responsible for pension reform: urban officials and state-owned enterprise managers. Frazier shows that China's highly decentralized pension administration both encourages the "grabbing hand" of local officials to collect large amounts of pension and other social insurance revenue and compels redistribution of these revenues to urban pensioners, a crucial political constituency.

    More broadly, Socialist Insecurity shows that the inequalities of welfare policy put China in the same quandary as other large uneven developers-countries that have succeeded in achieving rapid growth but with growing economic inequalities. While most explanations of the formation and expansion of welfare states are derived from experience in today's mature welfare systems, developing countries such as China, Frazier argues, provide new terrain to explore how welfare programs evolve, who drives the process, and who sees the greatest benefit.

    eISBN: 978-0-8014-5860-6
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface and Acknowledgments
    (pp. vii-x)
  4. Conversion of Chinese Yuan to U.S. Dollars
    (pp. xi-xiv)
  5. Introduction
    (pp. 1-14)

    The headlines and news stories from China paint a bleak picture. The “harmonious society” that Hu Jintao and the Chinese Communist Party (CCP) are striving to create appears to be anything but harmonious. Growing inequalities have fueled protests and other mass incidents involving violent clashes between state authorities and aggrieved citizens. Environmental disasters, product and food safety scandals, mining deaths, and other seeming failures in governance provide ample evidence that the CCP either cannot or will not regulate the factories and firms that have fueled the high-growth Chinese economy. In response to the inequities, conflicts, and other negative side effects...

  6. CHAPTER 1 Local Coalitions, Uneven Growth, and National Welfare Politics
    (pp. 15-42)

    During summer 2006, more than one hundred investigators and auditors from central government ministries descended on Shanghai to piece together a vast network of loans and bribes among leading Shanghai officials and entrepreneurs. The investigation team members sequestered themselves behind the gates of a local hotel, and police had to be called out to disperse scattered protests (Areddy 2006). At the center of the loan scandal was the Shanghai Social Insurance Agency (SIA), whose pension fund had become the chief source of financing for at least a dozen of the property developers in the city and their high- profile real...

  7. CHAPTER 2 Pathways to Pensions
    (pp. 43-70)

    Many governments adopted their first old-age pension laws during the early phases of industrialization, in part to cultivate a loyal if small working class. The initial policy decisions about who gained pension rights and how they would be financed carried important long-term consequences. The choice of initial design was crucial because pensions are potentially very costly and, once governments make the initial commitment to provide pension benefits to some or all of the population, such promises are extremely difficult for even authoritarian governments to modify or revoke. The choice to cover some workers and not others, the choice to finance...

  8. CHAPTER 3 Resolving the Puzzles of China’s Pension Reforms
    (pp. 71-89)

    The considerable amount of scholarly work done in recent years on pension and other social policy reforms adopts the metaphor of the veto to explain the substance and eventual fate of policy outcomes. The logic is that policy proposals are more likely to go down to defeat, or at least be substantially diluted, as the number of veto points increases. Thus, Raúl Madrid (2003, 149–51) shows that Brazil, unlike Argentina and Mexico, failed to enact pension privatization in part because it would have required a constitutional amendment supported by three-fifths of both houses in the legislature. Linda Cook (2007)...

  9. CHAPTER 4 Urban Governments, Social Insurance, and Rights to Revenue
    (pp. 90-119)

    The establishment of social insurance programs in the 1990s meant that large amounts of money began flowing into urban governments that, in most regions of China, faced serious revenue shortfalls. Although social insurance revenues and fiscal revenues were kept as separate accounts, it was not difficult for urban governments to use pension and other social insurance funds for expenditures on projects that would otherwise be funded by tax revenues. The opening of chapter 1 describes the ways in which the Shanghai government used funds collected by its SIA to invest in a number of local real estate and infrastructure projects....

  10. CHAPTER 5 How Employers Shaped China’s New Welfare Regime
    (pp. 120-142)

    Chinaʹs economic reforms enhanced the power of business owners, who in turn have strongly supported the political status quo of CCP rule. Business associations have succeeded in their efforts to gain beneficial regulations from government authorities (Kennedy 2005). In their political orientations, business owners are ambivalent about, if not suspicious of, democratic political competition that might weaken or overturn CCP rule (Dickson 2003; Tsai 2007). In this chapter, I examine the power of business and its relations with the state from a different and largely unexplored angle—the rapid expansion of welfare spending in China, which has largely been financed...

  11. CHAPTER 6 Public Opinion and Pensions
    (pp. 143-172)

    In the previous two chapters, I have dealt with issues of local state accumulation or the extraction of funds used to build the fragmented Chinese pension system; in this chapter, I turn to the question of how the public views pensions. How do the victims of the 1990s mass layoffs in China, who now make up a large share of its pensioners, assess government programs such as pensions? As the quotations demonstrate, official assessments of strong public support for pensions in China and for the government officials who administer pensions can be easily contradicted by comments from Chinese citizens who...

  12. Conclusion
    (pp. 173-184)

    After sixty years in power, the CCP faces a crucial choice about how to rebalance an economy whose rapid growth had been based on high savings, low consumption, and limited public welfare provision. As the United States and other economies on which China had relied so heavily for exports entered recessions in 2008, debate intensified over how best to allocate funds from the Chinese central government. One option was to revisit the strategy used in the slowdown of the late 1990s—injecting local governments with funds to expand infrastructure and to subsidize industries. In contrast to this producer-friendly stimulus, another...

  13. APPENDIX: List of Interviews
    (pp. 185-186)
  14. References
    (pp. 187-202)
  15. Index
    (pp. 203-210)