Li Qiang, “Characteristics and Trends of the Dramatic Changes in China's Social Stratification in the Last 20 Years: A Tsinghua Professor Speaks Out”
Social Stratification in China in the 21st Century: Characteristics and Trends in Structural Changes
The year 2021 marks the 100th anniversary of the founding of the Communist Party of China (CCP). In leading the Chinese people to carry out revolution and national construction over the past 100 years, CCP practice has proven that an understanding of the structure of social stratification is of great significance in formulating basic strategies, policies, and tactics. In the early days of the founding of the CCP, Mao Zedong made an incisive analysis of the various forces in Chinese society in his "Analysis of the Classes in Chinese Society."
Since the turn of the 21st century, China's economy has grown by leaps and bounds, and institutional reforms have continued to progress, especially the market economy system, which has by now penetrated all aspects of social life. Following the marketization of commodities and employment, the marketization of capital factors, such as finance and real estate, is also nearing completion, which has had a significant impact on social status and daily life in China. The majority of housing has changed from being publicly owned in the past to being owned by individuals today. All of these changes have had a huge impact on the structure of stratification in Chinese society. Some people have risen in social status while others have fallen. The sudden outbreak of the coronavirus in early 2020, and recent international pressures on China's development by developed economies have also affected the daily lives of ordinary people. This article attempts to explore the changes and future trends in the structure of China's social stratification and in various related social forces since the beginning of the 21st century, and especially in recent years.
Changes in the Overall Structure of Society
Looking at China’s social structure prior to reform and opening, we traditionally talked about the "four big classes,"[2] and later there was also the theory of the "two classes and one stratum,"[3] which we need not go into here. Since reform and opening, the overall structure of Chinese society has undergone earth-shattering changes. The original social classes, such as peasants, workers, and intellectuals, have experienced changes, and many new social classes have been created. To deal with these changes, the sociologist Lu Xueyi 陆学艺 (1933-2013) proposed the idea of "ten classes," namely, state and social managers 国家与社会管理者, owners of private enterprises, managers, professional and technical personnel, clerks, self-employed businessmen, commercial service workers, industrial workers, agricultural laborers, and unemployed and semi-employed people. In fact, this is basically an description of occupational stratification. I prefer to use a purely quantitative approach to study the structural changes in Chinese society based on the International Socio-Economic Status Index (ISESI) and national census data.
I argue that China’s social structure has changed from its original state, in which there were many people at the bottom of society and few in the middle or at the top, to a structure in which many of those who were at the bottom have moved to the middle.[4] This has produced two basic conditions: first, the lower-middle class still accounts for a large proportion of China's population; second, the middle class has clearly increased in proportional terms. According to my research team’s calculations, the middle class (including their family members) currently accounts for 26%-28% of the total population of China, with a population of more than 300 million. In the following paragraphs I will first address the four following comprehensive changes.
First, there is has been fundamental change in the structure of China’s urban and rural populations. In terms of overall social structure, China has changed from a predominantly rural society at the beginning of the 21st century to a society with a predominantly urban resident population today. In 2001, China's urban population was 480.64 million, which made up 37.7% of the total population, while the rural population was 795.63 million, accounting for 62.3%. According to the data of the seventh national census in 2020, the urban population was 901.99 million, or 63.89%; and the rural population was 509.79 million, or 36.11%. In other words, China's urban-rural population ratio has reversed itself in the first two decades of the 21st century, with those living in rural areas accounting for more than 60% of the population at the turn of the century, and those living in urban areas accounting for more than 60% in 2020.
The urban-rural relationship has become more complex. Historically, the urban-rural divide has been one of China's biggest problems, but now it has taken on a new character in that the urban-rural divide has become more complex and diversified. It we look at the urban-rural divide solely in terms of income discrepancies, comparing the annual per capita income of urban residents with that of rural residents, the gap has narrowed somewhat, in the sense that urban incomes are a currently bit more than two times those of rural dwellers while it was greater than three times in the past. But the actual situation is much more complicated than this comparison of average incomes reveals.
Today, the rural-rural divide is also striking. There are very poor rural areas and very rich ones. The urban-rural relationship is much more complex than before. In the past, rural development basically depended on urbanization and the movement of peasants to the cities. Now farmers are reluctant to become urban dwellers, because this means losing their land, which is a source of wealth. There are many such cases. In many places, following the allocation of land rights, farmers find themselves with land certificates 土地证, homestead certificates 宅基地证, and real estate certificates 房产证. Many villages have issued shares in village land and collective property. Farmers have become equity holders and received a lot of dividends and profits. Especially in the rural areas not too far from the big cities, there are a number of villages that have become rich and have created new ways of functioning. On the whole, rural areas close to big cities are richer, while rural areas far from big cities and remote areas are more backward.
Second, the demographic changes in urban and rural areas have brought about huge changes in the mode of production and in the life styles of the inhabitants. Such a huge evolution in the urban and rural population structure has brought about a full range of social changes. The mode of production of hundreds of millions of people has changed from agricultural labor in rural areas to industrial labor, service labor, and commercial labor in cities and towns. Lifestyle changes have also been fundamental. The rural lifestyle of "planting melons and beans around the house,”[5] raising chickens and pigs for self-sufficiency, and basically not spending any money in daily life, has been transformed into a lifestyle where almost everything has to be done through commercial exchange. If many elderly people are still not very comfortable with the changes, the changes have truly raised the market consumption level of the population.
When peasants move to the cities, their housing is clearly less spacious than before, but life in general is much more convenient and travel conditions are incomparable to those in rural areas. Peasants who have changed their household registration to become city dwellers have been given the social welfare rights of urban residents, and so their rights and interests have changed dramatically. Of course, for many people, the most difficult thing has been to change is their living habits and way of thinking, and urban life trains people every day to conform to the behavior expected by modern urban civilization. Many of the changes in the four areas of production, lifestyle, rights and interests, and civilized behavior are difficult to quantify, but the tremendous social changes they have brought about are real.
Third, the occupational structure of Chinese society has changed dramatically. Let's look at the three new occupational groups. First, people who deliver food and other items. According to the "2020-2025 China Express Industry Market Outlook and Future Investment Strategy Analysis Report," the total number of Chinese delivery workers and couriers reached 10 million, and its growth rate is very impressive: there were only 3 million such workers in 2018. Second, online rideshare drivers. According to a report in October 2019, the number of Chinese online rideshare drivers in the industry reached 30 million. Third, online sales people. The number of people engaged in online sales in China's urban and rural areas is an unfathomably large group of people for which no official statistics are available at present. According to our daily observations, many people of all ages have experience in online sales, and even in WeChat groups, online sales are a common phenomenon. Many members of these three large groups are part-time workers, and many of them work several jobs a day.
Therefore, this constitutes a new way of working in Chinese history. In contemporary Chinese history, we are all familiar with the era of the "iron rice bowl" in which everyone worked in one unit and one occupation for their whole lives. Since the marketization of labor in the mid- to late-1990s, however, it has become more common for workers to change work units and occupations. Today, we see a new trend in which workers will flock to the labor market that pays the best, and many of them are working part-time. Consequently, it becomes more difficult for researchers to strictly distinguish the occupational position of each individual.
Fourth, there is a huge divergence between the socio-economic status of the population in large cities and mega-cities and conditions in small cities and towns. As mentioned above, there has been a fundamental change in China’s overall social structure in terms of urban-rural relations. As a result of ongoing multi-faceted policy adjustments, the difference between urban and rural areas has changed dramatically, with many peasants beginning to buy homes in cities or towns near their hometowns, shifting from rural to urban life. At the same time, a huge change has occurred, producing a huge division between large cities, super-large cities, mega-cities on the one hand, and small and medium-sized cities on the other. Three aspects highlight the discrepancies:
One is the differentiation of occupational status between and among cities. People's occupational status is in fact a comprehensive social status, which relates to social status, economic income, prestige, etc., and is very important. Let's look at the following table (not reproduced).
The cities described in the table conform to official definitions of cities in China, which are: small cities have a resident population of less than 500,000; medium cities have a resident population between 500,000 to less and 1 million; large cities have a resident population between 1 and 3 million, supercities have a resident population between 3 and 10 million; and mega-cities have a resident population of more than 10 million. Since the country has not yet published the occupational data from the seventh census, we are using data from the sixth census here. However, we can see that even small and medium-sized cities are not in fact small.
Differences in occupational status are determined by the International Socio-Economic Status Index (ISEI), the details of which do not appear on the table. From Table 1 above, it is clear that the difference in occupational status between the population of mega-cities and small and medium-sized cities, especially for the population of the city, is very clear. Therefore, in recent years, many university graduates feel that the occupational structure of small and medium-sized cities does not match the occupational structure of their majors studied in universities in big cities, even they want to return home to work. For this reason, talent flows more from small cities to big cities. Talent is the key to urban development, and the loss of talent is likely to cause a vicious circle in small city development.
Secondly, I believe that this difference between mega-cities, big cities and small and medium-sized cities is a kind of "political-economic-social-regional" difference. The phenomenon of "political-economic-social regional units" is quite prominent in China, because the government plays the most prominent role in resource allocation. Each region is assigned an administrative level, and the allocation of resources is largely in accordance with this administrative level. Therefore, the big cities with high administrative rankings naturally get more political, economic, and social resources, and the small cities, even if they have dynamic markets, cannot compare to the all-round resource allocation which is provided according to the administrative level.
Third, this difference is also clearly expressed in housing prices. Housing prices in supercities and megacities continue to rise, no matter what measures of control are imposed. In comparison, housing prices in some small and medium-sized cities have also risen, but most of them are on a downward trend. A recent study by Peking University shows that 79.8% of Chinese urban residents' household property is made up of real estate. The fact that housing is increasingly expensive in supercities and megacities, and that housing prices are falling small cities, in itself represents important discrepancies in terms of household wealth, and an important cause of polarization. For this reason, how to deal with the cumulative effect of increasing housing prices in big cities remains a difficult problem.
Changes in the Middle Classes and Middle-Income Groups
We could have discussed the changing trends of China's middle class in the context of the overall structure above, but since there is quite a bit to say on the subject, we will talk about it here. The topic of the middle class and middle-income groups has merited a great deal of attention in Chinese media circles and society at large in recent years. The idea of a middle income group is of course easy to understand since we divide groups into high, middle and low according to their income. From a sociological point of view, people at a certain income level must also have corresponding occupational characteristics, educational characteristics, economic and property status characteristics, lifestyle characteristics, etc. Therefore, sociological circles generally use the term middle class, even if there is a variety of technical terms in Chinese that mean the same thing in English.
The growth of the middle class in China has been a prominent phenomenon since the beginning of the 21st century. During this period, China’s total wealth expanded dramatically, which was the economic basis for the growth of the middle class. During the period when China's economy was climbing rapidly, an optimistic estimate was that the middle class in China had increased by 8% over the course of eight years, with 8 million people entering the middle class every year, a development that largely shaped contemporary China’s social structure. Surveys also suggested that a relatively important percentage of China’s population self-identifies as middle-class. However, this optimistic estimate has recently received a major challenge.
A large number of middle, small, and micro-enterprises (MSMEs), mainly in the brick-and-mortar service sector, were hit hard by the outbreak of the coronavirus epidemic in early 2020. According to reports, the revenue of these MSMEs fell by 69.5%. Many MSMEs could not hold on and had to close, and the urban white-collar group felt unprecedented pressure as a result. Most of the urban white-collar group are college graduates who had come to the city for employment, and the first thing they encounter is the pressure of mortgage or rent payments. When the economy is growing, their income is stable, and they can generally make their mortgage or rent payments, but if their income falls or they lose their jobs, they often have to turn to their parents for help. If their parents are also unable to finance them, however, they face the risk of losing their homes, as well as the money invested in their homes, and even risk of having to leave the city and return home to the countryside if they lose their jobs.
Then there is the pressure to maintain a middle-class lifestyle. By middle-class lifestyle we mean that the amount paid for daily consumption, children's education, social interaction, etc. are all at a significantly higher level than those with lower incomes, and once they encounter a sudden economic blow, they will have to withdraw from the middle-class lifestyle. Even before the pandemic, China’s middle class did not represent a big proportion of the population; according to my estimates and those of other scholars, the middle class currently accounts for only about 25% of all employed people. In addition, most of the people in the middle class do not occupy what we might call the “core middle class,” whose status is more or less stable, but instead are on the fringe of the middle class; research I have done in the past suggests that some 73% of China’s middle class is in this fringe position.
This marginal status means that once they suffer economic shocks, they may fall from the middle class to rejoin lower income groups. In addition, the current international situation is extremely unfavorable, with many developed economies taking various measures against the Chinese economy. For these reasons, I am afraid that the previous estimates of the development of China's middle class, which were relatively optimistic, will have to be adjusted; I am afraid that the expectations of the future development rate of China's middle class will have to be reduced.
Of course, expanding the size of the middle-income group is a major strategy proposed by the CCP Central Committee in the new era. In May of 2016, General Secretary Xi Jinping made an important speech on this strategy, and used the term "middle-income group" instead of “those with middle-incomes,” which is significant. The General Secretary explained in detail the specific measures to be employed to expand the middle-income group: first, we must adhere to qualitative and effective development, maintain macroeconomic stability, and lay a stronger foundation for the improvement of people's lives; second, we must promote the spirit of creating wealth by working hard, and motivate people to create a better life through labor; third, we must improve the income distribution system; fourth, we must strengthen human capital and increase our investment in human capital; fifth, we must strengthen the role of entrepreneurs and guarantee the return of various factor inputs; sixth, we must strengthen the protection of property rights, improve the modern property rights system, and enhance the people's sense of property security. The Party and the State have provided policy guarantees for the development of China's middle-income group, and it is our unwavering strategy to expand the middle-income group.
I have analyzed three major pathways leading to the formation of China's middle-class society: the first is formal education, the second is professional and technical training, and the third is the market. My research to date proves that in the 40 years since China's reform and opening, the largest number of people have risen in social status through the market. Most of China’s work force is still made up of peasants and migrant workers, and the vast majority of these have managed to increase their social status through the hard work of running small businesses in accord with the functioning of the market. Therefore, those who run our cities should pay special attention to protecting the rights and interests of small and medium-sized operators, and should in no circumstance crack down on them. Instead, they should learn to perfect their management techniques so as to create a standardized, healthy business environment.
It was not easy for these entrepreneurs, who were born as peasants, to rise from the bottom of the society through their own economic efforts. If a future China is a realize a middle-class society, there must also have strict legal constraints on economic monopoly. A highly monopolistic economy will destroy hundreds of millions of small and medium-sized entrepreneurs. History has proven that the Chinese people are very good at business, and if we want to create a middle-class in a society with a huge population like ours, we must create an institutional environment that is conducive to hundreds of millions of small, medium, and micro-entrepreneurs.
On the Question of Poor Groups in China
Since reform and opening, and especially in recent years, China has made great achievements in poverty management. The number of poor people has been reduced from 98.99 million at the end of 2012 to 55.11 million at the end of 2019, and by the end of 2020, the Party and the government announced that all rural poor people under the current standards in China have been removed from poverty and all poor counties have been removed from the list. Such an achievement has been noticed throughout the world.
Of course, we must also realize that dealing with poverty is a long-term, arduous task. From a theoretical standpoint, we can distinguish between "absolute poverty" and "relative poverty." Absolute poverty is defined as a level below the minimum threshold for sustaining basic life functions, and was first proposed by the British sociologist B. S. Rowntree (1871-1954). Of course, standards of absolute poverty have varied greatly from one historical period to another. The initial attempt to measure absolute poverty in China was proposed by the Rural Political Research Office of the Secretariat of the Central Committee of the Communist Party of China in 1984. At the time, the standard was based on grain consumption, and absolute poverty was defined as a per capita consumption of less than 400 catties per year in southern rice-producing areas and less than 300 catties per year in northern miscellaneous grain-producing areas. Clearly, standards at the time were extremely low.
Thereafter, the standard was changed that of annual net per capita income, which was initially set at only 200-300 hundred RMB. In 1989, the standard was 259 RMB, and the poor population in that year was 106 million. Subsequently, the standard has been increased significantly each year, and by 2011 had reached 2,300 RMB (which was consistent with the World Bank standard for that year). Since the standard had been adjusted, the number of poor people in China in that year remained at 106 million. In 2019 the standard was 3,218 yuan, and the by the end of 2020, 4,000 yuan. This is what we mean by lifting the entire rural poor population out of poverty according to current standards. Of course, in addition to the standard of annual net income per capita, China has also set other protection standards accordingly.
So what is relative poverty? Relative poverty means that relative to the average living standard in a society, some people find themselves at the bottom. Thus, relative poverty measures the share of wealth or the income distribution among different social classes and social groups. The report of the 19th National Congress of the CCP, held in October 2017, pointed out that the principle contradiction in Chinese society had become the contradiction between the people's growing need for a better life and the current state of unbalanced and inadequate development. Therefore, dealing with the problem of relative poverty will be a long-term task in China’s new era of socialist construction. At present, the problem of wealth and income disparity between different regions, classes, and social groups in China remains acute, so it is necessary to promote reforms in many aspects, such as the resource allocation system, and the income distribution and social security systems. The struggle against relative poverty requires ideological preparation for a long-term struggle.
The following is a discussion of future trends and solutions to the problem of relative poverty in urban China, solely from the perspective of minimum living standards for urban residents. Prior to the end of 2020, the focus of China's poverty alleviation efforts was more on rural areas, but having won the battle against absolute poverty, we should note that the problem of relative poverty is beginning to become more acute in the cities. On the one hand, this is because China has become a society with a predominantly urban population, as mentioned above; at the same time, the problem of poverty in cities has its own particularities.
In the countryside, farmers live off the land, and as long as they cultivate the land, they will always harvest a little something, and most of them grow vegetables, raise chickens, ducks, and pigs, and are generally able to maintain the basics of daily life. Urban residents, on the other hand, need money in all aspects of life, once they are out of work they are cut off from their source of livelihood, and if they have no savings, they will truly be in a desperate state. In response to this problem, Decree No. 271 of State Council announced the implementation of the Regulations on the Minimum Livelihood Security for Urban Residents, beginning on October 1, 1999. According to these regulations, each city throughout the country sets its own minimum living standard for urban residents. In deciding on the standard, consideration is given to the cost of clothing, food, and housing necessary to maintain the basic living conditions of local urban residents' families, with due consideration given to the cost of water, electricity, coal (gas) and the cost of compulsory education for children.
Of course, the situation varies greatly from city to city across the country, with mega-cities and first-tier cities having a higher cost of living, which means that their minimum living standards will be somewhat higher. Let's compare the minimum security standard for urban residents in Beijing and Shijiazhuang. in July of 2020, the minimum living standard in Beijing was adjusted from the previous monthly per capita household income of 1,100 RMB to 1,170 RMB. Over the past eight years, Beijing's standard has been increased annually, from the previous monthly per capita household rates of 500, 520, 580, 650, 710, 800, and 1,000 RMB, finally increasing to the current rate. Compared to Beijing, Shijiazhuang's urban standard is only 671 RMB per capita per month for a family (8052 RMB/year) due to the lower cost of living in the city. Of course, standards in Shijiazhuang have also increased annually. According to the state regulations, when the per capita income of urban residents' families does not reach this level, they can apply to their base-level urban community neighborhood committee, and after approval, the civil affairs department will provide the cash to make up the difference.
From the above comparison, it can be seen that the problem of urban poverty in China, which is characterized more by relative poverty, is influenced by many factors. This includes the price of goods, and if these prices increase significantly, the amount of the subsidy should be adjusted accordingly. Another example is that, because of the pandemic, some people have lost their jobs and suddenly have no source of income; they should hasten to apply to the relevant authorities. It is also very important to note that the current policy of minimum living standards for urban residents in China applies only to those whose household registration is in the city, and neither workers from other parts of China nor migrant workers are eligible for these benefits. For example, Beijing has a population of nearly 24 million, but only half of them have Beijing household registration status, while the other 12 million are workers from other parts of China and migrant workers who are not eligible for Beijing's minimum security benefits even though they live in Beijing. Furthermore, in most regions of China, there is still a big difference in low income thresholds between urban and rural areas. Therefore, we must realize that relative poverty will persist and that the fight against it will be a long-term task.
From the perspective of sociological theory and practice, the most difficult thing when trying to solve the problem of poverty is "cultural poverty." In other words, poverty is not merely an economic phenomenon, but is also part of a particular cultural system. This phenomenon can be seen in some "special cultural groups" in western China, which used to be called "concentrated poverty areas.” As a result of living in poverty for a long time, these groups have developed a special way of life, behavioral norms and values, forming a "poverty subculture" that has an impact on the people around them and on future generations, and is even passed on from generation to generation. In some poverty alleviation programs in China, there were cases where local poverty alleviation cadres helped poor minority groups to move to the plains and into new homes, but later, many of them returned to the backward mountain areas, saying that they could not adapt to living on the plains. Therefore, it will be a more difficult task to educate such groups to form positive and progressive values with a spirit of struggle, and to adapt to new ways of production and new lifestyles.
On the Question of Common Prosperity
The above discussion of poor groups necessarily involves a comparison with richer groups, and thus raises the question of the wealth gap. Measuring rich and poor is usually a matter of measuring wealth or income. Since measuring wealth is complicated hard to do, we usually measure income, so we also call this the income gap problem.
The gap between rich and poor in China has indeed been at a high level throughout the 21st century. The Gini coefficient is used below to show the gap between the rich and the poor, based on the Gini coefficient of per capita income of Chinese households. Before reform and opening, the Gini coefficient of per capita income of urban households in China was 0.16. Such a low Gini coefficient is extremely rare in the world. This was directly related to China's equalized distribution system (including the housing distribution system) and the rationing of scare items that was practiced at the time.
After reform and opening, China gradually established a system in which resources were allocated by the market. The market principle encourages fierce competition and the survival of the fittest, and the Gini coefficient of per capita income of Chinese urban and rural households immediately surged upward. According to my calculations, it reached 0.38 in 1988 and 0.43 in 1994. According to the National Bureau of Statistics, trends continued upward in the 21st century, but after reaching a peak of 0.49 in 2008-2009, it declined year by year, and by 2015-2016, the Gini coefficient of per capita income of urban and rural households was 0.46~0.47. The National Bureau of Statistics has not published new data on the Gini coefficient since 2016, so we will analyze the gap between rich and poor according to these latest statistics.
Social stratification studies look at the gap between rich and poor in two ways: the first question is, who gets what share? The second question is, why do they get that share? For the first question, it is true that prior to China's reform and opening, there was very little difference in the share that the vast majority received, while after the reform and opening up, and especially since the turn of the century, income differences have clearly grown. In terms of the Gini coefficient, some research institutions have calculated significantly higher Gini coefficients than those reported by the National Bureau of Statistics. For example, the report of the China Household Finance Survey of the Southwest University of Finance and Economics argues that the Gini coefficient per capita of urban and rural households in China was 0.61 in 2010; the report of the Social Science Survey Center of Peking University suggests that the Gini coefficient of household property of urban and rural residents in China was about 0.73 in 2012. Of course, this is all unofficial data. Despite the differences in such reports, it is a relatively unanimous consensus among all sectors of society that the gap between the rich and the poor in China has grown in the 21st century. Of course, Figure 2 (not reproduced) shows that after reaching a peak in 2008-2009, the Gini coefficient has been on a downward trend. But at present it is no less than 0.46, which is still a high level.
What to make of this high Gini coefficient? This brings us to the second question: what produced this distribution? The above analysis has already pointed out that the low per capita Gini coefficient of Chinese households before reform and opening was due to administrative measures and the use of rationing to allocate resources, which resulted in a high degree of "equalization," but this was in no way “common prosperity,” but instead a last ditch effort to make do with extremely limited resources. This old system of distribution in which “it’s all the same if you work a lot or you work a little—it’s all the same if you do a good job or a bad job” did considerable damage to the worker’s activism and to economic efficiency.
From 1950 to 1975, the gap between China's per capita GNP and that of the world's most industrialized countries grew wider and wider, so simply looking at the first question will not do. In the 1990s, I carried out a large-scale household sample survey of urban residents to study the economic history of the households in question. I discovered that between 1950 and 1994, the period with the lowest Gini coefficient of per capita income of urban households in China was the decade of the Cultural Revolution. Therefore, the pursuit of a low Gini coefficient is not our goal, and the general public is not willing to live in the days of widespread poverty and commodity shortages.
Since the turn of the century, China's Gini coefficient has indeed remained at a high level. As already pointed out, the reason for this is directly related to the system of market allocation of resources. How does the market allocate resources? A document of the Central Committee of the CCP states that "the market determines the mechanism of reward for all factors of production." In other words, labor, knowledge, technology, management, and capital factors participate in the distribution according to their respective contributions. Although central documents have repeatedly emphasized the need to increase the proportion of labor remuneration in the primary distribution, the recompense of ordinary workers and farmers' labor remains very low. In contrast, the benefits of capital have a clear "snowball effect." In addition, the high level of monopolization of the economy has allowed a few monopolies to profit greatly, while the majority of workers suffer. China has a huge population of 1.4 billion people and 494.16 million households. In order to make the vast majority of them rich, it is necessary to protect the economic interests of small and medium-sized and micro-entrepreneurs, and to strictly restrain the control of economic resources by monopolies.
To sum up, the causes of China's current high Gini coefficient are extremely complex. In terms of primary distribution, market competition is an important factor. Recently, there has been a shortage of skilled technical personnel so that the wage levels of some highly skilled front-line workers have risen, even surpassing those of white-collar office workers, which is why the CCP Central Committee has repeatedly emphasized the need to expand the training of highly skilled technical workers. Secondary redistribution is carried out through taxation, social welfare, and social security systems. The current 14th Five-Year Plan, covering the years 2021-2025, places special emphasis on measures that aim to increase tax revenues, social security, and transfer payments. In addition, there is a tertiary distribution, which refers to charity, poverty alleviation, and helping others, in which all people should participate. The pursuit of the goal of common prosperity truly requires the participation of all of the people. While the adjustment of the Party and state policies is important, common prosperity will be difficult to achieve without the establishment of such ideal beliefs and goals by the entire population. Therefore, in the 21st century, the task of making all the people establish ideal beliefs and goals is also quite challenging.
On the Question of Social Mobility and Class Solidification
There is a great deal of discussion about social mobility and class solidification, especially around the time of college entrance exams, the hot topic being whether college entrance exams are still the most important mechanism to elevate one’s status in society. There is a popular view that class solidification is indeed occurring in China, and that the phenomena of “second generation rich” and “second generation officials” are reflections of such class solidification.
So, how does sociology measure social mobility and figure out whether class solidification is occurring? Sociology measures something called "intergenerational mobility," which is does through recording the social status (including occupational status, economic status, educational status, etc.) of grandparents, fathers (and mothers), and sons (and daughters) in different types of urban and rural households through a large sample of households, and then analyzing the data to reveal how status has changed over the generations. Of course, this change may go up or down, and putting the two together gives you the ratio of mobility. A high ratio indicates a lack of intergenerational solidification, and conversely, a low ratio indicates class solidification.
What do such calculations reveal about the intergenerational mobility rate in China? According to the results published by Lu Xueyi and his research group in 2004, the intergenerational mobility rate in China has increased significantly since reform and opening, from 41.4% before to 54.0% after, and this is even more the case for upward mobility, which has increased from 32.4% before reform and opening to 40.9% after. This means that, for ordinary people, reform and opening provided them with more opportunities to move up.
Furthermore, research shows that 15.4% of China’s managerial class has parents who were cadres, business managers and business owners. This means that the remaining 84.6% of managers had parents who were not from these groups: 9.2% were professionals and technicians, 9.2% were clerks, 3.1% were small business owners, 16.9% were workers, and 46.2% were farmers. To put it simply, the national social survey data do not support the idea of class solidification. Of course, the study also shows that while a high percentage of current managers came from peasant families, the probability that people whose parents were managers is still significantly higher than for those whose parents were farmers, because of the high percentage of peasants in the overall population (over 60% of the total population), and the lower percentage of managers.
Below I will look at two types of data: one is the “National Urban and Rural Household Survey Data with Equal Probability Sampling,” which I put together in the mid-1990s, and which covers the 1990s; the other is the Chinese General Social Survey data from the Survey Center of Renmin University of China, which covers the situation since the turn of the century.
In Figure 2 (not reproduced), the vertical coordinates show the intergenerational mobility rate and the horizontal coordinates show the year of birth of the respondents, from those born before 1934 until those born in 1975-1979 and those born in 1980-1989. The point of the comparison is to see how the occupational status of these respondents has changed compared to their parents' generation. The data show that the overall intergenerational mobility rate of Chinese people is still relatively high since reform and opening, especially since the turn of the century.
Moreover, a particular feature of this overall mobility is that the younger the generation, the higher the mobility rate. Comparing those born in 1980-1989 and 1975-1979 with those born in the previous groups, the intergenerational mobility rate increases significantly. Therefore, the claim of class solidification is not supported by the national survey data. Of course, I also agree with the above analysis of scholars such as Lu Xueyi that since the population base of peasants and migrant workers is huge, while the population of top managers and top technologists is small, the probability of the latter's children entering the management class is still higher than that of the former’s.
The question is how to explain the paradoxical phenomenon we currently encounter? That is, on the one hand, as the data show, the actual intergenerational mobility rate in China is still rising in historical terms; yet on the other hand, the popular view in the media and in society is that social classes are solidifying. How does such a prominent contradiction arise? I would argue that China's current high intergenerational mobility rate is relatively understandable because China is still in the process of the world's largest transition toward urbanization and industrialization. In the course of this transition, China's urban and rural areas are undergoing huge changes, and the largest group of the population, made up of farmers, migrant workers, and their children, is are undergoing occupational status changes, which means that the overall intergenerational mobility rate will be high.
So, how did the popular view of class solidification come about? It cannot be denied that it does indeed grow out of concrete examples from current society. For example, in some village, township, and county governments, there is a clear phenomenon of nepotism, which is directly observable by the common people. Of course, at the same time we find cases of a different type, i.e., the children of families with low parental occupational status who have achieved upward mobility through their own efforts. In addition, the media influence of the famous, the rich, and other celebrities attracts the attention of hundreds of millions of people, and when their children enjoy high status as well, people will notice, giving rise to the notion of “second generation rich,” “second generation officials,” and “second generation stars.” These individual cases are certainly not representative, and sociology emphasizes the use of rigorous national sampling methods to obtain the data on which one can base the estimates that represent the population as a whole. This also reflects the significance and value of empirical research studies in the social sciences.
So, where does China's intergenerational mobility rate stand internationally? Figure 2 above shows that China's intergenerational mobility rate is also relatively high internationally since the turn of the 21st century. In the 1990s, China's intergenerational mobility rate was similar to that of the U.S., both being a little over 0.4, while China's overall intergenerational mobility rate in the 21st century is over 0.55, which is clearly higher than that of the U.S. The U.S. mobility rate is considered moderate internationally, and the highest intergenerational mobility rates are in some of the Scandinavian countries, such as Denmark, Sweden, Norway, and Finland. The high intergenerational mobility rates in these countries are due to the fact that they are all high welfare countries where the phenomenon of class and stratification in society has been considerably weakened.
Countries with low intergenerational mobility rates, or what we might call countries where classes have solidified, are mostly countries where the class phenomenon is more prominent, such as countries in South Asia, Africa, and other regions. For example, India has a low intergenerational mobility rate, which is related to its prominent class hierarchy. Although India has abolished the caste system in legal terms, the historical and cultural heritage of caste still remains and is related to class issues, so the phenomenon of class solidification is still more prevalent.
In short, in the 21st century, China's overall intergenerational mobility rate is still relatively high. A high intergenerational mobility rate is a good thing, because a high mobility rate means that society is dynamic, meaning that more people have the opportunity to rise in status through their own efforts. Of course, with the gradual completion of urbanization and industrialization, the favorable conditions that cause higher mobility rates in the future will gradually diminish. Therefore, maintaining a high rate of social mobility will requiring reforming and optimizing various institutions. The report of the 19th National Congress of the CCP talks about "removing flawed institutional mechanisms that hinder the social mobility of labor and talent, so that everyone has the opportunity to realize their own development through hard work." Hence, the task of maintaining a high mobility rate in the 21st century by deepening reforms and breaking down multiple institutional barriers is still extremely difficult.
On the Question of New Social Classes
What we might call “new social stratification” refers to the new social strata that have emerged since reform and opening , and especially since the turn of 21st century, against the backdrop of the overall structural changes in society. Of course, from the perspective of social stratification, almost all social strata in China have undergone changes since reform and opening. As mentioned above, new occupational groups have increasingly become the mainstay of various industries and markets, and these are the new strata. However, according to CCP theory, the new social strata have a specific meaning, and the theoretical meaning they embody is: from the perspective of the United Front, how, in the new social situation, should we maximize the unity of social forces? The “Regulations on the Work of the CCP United Front,” newly revised and promulgated in 2020, propose that the new social strata mainly include: management and technical personnel in private and foreign-invested enterprises, employees of intermediary and social organizations, freelancers, and new media practitioners.
Since there are many groups included in the new social classes, limitations of space will lead me to talk mainly about the issue of managers in private enterprises, which also speaks to one of the most important problems encountered in the theory of social class since reform and opening.
There have been major theoretical innovations in the evaluation of private enterprise managers or private entrepreneurs over the course of the period of reform and opening. When the People's Republic of China was first established, we called them capitalists or the bourgeois class. Although in the Constitution, "capitalist ownership" was included as one of the four legal forms of ownership, all capitalist enterprises were transformed into public-private joint ventures in the mid-1950s, after a series of campaigns, and the capitalist class no longer possessed any means of production.
After reform and opening, the Central Committee of the CCP advocated new development ideas to promote the development of the private economy. In the early stages of reform, those old entrepreneurs were encouraged to run to their old businesses once again. This reflects a great difference between China and the Soviet Union. In China, the interruption of private enterprises only lasted about 20 years or so, from 1956 to the beginning of reform and opening, so a good number of the old generation of entrepreneurs was still around, and made important contributions in terms of setting up enterprises and ensuring continuity in the early years of reform and opening. In the Soviet Union, on the other hand, the old class of entrepreneurs, along with the entire business culture, had completely disappeared, which is one of the important reasons why the economic development of China came to be quite different from that of Russia.
In the 21st century, China's private economy has developed even more rapidly. Currently, there are more than 27 million private enterprises and 95.864 million individual businesses in China, and these enterprises and businesses provide more than 80% of urban employment and account for more than 90% of the total number of enterprises in China, making them a very important force in the development of the contemporary Chinese economy.
More importantly, in the 21st century, the CCP has made clear the theory that the private economy is one of the two major components of the socialist economy with Chinese characteristics, and has put forward the theory of "the two unwaverings 两个毫不动摇" to encourage the development of the private economy. At present, CCP Central Committee documents use the term "citizen" enterprises “民营”企业 [usually translated as “private enterprises], as opposed to the term “private enterprises 私营企业,” or even “capitalists,” which were often used in the past, and this change in terminology has profound theoretical implications. In this sense, the theoretical community has provided their interpretation of Marxist theory.
In his Introduction to the Critique of Political Economy Marx argued that "There is in every social formation a particular branch of production which determines the position and importance of all the others, and the relations obtaining in this branch accordingly determine the relations of all other branches as well. It is as though the light of a particular hue were cast upon everything, tingeing all other colors and modifying their specific features; or as if a special ether determined the specific gravity of everything found in it."[6] China is a socialist country led by the Chinese Communist Party, and this basic political, economic and social system is the "light" that determines all other relationships. In China, the private economy and private entrepreneurs are under the leadership of the CPC and are engaged in the business of socialist construction that serves the national economy and the people's livelihood, and are an indispensable part of socialism, so in the future they should not be referred to in negative ways.
This also relates to the question of how to view entrepreneurs. In any modern country, entrepreneurs are the most important social force in advancing economic and social development and promoting social innovation. The concept of the entrepreneur, in English, originally meant someone who set up an enterprise and took risks. As we know, entrepreneurs are required to undertake huge financial analysis and business risks. Therefore, in the 21st century, the task of building China into a socialist modern power will at every moment require the significant contributions of entrepreneurs. A large number of patriotic, socially responsible, and innovative entrepreneurs is one of the most important social forces to ensure the success of China's socialist construction.
Notes
[1]李强, “近20年中国社会分层剧变的特征与趋势: 一位清华教授的直言不讳” originally published in the May 2021 edition of the Hebei Academic Journal 河北学刊, republished online by the Beijing Cultural Review 文化纵横 on November 9, 2021.
[2]Translator’s note: This appears to refer to the classic Marxist sociological categories of landlords, peasants, workers, and capitalists.
[3]Translator’s note: The two “classes” were comprised of workers and peasants, and the “stratum” was made up of intellectuals.
[4]Translator’s note: Li Qiang uses Chinese characters to provide images of these changes: at the outset, Chinese society resembled an inverted 丁ding character, but after reform and opening has evolved to take the shape of the 土 tu character.
[5]Translator’s note: This is rhyming phrase in Chinese--房前屋后种瓜种豆—and may be something akin to a nursery rhyme.
[6]Translator’s note: Translation taken from https://www.marxists.org/archive/marx/works/download/Marx_Contribution_to_the_Critique_of_Political_Economy.pdf, p. 126.
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