Don’t Bite the Hand that Feeds Your Economy

People Should Not be Afraid of their Governments, Governments Should be Afraid of their People

Several weeks ago, China’s 18th National Congress held its Third Plenum meeting, a gathering in which the Communist Party usually reveals what reforms it plans to enact in the coming years.

What millions of Chinese citizens sought from this Third Plenum was a decision to repeal the hukou system, a household registration policy that severely controls the migration of citizens outside of their native province. Instead, the party revealed just how adept it is at using vague language to assuage the millions of Chinese seeking reform while at the same time articulating zero clear-cut amendments to legislation.

The hukou system, originally a system designed to maintain social and economic order, is now a blight on China’s socioeconomic distribution that will likely lead to economic stagnation and social instability. The government’s hesitancy to address this outdated policy stems from the anticipated welfare costs that millions of migrant workers could incur upon major cities. However, the party must realize that these costs are minute relative to the immeasurable costs of economic and social instability that will occur should this policy continue to exist.

Dating back to Chairman Mao’s rule, the hukou household registration system actively discriminates against a portion of citizens born to rural provinces. It segregates urban and rural residents, providing urban registered citizens with superior education, health care, and employment opportunities, while providing rural residents with land for agricultural cultivation.

Initially, this system was an attempt to provide ‘separate but equal’ opportunities (better not inform the US Supreme Court about this), and to ensure that Chinese in urban provinces did not flood into its major cities and overwhelm municipal governments.

Unfortunately for rural dwellers, China’s current agricultural tax system makes farming highly unprofitable. With inferior education relative to their urban compatriots and scarce job opportunities, many citizens born to rural domiciles have no choice but to illegally migrate outside of their registered province to work in menial labor, construction, and manufacturing.

Once outside of their native province, these migrant workers are denied health insurance and housing. Since their children are forbidden from attending school outside of their home province, many children of migrant workers either forfeit schooling or attend under-funded, inferior schools in the countryside. For this reason, economic mobility is not viable for the demographic that composes more than 10% of China’s population.

Repeal of this policy is not solely a matter of equality. China’s future interests are best served by abolishing this outdated policy. It is better to reform prematurely in the name of equality and economic viability than later in response to social unrest and economic stagnation.

After decades of enforcing the one-child policy, China is about to confront a demographics crunch. As its enormous labor force begins to downsize, China’s cheap manufacturing industry will wane, and unemployment rates of its floating population will skyrocket. Idle workers are just one political scandal away from taking to the streets.

Declining work opportunities may not be the only determinant of political dissidence. As a result of sex-selective abortions, there are 30 million more men than women in China and that number is only expected to rise in the years to come. With dismal economic prospects and low social status, male migrant workers are having a harder time finding a wife. Add sexual frustration to widespread unemployment, and the result is millions of migrant workers rising up against China’s authoritarian regime. Jasmine Revolution Part II.

Fear of uprising need not be the main motivation for policy changes. It is time Xi Jinping and his band of merry men look to their migrant worker labor force as a source of economic vitality instead of as a means of exploitation.

With China’s hegemony as the world’s manufacturer set to expire in the coming decades, radical transformations of their labor force is a strategic move. Most migrant workers are severely undereducated. Repeal of the hukou system will provide children of migrant workers with superior access to education, improving China’s ability to compete in the global service industry.

Invest in migrant workers’ success and the rewards will be bountiful. Just look back at the effect that the GI Bill had on the US economy. China could very easily create a network of institutes to train its millions of migrant workers in technology, computer programming, and human resources. Why let India have all the fun?

Enabling migrant workers to rise from low-income to middle-income workers can have the additional effect of stimulating China’s domestic demand, which, for a nation with the second largest economy in the world, is appallingly low. Even if such a paradigm shift in income is decades in the making, simply opening up the doors of opportunity can pay untold dividends. Present the possibility of economic mobility and you instill in millions of impoverished Chinese a sense of burgeoning hope.

Deny them a chance at striving for economic advancement, and the Communist Party will pay a heavier price down the road. At 150 million people, China’s migrant worker population is a force to be reckoned with. In 1989, China’s government successfully thwarted protests of college students and dissidents numbering in the hundreds of thousands. Such suppression of an uprising would be unachievable when faced with even just a few million members of China’s floating population. Best to err on the side of caution. Don’t bite the hand that feeds your economy.

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One Response to Don’t Bite the Hand that Feeds Your Economy

  1. aaronmbr says:

    This is a very interesting point that you made concerning the rights of citizens in China. I agree with you that hukou system is flawed and needs to be reformed in order to prevent revolting within China, but I also believe that this has international consequences as well. If China were to experience a revolt from the masses of people, the government forces might not be able to control such an uprising with out resorting to violent means of suppression. If this happens other countries like Japan and Russia might see this as an opportunity to move into China, legitimize their presence and then get a foot up on China. Also because of the fact that China is now the worlds second largest economic power, it becomes a major issue when a large majority of the population is poor or unemployed, while the government continues to flourish. If China does not make changes to its current system it will experience major changes and outside nations will come in and try to force China to adapt. On Don’t Bit the Hand that Feeds Your Economy.

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