China was able to maintain a good level of social stability over the past three decades primarily because of its use of old-fashioned government controls. Unlike Russian government leaders, who undertook economic and political reforms simultaneously, Chinese government leaders have maintained tight political power to create economic reform without political revolution. Reforms in education have decreased China’s illiteracy rate by more than half to less than 10 per cent of the population today. A greater number of Chinese citizens are now able to partake in opportunities that were not available to them three decades ago, improving China’s harmoniousness.
China still faces many social stability threats on its hyper-speed path to economic development. One of the biggest is income inequality. According to the China Academy of Social Sciences, China’s Gini Coefficient is 0.5. By World Bank standards, a Gini of 0.6 signifies that a country’s economic and social stability is at risk. China, with a continually rising income disparity, faces imminent social stability danger if the issue of income disparity is not addressed immediately. Further, the income disparity is not just between urban and rural areas — even the ratio of coastal-to-inland per capita income has steadily increased over the past 30 years.
Rural-to-urban migration remains a pivotal social stability issue in China. Though such migration provides opportunities for rural labourers to find urban jobs and accumulate savings, the pay is extremely low and often below minimum wage standards. Such large-scale migration also brings other social stability issues to China, including environmental pollution, health and sanitation problems, homelessness and crime. Alongside migrant workers, urban workers are also facing daunting prospects of unemployment — the current urban unemployment rate is estimated to be more than 4 per cent. With the rise of privately owned corporations, many employees of state-owned enterprises have been laid-off and now represent a significant part of the lowest-income population in China. This trend contributes not only to the rising income disparity but also poses a large problem for Chinese social stability in its own right as China moves towards market reforms and abandons the socialist-era state-owned enterprise setup.
China’s aging population is another threat to social stability. China’s birth rate ratio is currently 1.8. By global standards, a birth rate of 2.1 is necessary to keep a nation’s population constant. It is estimated that in twenty years China will have the oldest population in the world. Yet China has not developed a well-funded social safety net, so Chinese citizens continue to rely on their children for old-age support. This places a severe strain on the nation’s social stability, and constitutes a difficult challenge for the government, as the single-child generation will be responsible for taking care of two parents and four grandparents.
Corruption is another major social stability constraint. China has no system of checks and balances within its governmental structure. This exacerbates the tensions between central and local governments. If the central government tries to implement new reforms and allocate funding to certain social projects corrupt local officials may rent-seek and siphon the money elsewhere for personal gain.
A final factor threatening social stability is that the lack of a social safety net increases health risks. A 2005 report by China’s State Council Development Research Centre found that ‘the country’s medical insurance system currently covers less than half of urban residents (approximately 100 million people) and only 10 per cent of the rural population’. With such an inadequate social welfare system the Chinese population is vulnerable to the spread of infectious diseases as well as other imminent health dangers like chronic and non-communicable diseases. All of this undermines China’s efforts towards maintaining a healthy, harmonious society.
Because of growing discontent among many Chinese, who have been forced to deal with rural land confiscation, legal grievances and forced resettlements due to urban development, the number of protests and demonstrations has increased. Compared to the number of protests in 1993, the number of protests in 2006 has increased tenfold from 8,700 to more than 87,000. This past spring, a series of strikes by discontent migrant workers in foreign-invested enterprises dominated headlines across the world.
China needs to take proactive steps to combat increasing domestic social instability. It could start by creating a more reliable social safety net. This would help combat health issues, the aging population and potentially spur domestic consumption. Second, China needs to provide extensive rural income support, which will help mitigate current income inequalities and the rural–urban gap, contributing to a more harmonious society. A crucial third initiative would be to boost the underdeveloped tertiary sector. If China could switch to a more labour-intensive instead of capital-intensive growth model, it would be better positioned to decrease unemployment and increase labour absorption. If China wants to maintain its hyper-growth economy without falling foul of social instability it is imperative that it address these issues immediately.
Lena Ren is a recent graduate of Yale University with a major in East Asian Studies.
This piece was submitted as part of the Australian National University’s Asia Pacific Week Conference, held in July.