April 17, 2015, by Editor
China’s New Urban Poverty
Written by Dorothy J. Solinger.
Beginning in the second half of the 1990s, poverty emerged in Chinese cities as a novelty under the rule of the Communist Party. Prior to that time, pockets of penury were concentrated either in rural areas, where some 200 millions were still said to be in dire straits at the start of the reform era in the late 1970s, or else in particular regions of the country, especially in the provinces of the northwest and the southwest. Indeed, in the closing years of the last century scholars researching the issue of the indigent for the most part focused their investigations primarily either on the growing gaps between the more well-to-do municipalities and the progressively poorer countryside, or else on the steadily enlarging disparities between the eastern seacoast and the inland and far west areas. Only in recent years have Chinese researchers and Western scholars begun to concern themselves with the novel phenomenon of large numbers of poverty-stricken people living within China’s large cities.
This newfound direction in research on the urban poor is in part a function of growing interest in the huge alterations that have taken place in China’s social structure as a result of the change in the economic mechanism. It is also a result of reflections upon the desperate need of the Chinese polity to undergird the livelihood of the lately laid-off and unemployed masses in the cities by constructing a still incomplete social welfare system to replace the defunct work units of the pre-reform era.
The cities, for the most part, appeared up until the middle of the 1990s to be islands in which job-secured workers could be certain that their livelihood, health, and living abodes would evermore undergird their sustenance. Certainly at least until the late 1980s, urbanites who stuck with the state-sector considered good treatment on the job a kind of birthright, an entitlement that was sure to be enforced. In the cities, true, there had always been the disadvantaged after 1949–those without offspring or spouses, the disabled, and people unable to support themselves. But such individuals generally survived in the shadows and out of sight, subsisting but just barely, as members of the “three withouts” on a mere pittance in the form of meagre “social relief” from civil affairs departments.
Not only did cities seem immune from the perils of hardship up until two decades ago, but there was even reason to hope that reform-induced upgrading in living standards was to continue for everyone in them. The dawn of the switch to the market economy in the early 1980s was accompanied by the credo that the wealth being generated–first by the fertilization lent by the inrush of foreign capital along the coast and later by rapidly shooting sprouts of the private sector–would in time shed seeds that fostered prosperity much more widely. As glittering material emblems of economic “reform” in the metropolises became paired with apparently instant success for some, even the envious gingerly and hopefully abandoned their faith in the old, Mao-inspired ideal of a pervasive plateau on which the populace as a whole would dwell–if quite modestly–one on which there were to be no obvious peaks or troughs.
Optimism, especially in macro/average terms, was fueled by statistics such as the following: during the Ninth Five-Year Plan period (1996 to 2001), per household disposable income increased at an annual per capita rate of 5.7 per cent in real terms in the cities, while the urban wage for staff and workers experienced an average per person annual increase of 15.9 percent. Permanent residents’ average disposable income had climbed up to 6,860 per year, an improvement of nearly 19-fold over the year when reform began in 1978.
But evolving externalities of these very uplifting improvements in economic strategy had already begun to become manifest in the cities after 1994, especially once the state-owned firms succumbed to competition from imports, as well as from the non-state and foreign-invested sectors. For in these other portions of the economy the responsibility the state had long bestowed on the state-run enterprises to provide welfare and other benefits for the staff and labor force was absent, thus enhancing the relative profitability and competitiveness of the non-state firms. State-owned plants also suffered from central governmental bouts of budget tightening and inflation control, both in the late 1980s and again in the years between 1993 and 1996, when the customarily lavish credit that state firms ordinarily counted on was temporarily cut off. Other direct causes of the plight of the official enterprises included the obsolescence of much of their equipment, added onto the serious mismatch between the largely unschooled nature of a huge segment of the workforce (owing to its coming of age during the years of the Cultural Revolution) and the type of demand issuing from the market, as the economy underwent its marketization.
For a significant segment of the old proletariat in the factories of China’s metropolises the mounting losses among state companies spelt involuntary unemployment. Indeed, according to China’s own National Statistical Bureau, “the number of workers employed in the state-owned sector fell from 113 million to 67 million, a decline of 40 percent over the five years 1996 to 2001. And, in turn, much of the new urban poverty that surfaced in this period was the immediate product of job loss. For the first time in the cities of the People’s Republic, there were widespread instances of people with work ability and a desire to work who were unable to find jobs.
In 1993, a program entitled the zuidi shenghuo baozhang zhidu [minimum livelihood guarantee system] (colloquially known as the dibao), was initiated in Shanghai to cope with this new-found destitution, and it spread nationally in the years thereafter. But by September 1999, the recipient population amounted to a mere 2.82 million people. Still, progress had been made: of those being served, just about a fifth were traditional targets of civil affairs relief, with the remainder being the newly poor. Monies allotted had risen substantially as well: in the first nine months of that year, 1.5 billion yuan was allocated for this program, a ten-fold increase over the total of funds that had been spent on relief just seven years before.
During the year 2001, in the midst of recurrent and sizable protests by laid-off workers, however, there was a massive upswing in the monies that the central government invested in the program (no doubt in order to cope with the evident anger of the dismissed proletariat), with the result that the numbers of recipients shot up quickly. By late 2003, over 30 million people had been assisted by the project (though only somewhat over 20 million were official recipients). Around that point, China’s National Bureau of Statistics, in collaboration with the State Council Research Office and several other agencies, discovered that nationwide 20 to 30 million urban-registered workers had fallen into poverty, and that, with their family members, they added up to about 40 to 50 million people, or almost 13 percent of the urban population. In 2006, World Bank researchers found that 7.7 percent of the total urban population had a net income below the relevant dibao line in their cities of registration, and that only about half of this eligible population (3-4 percent of China’s registered urbanites) was receiving the assistance.
The statistics showing 30 or even 50 million poverty-stricken urbanites, though, are far from complete. This is because such figures omit from the count rural migrants living in cities, who do not hold urban household registration (and so are ineligible for the urban dibao) and whose numbers in the cities had surpassed 150 million by 2015; these migrants earn only about half the income that urbanites do on average.
As two commentators on the dibao program concluded, “The dibao merely prevents recipients from starving.” Indeed, beyond ensuring subsistence, the subtext of the venture contains the further objectives of securing “social stability” and facilitating enterprise restructuring. In 1999, as the national scheme was getting underway, one writer went so far as to refer to the dibao as a ‘tranquilizer’, which would permit the state enterprises in Shenyang’s Tiexi district (a site of massive layoffs) to go forward without obstruction. For without it, this essayist unabashedly penned, “These people must become a burden that the enterprises would find hard to throw off…possibly arousing even larger social contradictions.”
Besides the paltry size of the handouts, its beneficiaries experience stigmatization and restrictions that add to their ordeal of material deprivation. While about 100 home visits in eight cities over the years 2007-2014 have nearly unfailingly confirmed this unfavorable reflection, comparisons with similar schemes around the world only bolster the views. Moreover, the trend in the project’s operation over its 16 years in nationwide existence–signaling intensifying frugality–seems to march in step with the submissiveness its subjects have displayed. This parallel development (diminished protests and decreasing provisions) shores up my pessimism.
While distribution is managed locally, administratively national uniformity obtains. The process is inherently shaming: a three-level assessment process puts applicants through repeated appraisals of their household’s income, first at the community [shequ] level, then at the street [jiedao] tier, and lastly, where the final decision is made, in the district [qu]. Not only do these investigations entail community workers entering the home and digging for hidden possessions; they also call for neighbors to engage in a “democratic selection” of recipients and for a public posting within the shequ informing passersby of the family’s income, data that fellow community members are encouraged to challenge. Many cities, hoping to save funds, have set up lists of articles (computers, cell phones, fancy pets, motorcycles) the possession of which is to automatically cancel a potential recipient’s chances to secure the funds.
A major source of the shortfall is that “the scheme is underfunded,” with dibao payments being “too low to assure that the dibao line is reached,” researchers have found. A crucial question in evaluating the worth of the program is whether its beneficiaries can subsist just on its payments. Judgments are inconclusive. Some beneficiaries do struggle mightily to do just that. And a Civil Affairs Ministry official who manages the program nationally alleged in late 2014 that, “Among the dibaohu [the Chinese term for the recipients], staying home is very common.” Nonetheless, scholars investigating in Shanghai from 2009 to 2011 discovered that, “Very few families relied on the dibao as their sole source of income, with many getting support from retired parents, relatives, and through informal employment.” And an informant from a small Heilongjiang town that year related that, ‘many [there] find jobs,’ ideally jobs not offering a contract, affording concealment of their work and its wages.
Those taking the dibao are a very sorry lot. As of 2002, about two-thirds of recipient families were saddled with one or more persons chronically ill or suffering from serious illnesses, while a third had a disabled person at home, according to the Ministry of Civil Affairs. The most recent official tabulation shows that over 60 percent of the participants were of working age in 2013; in 2013, 38 percent of the beneficiaries nationwide were unemployed, with another 22 percent working only occasionally in one flexible, temporary position or another (and, doubtless, often shifting among such slots). They also eat very poorly: a third could afford meat or fish just once per week, while nearly three quarters were unable to buy any new clothes at all. Over 60 percent lacked means to purchase daily necessities costing over 50 yuan. Additionally, only 30 percent could manage to pay the fees for seeing a doctor if they become ill. These findings resemble those researchers uncovered in 1998. One cannot help but wonder how families who subsist just on the dibao could have managed to survive while so malnourished for more than a decade. If they do labor, their casual employment clusters in sectors where prestige is low, such as pedicab driving and other kinds of transport and hauling, and housework. Less than 1 percent perform skilled labor or even low-level office work.
At the start of the program, around 1998, the average dibao norm (poverty line) across China represented 26.7 percent of the average disposable urban income. But that figure has dropped steadily with time, until, in 2010, it reached a tiny 13.8 percent. Raw figures demonstrate the low numbers: as of September 2013, the line as a national average was just 362 yuan per person per month, ranging between 277 in Ningxia and 640 in Shanghai. For wages the story is similar: in 1998, the urban average poverty line (dibao norm) amounted to 20.5 percent of the mean wage in very large cities. By 2011, it had declined to 7.8 percent of the average wage in state firms. All told, the livelihood—or, at the very least, the relative livelihood—of the dibaohu is clearly a topic of declining moment.
Inherent weaknesses in the program include that, unlike social assistance programs in much of the rest of the world, China’s does not aim to develop human capital; as against “conditional cash transfers,” common in the developing world that require that grantee mothers bring their children to clinics and take them to school, the dibao puts no demands upon recipients. Moreover, the tiny budgets of these parents are totally inadequate to prepare the children for what is vicious educational and job market competition in China today.
A second problematic issue intrinsic to the program has to do with targeting success: the capacity of the dibao to accurately pinpoint those who deserve to receive it, and to winnow out those whose income is above the line, has been questioned. “Leakage” to the non-deserving likely has its roots in bribery and fraud, both of which have been reported not infrequently.
Another issue is that, especially in areas where funding is terribly tight, there is a widespread practice of considering the poor to be in receipt of types of income for which they are in principle eligible–such as wages, allowances for the laid-off, or unemployment insurance–which they are in fact not receiving. Thus, resident committee personnel and civil affairs officials in the financially more strapped places strive to save money by skimping on their outlays in this manner. There are also lapses owing to the low educational preparation of work personnel, failures of coordination among relevant bureaus, and insufficient technological support in information use and storage.
Other bases for pitfalls can be traced to the poor themselves. Certainly the inability to live just on the dibao drives some impoverished to take up odd jobs and even start small businesses; they then feel compelled to hide their income. Undeclared income in turn renders it usually impossible for program managers to assess applicants’ actual neediness.
The government has made attempts to help the urban poor–especially the laid-off and otherwise unemployed–to help themselves. Efforts involve small-scale credit, training programs, tax cuts for setting up ventures, and reemployment services. The fact, however, is that the poverty-beset are, sadly enough—given the poor health and low levels of education among the majority of them–usually psychologically, intellectually, and physically not really capable of responding to these programs. Totally deficient in competitive ability, afraid of entering the high-stress employment market, or fearing the loss of their dibao, some recipients’ disinclination to work is understandable.
In sum, the dibao project is inadequate, belittling, debasing and impoverishing. Yet even if these traits are typical enough in social assistance everywhere, China would appear to be less generous than elsewhere. Hoarding its collective resources to mount flashing neon lights and to fabricate fabulous, towering edifices–structures flanked by racing, high-speed roadways–the country registers as more frugal toward its unfortunate than are other states.
Thus, low-skilled, now laid-off workers have been left almost entirely to their own devices. I would argue that this happened since they are viewed and treated as a blemish on the visage of the nation as it stretches toward modernity. My outlook resonates with the country’s campaign to raise the ‘human quality’ of its populace, with its implicit exclusion from the mainstream of those who cannot make this grade. For this reason, the dibao keeps the poor, most of whom are too ashamed to show their visages, largely out of sight. Snobbery goes a long way to elucidating the shabby treatment these people are accorded.
The next pillar undergirding my negative view of the destitutes’ predicament is the changes the program has undergone over a decade. These transformations are likely a function of the dwindling perceived value to the regime of bothering with the dibao grantees—supporting their livelihood just no longer seems worth much money. The relative decline in their take rests, I judge, upon the low utility now accorded these once-workers as a site for injecting state investment after they have grown largely mum. Additionally, a 2012 State Council regulation added a new criterion: an applicant family now must expose for examination every form of its assets, including motor vehicles, insurance, housing, savings, any negotiable stocks its members might own, the sum of its tax payments, and its mortgages, not to mention its income.
And there is yet one more clue demonstrating the state’s altered appraisal of the program’s recipients: it has become increasingly difficult to obtain the allowance at all. The ability to labor has more and more become a line dividing who is eligible from who is not. As one neighborhood official expressed it in 2012: “A person aged under 50 with work ability can’t get the dibao now; the policy has become very strict. If s/he can’t find work, that’s not a condition for getting the dibao. We encourage them to work.”
In sum, I surmise that benefits have plummeted precisely because the targets are largely no longer raucous, and consequently no more either a threat to the state nor a thorn in the side of the larger reform. The outcome has been a steady downslide in what is doled out to the dibaohu, relatively speaking. Grown silent, they match quite neatly the premise of Piven and Cloward’s jaundiced but telling interpretation of welfare: “The size of the welfare rolls is not a response to the needs of the poor but…to the trouble they make.” It would seem that only massive havoc on the highways would be enough to stir the country’s decision-makers. And this the weak, ill, and deserted are not apt to mount.
Dorothy J. Solinger is Professor of Political Science at the University of California, Irvine. Image Credit: CC by Carsten Ullrich/Flickr.
Cited in Albert Park and John Giles, “How has Economic Restructuring Affected China’s Urban Workers?” (Ms., October 2003), p. 1.
Tang Jun, “The New Situation of Poverty and Antipoverty,” report published as a chapter in Ru Xin, Lu Xueyi, Li Peilin, et al., eds., “2002 nian: zhongguo shehui xingshi yu yuce (shehui lanpishu): [Year 2002: Analysis and Forecast of China’s Social Situatiuon (Blue Book on Chinese Society)], January 1, 2002. [FBIS Translated Text].
Zhonggong zhongyang zuzhibu ketizu [Chinese central organization department research group], 2000-2001 Zhongguo diaocha baogao–xin xingshixia renmin neibu maodun yanjiu [2000-2001 Chinese investigation report–research on internal contradictions within the people under the new situation] (Beijing: Zhongyang bianyi chubanshe [Central compilation & translation press], 2001), pp. 170-71.
 According to the regulations on the dibao program, each city is charged with setting its own dibao norm or poverty line, calculated as the amount of funds a person needs to stay minimally alive.
 S. Chen, M. Ravallion and Y. Wang, “Does the Di Bao Program Guarantee a Minimum Income in China’s Cities?” in Jiwei Lou and Shuililn Wang, eds., Public Finance in China, (Washington, D.C.: World Bank, 2006).
Fulong Wu and Chris Webster, eds., Marginalization in Urban China: Comparative Perspectives (Palgrave/Macmillan, Houndmills, Basingstoke, 2010), p. 303.
 L. Ding, “Cong danwei fuli dao shehui baozhang–ji zhongguo chengshi jumin zuidi shenghuo baozhang zhidu de dansheng” [From unit welfare to social security–recording the emergence of Chinese urban residents’ minimum livelihood guarantee system], Zhongguo minzheng [Chinese civil policy] (1999), 11, p. 7.
Martin Ravallion, “Decentralizing Eligibility for a Federal Antipoverty Program.” World Bank Economic Review, 23(1) (2009), pp. 22, 23.
Y. Wong, H. Chen, and Q. Zeng, “Social assistance in Shanghai,” International Journal of Social Welfare 23 (2014), p. 338.
Leung, J. and Y. Xu (2014), China’s Social Welfare, Cambridge: Polity Press, draft ms., p. 144.
Frances Fox Piven & Richard A. Cloward, Regulating the Poor, NY: Vintage Books (1993), [rev. ed.], p. 336.