China’s portentous and sustained economic growth has impressed commentators all over the world, and is widely considered to be a history of success. Lured by double-digit GDP growth, enthusiasts and apologists failed for decades to see the human cost of China’s economic miracle, a cost brought mostly by the millions of rural migrant workers who made such rapid growth possible. Their lower status is sanctioned by a system of residence permits, the “Hukou” system, that effectively restricts their rights as citizens; their position within this system makes them prone to accept worse working conditions whilst allowing the authorities to dispose of them according to the needs of the economy. A leadership keen on inclusive and sustainable growth must address the issues faced by China’s migrant workers, and implement a radical reform of the Hukou system.
On May, 6th 2013, the death of a 22 year-old migrant worker named Yuan Liya brought the miserable position of China’s migrant workers to the attention of international media. Police maintained that she had committed suicide, but friends and fellow migrant workers refused to accept the official story and took to the streets of Beijing to protest. The BBC reported at least 100 people protesting against what they consider to be a police cover-up; bloggers and other media outlets said that the number of protesters was closer to a thousand. After anti-riot vans and security forces had been deployed, relevant search terms blocked on social networks, several arrests made (including that of Yuan Liya’s boyfriend, who was sentenced to four years in prison for his role in organising the protests), and despite the persistent skepticism of activists, bloggers and fellow migrant workers, the story eventually died out and disappeared from the news.
Whether caused by police brutality or poverty, loneliness and desperation, the death of Yuan Liya highlighted the dramatic condition of rural migrant workers in contemporary China. This vast underclass constitutes the hidden engine of China’s three-decade growth miracle. Their contribution to the country’s economic expansion has been determinant, and has also shaped the country in another way: the arrangements that made it possible for the authorities to control them have moulded China’s economic system into its peculiar style of authoritarian capitalism.
China’s economy has grown massively in the last thirty years. The strategy followed has been that of flooding the world’s markets with low priced versions of such goods as used to keep European and American factories running. Prices can be kept low in labor-intensive industries only if labor itself is cheap: Chinese factories and foreign companies based in China have been able to conquer the global markets because Chinese workers are inexpensive. But unlike most other commodities, the price of labor is not merely determined by the balance of supply and demand in markets. A labor market is a political construct, and keeping labor cheap doesn’t just require free markets. It needs active political involvement.
In post-reform China the instrument for the political creation of cheap labor is a system built upon the issuing of residence permits, the Hukous, that determine the locality in which the citizen has access to Welfare services. It is mostly this institutional arrangement that has made it possible for the authorities to exert control over this vast internal migration, and to regulate the movements of the population to accommodate the needs of industry and urban planning.
The Hukou system was created in the late 1950’s as an instrument for the rationing of goods in the context of a planned economy; the system tied the validity of coupons for goods to a specific locality, thus requiring the issue of a permit of temporary residence in the event of a relocation. This not only allowed goods to be rationed more effectively amongst different geographical areas, but provided authorities with a powerful tool to regulate the flow of labor between state owned enterprises, privileging those with higher demand. Furthermore, the control of migration from country to cities was crucial for the sustainability of an industrialisation strategy that, because it focused on heavy industries, required the intensive extraction of agricultural surplus from the countryside. The Hukou system made it possible for the Chinese authorities to maintain for decades a typical Stalinist mode of industrialisation, despite the heavy toll on the rural population.
With the gradual shift to a capitalist economy, the introduction of markets for labour and capital, and the progressive dismissal of state owned enterprises, the government has retained the system as a policy instrument to curb and control internal migration, restricting or loosening the flow according to the needs of the economy. The Hukou system enables the government to limit the access of migrant workers to urban centres in times of scarcity or when a city’s infrastructure is at capacity, and to force them to leave when ageing or illness prevents them from working (unemployed people without a valid permit don’t have a right to reside in urban areas). The system also restricts the access of rural migrants to welfare benefits in locations other than that where their Hukou permit has been issued, which usually is the worker’s birthplace, although children of a worker with rural Hukou will receive the Hukou of the same village or county as their parents, not of the city they were born in. Benefits are limited to those with city-issued Hukou.
The size of China’s internal migration from country to cities is staggering. According to Xinhua Agency, which reports data from China’s National Bureau of Statistics, by the end of 2012 the number of migrant workers reached 262 million. Because of their condition, these people are unable to participate in the country’s system of social protection: only 1 in 7 of them is participating in any form of pension and only 1 in 6 has medical insurance. In combination with this lack of access to most forms of social security, migrant workers are disproportionately employed in dangerous jobs, and as a result migrant workers accounted for 70% of all work related deaths in China in 2012 (according to the China Labour Bulletin).
In a 2010 paper published in the International Journal of Urban and Regional Research, leading scholar Kam Wing Chan calls the Hukou system “a mechanism of social control and the main tool for excluding the rural population from access to state-provided goods, welfare and entitlements”. He also notes the contradiction inherent in China’s free-market economy, still making use of “a major instrument of the socialist command apparatus”. This contradiction is perhaps the trademark of the country’s authoritarian and dirigiste version of Capitalism.
As a consequence of these restrictions, two different kinds of internal migrations coexist in contemporary China: a Hukou- based one, almost wholly made up of rich and educated migrants, and a non-Hukou one, composed of poor work migrants from the countryside without an appropriate permit. The second kind of workers are segregated in a parallel labour market different from that for regular residents, a separated circuit with worse jobs, lower wages and virtually no form of protection whatsoever. The fact that this division develops along a rural-urban divide evokes the memory of the “chengxiang eryuan jiegou”, the two-tier structure into which the pre-capitalist Chinese society was ordered, segmented between a relatively privileged class of urban citizens and a marginalised class of peasants devoid of rights.
As second-class citizens, rural migrant workers often find themselves at the mercy of both public authorities and employers. Many cases of physical abuse by factory supervisors and arbitrary detention by police have been reported. It is even common for employers to delay payment of wages and to force extenuating overtime hours, particularly in periods of excess demand. Other frequent practices include the arbitrary and illegal detention of a monetary deposit or the worker’s personal identifications, as a cautionary or retaliatory measure; withholding pay with the promise to give it back at a later date; and military-style regulation of workers’ lives, extending even beyond working hours.
As the frequent episodes of unrest, protest and suicide suggest, the economic strategy currently implemented in China is both economically and socially unsustainable. One phenomenon, that of the systematic exploitation of rural migrant workers, deserves special attention because of its size and massive impact on the economy and structure of Chinese society. Recent calls for reform of the Hukou system, both by the European Commission (Issue 26 of the ECFIN Economic Brief published in July 2013), and by Government authorities (such as the last Work Report, published during Wen Jiabao’s premiership), have not yet catalysed enough political will to address this institutional inequality. The primary reason for reform is the lack of institutional, redistributive and judiciary justice, which considerations should have a major influence on the Chinese government’s approach to regulatory policies for internal migration.
A sustainable and fair economic and social environment can be created only by radical reform of the Hukou system. This reform must include universal access to welfare provisions, with increased freedom in individual mobility and the protection of workers’ rights. Not only this is fair, it’s economically sound. China’s export-driven strategy is widely thought to be in need of a revision; the heavy imbalance towards exports that fuelled its growth expansion is primarily a symptom of domestic demand being insufficient. As the Chinese authorities are slowly beginning to realise, a rise in domestic consumption can be brought only by a rise in real incomes for the vast bulk of the population. This is inseparable from a reform of the Hukou system ending the discriminatory treatment of migrant workers.
Some changes have been introduced in more recent years: the public pressure that in 2003 followed the brutal beating of a 27 year-old migrant worker, Sun Zhigang, perpetrated by the personnel at the police station where he was awaiting deportation to his home village, pushed the government to swiftly reform the ‘Measures for the Internment and Deportation of Urban Vagrants and Beggars. Issued in 1982, this criminalised unregulated migration and allowed police authorities to detain and deport citizens not in possession of an adequate residence permit. Other changes have also been made, such as the ability for workers to buy temporary permits to reside in cities, although some argue that these changes do not significantly alter the structure of the system and that, crucially, they don’t affect its dual, discriminatory nature. But reforms are happening, although slowly and only after intense public pressure.
Maybe the protests stirred by the death of Yuan Liya are an example of the influence that, even in a deeply authoritarian State, disempowered individuals can exert on authorities. Perhaps a bottom-up change could be fostered especially by second generation migrant workers, who are more educated than their parents, more eager to attain positions of responsibility and prestige, have higher expectations of their careers and are less willing to accept exploitation. This second generation of migrant workers have never lived in the countryside and their identity is directly tied to the city where they have been living all their lives. As aptly expressed by the China Labor Bulletin, they don’t consider themselves “to be in any way ‘rural’ or even ‘migrant’”. Many grew up or were born in the city, and have never thought of returning to their Hukou-determined “hometown’’.
Commentators worldwide have repeatedly expressed admiration at the wonders of Chinese economic achievements. Impressive in its strength and rapidity, the grand picture of China’s growth in the last decades, a miracle of coordination and resource exploitation, understandably awes us. However, we should not overlook the grinding gears of the system, the millions of workers that have made this astounding process possible.
China’s migrant workers have been and continue to be essential to their country’s economic growth. They deserve better consideration from the authorities and, if not full-out support, at least an end to state-sanctioned discrimination.