T03P10 - Political Economy of Social Policy Reform in China

Topic : Policy and Politics sponsored by Policy & Politics Journal

Panel Chair : Qian Jiwei - jiwei.qian@nus.edu.sg

Objectives and Scientific Relevance of the panel

Call for papers

Session 1

Policy Re-framing and Entrepreneurship in China’s Public Hospital Reforms: The Case of Fujian Province

ALEX JINGWEI HE - jwhe@eduhk.hk - The Education University of Hong Kong - Hong Kong, (China)

How policy problems are framed exerts significant impact on how policy solutions will be formulated. Policy framing vigorously shapes policy content. New framing can change the conventional perceptions of the causes of the problem and provide new vision necessary for presenting innovative solutions. Many previous studies have revealed the powerful role of issue reframing in social policy reforms. By examining the public hospital reform in Fujian Province, China’s nationwide “model” of health care reforms, this paper illustrates the dynamics of policy issue reframing and the role played by policy entrepreneurs. It elucidates the interaction between agent and structure and how this gives opportunities for policy reframing that opens the door for the introduction of innovative health policy reforms.  

The Political Economy of Chinese Health Reform:A Health Financing Perspective

Shaolong Wu - wushlong@mail.sysu.edu.cn - Sun Yat-sen University - China


The Political Economy of Chinese Health Reform:A Health Financing Perspective


Chinese health reform has come to the so-called deep water zone, which involves the change of the stakeholders’ power and interest. The stakeholder in Chinese health reform is the governments, departments, patients, hospitals and doctors, and drug manufacturers and distributors. To improve Chinese health system, the health reform not only need input more resources, but also need redistribute the stakeholder’s power and interest.

From the perspective of health financing, the first phase of political economy of China’s health reform is collecting money, which has been accomplished successfully in recent years with high health insurance coverage. The second phase is to administer, allocate, use and pay the public money for better health system performance, which involves the basic problem in the fund flow process: who get what, when and how.

After the public money was collected in China, which department should take in charge of the health insurance fund, or the Chinese government delegated authority to which department? The new rural cooperative medical insurance is ministered by department of health, and the urban employee basic medical insurance and urban resident basic medical insurance are administered by department of human resource and social security. When the central government tries to integrate the three insurance funds, the delegation problem emerges. The department of health and human resources and social security are both striving for the huge management power instead of better service.


Patients in China can choose a medical institution and a doctor freely, and they tend to go to high-level hospitals even for mild symptoms, effectively overcrowding those hospitals and overusing the health fund. Although many disorders could be treated in primary healthcare institutions with convenient access and at an affordable price, many patients are unwilling to go to these institutions owing to their lack of confidence in the health professionals’ skills and the quality of health care provided. How to limit the patient’s discretion of access to medical institutions and establish a Hierarchical Treatment Model? This is a great challenge for Chinese government because of strong opposition from patients and hospitals.


Though more than ten government departments manage the public hospitals, actually public hospital have big autonomy and no department could control them. On one hand, the fragment health insurance authority should be integrated to control the public hospital. On the other hand, the public hospital’s autonomy of income allocation and debt financing should be limited or cancelled because of profit-oriented overtreatment.


The public hospitals earn income though high medicine price (yi yao yang yi) under regulated low service prices. Due to corruption in the pricing process, the price of medicine in Chinese mainland is raised higher than Hong Kong, Macau, and Taiwan. The new money becomes the profit of drug manufacturers and distributors and the illegal income of some doctors instead of service delivery. Reduce drug prices and raise the wages of all medical staff, the government needs to redistribute the interests generated by drug price.


“Allocation of Authority” in China's Social Policy Reform

Qian Jiwei - jiwei.qian@nus.edu.sg - East Asian Institute, National University of Singapore - Singapore

For many countries, it is difficult to have institutional changes in the welfare system given the existence of vested interest, multiple veto players and constraints from the rules of formal institutions. While policies and institutions are resilient in some policy areas in the Chinese social welfare system, there have been large scale changes in some selected areas.By analysing recent cases in the Chinese social policy reform, this paper attempts to understand the peculiarity from the perspective of authority allocation.

Session 2

Reforms to Improve Education Accountability: Recent Experience from Beijing

YIFEI YAN - yifei.yan@u.nus.edu - Lee Kuan Yew School of Public Policy - Singapore

Accountability has frequently been highlighted as a key towards better education outcomes. However, current research on education accountability falls short in at least three dimensions. First, the emphasis is still largely discipline and control, with the equally important aspect of support and recognition fairly under-explored. Second, those which do study the latter kind of accountability mainly focus on short-term interventions. Long-term supportive interventions are not yet systematically studied. Finally, to the extent that transparency matters for accountability, studies so far highlighted more the static aspect of providing information, rather than the dynamic aspect of how such information is communicated among different stakeholders.


This paper intends to fill in the above-mentioned gaps by presenting, as a case study, recent reforms to improve education accountability in Beijing’s government middle schools. In particular, it zooms into three long-term supportive practices that involve all major stakeholders: training and career development for teachers, that for principals, and inter-stakeholder communication. Beijing’s experience freshly illustrates how a previously centralized apparatus is striving to match the needs and incentives at the grass-root level, as well as the merits and limitations within the top-down approach.


After introduction, Section II describes the traditional governance hierarchy in Beijing’s basic education system. Section III summarizes how training, recognition and communications are organized, with a particular focus on how these practices match with stakeholder incentives. Section IV critically analyzes the potential tensions and inertia among different stakeholders in a reform dominated by top-level agencies. Section V concludes with policy implications.

Equity in Redistribution to the Elderly and Children: An Intergenerational Conflict in Hong Kong?

Alfred Muluan Wu - wumuluan@gmail.com - Department of Asian and Policy Studies, The Education University of Hong Kong - Hong Kong, (China)

Similar to other developed economies, Hong Kong is an ageing society and it is argued that there is an intergenerational conflict over welfare resources between the older and younger people. A concern has arisen for a long time among social policy analysts about horizontal equity and intergenerational fairness. Individuals in childhood and old age (especially after retirement) receive most financial and other help from the government. Nevertheless, there is little research on public expenditure on the elderly and children in the Hong Kong context. In this study, we aim to tackle this important issue through analyzing public spending on the elderly and children using a mixed method. Policy implications are drawn to inform the debate regarding the financial sustainability and legitimacy of aged-related public expenditure in an Asian context.

Do women benefit from higher education? A study of female workers in the labour market of urban China

Jin JIANG - jjiang@ln.edu.hk - Lingnan University - Hong Kong, (China)

Qian Jiwei - jiwei.qian@nus.edu.sg - East Asian Institute, National University of Singapore - Singapore

The government social expenditure in China has grown dramatically in recent decades. In particular, the government expenditure on education was RMB 203 billion in 1998, but increase from RMB 385 billion in 2003, to RMB 1045 billion in 2008, and even leaped to RMB 2449 billion in 2013.  In terms of amount and increasing rate, the expenditure on education is larger than that of another two main areas—health, and social security and social assistant. The substantial change in educational expenditure coincided with the massification of higher education since 1999. During the reform, more and more female students gained access to higher education. According to the official statistics, female students in regular higher education intuitions was 4.74 million in 2003, which is almost triple of that in 1998 (1.6 million). The number further increased to 10. 8 million in 2008, and 13.8 million in 2013.  Moreover, female labour force participation rate in China is over 70%, which is relatively high compared to other Asian countries, and over 10% of female population in China has a college degree.


Against the backdrop of the policy reform of higher education in China, the number of female college-educated workers in the labour market is unprecedented. However, the impacts of higher education on labour market conditions for female workers are less well understood. To fill this gap, the current study examines whether and how women benefit from higher education in the labour market of urban China. We focus our analysis on the advantages/ disadvantages of college-educated female in terms of income and their employment in informal sector (i.e., working in registered small-scale private enterprises, self-employed, and flexible employment).


Drawing on a recent nationwide household survey (China Labour-force Dynamics Survey 2012) and the city-level statistics, this study finds that higher education in general has a significant and positive impact on female workers’ conditions. We find college-educated female workers are less likely to work in the informal sector and more likely to receive higher income, compare to those without college degree. Interestingly, female workers may benefit more from a college degree compared to their male counterparts in securing a job from the urban formal sector (i.e., state-owned enterprises, collectively owned enterprises, limited liability companies, shareholding corporations, foreign-owned companies and joint ventures). However, for female workers from rural areas, the impact from a college degree on income is significantly less compared to female workers from urban areas. And “glass-ceiling” effect of college-educated female workers also exists in the informal sector.


The Chinese All-Round Education Reform

Chen Wendy Daowen - wendychen0316@gmail.com - George Mason University - United States

Education is one of the top priorities for all countries around the world, and China leads the way in basic education in terms of students’ exam performances. However, with China’s rapid economic development over the past few decades, the Chinese government and its people have started to realize that Chinese students on average fall behind their counterparts in the West in a number of necessary skills such as creativity, mental health, physical abilities, and many argue that the traditional exam-oriented education style is to blame.


Therefore, since the late 80s, the Chinese government has tried to reform basic education by promoting all-round education (also known as quality-oriented education). A variety of new education policies were implemented due to the reform including reducing the amount of homework, increasing curricular not directly related to exam subjects, adding teachers’ training for all-round education and so on. However, due to the size and complex political and economic structures of the country, the implementation of the policies varies in different regions. Take Shanghai as an example, as one of the most prosperous cities in China, it receives more financial support from the government than other smaller cities over time. But, (1) how does the all-round education reform in Shanghai impact students’ i) interest and knowledge in science and innovation, ii) comprehension of music and arts, iii) mental health and motivation, iv) habits of learning, and v) physical ability? (2) What is the relation between the local government funding and the results of the all-round education reform? (3) What is the role that the local government and institutions plays in this reform?


The all-round education style has been found vital in increasing students’ creativity and innovation skills etc. in western countries. However, although the Chinese government has put a large amount of financial investment in the all-round education reform, the effectiveness of the reform and the role the local governments are playing remains unclear.


Because the results of all-round education are hard to estimate, so far almost no extant studies have done a thorough investigation of the Chinese all-round education reform from the perspective of political economy. This paper, as one of the first attempts to examine these issues, adopts an interdisciplinary perspective with both theoretical and empirical approaches. The study focuses on Shanghai and uses the PISA (Program for International Student Assessment) survey dataset. The Program for International Student Assessment surveys students’ knowledge and skills that an all-round student is supposed to have. Shanghai has participated in the PISA study since 2000. Therefore, this study is able to compare the results over time and associate them with the local economy, government’s financial support, and the role the local government plays. The policy implications are provided as well. The study will contribute to the literature on Chinese education reform from the perspective of political economy.

Session 3

Capabilities Development Among Elderly Chinese: a Comparative Study Between two Different Hukous

Birgitte Egeskov Jensen - bej@dps.aau.dk - Aalborg University (and Chinese Academy of Sciences) - Denmark

Capabilities Development Among Elderly Chinese: a Comparative Study Between two Different Hukous

The hukou system has immense power over the Chinese people as a concept that relates to people's social and economic positions, it has institutionalized inequality and discrimination against people with agricultural hukous, which seriously limits their capabilities development. The situation is worsened by the skewed demographic composition of the rural areas. The rural demographics have become increasingly disproportionate as elders and children are left behind, due to massive rural-urban migration by the working generation. Due to migration, the traditional intergenerational contract has changed, where the elderly must continue to do a considerable share of the agricultural work, as well as care for the left-behind children. This potentially creates a situation where land may be left uncultivated, resulting in poverty and increasing dependency on welfare for the left-behind elderly, combined with a massive take-up problem.
Rural citizens are, from a historical institutionalist perspective, perpetuating a path dependent sense of self-providing resilience created under the ‘Iron Rice Bowl’, relying heavily on family support. This in turn makes migrant workers and their left-behind families very vulnerable, seeing as migrant workers do not always earn enough to send home remittances, furthermore are they, due to the persistent discrimination of rural hukou holders, highly susceptible to ill-treatment and long periods of unemployment with less than adequate unemployment protection through the MSLS.
This article will contribute to the current debate regarding the segregational power of the hukou system within the Chinese ‘appropriate universal’ welfare system. The approach taken in this article will provide an unorthodox perspective from which to view the hukou divide, by exploring an alternative stream of development thinking termed ‘the capability approach’ by Amartya Sen. Through this approach I examine the divide created by the hukou system by exploring equity in capability development across the hukou divide. It becomes a crucial question whether the institutional logic of the hukou system is inhibiting elderly people and limiting their capabilities in their realm of autonomy.

Property Tax, Home Purchase Restriction, Expectation and Housing Prices: An Empirical Study of 35 Large and Medium-sized Cities in China

Cheng Ruijie - r.cheng@u.nus.edu - Lee Kuan Yew School of Public Policy - Singapore

During the past decade, property prices have been experiencing a dramatic and uninterrupted increase in Chinese housing market and the upsurge housing price has been a public concern. There are discussions that China's housing market has gone too far ahead of itself and cannot be well explained by fundamental variables, instead, macroeconomic regulation and control on prices has strong explanatory power. The government has carried out a series of macro regulatory measures. However, housing prices still keep going up. People begin to question the effectiveness of various regulatory policy tools. Housing market regulation is a systematic project. Aside from the considerations of policy tool effectiveness, the logic of response by the general public should also be taken into account.


In this paper project, I investigate two housing regulatory policies in China (home purchase restriction policy starting from 2010 and the trials of property tax reform in Shanghai and Chongqing carried out in February 2011) and the market expectation and empirically examine their roles in influencing housing prices. My methodology is a pooled OLS and fixed effect panel regression analysis based on 35 large and medium-sized Chinese cities by adopting monthly data from 2007 to 2011.


Based on the estimation results, I find that home-purchase restriction policy significantly reduces the housing prices by 1.2 per cent according to pooled OLS regression model estimation and the property tax trial in Chongqing significantly reduces the housing prices by 1.7 per cent, while the property tax trial in Shanghai has a significant positive effect on the housing prices, robust to pooled OLS model and fixed effect model estimations, suggesting a policy failure in the experiment in Shanghai. Expectation significantly contributes to the large proportion of the increase in the housing prices. More than 80 per cent rise in the housing prices can be explained by the market expectation for housing prices to continue going up.  


This paper aims at understanding housing policy reform in China and will contribute to the general knowledge of political economy in social policy areas in China in a broad sense, which falls into the scope and matches the interest of the panel.


Determinants of China’s land supply for affordable housing: A city-level analysis

Zhiyong Hu - zyhu@eduhk.hk - The Education University of Hong Kong - Hong Kong, (China)

Qian Jiwei - jiwei.qian@nus.edu.sg - East Asian Institute, National University of Singapore - Singapore

China’s booming housing market and the resultant skyrocketing housing prices in Chinese cities during the past decade have led the Chinese government to step up its effort to provide indemnity housing for low- and middle-income households. Despite the central government’s renewed policy focus on low-income housing, the real pace of low-income housing program in urban China has been too sluggish to achieve its intended objective. Based on a panel dataset of land supply in Chinese cities at prefectural level and above between 2009 and 2013, we in this paper examine the political-economic determinants affecting local governments’ commitment to affordable housing land supply. The empirical findings identify a significant negative relationship between urban governments’ reliance on land finance and the share of residential land supplied for affordable housing. Cities with strong fiscal capacity were likely to reserve more land for indemnity housing, while increasing fiscal autonomy with reduced reliance on central transfer tended to undermine local governments’ incentive to provide affordable housing land. Geographically, cities in inland area with low demand for affordable housing were more willing to supply land for such purpose. The study suggests that the project of indemnity housing provision in urban China cannot be successfully implemented unless local governments’ vested interests in landed property are weakened.

Export PDF