Highlights

Examining China’s Reform from the Perspective of Domestic Services

Fuping Development Institute is a privately held non-for-profit organization in Tongzhou, Beijing. It was founded in March 2002 in order to help women from distant and less developed regions to get employed. The Institute trains household service personnel (i.e., nannies). When the School was founded, being a nanny did not require much education, or technological expertise, but a warm heart that’s serving and caring. So far, this Institute has trained over 28,000 people in 13 years, 95% of whom have obtained jobs with the help of the Institute. The wage in 2002 was RMB 450 (i.e., income excluding accommodation expenses). Now, the wage has risen to RMB 3,500, almost ten times. In the meantime, the CPI has risen by 38% (see China Statistical Yearbook 2014).
 

70% of the 28,000 trained personnel come from the least developed areas in Gansu Province. Women in those areas not only suffer from heavy labor, but also from low social and family status due to the old thinking. They have to work hard and bring up children, which is their lifetime career. The closeness of the environment results in the loss of hope and confidence for most of the women. However, thanks to Fuping Development Institute, those who are brave and open-minded have managed to come to Beijing and found new opportunities for themselves and their families. The economic independence has also altered their social status. Compared to others, they have become more knowledgeable. They have also obtained a say in areas where they were not entitled in. They are respected, and confident. Their lives have been changed. 
 

If these 28,000 people are employed, the value they create on a yearly basis is about RMB 1.8 billion (provided that money income and accommodation expenses amount to RMB 5,500). Should they have not come to Fuping Development Institute and stayed in their villages, their contribution in the GDP terms would not have exceeded RMB 170 million (providing that individual creation of value amounts to RMB 500 monthly). Fuming Development Institute was built upon private investment of some RMB 300,000, and yet it contributed more than RMB 1.6 billion to the GDP. I would call that a very good investment project. If this GDP share is used to purchase, such as making phone calls, or purchasing stuff in supermarkets, the tax revenue collected by the government will amount to over RMB 300 million (The macro tax burden of China accounts for 20% of the GDP).
 

In the beginning, 80% of the students here at the Institute were young girls who were around 20 years old, and very few middle-aged women. Now, over half of the students are in their 40s. The shift is attributed to the shortage of labor in China. Young people have better opportunities in the labor market where they become workers and white-collar office staff, instead of waitresses and nannies.
 

In the past, many people left their homes to find jobs because of economic reasons, such as debts, or the lack of labourers at home. Now over half of the students at the Institute come here because they have to support their children in colleges. They are not without choices, but are rather seeking for a better future and a shift from the low-income class to the middle-income class.
 

In regard to the educational background of the students, the early students were of elementary school education background mostly, and few of them could even speak Putonghua (Standard Chinese) properly. And now more and more middle-aged women who come here are of middle school education background. They not only know how to use the Internet, but also know how to dance and sing. They perform in the get-togethers during the Mid-Autumn Festival and even made it to the Spring Festival Gala of the migrant workers for three consecutive years. In terms of the income situation of the students, most of the early students came to the Institute with only one backpack. But now they come with suitcases and smartphones. In the past, the Institute was equipped with several public phones, and students would have to queue to call home. But now, everyone has their phones and the public phones are not used any more.
 

To look at the working conditions of the service industry, domestic services were looked down upon in the past. Clients lacked respect for their nannies and disputes often rose. Things have improved now. Most of the nannies are treated with respect. In the past, there was no day off for nannies, and then there were one or two days off every month. Now, nannies can get a day off every week (in the future, they can expect to have weekends). During their days off, the students can take a break. The Institute organizes them to go to parks, learn how to use computers, examine their physical health, and learn new skills for free. For some students who get ill, an emergency medical fund is called for (the fund comes from donations from the society).
 

These students who work in Beijing for a few years can also move on to find other opportunities to their wish. For those who move up a level and become professional domestic service personnel, their income can double. Some students have their family move to Beijing, some become self-employed and have their own business, some go to college, and some even go abroad to make the best use of their skills. After all, Fuping Development Institute has changed their life in ways they could not have imagined.
 

The change in Fuping Development Institute took place in the bigger background of China. In the past few years, the average income has more than doubled. More and more families can afford domestic services, which creates demands with higher wages. The clients are also becoming more and more civil. Thanks to the western values such as equality and freedom, the clients become more and more respectful towards domestic service personnel. This can be considered a huge change in a country with thousands of years’ tradition of a feudal society.
 

Reforms have benefited everyone. Some have doubts about the improvement of the low-income class. But considering the changes in the domestic services, their doubts may not hold water. Those in this industry are from the lower class of the society, because this industry is looked down upon. Anyone who can take jobs in other professions may not wind up in this industry. The enormous change in their lives indicates the enormous change to the society.

MAO Yushi, Honorary President of Unirule Institute of Economics

Current Events

Unirule Master Thoughts Class(2014) 4th Session Held in Beijing

March 14th to 15th, Unirule Master Thoughts Class(2014) 4th session was held in Beijing. This session was gracefully joined by Professor MAO Yushi, Honorary President of Unirule; Professor SHENG Hong, Director of Unirule; and Professor SUN Liping from Tsinghua University. 

Unirule Salon for Young Scholars(VIII) Held in Beijing

Afternoon of March 16th, Unirule Salon for Young Scholars (VIII) was held at Unirule office in Beijing.

The theme of this session was “The Spirit of Capitalism and the Anti-Capitalist Mentality in China and the World”. This session was proud to present Professor Jonathan Haidt and Professor MAO Yushi, two of the Prospect’s “World Thinkers”.(To read more)

2015 Unirule Academic Committee Annual Meeting Held in Beijing

On the morning of March 19th, Unirule Academic Committee Annual Meeting was held at Unirule office in Beijing. Eight Unirule Academic Committee Board members including Professor MAO Yushi, Professor GAO Quanxi, and Professor CHEN Zhiwu attended this meeting.(To read more)

News

Unirule 10-D Spatial Simulation Planning Model (SSPM)

The Unirule 10-D Spatial Simulation Planning Model (SSPM) is a mathematical and computational model based on economics. It is developed by a Unirule research team led by Professor SHENG Hong. SSPM is designed to simulate the development scale, economic density, industry distribution, resource constraints, ecological preservation, institutional influence, policy effect, and the evolution process in the next ten to twenty years or even longer period for a region. SSPM provides reference for the regional economic development strategy making, which can be directly adopted in the planning on regional economic development, population, land use, industry development, townships, water and ecology.

So far, SSPM has been adopted in the industry planning of Qianhai Area, Shenzhen, and the economic development planning of Yangcheng County, Shanxi Province.

Learn more about the SSPM

Current Researches/ Consulting

Improving China’s Implimentation and Supervision Institution of the Constitution

At present, research on the implimentation and supervision institution of China’s constitution is insufficient. Multiple problems exist in the current studies, such as the lack of a cultural perspective, and empathetic understanding of China’s political tradition; a lack of authentic Chinese perspective and an indulgence of Westernized framework of analysis; and a lack of reflection of the reality and the existing political framework.

The research on China’s constitution review institution should put the protection of civil rights and constitutional construction first, with a reflection of China’s reality and take in the advantages of external researches. A plausible research approach is as follows: 1. This research ought to provide a right relief mechanism; 2. It should take into account that China is a vast country with imbalanced regional development realities which foster unique and differentiated conceptions of the law and politics in general; 3. It should be built upon the current constitutional structure and take into account the interactive system of the power of the party, the National People’s Congress, etc. in order to make it a progressive research, which can enable the elements of constitutionalism to supplement the current constitutional framework; 4. Scrupulous examination should be given to constitutional practices in other regions and cultures, especially those influenced by the Chinese culture or with a similar institutional set-up, such as Taiwan and France; 5. Observations should be made in regard to the traditional Chinese institutions, such as the institution of the expostulation system (“谏议制度”, or giving advice),  supervision system, and the institutions established in this light, e.g., Taiwan’s Control Yuan.

Improving Entrepreneurs' Survival Environment: Abolishing Death Penalties in Relation to Fund-Raising Cases in China

In recent years, environment for private enterprises has been taking a deteriorating turn, which attracts attention from the media and the academia. The causes are complex and multi-faceted, including: 1, the abuse of powers by government officials as the government powers expand; 2, “the private-owned deteriorating with the state-owned advancing” (guojin mintui) worsens the picture where the survival environment for private enterprises gets more and more squeezed; 3, external demands of enterprises decrease while internal cost increases; 4, financial suppression escalates with the industrial restructuring and updating lagging behind; and 5, the fluctuation of macroeconomic policies by the government poses uncertainty for production and investment. Moreover, many innocent entrepreneurs were labeled and persecuted for their “gangster behaviors” by the policy and law enforcements in Chongqing city, which was just a glimpse of similar occasional “gangster crashing” movements in the country. Many entrepreneurs are suppressed and sanctioned in the name of “illegal fund-raising”. According to active law, the court can sentence entrepreneurs to death penalty with this charge.

Unirule Institute of Economics is planning to undertake research on the problems of the crime of “illegal fund-raising” and specific methods to abolish this charge.

It is fit for Unirule to carry out this research project. Unirule Institute of Economics is a non-profit, non-governmental organization, which focuses on institutional economics with expertise in economics, laws, and politics. It has been dedicated to independent research on China’s institutional reforms and public policies as well as the reform of private finance. In 2003, 2011, and 2013, Unirule held seminars on the cases of Mr. SUN Dawu, Ms. WU Ying, and Mr. ZENG Chengjie. These seminars have been very influential before and after the close of the cases.

Unirule Institute of Economics has undertaken research projects in corporate finance and private finance in recent years. Over the years, Professor FENG Xingyuan has been carrying out pioneering research on private finance and private enterprises. He has gained rich experience and published many publications and papers on relevant topics, including “Report on the Freedom of China’s Corporate Capitals”, “Report on the Survival Environment of China’s Private Enterprises 2012”, research on the risks of private finance, etc. In August 2013, Professor FENG Xingyuan and his research team completed and released the “Report on Private Enterprise Fund-Raiding in West Hunan and the Case of Mr. ZENG Chengjie”, which analyzed and assessed the process, nature, problems, and causes of a series of events and proposed policy recommendations concerning the fund-raising activities in West Hunan and the case of Mr. ZENG Chengjie.

Business Ethics Declaration of Chinese Entrepreneurs

Over the last three decades, China’s economy has been embracing rapid growth with entrepreneurs being a key drive. The biggest and most significant structural change is the rise of entrepreneurs who constitute the pillar of the society nowadays. Today, the biggest, and the youngest group of entrepreneurs are going international, bridging China and the world.

However, because of the abnormal political, social and ideological environment of China for the last five decades, Chinese entrepreneurs happen to be widely confused and for the last thirty years, the emerging group of entrepreneurs has been suffering from severe anxiety over identity:

Firstly, due to the long time anti-market ideological propaganda by the authorities, many entrepreneurs believe they have the “original sin”. They are led to believe that their profits are based on exploiting the workers, which further leads to their confusion and anxiety over the ethical justification of their fortune and profits.

Secondly, this anti-market ideology also affects the public; leading the public to envy the fortune of entrepreneurs while disrespect them since their deeds are “unethical” and “dishonest”. This public opinion, in return, affects entrepreneurs’ self-identity. They, therefore, can’t convince themselves of the contributions they make to the society, or identify themselves within the social hierarchy.

Thirdly, Chinese entrepreneurs, especially those whose enterprises have gone international, are bothered with this severe identification anxiety. Chinese people stand out in entrepreneurship, so do Chinese enterprises. But what are the driving forces behind? Thanks to the long time culture break-up from the traditions, and the anti-tradition propaganda, Chinese entrepreneurs find it hard to comprehend and identify their cultural and social roles. This leads to the chaotic and restless mental state of entrepreneurs. This also results in the lack of a cultural supportive pillar for enterprise management in China.

“Business Ethics Declaration of Chinese Entrepreneurs” aims to provide answers to the anxiety over identity for Chinese entrepreneurs, to re-identify them by providing authentic and orthodoxical conceptions, to help them mature their thoughts and corporate social responsibilities.

This research project is committed to establishing a value system for Chinese entrepreneurs. To confront the anxiety over identity for Chinese entrepreneurs, this project provides answers to the three questions below:

1.Do Chinese entrepreneurs have the “original sin”?
2.What do Chinese entrepreneurs contribute to the society?
3.How do Chinese entrepreneurs gain respect?

An Economic Research of Chinese Urban Smog Management

The issue of smog has been on the spotlight in China that no matter government officials, ordinary citizens, or journalists and the press have expressed serious concern and anxiety towards it. Unirule Institute of Economics takes on this research topic and is conducting an economic research on China’s urban smog management.

The urban smog is attributed to multiple factors with many interest parties involved, which also makes it an economic issue. Unirule seeks to find a solution to the management of smog by the design of institutions from an economic point of view.

Fairness and Efficiency of Financial Resource Allocation

The first scale problem of the fairness and efficiency of financial resource allocation is whether the overall tax bearing standard falls within the optimal interval, whether the design of tax kinds and the mechanism will harm the development of the economy. The second scale problem is whether the expenditure structure of the existing financial resource allocation, especially transfer payment, obeys the principal of justice, and the efficiency of financial expenditure especially the general administrative costs.

Unirule Institute of Economics is going to undertake research on the fairness and efficiency of financial resource allocation with the emphasis on the second scale problem. In order to fulfill the ideal of justice in a society, the involvement of financial resource allocation is one of the methods, and a universal one. A state can promote justice by implying financial expenditure in two ways: the direct and the indirect way. When applying the direct way of implying financial expenditure measures to promote justice, financial expenditure is directly distributed to individuals to fill the gap of incomes between individuals.

Among the financial expenditure items of China are pensions and relief funds for social welfare, rural relief funds as well as social insurance funds. The indirect way is by governments' increase in expenditure used for supporting agriculture and villagers, construction of infrastructure, education and medical treatments. This research is on the justice of financial resource allocation and it deals mainly with whether the transfer payment of financial resources obeys the second rule of Rawls's theory of justice, which states that when violation to the first rule has to be made, resource allocation can be towards the poorest group of people. Besides the justice issue, efficiency is also involved in the financial resource allocation. The administrative costs of China have long been above the average standard of other countries in the world, therefore, a big amount of public financial resources are wasted (trillions of RMB per year as estimated). In regard with the efficiency issue of the financial resource allocation, this research deals mainly with the change of ratio of administrative costs by government agencies (in addition to other costs, such as medical treatments of government officials covered by public budgets, and housing subsidies) of financial income. The reform of the fiscal and taxation system is one of the core issues in China's on-going reforms. This research aims not at a comprehensive examination of the fiscal and taxation system, but a specific aspect which is the "fairness and efficiency of financial resource allocation", and evaluating the status quo of China's financial resource allocation.

Research on China's Urbanization on the Local Level

Urbanization is one of the most essential economic and social policies of the new administration. The emphasis of this policy is posed on medium and small cities as well as townships. As noticed, there are thousands of industrialized townships in China with their social governance lagging far behind their economic development.

Firstly, a big population is located in between the urban and rural level, which can't transform into citizens. Hundreds of millions of people have left their villages and moved to commercialized and industrialized towns. They are in industrial and commercial occupations and it is highly unlikely that they would go back to their villages. However, they are not entitled to local Hukou registration, which further leads to the deprivation of various rights, for example, the right of education.

Secondly, public governance in such industrialized and commercialized towns, in general, is at a rudimentary level. The number of officially budgeted posts is asymmetric with the population governed, which leads to the employment of a large number of unofficially budgeted staff and unjustified power to govern. There is a lack of financial resources for the local government to carry out infrastructure construction or to provide public goods sufficiently. Thirdly, the urbanization results in imbalanced development of the structure of society. Since the industrialized and commercialized townships are unable to complete urbanization, urbanization in China has basically become mega-urbanization which is dominated by administrative power. Local governments centralize periphery resources with administrative power and construct cities artificially, which impedes townships and villages from evolving into cities by spontaneous order. Fourthly, industry upgrading can't be undertaken in those industrialized and commercialized townships and the capacity for future economic development is greatly limited. The industry upgrading is, in essence, the upgrading of people. Enterprises ought to draw and maintain technicians, researchers, and investors, to meet their needs for living standards, which cannot be satisfied by townships. Similarly, the lagging urbanization reversely sets back the cultivation and development of the service industry, especially the medium and high-end services.

Unirule Institute of Economics is going to carry out research on urbanization of China on the local level, aiming at improving public governance of the industrialized townships, optimizing the urbanization methodologies, and improving the "citizenization" of migrant workers, therefore further pushing social governance towards self-governance and democracy.

Research on the Public Governance Index of Provincial Capitals

At the beginning of the year 2013, Unirule conducted field survey, including more than 10 thousands of households in 30 local capital cities. According to the field survey, the Public Governance Index was derived. The main conclusions of the PGI report as below:

Three statements summarize the status quo of public governance in provincial capitals. Firstly, public services have generally just gotten a pass. Secondly, protection to civil rights is disturbing. Finally, governance methodologies need improvements. These statements point out the solution: the structure of the society needs to be altered from that with a government monopoly to a civil society with diverse governance subjects. The ranking of provincial capitals in the public governance assessment from the top to the bottom is as follows: Hangzhou, Nanjing, Urumqi, Tianjin, Chengdu, Shanghai, Beijing, Nanchang, Xi'an, Xining, Shijiazhuang, Wuhan, Guangzhou, Yinchuan, Hohhot, Chongqing, Shenyang, Changsha, Jinan, Kunming, Nanning, Haikou, Fuzhou, Guiyang, Harbin, Hefei, Changchun, Zhengzhou, Taiyuan and Lanzhou.

Generally speaking, all provincial capitals are graded comparatively low in the three public governance assessments from 2008 to 2012. Even those that ranked the highest in performance have just barely passed the bar of 60 points. Few provincial capitals with poor public governance got over 50 points.

There is a certain amount of correlation between the changes of ranking and improvements in public governance in provincial capitals. In the short term, should the capital cities be willing to raise their rankings, they can achieve this by increasing transparency in government information and civil servants selection, encouraging local non-governmental organizations, or promoting wider participation in local affairs. There is but a weak correlation between public governance and the local GDP level. However, a strong correlation exists between the rankings and the equity of local fiscal transfer payment. That is to say, a region gets a higher ranking in public governance if subsidies to local social security, medical care, education and housing are distributed more to the poorest residents in that region. On the contrary, a region's ranking falls if such resources are distributed with prejudice to the groups with high incomes. This phenomenon shows that equity is of significance in the assessment of the government by the people.

When residents are not satisfied with medical care, elderly support system, water supply and electricity supply, the situation can be improved when they complain to the government. But when similar situations take place in public transportation, environment greening, heating systems, and garbage management, whether by collective actions or filing complaints to government agencies, residents can hardly be satisfied with what the government does.

According to the three public governance assessments carried out from 2008 to2012, we discovered that the Gini coefficient of residents in provincial capitals was decreasing and the income fluidity was improving. From 2010 to 2012, citizens' comments on protection of civil rights are deteriorating, especially in terms of property and personal security. The request for freedom of speech is also increasing. For the moment, citizens in provincial capitals have a low evaluation on the cleanness and honesty of local governments.

Research on Disclosure of Government Information

Room for reforms is getting narrower as the opening-up and reforms deepen. It also leads to a more stabilized vertical mobilization of the demographic structure with the conflicts in the distribution of interests exacerbating. A collaborative system centering the political and law system and involving close cooperation between the police, courts, petition offices, and the city guards (Chengguan) is developed to deal with social unrest. This system is operated by local governments and finalized as a system of maintaining stability (Weiwen). There have been Internet spats over the amount of Weiwen funds. It is unsustainable to maintain such a Weiwen system, and the disclosure of government information is the most significant approach for this end. The essence of public governance is to dissolute conflicts instead of hiding and neglecting them. And one way to achieve this is by sufficient communication. Public and transparent appraisement and supervision cannot be achieved without transparent government information, otherwise the result will be the exclusion of citizens from public governance.

Unirule Institute of Economics has been undertaking research on the disclosure of government information since 2011. This research is carried out not only from the perspective of the regulations for the disclosure of government information which evaluates whether governments of various levels are obeying the regulations and their performances, but also by examining information disclosure laws in developed countries while looking at the status quo in China. There are seven aspects where government information disclosure can be improved, namely, information disclosure of government officials, transparency of finance, transparency in the decision-making mechanism, transparency in administration, transparency in public services, transparency of enterprises owned by local governments, and transparency in civil rights protection.

Upcoming Events

Unirule Master Thoughts Class(2014)

Unirule Biweekly Symposiums

Unirule's Biweekly Symposiums are known in China and throughout the world for their long history of open and in-depth discussions and exchanges of ideas in economics and other social sciences. Over 380 sessions have been held and over 15,000 scholars, policy makers, and students, as well as countless readers on the web, have directly and indirectly, and participated in the Biweekly Symposium for close to 20 years.

Biweekly Symposiums begin at 2 p.m. every other Friday and are free and open to the public.

Schedule
Biweekly Symposium No. 522: 10th April, 2015
Biweekly Symposium No. 523: 24th April, 2015

Previous Biweekly Symposiums

Biweekly Symposium No. 521: World Factory with Chinese Characteristics: Sociological Observation of the Status of Workers in the New Era
Lecturer: Professor GUO Yuhua
Host: Professor ZHANG Shuguang, Chairman of Unirule Academic Committee
Commentators: DAI Jianzhong, WANG Songjiang, CHANG Kai, CHEN Bulei, SHENG Hong, ZHAO Nong.

Professor GUO Yuhua is renowned for his research on China's rural areas. By analyzing the backstage story of China's evolution to the "world factory", Professor GUO Yuhua took a serious look at the workers as a class that acted as the bedrock of the China model.

Professor GUO Yuhua believed that today's China, famous for "Made in China", presented itself along with the massive workers to the world. However, the workers were overlooked and neglected as a driving force of social advance.

After thorough analysis of the situations, mistreatment and status quo of China's working class, Professor GUO Yuhua stressed that the problem concerning the workers were the problem concerning China. This was not only an economic or social issue, but also a political one.

Editor: MA Junjie
Revisor: Hannah Luftensteiner