Home Political science Dancing with the devil : the political economy of privatization in China
Structure and Change of the Post-1949 Population
The year 1949 was a major landmark in China’s population history.1 Before the revolution, the country had high birth rate and high death rate. A high birth rate persisted into the 1950s and the 1960s. Yet the death rate, especially infant mortality, decreased sharply after the revolution and continued to decline afterward, largely owing to the end of wars and the improvement of nutrition, sanitation, and healthcare. This paved the way for the next phase of demographic transition that began in the early 1970s and featured declining fertility and rising life expectancy.
There was no systematic family planning program before the early 1970s. During 1949-1952 the newly established government actually encouraged childbearing by women, in part to compensate for the huge loss of lives during the civil war (Xu Dixin 1988). In view of the underdeveloped economy and fast-rising fertility, however, the government retreated from the initial stance and began to experiment with measures to introduce family planning during 1953-1957. But that undertaking was sidetracked by the radicalization of politics during and after the Anti-Rightist Campaign (1957-1958), which was aimed at punishing and silencing people who were skeptical or critical of Mao’s policies, especially his attempt to accelerate the pace of socialist transformation. Among the collateral victims of the campaign was Ma Yinchu, president (1951-1960) of Peking University. An economist by training, he was a major advocate for the adoption of fertility control measures. Although he was not labeled a “rightist,” open discussion of his view on population policy was suppressed.
In the following decade, no effective family planning program was implemented. The massive deaths during the Great Famine of 1959-1961 briefly eclipsed the concern about fast population growth. But discussions about the need to control population size resumed at the highest level of policymaking during 1962-1965. Such discussions were disrupted by the onset of the Cultural Revolution (1966-1976). In 1971, when the most violent storms of the revolution had subsided, the reorganized central government decided to 
put family planning on the active agenda and initiated a nationwide campaign to raise the marriage age among young people, prolong the interval between births, and even limit the number of births per married couple. The campaign was carried out through government-controlled work units—the only form of formal organization—in urban and rural areas. It had a major constraining effect on the birth rate and heralded the eventual adoption of the one-child policy during 1979-1980.
Figure 2.1 shows the natural rate of population growth in the five decades following the communist revolution. The pattern mirrors the changes in the policy environment: the rising trend (briefly reversed during the famine years) prior to the early 1970s took place in the absence of systematic policy constraints, whereas the steady decline thereafter reflects the increasing impact of family planning programs. Table 2.1 summarizes further information from census data. An important fact it shows is that the vast majority of the population resided in rural areas throughout the Mao era and the early years of reform. It was not until the early 1990s that the pace of urbanization began to accelerate. This spatial pattern of population distribution was largely the result of the economic development strategy of the government.
When the CCP came to power in 1949, China was a predominantly agrarian economy, where the rural sector was home to some 92% of the workforce
FIGURE 2.1 Natural rate (%o) of population growth, 1949-2009 Sources: CSY2001,2010.
Table 2.1 Selected statistics from population censuses
Note: Data do not include the populations of Hong Kong, Macau, and Taiwan.
Sources: CSY2010; CSA 2011; PSPRC; 1982PCC; T1990PC; MF2000PCC; T2010PC.
(CLWS a, 5). Prompted by encounters with Western powers in the midnineteenth century, the development of the modern sector had nevertheless been slow and heavily concentrated in consumer goods industries and limited urban services. As noted in chapter 1, the state eliminated private ownership by the end of the 1950s and became the sole allocator of resources. In view of China’s economic underdevelopment, CCP leaders regarded acceleration of industrialization as a top priority. Yet they faced severe resource constraints. In 1950, despite US-led refusal to give political recognition to the new communist regime, Western countries still accounted for 60% of China’s foreign trade (Zuo Chuntai and Song Xinzhong 1988, 87). But such economic ties were abruptly cut off in December of that year, when a Western embargo was imposed on China after Chinese troops entered the Korean War (1950-1953) in October. While Soviet aid during the early to mid-1950s played a vital role in broadening China’s industrial base, it quickly diminished as the relationship between the two countries deteriorated toward the end of the decade. With limited domestic supply, CCP leaders decided to concentrate the allocation of scarce resources in the sectors that they considered to be of greatest strategic importance for the country’s long-term development, namely, producer goods industries.
To facilitate the official strategy of development, the state created a pecking order of resource allocation biased toward urban industries, and stratified economic organizations accordingly. Under the central planning system, there were three basic types of economic organization: state-owned enterprises controlled by national, provincial, and city/county authorities; urban collective enterprises exclusively controlled by sub-provincial authorities; and people’s communes under the purview of county governments. State-owned enterprises and urban collective enterprises were the main carriers of nonfarm economic activities. Their size and complexity varied greatly, depending on the sector and the technology used, among other things. The level of direct supervising authority over an enterprise signified the importance the government attached to it. With the same level of direct government control, capital goods producers tended to enjoy higher priority in resource allocation than their peers producing consumer goods or providing services. People’s communes were at the bottom of the system by both criteria, though over time many of them also undertook some limited nonfarm economic activities, which accounted for less than 10% of the rural workforce in 1978 (CTEY 1987, 245).
These realities of stratified resource allocation were sustained through several contemporaneous institutional arrangements (Riskin 1987). To squeeze out more resources for capital-intensive industrial development and to limit the demand for consumer goods and services, wages were maintained at very low and stagnant levels. The supply of essential daily necessities was rationed through a rationing coupon system. For urban employees and their families the provision of basic social services, such as housing, healthcare, and old-age support, was internalized or administered at the level of each and every formal organization, known as the work unit (danwei), whereas rural citizens had only minimal healthcare benefits under a cooperative medicine system. Closely coupled with such an employment practice was a household registration (hukou) system (Cheng and Selden 1994). Crafted after the revolution and institutionalized in the late 1950s, it classified citizens into urban and rural categories with spatially fixed residential status. Such status was combined with strict restrictions on intercategory change, extralocale employment, and even interlocale travel such that the allocation of human resources and their means of living could be centrally planned and extraplan provision and distribution of consumer goods and services (including transportation services) for working people and their families could be minimized.
An important implication of the state’s economic development strategy is that the absorption of the rural work-age population into the urban workforce could not grow at very fast rate because of the capital-intensive nature of producer goods industries. Indeed from 1958 to 1978 the share of the rural sector in the total workforce only edged down from 80% to 77%, whereas the share of the industrial sector in GDP doubled from 21% to 42% (LSYC1987, 5; CSY2010, 36). Although there was considerable underutilization of the vast rural workforce—especially in the oversaturated farming sector (Perkins 1988)—the initial significance of underaged cohorts in the population somehow moderated the job creation pressure for the economy as a whole and thereby allowed a certain degree of freedom for CCP leaders to launch and implement their industrialization strategy.
When the CCP came to power, the population had a very young age structure. As shown in table 2.1, the median age in 1953 was 22.7 and dropped to 20.2 in 1964. It remained at that level for close to two decades. This long span of a young age structure was largely due to the initial significance of the cohorts below work age in the population and the high birth rate in the booming years that followed. With most baby boomers of the 1950s and
Table 2.2 Cultivated land and per capita shares
Note: i mu = 0.067 hectare.
Sources: SYCLR1996; CSY1996, 2000.
1960s yet to reach work age, the share of the workforce in the total population remained under 60% throughout the 1950s, 1960s, and 1970s. It was not until after 1980, when the dependency ratio eased to 67% (which translates into a 59.9% share accounted for by the workforce in the total population), that the 60% mark was crossed and the demand for employment of new entrants into work-age cohorts began to escalate and intensify. Table 2.1 shows that the number of people turning fifteen was 13.5 million in 1964; it rose to 22.8 million in 1982, and the annual number subsequently persisted around that level for more than two decades.
Despite the moderating effect of age structure on the immediate pressure for employment growth in the Mao era, feeding the large and fast-growing number of underaged people was a formidable challenge. The fact that most of these people and their families resided in rural areas added to the pressure on China’s limited arable land. Table 2.2 shows that per capita land cultivated steadily declined with the growth of the population after the revolution. Yet in the meantime agricultural productivity deteriorated during the Mao era, largely because of the lack of modern farm inputs, poor organization, and incentive problems. From 1957 to 1977, grain output per capita never exceeded the level attained in 1956 (ASFYNC, 79), when the high tide of collectivization ascended. As a result, intrafamily reallocation of food and other essential daily supplies became the common means for the vast majority of the growing population to eke out a poor living in support of the country’s accelerating industrialization.
FIGURE 2.2 Estimates of net addition (millions) to workforce pool, 1949-2010 Note: Annual net addition to workforce pool is derived as the difference between people entering (at age 15) and exiting (at age 65) (estimated with census data on various age groups, adjusted for corresponding mortality rates) the workforce, plus the difference between entrants and graduates of high schools, vocational schools, and tertiary institutions.
Sources: CSDMSYNC; PSPRC; 1982PCC; T1990PC; MF2000PCC; T2010PC.
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