This essay should also indict who has benefited most from such a quick and bold move to a market economy, and those who have lost out and not been so lucky as others due to the open door policy of China which was introduced in 1978, by then Chinese Premier Deng Xiao Ping (??? ). This essay will take each class individually and contrast them to other class’s, both those that existed during the Maoist era of pre-1978 and the class’s that have emerged as a result of the economic reforms pursued by China since the opening of its economy and internal reforms where introduced.
Lastly it will look at if China’s communist party has steered away from the founding ethics of a socialist economy to that of a capitalist one due to social class division and what effect this can have on China in the near distant future. Firstly looking at the Peasant class, one of the three original social class’s during the Maoist period of 1949-1978, (the other two being the working class and the cadre class). The peasant class, along with the working class during Maoist China were dubbed the proletariat class, in comparison the relatively small but evident cadre class.
The rural-urban divide has always been existent in Chinese society, largely based on economic and geographical contributions. However throughout the Maoist era, peasant’s standard of living; to a certain extent were raised. With the abolishment of savage landlords which persisted during the imperial and republican times and the introduction of many yet simple beneficiaries to rural areas of China, peasant’s standard of living from 1949-1976, actually rose significantly, ‘On the one hand, standards of living can be seen as improved due to the absence of warlords, bandits, landlord, and local tyrants.
The government invested a lot in agriculture, especially water conservancy, irrigation works, chemical fertilizers, and agricultural machinery…. The life expectancy of peasants increased from less than forty years before 1949 to more than sixty years in the 1970s’ Simple improvements in education and health, the fundamentals of any society to prosper were drastically improved by the so called “barefoot” teachers and doctors.
However, prosperity was limited due to collectivisation of all the land available for agriculture, restricting peasant’s income and also led to the disaster of the Great Leap Forward campaign, which saw many peasants suffer in comparison to their urban counterparts. Restrictive movements of people from rural to urban also led to a stagnated peasant society, with the introduction of the household registration system (?? ) , ensuring that peasants and their families never had the chance to seek a more prosperous life in the cities or enjoy the benefits of those of urban household with hukou registration.
The reforms of 1978 first and profoundly had an immediate effect on rural areas. This came with the abolishment of the commune system, establishment of free market practice in the countryside with agricultural products and the thriving success of the Town and Village Enterprises (TVE’s). By 1993, 145 million peasants had become members of the working class; however they would be referred to as peasant worker, and not urban worker due to the hukou registration system. (Li Yi, China Startifictaion, p. 105).
Many rural inhabitants, after the reform era had taken jobs in cities, albeit as a floating population, due to the strictness of the hukou household registration system most rural registered workers in cities today don’t enjoy the benefits of their urban registered counterparts, of housing, health care and schooling for their children. Most rural areas are also responsible for development of their own areas, with little support from the government, taxes and fees remain high in proportion in the countryside, as is the cost and low opportunities of schooling and further education. Li Yi China Stratification p. 192)Peasants also missed out largely in China’s great economic boom during the 1990’s and early 2000’s, with China’s economic annual growth an average of 9% in recent years, peasant income has increased, but rather in some cases decreased (Li Yi China Stratification p. 219). Peasants are in a sense stuck within their boundaries due to the Household Registration System, or hukou. This social “apartheid” has created a massive imbalance between the coastal urban areas and the mainly rural western half of China.
Urban household registered hukou holders had much of the states benefits in housing, education healthcare and employment ( Fei Ling Wang, Chinese Society, Change, conflict and resistance, (New York, Routledge, 2000). But as with the opening reforms of the late 1970’s, not all urban households and workers have managed to benefit, with that creating class differences even within China’s urban populace. Throughout the Maoist era, most urban employment was contingent within State Owned Enterprises(SOE’s), with workers benefiting from the system dubbed the “iron rice bowl”.
This system, commonly a factor of socialist geared economies and societies was the benefits urban state employees enjoyed throughout Mao’s reign. Benefits included housing, food rations, healthcare insurance and education of employee’s children. The “iron rice bowl” also supplied life long work and benefits to those who were employed with work units, danwei (?? ) and simplified that throughout the socialist market era, little social conflicts and imbalanced occurred amongst the urban working class.
As of 1978, as much of 78% of urban labour force were recipients of this “iron rice bowl” welfare.  Starting with the reforms initiated by Deng Xiao Ping, slowly the “iron rice bowl” was withdrawn and open competitiveness was encouraged. Seen as extremely costly to the state, SOE’s would now undergo huge transformation. “Grasp the big, release the small” was now in effect, with SOE’s that were making a loss to face closure, and the ones that remained facing intense competition from the more effectively run foreign enterprises and privately run sector.
This in effect led to high levels of lay offs, never heard or seen of during the Mao regime, with estimates as high as 60 million, with an overall figure including those waiting on employment reaching 100million.  The huge amount of layoffs had never been experienced in China, and the sheer pressure on the state took hold, not all of employees who had lost their “iron rice bowl” could find work, due to the fact, they had worked in industries all their lives that largely included the same repetitive work, and had no grasp of competitiveness.
Much of the lay offs were women, and above average age workers, the category that will find it hardest to find re employment. Much lacked a good education, having experienced the chaos of the cultural revolution of 1966-1976, which saw China’s education, especially upper levels deteriorate. This urban class, dubbed the xiagong, literally went from complete stableness in the “iron rice bowl” system to a complete foundation less society. Alongside the rural migrants of the “floating population”, who’s number in cities is rising, coincided with the now jobless former state urban workers. Competition for employment was extensive.
With a poor social security service, or none at all, these former secure workers now faced a much tougher life to secure an income to support themselves and families, with wages below the average of urban household incomes, ‘it is not surprising that by early 2000, 73 per cent of China’s urban population had incomes below the national average, and just 27 per cent were above it,’ A real sense of anxiety surely crossed the minds of those who lost out, having gone from a society that provided everything to one now having to defend for themselves with the handicap of age, lack of education and skills that were needed to fill the positions now open to the market economy. Not only did they see there jobs and way of lives disappear, state benefits also dried up, or were not enough to help support this group of former state workers. The numbers who fell into poverty, which is classified depending on which city it is in China reached startling highs of almost 13 per cent of urban population, 40-50million,  in 2001. The unemployment figures, relating from state owned enterprises and cooperatives seems to have increased as of 2001, with China’s acceptance into the World Trade Organisation (WTO).
The state-society model, developed throughout the Maoist years seems threaten, with the massive layoffs of these ordinary workers, however much of the managerial staff and cadre’s who where involved in the running of these SOE’s have benefited, becoming prime shareholders, re allocated to improved positions of employment and benefits that go with that, again dividing urban class standards, ‘People working in rich work units could easily get a comfortable spacious apartment, while those in poor work units remained in near-slum conditions. Work units ability to provide housing varied between state and collective sectors and with bureaucratic rank. While work unit housing was allocated to satisfy needs (large or multigenerational families were allocated first and got more living space) spacious and quality units were a work units resources and served as incentives to reward political and managerial authority, seniority , professional expertise, and social connections. ’ At the expense of the ordinary workers losing their occupations in the numbers, a new class of highly educated, well positioned (through connections like guanxi (?? ) and entrepreneurial class has reaped the real rewards of the booming Chinese economy of the recent years. Have the government and the ruling Communist Party really shown nepotism away from its own founding base of the working class? What can the workers do t voice their concerns, in a country that restricts free speech and emotion? Any organisations of protests are met with harsh retaliations, and those accused of such activities are harshly dealt with. Taking the example of the Daqing petroleum protest of March 2002, in Daqing Heilongjiang province, the state must address and deal with these challenges sensitively, knowing that a lot rests on its outcome.
In dealing with large scale outbreaks of protest like this the state has developed a ‘divide-and-rule strategy, encouraging employed workers to keep their distance from the protests, and intentionally causing the rank and file among the unemployed to believe that the protests are to blame for the cancellation of payments’. This form of catch-22 policy has so far deemed successful in maintaining stability and control over any protest or arguments amongst the newly found unemployed “iron rice bowl” employees. This has allowed the government to keep on track with its promotion of the market based economy on a whole, as well formulating a large labour surplus into the workforce. The urban working class has definitely been the class that has lost most in the post-reform era of China, while a new class has benefited at their downfall.
Reform era China has provided vast opportunities in newly emerging industries and privately owned, foreign invested or created from scratch enterprises have thrived. However demand for educated, well positioned workers, has left modern China with a development of a “middle class”. It is hard to say what exact characteristics make up this “middle class”, as in comparison to western middle class society, it is far from a following example, like the ownership of cars as common in western income families in the west is obviously not matched in China. In terms of income, an annual household income of 60,000-500,000 yuan is thought to qualify a household as middle strata levels. 8] This newly educated class, with social guanxi is the new driving force of China’s growth, with the closing of SOE’s and rising capitalist activity in the Chinese economy. Newly developed entrepreneurs, officially welcome into the Communist Party in 2001, by invite of the Three Represents, have been behind much of China’s economic activity, able through connections, know how, and close connections to the party(Goodman, New Rich in China, p34-36) been able to secure funds to help develop their prestige. Professionals and managers have also been on ends of high salary turnovers, seen to the state as vital in its strategic to immense economic activity.
Favours from the state also passed their way through to this new elite group, with property and housing given at lower rates, ‘the massive sale of public housing to employees throughout the 1990s occurred at highly subsidized prices for the existing housing stock, or alternatively employees were given the option of buying newly built houses while the work unit carried the lion’s share in construction or purchasing costs…buying extensively to cater for the needs of their professionals and other employees. ’  These new homes ‘awarded’ to the newly emerging elites are often found close to the best schools and other community services, creating so called neighbourhood apartheid. An estimated 20-30 billion yuan was lost due to under value sales of land, ( www. internationalviewpoint. org/spip. php? article751) . So why has the state in turn favoured the class that had been, during the Maoist era received massive vocal attacks? Well in dealing with the massive under performing
SOEs , the state could and did look to the emerging capitalists as a source of absorbing the loose employment that spilled out of the massive state owned unemployed. Capitalists are thought to have accounted for between 70-85% of China’s GDP ( Li Yi, China Stratification, p137), without this China may well have internally collapsed, unwilling to disband its loss making enterprises and not indulging into a market economy. This system, albeit seeming unfair, is following in Deng Xiao Ping’s approach of allowing some people to get rich first’. However this route, of eventually reaching a society where the middle class is prominent and thriving will take time and the correct policies and approach, with careful management.