Berkley Center

For the past few weeks, I have had the privilege of listening to guest lecturers from China’s business leaders for a course I am taking called “Chinese Economic Reform and Development” in Peking University’s Guanghua School of Management. The course is an interesting perspective on “socialism with Chinese characteristics” and how that concept is taught to students preparing to work in business in China. It also helps to shed some light on some social phenomena that China is currently wrestling with.

Walking through the streets of Beijing, there is a very clear dichotomy before my eyes between consumers from the city and migrant workers from the countryside. Citing national statistics, the International Labor Organization says that there were almost 230 million migrant workers in China in 2009, with 70 percent working in the highly populated and relatively wealthy eastern provinces. I see them daily working in construction or maintenance jobs; they are also concentrated in manufacturing.

However, despite the wealth that these rural migrant workers bring to China’s big cities, they are unable to reap the same benefits as city residents. For example, they are restricted from sending their children to city schools, and they cannot use the national health insurance at city hospitals. China uses the hukou system to tie people’s benefits and privileges to their hometowns, a system that China says aids rural residents in keeping the rights to their land.

In my management course, I heard two lectures by Pu Jian, a Chinese business man and Communist Party member on the board of several major financial companies. Mr. Pu says that the market is the result of the combination of the material, social, and intellectual qualities of man: a knowledge-based solution using interpersonal connections to satisfy material demands. As a socialist system and in response to a “lower average intellectual capability,” China’s economics have focused on centralized strategic policies, using decentralized policies only to stay competitive (i.e. special economic zones). In Mr. Pu’s words, these centralized policies are designed to create a valuable relationship between individual intellectual potential and the market.

So how does this relate to migrant workers? According to Mr. Pu, migrant workers should be excluded from participating in the market until their “intellectual capacity” increases. This type of mindset could be a driving force behind systems like the hukou that prevent migrant workers from participating in the market systems of the big cities where they work, and it may help observers to understand why China focuses economic development opportunities in particular areas over others: the government believes that market activity should be concentrated areas in where intellectual capability is higher and the people more educated, and the state should use centralized economic policies to target less educated areas.

Is this approach working to develop China as a whole, or is this system perpetuating the inequality between China’s wealthy coastal areas and poorer inland areas? Seven of the top ten colleges in China in 2014 are located in large cities in coastal provinces (including Nanjing), but there are many students from western provinces that come to these universities to study and who have the opportunity to take their education back to their hometowns. Additionally, as factories in the east develop and become more technologically advanced, lower end manufacturing is moving inland, paving the way for development there as well. Some factory owners are using the expertise gained from manufacturing goods for other companies to start businesses of their own, including women's shoe brand Daphne.

I hope that as time goes on development will even out, and more Chinese from inland provinces will be coming to coastal cities for business or leisure, instead of leaving their families behind simply to make enough money to get by.