BEIJING — China’s new promise to level the playing field for the country’s millions of rural residents, the people who make up the bulk of the country’s manufacturing labor force, will have a major impact on the production economy in years to come.
Late Friday, the central government unveiled a detailed explanation of its plans to reform the country’s political and economic structure over the course of the next 10 years. While the document lacks specific timelines and details on how plans will be implemented, it does spell out several critical changes.
Related to the manufacturing economy, a key change will be granting more rights to rural residents, those who make up the more than 200 million migrant workers that power China’s economic engine in factories and on construction sites. While China is not proposing to abolish outright the hukou household registration system, the convocation of top leaders did agree to take measured steps toward granting the same right to those born in villages as those born in cities. Currently, rural residents are limited in their options for education, health care and even where they can marry. The system keeps more than half of China’s nearly 1.4 billion people tethered to their hometowns for critical life events and schooling.
Those rural residents have, for 30 years, made up the bulk of factory workers, accustomed to lower salaries than their urban counterparts. Hence the change could usher in a new era of better-paying jobs and more rights for manufacturing workers, but economists say the net impact won’t be precisely clear until the government reveals how and when it will restructure the system.
“There is a big gap between the advantaged group and disadvantaged group. In order to change the disadvantages of the weak, enhancing social welfare and giving more chances to gain more knowledge is a positive step,” said Zhong Dajun, director of the Dajun Center for Economic Observation in Beijing. “In some small and medium-sized cities, residence permits will not be a problem. Migrant workers can enjoy the same rights as urban residents. And if they buy a house, they can stay.”
Zhong and others said the promised reforms will benefit Chinese workers, perhaps further solidifying the labor contract rights brought into law in 2008 by allowing them to establish their lives more permanently where they work.
Hu Xingdou, a professor at the School of Economics, Beijing Institute of Technology, said he did not believe the changes would add to labor costs in China. That despite the fact that workers will have better access to education and opportunities outside the factory gates. Hu said reform of the household registration is critical, and well past due for China.
“[The reform] will help migrant workers become professional industrial workers in the cities; enjoying the equal rights in education and other aspects will help them improve their skills,” he said.
The reform is likely to be in line with China’s overarching plan to move up the value chain, away from low-end production and into innovation and research. By giving workers more chances to step up through access to education, lower-skilled jobs will go elsewhere.
“Actually it is good for companies as it will help enhance the quality of the products,” said Zhong. “Only bad companies exploiting labor will choose to leave.
“Good enterprises know the importance of human resources,” he added. “If they do not have enough workers or the workers have low skills and move around a lot, it is hard for the enterprises to increase their efficiency.”
In addition to promising reforms directed at rural-urban equity, China’s government has taken the bold step of promising to all but end its reviled one-child policy. The government reform package includes an item that will allow couples where only one parent is an only child to have two children, an exception that, added to others on the books, will make the majority of Chinese couples legally able to have more than one child. Many couples, especially those in rural areas, already have more than one child, however.
The reform package, likely to trickle out in specifics in the coming months, also includes plans for an environmental tax, banking system adjustments and other measures.