Editor’s Note：We thank Dr. Yi Li for giving us the permission to translate this paper into English and publish both the Chinese and the English versions on www.ChinaUSFriendship.com; this paper is the full text of the morning speech on sociology given by Dr. Li on June 13, 2013, at Shandong University. This article and Dr. Li Yi's speech at Tsinghua University can be found in Chinese on major websites including:
http://www.csstoday.net/xueshuzixun/jishizixun/80965.html; http://finance.china.com.cn/roll/20130419/1400941.shtml; and http://www.csstoday.net/Item/68717.aspx
10. The peasant class of China
The rapid decline of the peasant class of China is the greatest achievement of China's social and economic development over the thirty years of reform and opening up. The so-called social modernization in the most basic sense is to transform the peasants into workers and urbanize the rural areas. In 2011, the number of Chinese farmers engaged in agriculture was already less than 150 million. The United States has a population of 300 million and only 2.6 million are farmers (agricultural workers), but they can produce enough farm products to feed 450 million people. For China, if 26 million farmers are not enough, 52 million should be sufficient. I think that within ten to twenty years, the Chinese farmers can be reduced from the current 150 million to 50 million or so. I can say this, and it is not an illusion.
In 2011, China’s per capita net income of rural residents was 6,977 yuan. What does this mean? I think that this 6,977 yuan was not the per capita net income of the 150 million farmers, but the per capita net income of the entire 897 million residents who had rural hukou after including the income of the 250 million migrant workers. In early April 2013, I interviewed a 70-year-old granny farmer in the Guanzhong Plain (关中平原) of Shaanxi (陕西) Province. Her husband died several years ago, and her eldest son and daughter-in-law took the children with them to become migrant workers. Her second son had a Ph.D. and was teaching at the university. She was the only old lady staying at home and she owned 3.7 mu (1 mu = 1/6 U.S. acre) of land. The state subsidized her with 150 yuan per mu. Seeds were very cheap. She hired someone to harvest and paid 40 yuan per mu. The fertilizer cost of the 3.7 mu of land was 800 or 900 dollars. The total cost of farming was less than 1,500 yuan and the total farming income was close to 4,000 yuan. The net income was only 2,500 yuan. If she did not farm the land herself, she could subcontract the farming work to others and receive 200 yuan per mu as the subcontracting fee. If she did not farm, by collecting the subcontracting fee, plus the state aid, her annual income would be 1,295 yuan. Up to this point, the words she spoke were nothing new to me. However, what she told me later was very important. I asked her: “What kind of people do you subcontract to? ” She said: “They are a peasant couple over fifty years old”. I asked: “How much land do they farm now?” She said: “More than forty acres”.
The fifty-year-old peasant couple who farm more than 40 acres of land represent the three directions of China: agriculture, rural areas and farmers. Of course, this is not to say that all the land must have intensive farming management. Small-scale farmers on a small part of the land can also co-exist. China's new leadership can take the opportunity to solve the hukou issue which causes urban and rural isolation. They have long been able to solve this problem and should have solved the problem long time ago. If they can also reasonably support intensive land farming, the number of Chinese farmers will shrink to 50 million from 150 million in not too long a time. Then, the future of Chinese agriculture, rural areas and farmers is bound to be bright.
11. China has twenty-four million taxpayers
After all, how many rich people are there in China today? China now has nearly 1.4 (1.38) billion people. Over the last 10 to 20 years, China’s various media reported numerous stories of the wealthy Chinese. These have given some Chinese social scientists and sociologists a great illusion on the number of wealthy Chinese. Here, let us focus on one very important fact. To avoid some people saying that I am quoting out of context, the full text of this document is shown below:
Ministry of Finance: After modification of the tax law, the number of taxpayers is reduced to about 24 million
By China News Network at 16:46 on June 30, 2011
China News Network BEIJING, June 30: Deputy Director of the Tax Policy Department of the Ministry of Finance Wang Jianfan (王建凡) said today that under the revised tax law, the tax liability of wage earners is adjusted, and the number of taxpayers is reduced from about 84 million to about 24 million. This means that about 60 million people do not need to pay personal income tax and only about 24 million people continue to pay tax.
In the afternoon of June 30, the General Office of the NPC Standing Committee held a press conference by inviting interested parties who are leading cadres to answer questions from reporters concerning the legal issues voted through by the twenty-first session of the Eleventh National People's Congress.
Wang Jianfan pointed out that the modified personal income tax law will play an active role in the following four aspects.
First, it will significantly reduce the tax burden on the medium- and low-income groups. The reduction of tax burden on the medium- and low-income taxpayers contains a combination of steps. On the one hand, after the deduction standard of taxable income is raised from 2000 to 3500 yuan, the tax burden of taxpayers is generally reduced reflecting the state compensation to the rising living costs resulting from price increases and other factors. After the adjustment, the tax rate of workers and wage earners is reduced from current about 28 percent to about 7.7 percent, and the number of taxpayers is reduced from about 84 million to about 24 million. This means that after this adjustment, about 60 million people do not need to pay personal income tax and only about 24 million people continue to pay tax.
Second, the adjustment effort is appropriately increased on high-income earners by raising the deduction standard of workers and wage earners and at the same time connecting this change with the adjustment of the payroll tax rate structure, so that part of the high-income earners bear additional tax liabilities to offset the tax benefit they receive resulting from the raise of the payroll deduction standard.
Third, the modification reduces the tax burden of private or individually-owned businesses, contractors and leasehold operators. The largest tax reduction occurs for taxpayers whose annual taxable income is less than 60,000 yuan; the average tax reduction is about 40 percent and the biggest drop is 57 percent. This is in favor of supporting the development of private or individually-owned businesses, contractors and leasehold operators.
Fourth, it is easier for the withholding agents and the individual taxpayers to file tax returns. The content of this adjustment is favorable to taxpayers. (The above paragraphs are edited according to the live-broadcast texts by the China News Network).
In short, according to the Revenue Division of the Chinese Ministry of Finance, in 2011, the number of people in China having a monthly income of more than 3,500 yuan was only 24 million (only 84 million earned more than 2,000 yuan). Whenever I show these data, some would say that these data could not be trusted. Some would even say that none of the Chinese government statistics could be trusted. I am here to make a few comments. First, what is your basis to say that these data cannot be trusted? Do the Chinese central, provincial and municipal governments need to conceal the number of people whose monthly incomes were more than 3,500 yuan? Second, if you do not believe that the number was 24 million, do you believe it being 48 million? Do you believe it being 72 million? Third, even it were 72 million, was the number of wealthy Chinese still far fewer than what you think? Fourth, according to the Li Yi model of the structure of China’s social stratification, I assume that even if these data missed out some taxpayers, the current number cannot be more than 48 million.
My assumption is well-founded, please see a latest source of data:
Low wages in private companies mirror the current situation of the society
By Xinhua Daily at 10:40 on June 5, 2013
The “2012 bulletin of provincial wage statistics of the employees in cities and townships” released by Jiangsu (江苏) Province shows that the average annual wages of Jiangsu employees working for urban private and non-private units were 32,069 yuan and 50,639 yuan, respectively; the difference is nearly 100 percent. (Reported by this newspaper on June 4).
Jiangsu’s situation is the epitome of many more places. Since there are higher probabilities for most incomes below the average, the average annual salary of the privately-run units is in fact hard to reach for the majority of employees working for the privately-run units.
Because of this, even though the year of 2013 is called "the most difficult job-seeking year", college students still dislike and avoid working for the private enterprises.
The pay situation in the private sector is poor, but this cannot simply be concluded as being due to the strength of the capitalists or the weakness of the laborers or even simply as the “evil hearts” of the employers. In fact, the private enterprises are mostly in the labor-intensive low-end manufacturing industries with low profit margins and heavy tax burdens. Statistics show that the small- and medium-sized enterprise (SMEs) need to pay more than 20 kinds of taxes including income tax, value added tax, business tax, turnover added tax, stamp duty, deed tax, etc. If the various implicit and explicit taxes are added together, the average corporate tax burden comes to 40 percent or more. With a heavy tax burden like this, is there still much room for private enterprises to increase salaries and add benefits?
The poor wages in privately-run enterprises have multiple meanings. They provide us with a reference to observe and assess the current situation of the society and a warning of ecological imbalance in economy. Or, in other words, it is a deep call for accelerating the reform of the distribution system and the improvement of the market environment to reduce the tax burden of privately-run enterprises.
(Source: Xinhua Daily)
12. Today’s China has no middle class
The Chinese society today has no evidence or data indicating the existence of a middle class formed by white-collar professionals in the service sector. From a sociological point of view, there are two definitions for middle class. Broadly speaking, the middle class is in the middle position of the structure of social stratification. According to this definition, Figure 6-3 shows that migrant workers are the middle class in today’s China. Narrowly speaking, the middle class specifically points to the class of white-collar professionals in the service sector. In the developed countries, this class in the early and mid-industrial societies was a part of the upper class. In the late industrial and post-industrial societies, the size of this class gradually caught up with and eventually exceeded the size of the working class to stay in the middle of the upper class (bourgeoisie and upper management) and the lower class (blue-collar working class), so this class eventually became the middle class.
China is now entering the mid-industrial society. It is not possible yet to have a middle class composed of white-collar professionals in the service sector. In today’s China, the majority of white-collar professionals in the service sector are cadres and quasi-cadres. Regardless of power, wealth and prestige, they all belong to the upper class. Most research on China’s middle class has created some statistical indicators to define the presence of a Chinese middle class, and the most common statistical indicator is whether they have a car. According to the "2012 bulletin of China national economic and social development statistics" of the National Bureau of Statistics, the number of private cars in China was 53.08 million at the end of 2012. China’s population is now close to 1.4 billion, but there are only 53.08 million civilian cars. Obviously, owning a private car at the end of 2012 in China was not a sign of middle class, but rather a sign of upper class.
The number of China’s white-collar professionals in the service sector will surely catch up with and surpass that of the blue-collar working class to become the middle class and forms a part of the upper class. This is an irresistible trend of history and the future China. As mentioned earlier, I think that the present 80 million quasi-cadres form a hotbed of the future Chinese middle class. In 20 or 30 more years, when the number of quasi-cadres reaches 300 million, then the Chinese middle class will have formed. It depends not only on annual university freshmen of 5 to 10 million, but more importantly on whether these college graduates can find jobs. Only when the current development model of China transforms to an innovation-based development model can the 200 million college graduates find jobs.
13. Hukou and China’s social stratification
The current hukou system has caused urban and rural isolation, regional isolation and segregation, hindered China's urbanization and reduced the domestic demand. As a result, China cannot form a nationwide labor market, a commodity market, a capital market, a social security system and an educational system. It has directly reduced the speed and quality of China’s economic development and must urgently be repealed. The hukou system was already established in the Qin and the Han Dynasties. But until 1949, there was no urban and rural isolation. The current hukou system which causes the urban and rural isolation and shapes the dual society is a new thing. The reasons for the existence of the dual society differ in three different historical periods. In the 1950s and early 1960s, the current hukou system was used to establish a state monopoly over purchase and marketing, and later coped with the famine brought on by the Great Leap Forward. From 1965 to 1985, in addition to the above reasons, the hukou system was used to cope with a possible large-scale foreign invasion, and to prepare for war and the Three-line Constructions. After 1985, the food problem was solved and the danger of foreign invasion was eliminated. So, the current hukou system is not at all necessary. The actual result is to maintain the privileges of the urban residents, and keep the imagined urban social stability brought by the urban-rural isolation and the dual society
The hukou system has caused the urbanization of China to lag far behind its industrialization. Now the Chinese agricultural labor is only one fifth of the total labor force, but the rural hukou population of China accounts for nearly 65 percent of the total population. So, at present the urbanization rate of China is actually only 35 percent. The current hukou system makes China’s urbanization fall behind its social and economic development by 45 percentage points for no reason at all. In Table 7-1, the data before 2000 given by the National Bureau of Statistics were accurate, after 2000, they were falsified. As Mr. Lu Xueyi (陆学艺) repeatedly pointed out many times before he passed away: "In 2000, the National Bureau of Statistics changed the statistical indicators, called the rural migrant workers who stayed in the cities for more than half a year the urban permanent residents, and included them in the statistics of the urban population. So the urbanization rate has greatly improved in recent several years". Every time recalling this, I could not help but admire and cherish my memory of Mr. Lu Xueyi.
In the Mao era, at least between the cadres, and between the workers, the country basically achieved equal pay for equal work. But after 1985, due to social isolation that blocked competition and free movement of the population, regional differences widened rapidly. Take Shanghai (上海) and Qinghai (青海) as an example. Now for the same work in Shanghai the wage may be five to ten times higher than that in Qinghai, because people cannot flow freely between Shanghai and Qinghai. This system of social isolation is the root that has caused the huge income disparities between the eastern, the central and the western regions. If the social isolation is eliminated, the huge income disparities (rather than the gap of the development level) between the eastern, the central and the western regions will disappear on their own. And the development of each region will automatically become more balanced and more harmonious. The level of development and income disparities are not directly related. For example, at present, New York City is much better developed than Alabama. But for the same job, there is no huge income disparity between New York City and Alabama. It is essentially equal pay for equal work, because the population is free-flowing. Thus, the development in any one place in the United States will naturally also lead to the development of the entire United States. Similarly for China, if the population, the commodities and the capitals of Shanghai and Qinghai were free-flowing, there would be equal pay for equal work between Shanghai and Qinghai. Shanghai's development would naturally promote the development of Qinghai. This is where the magic lies in having a combined national labor market, a national commodities market and a national capital market. The so-called establishment of a modern nation-state and a modern market economy is to establish such a magical combination of the three major markets.
To establish a modern nation-state is to take many local communities and integrate them into a nationwide society as a whole. In this entire society, a unified national labor market is much more powerful than the numerous divided local communities separated by provinces, cities and counties. This is the source that allows a modern industrial society and a post-industrial society to have a much stronger cohesiveness and creativity than a pre-industrial society. Originally, industrialization necessarily required the establishment of a national labor market. However, social isolation has made the industrialization of China break into pieces according to the separations of provinces, cities and counties. Since 1985, the more China's industrialization has developed, the more serious has been its social fragmentation. This situation has forced the various provinces, municipalities and counties to only become interested in people who have a local residence permit, to only take care of their interests, and to place the local interests above the national interests. It is needless to mention taking into account the interests of other regions.
In fact as early as 1992, the State Council established a document drafting group for the reform of the hukou system reform. The group was led by the General Office of the State Council with the participation of the Ministry of Public Security and other departments. In June 1993, an overall plan for the reform of the hukou system was put forward, which included the elimination of the dual agricultural hukou and non-agricultural hukou, the unification of the urban and rural hukou registration systems, the implementation of the principle of hukou registration at the current address in order to have a legal permanent residence, a stable job or source of income as the major living requirements for basic settlement conditions, and the adjustment of the hukou migration policy. But the subsequent reform failed to implement the program. In today's world, only China and North Korea continue to implement the hukou system which disallows the free movement of people.
Chongqing (重庆) has led the first major reform. Starting from 2010 the city launched a two-year plan to allow 3 million farmers to enter the city, and a ten-year plan to allow 10 million farmers into the city. What Chongqing can do, all the provinces and cities of China also can do. Chongqing’s preliminary practice confirms my predictions over the years: If opening up the urban hukou, the situation of farmers swarming into the city striving to become city dwellers will not appear. For three decades, the main reason for opposing the hukou reform has always been this: If you eliminate the urban and rural isolation, the Chinese farmers will be like headless flies blindly rushing into the cities, and once they come, they will not leave. Then the Chinese cities would become slums and the world would be in chaos. The PRD migrant workers' wages have continuously risen after 2009, showing again the emergence of labor shortage. So, the elimination of urban and rural isolation would not be great scourges. Chinese farmers are not blind flies without a head but highly rational economic men. Do not say that farmers do not come if there is no work; even there is work, if wages are too low, farmers will not come either. Why would Chinese farmers abandon their spacious farmhouse free from cold and hunger to live in the crowded slums of the cities?
The new collective leadership of President Xi Jinping and Premier Li Keqiang has made it clear that solving the hukou issue, eradicating the urban-rural isolation and vigorously promoting the urbanization process are important national policies that should be pushed forward as soon as possible. For detailed discussions, see "Coordination for Pushing Forward Urbanization Is a Major Strategic Choice to Achieve Modernization" published not long before Li Keqiang became the prime minister; see Administrative Management Reform (《行政管理改革》), No. 11, 2012. Solving the hukou issue to achieve free flow and the freedom of movement of the Chinese population is bound to push forward China's social economy more rapidly, more vigorously and more harmoniously.
14. Education and the social stratification of China
This is the content of the report "Vigorously Develop High School Education" by the 17th National Congress of the CPC.
The 12-year compulsory education and the high school education should be universal before the National Health Insurance becomes universal.
There is talk about high school education becoming universal in 2020, but there is no talk about high school compulsory education becoming universal. If compulsory high school education is not universal, how can high school education become universal?
The unfairness of the college entrance examination is intensified.
We must make sure to abolish the provincial college entrance examination and resume a unified national college entrance examination as soon as possible.
We must cancel the separation of arts and science in the college entrance examination, eliminate the separation of curriculums in high school education and cancel the foreign language test in the college entrance examination.
It is completely possible and we should implement annually full scholarships for 600 thousand undergraduate students, 100 thousand master-degree graduate students and 50 thousand Ph.D. students to compete for talents from around the world and to create a direct route for Chinese talents from first grade to the doctoral degree.
Table 7-1 Basic educational statistics from China’s National Population Census
For details, see my book The Structure and Evolution of Chinese Social Stratification, Chinese version (2008), Chapter 7, Section 1, "College Entrance Examination", and Section 4, Item 4, "Establish Free Compulsory Education and Build Education Market".
See my book Introduction to Sociology (2011), Chapter 12, "Sociology of Education."
(This issue will be discussed this afternoon.)
15. Leftists, Centrists and Rightists in the social classes and strata of contemporary China
In analyzing classes and strata, we must analyze the figures of the leftists, the centrists and the rightists among them. But in order to keep my distance from the realpolitik, I have not been involved in this topic. Fortunately, someone recently released related data. The Political Culture Research Director Zhang Shu (张明澍) at the Institute of Political Science of the Chinese Academy of Social Sciences published a book What Kind of Democracy Do the Chinese People Want (《中国人想要什么样的民主》，Social Sciences Documentation Publishing House, March 2013). For the analysis of leftists, centrists and rightists, see pages 47-49 of the book. This book is an extension of a key research project "Research on Chinese Citizens’ Political Quality" of the Chinese Academy of Social Sciences and has tracked and continued the research content of Zhang Mingshu’s book China’s Political Men (《中国“政治人”》) published in 1994. The research targeted "urban citizens who are more than 18 years of age", and through technical means ensures that the demographic indicators, age, gender, educational level, etc., of the research targets were the same as in the census data base published by the National Bureau of Statistics.
http://news.sina.com.cn/c/2013-05-05/113527030133.shtml Southern Weekend (《南方周末》) Q: For the same questionnaire, what was the biggest difference between the results of the two surveys?
Zhang Mingshu (张明澍) A: This time there is a new concern: Special attention is given to the left-center-right divisions. The results showed that the ratio of the rightists was low, the leftists had a high proportion, and a large part of the community people went along with the mainstream media; these three indications are beyond my expectations. In the 1988 survey, the survey targets showed a higher degree of Westernization than now. At that time, reform and opening up just started, the society showed a gesture of embracing the Western things. This time, on the contrary, we find that certain thinking that the intellectuals consider as leftist and outdated, in fact exerts a considerable influence on our society. Based on the survey data, today's Chinese society has 38.1 percent of leftists, 51.5 percent of centrists and 8 percent of rightists. These results surprise me. If you calmly observe people around you, do not just stay inside the intellectual circle, but go back to your hometown, go to the streets, you will find that these ratios are basically accurate.
There are three points that may be noted. First, these findings regarding leftists, centrists and rightists are fully consistent with the Li Yi model of the structure of China’s social stratification. The majority of workers, peasants and soldiers are essentially the leftists and the centrists. Second, readers, please pay special attention to this survey which covers only urban citizens older than 18 years. We can completely assume that if the survey covers all Chinese citizens including rural residents, there will be a greater proportion of leftists and the ratio of rightists will even be smaller, i.e., the rightists should number less than 5 percent. Third, who are mainly the rightists? It can be assumed that they are mainly among the 53.08 million private car owners, primarily among the 24 million crowd whose monthly income is over 3500 yuan.
The first paragraph of the book Selected Works of Mao Zedong (《毛泽东选集》), Volume I, Part I, is as follows:
Who are our enemies? Who are our friends? This question is the top issue of our revolution. China’s previous revolutionary struggles all had little success; the basic reason for this is that we could not unite with real friends in order to attack the real enemies. The revolutionary party is the guide of the masses. There has not been a revolution without failure when the revolutionary party led the revolution along a wrong path. Our revolution must avoid leading the revolution along a wrong path and must achieve success. We must pay attention to uniting with our real friends in order to attack our real enemies. In order to distinguish between genuine friends and foes, we cannot but make a general analysis of the economic status of the classes in the Chinese society and their attitude to the revolution.
What is the situation of the classes in the Chinese society?
Some people say that it is difficult to promote social reform in today's China, because it is difficult to mobilize forces that support the reform. I do not agree. If your reform is for the interests of the vast majority of the Chinese people, how can you get no support? Who would dare oppose you? Who can stop you?
The talk in the afternoon is entitled: The Sociology Picture of the China Dream.
Your comment is appreciated.
English publications see:
Other references are listed in the Chinese version of this article.