The State and Society of China by Yong Gao & Ying Wu

Author:Yong Gao & Ying Wu
Language: eng
Format: epub
Publisher: Springer Singapore, Singapore

4.1.1 Laid-off Workers: From Unit to Society

In the planned economy and public ownership period, the unit was the basic unit of society, and in the urban area it was reflected as urban enterprises and institutions.2 These various types of social and economic organizations were national administrative organs as well as the possessors of social resources.3 They connected the state and the individuals and played a role in political mobilization, economic development and social control for the state. Meanwhile, they were also sources of personal income, social welfare, and status for individuals.4 For example, in typical state-owned enterprises, employment was not a market relationship. Labor cannot be changed according to production. State-owned enterprises were not economic enterprises in the sense of capitalism, but a social system and a ruling mode. Weide summarized the characteristics of the unit beyond its productive nature: the responsibility of allocating public welfare, the role of political organization in the state’s domination, and the mechanism of absolute decision over the fate of the individual.5 Therefore, in this period, the individual was fully attached to the unit, and they were the “unit of the unit”.

In the economic field, the dual monopoly of the resources and personnel, the economic function and the political function of the unit, lead to inefficient operation of state-owned assets. Therefore, the Decision of the Third Plenary Session of the 14th CPC Central Committee put forward to establish a modern enterprise system reform centered on “clear property rights, clear rights and responsibilities, separate administration from management, and scientific management” for State-owned Enterprises. In this reform, the state-owned enterprises made great adjustment in corporate transformation, corporatization and scientization, such as the property operation, governance structure and personnel management and other aspects. Therefore, a large number of non-professional functions of enterprises were pulled away, non-performing assets were stripped, and the original functions of resource control, political control, ethical control and social control were gradually weakened.

In practice, in the process of restructuring and developing large-scale enterprises and enterprise groups, the strategies like “breaking the three restrictions in State-owned Enterprises”, “reducing staff for greater efficiency”, “redirecting laid-off workers”, “optimizing of labor organization”, “retaining the large enterprises while releasing the small ones”, also led to restructuring and bankruptcy of many small and medium-sized state-owned enterprises. On March 19, 2001, the World Bank published a report on “the Bankruptcy Study of Chinese State-owned Enterprises”, which was 100,000 words long. The report pointed out that the bankruptcy of state-owned enterprises in China has been implemented since 1994, and by 1996, targets should be about 1100 enterprises, involving 680,000 employees, 43 billion yuan of debt and more than 100 billion yuan of bad write-off. Bankruptcy of state and non-state enterprises has become more common since the mid-1990 s. According to the National Bureau of Statistics, in 1996 the number of state-owned industrial enterprises was 113,800, and the number of collective industrial enterprises was 1,591,800, but in 2004, both were reduced to 25,300 and 141,700.

The bankruptcy of state-owned enterprises made a large number of

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