Economic reforms, industrial relations and human resources in the People's Republic of China: an overview

Industrial Relations Journal 27:3 ISSN 0019-8692

Economic reforms, industrial relations and human resources

in the People’s Republic of China: an overview

Malcolm Warner

In this article, the impact of the post-1978 economic reforms on the Chinese labour-management system on the main sectors of employment (state, collective, private and joint ventures) is systematically discussed. The author concludes that as greater enterprise autonomy becomes more common, the labourmanagement system will evolve into a more ’marketised’ hybrid form albeit ‘with Chinese characteristics‘.

This article sets out to review ongoing trends in industrial relations (IR) in the People’s Republic of China in the 1990s. It examines the impact of economic reforms on the labour-management system and discusses how far it is moving towards an indigenous model ’with Chinese characteristics’. The main hypothesis in hand is that the system is blending elements of the post-1949 ‘iron- rice bowl’ employment system with those emerging as a result of the reforms to produce a more complex, hybrid form of industrial relations and deployment of human resources [ 1).

It has been pointed out elsewhere that the Chinese have not yet evolved a clearly Western-style type of industrial relations [2]. Chinese trade unions, for example, did not

0 Malcolm Warner is a Professor and Fellow of Wolfson College, Cambridge, as well as a Faculty Member of the Judge Institute of Management Stud- ies, University of Cambridge.

develop on common lines to their British, Continental European or North American counterparts. On the contrary, they had mod- elled themselves on the Soviet model [3]. Without collective bargaining on Western (or Japanese) lines, Chinese unions emerged as a politicised response to the modernisation process, particularly in an economy where at best only a minority of the total work-force (if those involved in agriculture are also counted) were to be found in the industrial sector and where a labour-market only existed in a very limited sense [4].

Conceptually, Chinese industrial relations can be regarded as sui generis, although at least until the 1980s resembling the ‘com- mand economy’ collective-representation model more than any other [5]. Such unions arguably do constitute components of an industrial relations system in Dunlop’s sense, [6] if not quite resembling the Western variant. Within it, trade unions in the People’s Republic of China were tradition-

@ Blackwell Publishers Ltd. 1996, 108 Cowley Road, Oxford OX4 lJF, UK and 238 Main St., Cambridge, MA 02142. USA.

Economic reforms in China 195

ally organised on vertical lines, in keeping with Leninist ideology and Soviet ‘industrial’ principles of organisation [7]. Craft and occupational structures constituted a horizontal dimension based on the older ’guild’ tradition which traditionally charac- terised master-apprentice relations [8]. It should also be noted that organised labour in China has traditionally be re-active to changes in the direction of economic policy since the PRC was established in 1949 and tends to follow Party direction both centrally and locally [9].

Any discussion of China’s dramatic changes since the death of Mao Zedong in 1976 must also take into account Deng Xiaoping’s policies of the ’Open Door’ to the West (and Japan) and the ’Four Modern- isations’ (of Agriculture, Industry, Science and Technology, as well as Defence) which first got off the ground in 1978-9. Such strategic shifts have had important impli- cations for the Chinese economy, and in turn for its management as well as its labour-

For much of the 1980s, the average trend- rate of economic growth was over 9% per year according to official sources and the longest period of sustained growth since the founding of the People’s Republic [ll]. Some experts even predict that China’s economy may become the second largest in the world by the year 2005 [12]. Economic growth at such a rapid rate provided a sharp contrast with the rest of the world, particularly when the major industrial powers faced recession. Whilst one may be sceptical regarding the most extreme estimates of actual and pro- jected rates of expansion, it is agreed by most observers that the Chinese economy has grown at an impressive rate.

As the five-yearly Chinese Communist Party Congress met in Beijing in October 1992, the assembled 2000 or so delegates dutifully endorsed Deng Xiaoping’s re- affirmation of the economic reform pro- gramme. The party’s paramount leader reaf- firmed the reform agenda [13]. This step further re-enforced ongoing changes in industrial relations and management. These innovations had been at hand since the mid- 1980s, but gained a boost from the new emphasis in economic policy. The collapse of the former Soviet Union left China’s leaders in a determined state of mind, but conscious of the fact that economic growth via decentralisation may be the best way to

supply [lo].

retain authority. Compared with the former Soviet Union however, China has perhaps had rather more perestroika than glasnost ~ 4 1 .

Labour market reform China’s ’Iron Rice-Bowl’ (tie fun wan) employment policy had its roots in the early 1950s and was based on a combination of Soviet-style industrial relations, together with direct urban labour allocation. It was also influenced by Japanese employment practices in pre-war Manchuria as well as under the Occupation, for Japanese personnel at least [15]. The system was originally intended to protect skilled workers after the Liberation in 1949, but eventually spread to cover the majority of urban workers. After leaving school, young Chinese workers were allocated jobs by local labour bureaux, in most cases with little reference as to where they wanted to work and in which kinds of tasks. They were then assigned to work-units (or danwei) which registered their citizenship status (or hukou). In some respects, it exemp- lifies a ’Lifetime Employment System’, although comparisons with Japanese companies may be as misleading as illuminating, as the two country-contexts markedly differ in that one is nominally still communist and other, capitalist. Citizenship registration thus anchored the worker to his or her danwei and labour mobility was minimal. Urban dwellers without their hukou were non-persons. The wage grade system-usually eight levels for factory workers-had been taken over from the Soviet model. As has been said of other Communist economies, ”they (the cadres) pretended to pay us, and we (the workers’ pretended to w o r k (anon.). For much of the time, and especially during the Cultural Revolution, an egalitarian system was common, but some critics have taken a sceptical view [16].

Another feature of the post-1950s Chinese employment system was the practice of ‘occupational inheritance’ (or dingti). When a worker retired, he or she could recommend a close relative for the job. This practice led to over-manning on an extensive scale [17]. Granick found that open inheritance of jobs was still very prevalent in the early and mid-l980s, with over 90% of posts in this category: it was, as he put it, ‘automalic‘, ’legal’ and ’real’ [18]. If the dingti arrange- ments were formally cancelled in 1986, later

196 lndustrial Relations Journal 0 Blackwell Publishers Ltd. 1996.

reports still indicated the practice was prevalent through labour-service companies set up by local labour bureaux. With rising youth unemployment, it is likely to continue “in legal or semi-legal guise” (191. Steps to scale down this system have met with mixed results as Chinese state enterprises (SOEs) have started to adopt the Labour Contract System with more open job recruitment (see Figure 1).

Given the scale of the problems, the ration- ale of the Dengist reforms was to introduce greater efficiency into the system by the use of market mechanisms (see Figure 1). Efficiency was not merely technical efficiency in terms of the best input-output ratios, but also allocative efficiency in terms of optimising the use of resources [20]. The Chinese leadership saw China at a primary stage of economic development and was therefore willing to see increasing inequality continue for some time. Equality was thus to be re-interpreted ’flexibly’ for the while and traded off against greater efficiencies. Discussions of wage-related issues had long focused on the Marxist dictum of ‘distribution according to labour’, but now this had to change. Reforms had to be designed to give both enterprises and individuals the greatest autonomy and initiatives possible. Economists, like the late Jiang Yiwei, Dong Fureng and Liu Guogang set out explicitly efficiency-centred strategies [21].

Even as late as 1988, a polemic ensued regarding a proposal to create a ’labour

market’ since not all economists agreed that labour was a commodity under socialism. Currently, official sources use the euphem- ism ’service-market’, as the notion of a ‘market’ for labour presents problems for Marxist theory [22]. Earlier, the proposition that ’distribution according to labour’, con- ditional on ’each according to his labour’, had been criticized. Many Chinese economists began to support the notion that the total wage-fund of the enterprise should be a reflection of its performance on both macro- and micro-grounds. Growth of aggre- gate wages should not go beyond national income and productivity; at the micro-level, the new approach was intended to increase the incentives of both firms and employees. For this to happen, however, other changes must take place such as price-reforms, so that enterprise profits could reflect their performance. Some went on to argue that it was wiser to open up the labour-market and let the market determine wage levels. The caveat was advanced, however, that profits were not created by labour alone. Thus, if wages were geared to profits rather than labour productivity, workers might become work-shy and seek illicit ways to boost profits to increase their wages. Others wanted a half-way house, where there was a fixed wage plus a bonus reflecting increases in enterprise profits. One idea was to merge the wage-fund, bonus-fund and welfare- fund as a ’labour contract-fund’ which would be part of the costs of production. When

System Old Characteristic

New

1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12.

Strategy Employment Conditions Mobility Rewards Wage System Promotion Union Role Management Factory/Party Role Work Organization Efficiency Criteria

Maoist Iron Rice-Bowl Job Security Job Assignment Egalitarian Grade Based Seniority/Political Consultative Economic Cadres Central Taylorist Tec hnica I

Dengist Labour Market Labour Contracts Job Choice Meritocratic Performance Based

Fidelity Skill-Related Co-ordinative Professional Managers Ancillary Flexible Allocative

Figure 1 : Reform of the labour-management system Sources: The above figure is based on several sources including those cited in references [l] [2] [3] and 191 for example, as well as the writer’s own field-work in China. The characterisation of the ideal- type old, Maoist system set out above does not however differ from the one outlined in Whyte (1974) - see footnote 1161.

@ Blackwell Publishers Ltd. 19%. Economic reforms in China 197

total production costs fall, with higher labour productivity, the fund would increase and vice-versa.

As price reforms were introduced, many everyday items, particularly food, became more expensive. Allocative efficiency was enhanced, and if wages were indexed, at least this was an overt rather than a covert subsidy. Some economists did not want national indexation, but rather a selective subsidy or a local adjustment. There was however, no consensus among Chinese economists on price and wage reforms.

Partly as a result of such thinking, material incentives were introduced. Bonuses became more important as a method of rewarding effort and productivity. Whilst such new practices were welcomed by some workers who stood to benefit, others who were potential losers were resentful. In effect, many managers paid all their employees a bonus in order to placate them and to avoid any conflict and disruption to production, thus defeating the purpose of the innovation, in the eyes of critics. ‘Red-eye disease’, as jealousy is referred to in Chinese parlance, was said to be quite common as a result of the economic reform policy. Greater economic rationality had led to discrepancies in rewards between groups of workers in the same firm or between firms but these were not perceived as a return for greater effort

Another consequence of the Dengist reforms was a move away from the Soviet- style grading system and to build in greater rewards for flexibility, albeit very much adapted to Chinese circumstances. Pro- motion was previously guided by seniority and political fidelity rather than acquired expertise and motivation: it was better to be ’red’ rather than ’expert’, in other words. Previously, all wage levels were fixed by the State. In principle, the system was based on ‘to each according to their labour’; there had long been a minimum wage system, based on the cost of subsistence for two people. The actual wage levels of each enterprise had been worked out by the local district labour bureaux, following provincial and industrial-level bureaux guidelines. Fringe- benefits, housing subsidies and the like were ascertained accordingly. The system was criticised for ‘low wages, high employment’, but fundamentally meant gross overman- ning. The system was seen as being inefficient not only by internal critics, but also

~ 3 1 .

by foreign investors. Rewards were now to be more closely linked to performance in principle at least and the ‘iron rice-bowl’ was to be ‘smashed’ [24].

By 1987, the State Economic Commission had launched extensive wage reforms. In future, state enterprises could decide their own reward levels. There would be a basic wage, topped up by bonuses and productivity deals. Such reforms were not welcomed by economic conservatives, whether lobbying at macro- or micro- levels, and were not well received in trade union circles. Piece-work which had been used a great deal in the 1950s in state enterprises, then banned in the Cultural Revolution, was re- introduced. Covering only one in ten state enterprise employees by the mid-l980s, it was mostly used previously in coal-mining and the docks.

Under the old labour system, dismissals were very rare and redundancies even rarer. Since the reforms of the early 1990s, they have become easier in principle but not extensive in reality, often less than one percent per annum, with several forms of dismissals varying in severity and depending on the gravity of the offence, even as late as the mid-1990s as recent interviewing at enterprise-level by the present writer can testify. They range from temporary suspension to outright sacking. Sometimes, for example, workers who perform poorly might be transferred to a ‘labour-service’ company owned by the same enterprise group, or to plant even on the same site. This development may be referred to as ‘one factory, two systems’ [25].

Redundancies were to be another novel feature of the economic reforms. As state enterprises were made more economically responsible, the less productive ones were exhorted to shed labour, particularly on ’pilot’ or ’experimental’ sites selected for trying out the new enterprise contract responsibility schemes. In such instances of mergers and contractions, older workers, or the less competent, were to be sacked, transferred, or retrained. Redundancies were explicitly sanctioned under the 1994 Labour Law, which became operative in January 1995. Similarly, large numbers of peasants have been displaced from the country-sidt+- many, but by no means all, finding work on a temporary basis in the cities [26].

Disguised unemployment has long been a feature of economic development. Over-

198 Industrial Relations Journal @ Blackwell Publishers Ltd. 1996.

manning in both the rural and urban sectors in China testify to this phenomenon. Fric- tional unemployment, due to changes in jobs, was low even in the relatively more mobile parts of the labour-market and until the early 1990s very low in the state sector where job-allocation had built-in rigidities. The rate of job transfer is, however, now increasing for professionals and technically skilled personnel in state-owned firms [27]. Prema- ture unemployment also exists, especially where well over one in ten young people are ’awaiting assignment’, as the euphemistic Chinese phrase puts it.

Officially, China now has a ‘three-in-one’ policy, using established labour bureaux, labour service firms and a mixture of infor- mally organised networks that encourage exchange in sectors like self-employment [28]. A pioneer in the last of these categories has been the Beijing Talent Exchange Centre. In 1989, it launched the Spring Labour Fair, bringing together 130 firms and 6,000 potential workers. By 1992, attendance had grown ten-fold. In recent years, a National Talent Fair has become an annual event. There are also unofficial labour-markets for rural migrants such as young women seeking jobs as domestic servants. In the larger cities, job transfers have become relatively easier. Nearly one million technical and managerial personnel were said to have registered at personnel exchange centres in order to seek re-location. Many qualified young graduates, for example, would like to work in joint- ventures. In Shanghai, which has over 1,000 substantial foreign-funded enterprises, nearly half their staff were hired by personnel agencies [29].

Fixed-term contracts for jobs were also a feature of the 1980s and 1990s changes in the labour-market [30]. Prior to the current reforms, the number of contract workers varied greatly, and was estimated to have risen to a maximum of 30% during the ’Great Leap Forward’ at the end of the 1950s. By the early 1980s, it had stabilised at about 6%, but by the end of the 1980s it was said to have risen to around 10%. In round numbers, contract workers were 31.23 million (21% of the urban work-force) by the end of 1993 (see Table 1) [31]. Part- time employment has also grown extensively, with more urban workers taking on second jobs. According to an official survey carried out by the ACFTU (the All-China Federation of Trade Unions), the official

trade union body, only around one in eight (12.2%) of workers in a selection of state- owned enterprises were said to display a high level of ‘enthusiasm’ in their work since labour contracts were introduced. Seven out of eight (87.8%) claimed they had only mediocre or inadequate motivation. Over one in three (36.3%) thought they now had no sense of being ‘masters’ in their enterprises, and half (51.5%) thought workers’ status was unduly low, and the rest believed, they had virtually become ’hired hands’ [32]. Low enthusiasm among workers, it was alleged, was principally reflected in the following: 1) low attendance rates; 2) low utilisation rate of working hours, which is not above 50%; 3) low labour enthusiasm and unwillingness to learn professional skills; 4) low labour productivity; and 5) low political enthusiasm where workers are not eager to join the youth league or the party, but only pursue material interests.

Although labour contracts were found in the state-owned enterprises in only varying degrees by the early 1990s, they were more common in other forms of economic organisations, such as township and village industries, joint-ventures and privately and/or foreign-owned firms. The labour-force in these concerns was more likely to be young, and/or female, as well as of recent rural origin. Incurring lower overhead welfare benefits for employees meant lower labour costs for enterprises, but higher money- wages may be on offer for such recruits to compensate for limited tenure. The notion of using temporary mostly short-term and non-pensionable ’contract-labour’, in contrast to most industrial workers in perma- nent jobs, was originally imported from the former Soviet Union in the mid-1950s [33]. It was used quite extensively on construction projects, but had also spread to other kinds of sites. Contract-labourers had reduced status in that they did not have the security, privileges and perks of the employed in the state enterprises. During the 1960s, the resentment felt made contract-labourers ready-recruits for the Red Guards during the Cultural Revolution. Currently, temporary short-term contracts coexist with labour- contracts of those which are renewable of short, medium or longer-tern duration, as was the case in the ten state enterprises investigated by present researcher in Sum- mer 1993. In the ten ‘pilot’ firms visited in Beijing and the North-East in a field-

@ Blackwell Publishers Ltd. 1996. Economic reforms in China 199

Table 2 : Numbers of contractual staff and workers in Chinese enterprises (end of 2993) ~ ~~

Year-end Figure (10,000 Percentage (Total staff and workers = persons) 100)

Urban Urban State- collective- State- collective- owned owned Other owned owned Other

Year Total units units units Total units units units

1983 1984 1985

1986 1987 1988 1989 1990

1991 1992 1993

65 57 209 154 409 332

624 524 873 735

1235 1008 1468 1190 1702 1372

1972 1589 2541 2058 3123 2396

8 32 72

92 125 206 245 287

323 299 526

3 5

8 13 20 33 43

60 84

200

0.6 0.6 1.8 2.0 3.3 3.7

4.9 5.6 6.6 7.6 9.1 10.1

10.7 11.8 12.1 13.3

13.6 14.9 17.2 18.9 21 .o 21.9

0.3 1.0 8.1 2.2 11.4

2.7 14.5 3.6 18.1 5.8 20.7 7.0 25.1 8.1 26.3

8.9 28.0 11.0 29.8 15.5 37.4

Source: State Statistical Yearbook, 1994

investigation by the present researcher in the Summer 1993, as will be described in greater detail later, all had placed new employees on contracts: some had 100% contracted.

The new Labour Law of 1994 fully formal- ised the requirements for labour contracts [34]. Such a move reflects a greater degree of convergence with other labour-markets in Asia or in the West, where life-time is not the norm. They also enable many overseas enterprises to take advantage of the plentiful supply of people to offer cheap labour to foreign firms, such as those of Hong Kong entrepreneurs, who are willing to bring their capital as well as their managerial expertise to bear on the problems of low productivity and poor quality control and to rectify these. Joint-ventures or wholly-owned enterprises were originally encouraged to provide an export-base along the coastal periphery of China [35].

State-owned industrial enterprises

A major policy shift signalled in early 1992, confirmed by the late Spring and legitimated in the Autumn of that year, has been the reform of the state-owned industrial sector.

This part of the economy had long been the favoured recipient of government support, heavily subsidised and staunchly protected. The reason for this special treatment was its vanguard role in the modernisation process since 1949. It was also a major contributor to state funds, as tax revenues could be gathered from its more productive sub-sectors.

State-owned enterprises ('owned by the whole people', in the official jargon) have long been the work-horse of Chinese industry and are mainly found in large industrial cities like Shanghai, Shenyang, Wuhan and so on. Large and medium sized SOEs in this sector used to produce the bulk of total gross value of industrial output, nearly 80% in 1980; now they produce under 45% of this total, although still growing in absolute terms. Employing nearly 110 million workers in all by the end of 1993, state enterprises were widely regarded as still inefficient and overmanned. It was not uncommon to find an enterprise with over two hundred thou- sand people on-site in a given city, such as the Anshan Iron and Steel Company (Angang), for example. Such large firms had the full stereotypical apparatus of Chinese labour-management relations under the 'Director Responsibility System' (see Figure

200 lndustrial Relations Journal @ Blackwell Publishers Ltd. 1996.

2). They claimed to have almost-complete unionisation with accompanying workers’ congresses as well as branch union commit- tees.

Trade unions in such work-units tended to stress production values rather than con- sumption ones, but nonetheless also had to look after the everyday welfare interests of their members. The trade union’s role was said to centre on ‘labour productivity, worker morale and welfare’ [36]. It did not bargain freely, or fix wage-levels as in West- em countries, but in contracted or leased enterprises often helped determine the allocation of funds and the arrangement of working schedules. Normally, trade unions were supposed to implement the details of resolutions passed by the workers’ congress in these areas. In the everyday work of the enterprise, union officials were also expected to defuse conflicts between the workers and

management. If the latter acted out of order, for example by reducing bonuses, or when there was a stoppage by the workers involved, the union was asked to intervene. In the recent years, Chinese trade unions, on the State’s initiative, have promoted a system of so-called ‘collective agreements’, now a formal requirement of the Labour Law of 1994. These accords are based on individual enterprises in order to anchor labour-management relations there and define the respective roles of managers and unions, but must be distinguished from Westem-style free collective bargaining [37]. The old pre-1994 collective agreements gave the unions a formal say in managerial decision making, but the new ones sanctioned by the 1994 Labour Law mostly only deal with wages and working conditions as set out in the pattern of individual contracts for a given enterprise. According to inter-

State bodies CPC ACFTU

/ h ;-

Management % I ‘.

Entearise TU Committee

Workers’ Staff Congress

Key: = authority-link

- - - _ _ _ = weak or ambiguous relationship

CPC = Chinese Communist Party

TU = Trade Union at enterprise-level ACFTU = All-China Federatian of Trade Unions

Figure 2: Key authority relationships in Chinese enterprises under ’Director Responsibility System’ Source: Adapted from Child, 1994, p. 67.

0 Blackwell Publishers Ltd. 1996. Economic reforms in China 201

views with Ministry of Labour officials in late 1995, very few of the new-style collective agreements had been introduced as yet. On key issues such as dismissals, management is more likely to meet with the union officials representing the workers’ congress, rather than the Party Committee, but it is doubtful if the unions play much of an independent role in the factory. In any case, the links between the Party and the trade unions are close because of overlapping membership. In addition, the union chair-person is normally a member of the enterprise party committee. At present, the future of trade unions at both macro- and micro-levels is in a state of flux (381.

In recent years, it became increasingly apparent that the volume of state subsidy for the state-owned enterprise sector had become not only a drain on resources that could be best used elsewhere, but also anom- alous in an emergent, if still regulated, market economy ‘with Chinese characteristics‘. Previously, this sector had not been appreci- ably open to market forces. By Spring 1992, the government had decided on the basis of policies formulated in May and September of the previous year to steer these enterprises into the market, holding them responsible for their profits and losses, even to the point of bankruptcy. A reform of the labour and personnel system was announced at the same time for 60,000 of the enterprises in the state industrial sector, potentially involv- ing as many as 30 million workers.

The Commission for Restructuring the Economy, the Ministry of Personnel and the All-China Federation of Trade Unions put forward a twelve-point proposal for deepen- ing refom of the system of administration of labour and personnel, wage distribution and social insurance in enterprises in early 1992 [39]. In order to deal with the accumulat- ing problems of the state industrial sector (particularly where many large enterprises such as in coal-mining made large losses), an initial reduction of the workforce was announced with the establishment of a social security system (that is, unemployment insurance) to cushion the blow to the displaced workers. It was estimated that 15% to 20% of SOE employees were potentially redundant. The State would have to develop employment in the service-industries to absorb surplus labour. The goal of these cuts was to deal with the low levels of economic efficiency, excessive over-manning and

unduly high indirect employment costs due to the generous welfare provisions provided in state industrial enterprises, referred ‘to, as we saw earlier, as ’the iron rice-bowl’ (see Figure 1). In order to deal with the human costs of bankruptcy; retraining and social insurance were also proposed [40].

Over 500 enterprises were thus designated as experimental sites for the above reforms. Greater competition was introduced and lifetime tenure for cadres abolished to encourage freer transfer of workers and performance based remuneration. Many enterprises with long-term losses would be merged, shut down or declared bankrupt [41].

The new regulations would enable state enterprises to decide ”the time, conditions, methods and numbers when hiring new employees” and to adopt “the contracted management or all-personnel labour contract system” [42]. Firms would have to recruit through examinations, senior staff who fail the tests would be assigned menial jobs, and junior employees would be promoted.

Implementation of reforms in the state-owned sector

In order to understand these reforms in the state-owned sector, we need to look at their implementation in greater detail. A field investigation was carried out in Beijing and the North-East of China (in Heilongjiang and Liaoning provinces) in Summer 1993. It covered 10 medium-sized to large state industrial enterprises (SOEs) as the main focus of the study (see Table 2). The firms were located in the cities of Beijing, Dalian, Harbin and Shenyang (and the adjacent city of Anshan). In addition, background data was collected from discussions with experts at the Chinese Academy of Social Sciences (CASs) and three provincial academies, four major municipal and provincial labour bureaux, five university management studies departments, six economic and social science research institutes, as well as one economic development zone and one trade union federation headquarters, were visited. Semi-structured interviews were undertaken with senior managers, labour bureaux personnel, researchers, and union officials, using colleagues from the CASS Institute of Industrial Economics as interpreters and translators.

Although the sample was a pre-selected group of enterprises chosen by myself and

202 Industrial Relations Journal 0 Blackwell Publishers Ltd. 1596.

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Chinese colleagues who collaborated with the research investigation, the firms were well-known locally as being at the 'leading- edge' of the enterprise reforms. First, the variation in age of the organisations was noteworthy. Four were founded pre-1914 by the Russians and then run by the Japanese in the North-East, two by the Japanese in the 1930s; and four after the Liberation, in the late 1940s or in the 1950s. They were all, therefore, well-established organisational entities, with their 'iron rice-bowls' well- institutionalised. Second, all the enterprises investigated were state-owned enterprises and were previously either run directly by Ministries or Bureaux. One of them was still formally under a provincial-level Industrial Bureau direction in 1993, for example Harbin Power Equipment. Dalian Port was run by the Ministry of Transportation and the City Government. Otherwise, the others were Corporations or parts of similar groupings. Third, although a good proportion of state enterprises operated at a loss (it was claimed for example that four out of every 10 enterprises in Shenyang were 'in the red' roughly corresponding to the national average at the time) most of the sample made a profit. The average sales turnover in 1992 was just over 9 billion RMB, and the average profits plus tax were just under 0.90 billion RMB, a ratio of 1 : l O approximately. Fourth, the range of enterprises' products was also relatively wide, ranging from iron and steel to pharmaceuticals, but most were in the heavy industrial sector. Seven out of the 10 were located in the metallurgy-based sector. Only one was exceptional, namely Dalian Port, as it provided a service rather than a product, although very heavily capitalised. Fifth, the variation in employee-size deserves mention, as the enterprises ranged from 1,300 to 60,000 workers (and 220,000 if the entire Anshan Iron and Steel complex (known as Angang) is taken into consideration). The average size of the nine was just under 20,000 workers (it would of course rise considerably if Anshan was included). Last, the data for the ten enterprises investigated is summarised in Table 2.

Whilst six of the ten SOEs investigated had moved to labour contracts, it was interesting that a minority, including a major one, namely the Capital Iron and Steel (Shougang) complex in Beijing, had not (as can be seen in Table 2). If those at the 'leading-edge' of

reform were conforming to the experimental initiative encouraged from above, the recal- citrants most likely had the political 'clout' to resist such pressures. Opposition was probably to be found in industrial concen- trations where political 'conservatives' (in Chinese terms) were strong and where enterprise-partyhnion factions were resili- ent. One may also surmise that it would be in the older enterprises and industries that such tendencies would be strongest, such as iron and steel and so on. Yet it is puzzling that if this particular reform was not fully introduced, other changes were implemented in the very same state enterprises in the fields of wages and social insurance. Moreover, it was true to say that all newcomers (at least) in the recalcitrant state enterprises had previously been put on labour contracts since the mid-1980s. Furthermore, by mid-1995, most large and medium-sized SOEs in the country as a whole were implementing the above reforms. A survey reported in late November 1995 that around 54% of SOE employees were on contracts. In private firms, the figure was 84.2% and in foreign-funded firms, 86.2% [43].

Next, the North-Eastern enterprises mostly reflected the 'post plus skills' (plus bonus) reforms (see Table 2). Nearly all of 10 firms had displaced the old eight-grade ladder. Enterprises now had more autonomy to implement reward-systems and there were now more inter-enterprise variations [44]. Interviews in the enterprises noted above revealed differentials ranged from 5: 1 to 3:l depending on economic circumstances; in profit-making firms, bonus payments were greater. There was a 'national' wages reform model consisting of a basic core of rewards topped up by collective and individual bonuses. Workers' average annual incomes (for 1992) ranged from around 3,200 yuan to 5,000 yuan, with an average of 4,030 yuan over the 10 organiza- tions. Earnings were higher than the annual average of 3,240 yuan cited for Dalian state enterprise workers in 1993, but much less than the 6,000 yuan estimated for rural industry employees, let alone the 9,600 yuan for those working in joint-ventures in that area for 1993 (the latter groups were not protected by the 'iron rice-bowl'). At the time of the investigation, the now aban- doned tourist exchange rate was just under 6 yuan FEC (Foreign Exchange Certificate)

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for one US dollar, whereas the ’free-rate’ was around 9 yuan RMB. The estimated, notional purchasing power parity equivalent was much larger than this, possibly up to five or six times greater. By mid-1995- after the experiments had been assimilated- wage reforms were being extensively implemented in most large and medium- sized SOEs all over China.

Last, the 10 enterprises visited reported that they had all implemented the new social insurance system reforms in varying degrees, with the larger ones having considerable residual burdens vis-a-vis retired employees. In all, over 35% on the total state payroll in the PRC are retirees. Contributions to the new social and unemployment insurance schemes were now to be paid by the individuals concerned as well as by the enterprise and by the State, according to the new 1994 Labour Law. Under Deng’s reforms, the numbers of workers in urban and rural industries covered by basic social insurance (for sickness, pensions, etc.) rose from 87 to 204 million. Around 95million employees in the industrial sector were covered by unemployment insurance by the end of 1994, however. Unemployment benefit was paid to 1.8 million people on a monthly basis last year. It was normally related to period of service and the original wage of the worker. Funds were also avail- able for the unemployed to set up as self- employed individuals or as small business collectives. Currently, plans are in hand to extend the scheme from the state-owned enterprise sector to wqrkers in all factories, but it is still ’early days’ in this respect. Poverty has been growing in recent years, largely because of inflation. Elderly factory- workers on pensions and those made redundant by loss-making SOEs are very vulner- able. According to official estimates in 1995, about 4% of urban households are regarded as below the official poverty threshold. A law extending welfare coverage is planned for 1997.

Collectively- and privately-owned enterprises

Collectively-owned (that is by major admin- istrative units and municipalities) industrial enterprises in urban areas employed nearly 34 million workers. In rural areas, townships and village enterprises (TVEs) accounted for nearly 93million jobs by the end of 1993

producing over 38% of total industrial output [45]. Since 1986, they have grown at around 18% per annum. In principle, they may recruit freely according to their production needs and the nature of their product-markets, but the larger ones are often like state sector enterprises and run by lower level government bodies which want to provide as many jobs as possible locally. They used to have ‘controlled’ wages but may now reward workers and managers more flexibly. Collectively-owned enterprises in urban areas at least have a relatively high incidence of trade union representation and workers‘ congresses. It is not known, however, how many enterprises described as ’collective’ are indeed ’private’. Some entrepreneurs find it ‘politic’ to turn over a minority of the shares to staff members, or pay substantial bonus payments, registering their firms as ’collective’ enterprises [46].

In 1978, there were only 150,000 licensed individually-owned firms (although many more were illicitly run); by 1993, there were over 6million of them in urban areas and around 16 million in rural areas [47]. There are still a vast number of unregistered enterprises, it is widely believed (the official figures probably grossly underestimate this number by factor two). Most of these are in small-scale commercial trade, or in services, such as catering or repairs. Little capital, labour or level of skills is needed. Many operate either in ‘grey’ or even ‘black’ markets, and until recently had a dubious repu- tation. Small family concerns are registered as individual industrial and commercial households (getihu or geti gongshanghu) and were initially supposed to employ no more than seven people and five who are appren- tices. By 1988, largely privately run enterprises (siying qiye) defined as having more than eight employees were legalised. They have greater leeway in their employment practices and in effect operate in more flexible ways than the state-owned and collective enterprises [48]. They can hire and fire personnel in a relatively unconstrained manner, sometimes sacking staff quite arbi- trarily. Unionisation in township and village enterprises is generally minimal.

Joint ventures Joint ventures and wholly foreign-owned firms became increasingly common. By the end of 1991 there were at least 20,000 joint-


ventures. By the end of 1994, over 200,000 foreign-funded, enterprises were agreed, but many of these were said to be small [49]. It is claimed that almost half of such firms were in Guandong province [50]. Since 1986, their output (together with that of private firms) has grown by over 50°/0 a year. They produced around 14% of the value of total industrial output by the end of 1994 and are very important for technology, knowledge- transfer and foreign trade. They are also able to recruit their own workers-there were almost three million of them by 1994-by examination and selection techniques; but in the early days, labour was allocated. Some of these foreign-invested enterprises (FIEs) may have trade unions, but not necessarily workers' congresses. Union militancy here has not been noteworthy, to date, although industrial disputes have risen in number of late. In the Shenzen Special Economic Zone, and large coastal cities like Dalian and Shanghai, it is claimed around half the foreign-funded firms have trade union representation [51] although other sources say this was only a stated ACFTU aim rather than a fact [52] and many have been described as little more than 'sweat-shops' [53]. Situated mostly on the Eastern sea-board, joint ventures often have to pay more, however, to attract better qualified workers, to take into account the lesser degree of job security and to compensate for the higher cost of living there. These enterprises are less constrained by state ownership and more reliant on their product-markets. American-style HRh4 is nowadays found in US-China joint ventures, such as Beijing Jeep, IBM and so on. They can 'hire and fire', enforce their own disciplinary measures and work practices. East Asian HRM practices, often derived from Hong Kong, South Korea or Taiwan, are frequently found in some foreign-funded enterprises. Stricter supervision and greater managerial control is common in such firms [MI.

Variation in personnel policies was often according to the size of such enterprises. Wages and bonuses are unquestionably higher in monetary terms in the coastal Special Economic Zones than inland. Higher wage-costs may be nonetheless balanced by higher productivity. Additional labour costs may be incurred by the foreign investor, but these are not necessarily paid to the worker. The local labour-service company may take a substantial percentage of total labour costs in order to cover both direct

and indirect costs of labour supply, such as social insurance and so on. Joint ventures also often supply dormitory accommodation in order to house these mainly rural migrants, who may only be temporary, cas- ual or contract employees as they have traditionally done in the early days of industri- alisation whether in China or Japan. Acceptance of overseas management practices in joint ventures has not been univer- sally welcomed. Apparently, the foreign managers of a joint-venture enterprise in Tianjin, for example, had widened salary- differentials and abolished some living and service facilities for employees. The latter's response, it was reported, was to become 'slack' in their work (551.

Discussion It is clear from this account of the different sectors of the Chinese economy that the kinds of industrial relations to be found in the PRC may vary considerably. In the state- owned sector, the 'iron rice-bowl' system is now being undermined as part and parcel of official policies to reform the large loss- making SOEs 1561. We have seen that the introduction of material rewards and the greater social insurance burdens for individual workers has been a feature of the reforms of the early 1990s. Such reforms are likely to extend to the whole state-owned sector in due course, if perhaps with growing resistance by those workers who stand to lose from them. As other workers are perceived as receiving higher wages, feelings of relative deprivation may lead to further worker discontent in this sector. There is as yet little evidence of foreign HRM practices taking root in SOEs, apart from the odd exception here and there. Conventional personnel administration is still de rigueur with influence shared between internal (personnel department, trade union, party committee) and external parties (such as the local labour bureau).

In the collectively-owned sector we have seen the fast growth of output and employment has led to weak union representation and flexible employment practices. In privately-owned enterprises (mostly small- scale) there is even greater lee-way for employers to evade their legal responsibilit- ies vis-a-vis, for example, health and safety legislation. The number of inspectors at local- (or even provincial-level) labour

206 Industrial Relations Journal @ Blackwell Publishers Ltd. 1996.

bureaux is extremely limited and this does not augur well for implementation of the laws.

In joint ventures and other foreign-funded firms, weak union representation varies from moderate to zero. Greater labour mobility mitigates the stronger managerial authority as many workers can (and often do) ’walk away‘ from employment conditions they find unpalatable. It is in this sector that foreign (usually US or East Asian) HRM practices are most likely to be found, at least in the larger enterprises.

The introduction of the 1994 Labour Law represents an attempt to codify and extend existing legislation in this field and to apply it to all sectors of industrial employment. Labour contracts are encouraged and the reality of redundancies underpinned in law. A new kind of collective agreement at factory level (another feature of the 1994 Labour Law) may not quite represent a move to collective bargaining but may be extended across all enterprises, including foreign- owned ones, in time. The institutionalisation of conciliation and arbitration machinery may also help defuse future potential industrial conflict. On the other hand, the degree to which the new legal code will be implemented is decidedly moot.

China is clearly a vast country, its industries span many sectors and forms of ownership, and its industrial relations take on many forms (see Figure 3). Reform of the economy has led to other market-led reforms, as in the exemplifications considered in this article concerning human resources. Although a fully-fledged labour market is still some years away, the change from the dirigisme and immobilisme of the Maoist yes- teryear has been noteworthy.

From the above analysis of China’s recent reforms, it is therefore clear that the nature of industrial relations is now very different from what it was a decade and a half ago.

It will probably further change as state- owned enterprises become less prominent: indeed, some 80% of the incremental economic growth came from the non-state sector by the end of 1994. Since the trade unions have traditionally complied with shifts of national policy, it is likely that they will continue to do so in the short-run at least. One observer fears that the reforms are set to fail because they break the ’social contract’ set up after 1949 between the state and the workers: under this arrangement, ”the enterprise, with its comprehensive welfare and political functions, is that State in minia- ture. Moreover, this identity based as it is on long-engrained habits of dependency remains popular [57].” In all the areas outlined in this article, trade unions and worker congresses (where one or both are actually present) will no doubt have had their say, but the evidence points to their becoming relatively marginalised of late and increasingly by-passed or over-ridden where there is further discretion for enterprise directors. Outside the state sector, their influence is already either limited or nonexistent. Insti- tutional adaption will no doubt proceed on pragmatic lines following the implementation of the 1994 Labour Law, neither old- style Maoist nor necessarily Western (or Japanese) but decidedly ’with Chinese characteristics’ [58].

Concluding remarks Comparing the data presented in this article with parallel research by Verma and Yan on HRM in Chinese enterprises, we find some differences. As they carried out their investigation at an earlier date, it is clear that the personnel reforms in SOEs had not yet gone as far in a market-oriented direction. The erosion on the ‘iron-rice bowl’ is now more extensive than set out in Verma and Yan’s contribution. In spite of this, SOEs had not

Variable Stateowned Collectively- Privately- Joint ventures and foreign- enterprises owned owned OWned

Trade union representation Ubiquitous Present Absent Moderate to zero Worker congresses Verycommon Present Absent Sometimes in joint ventures Hiring and firing Constrained Variable Unconstrained Variable Labour contracts Over 50% Under W/. Minimal Over 80%

~ ~ ~ ~~

Figure 3: lndustrial relations and ownership Sources: China Daily: Business Weekly. 26 November 1995; Warner (1995: 71) - see footnote 23.


yet advanced as far as JVs in adopting recognisable HRM practices. Both types of enterprises have moved a considerable way from the old norms, although in varying degrees. It is somewhat over-optimistic to see 'convergence' as Verma and Yan do as likely in the coming years [59].

The evidence presented in this article in my opinion thus supports the view that we are witnessing the slow emergence of a more complex, hybrid form of industrial change [60]. As 'marketisation' advances further and as enterprise autonomy increases, such a change will develop further [61]. The implementation of the 1994 Labour Law may be seen both as a response to this trend, as well as a further spur to a greater degree of coherence in the labour-management system. The progress towards an integrated system may, in any event, be slow. Areas where advances may be made include more extensive labour contracts, more arbitration and possibly wider social insurance. Even so, China may still look to the West and to Japan for further reforms in these areas.

Acknowledgement The field-work reported in this article is based on research carried out in Beijing and North-East China which was sponsored by the British AcademyIESRClCASS exchange scheme, whose generous support was appreciated. The author acknowledges the contribution of Ms Ding Yi and Ms Wang Wei, who acted as interpreters and translators during the visits to enterprises and the Institute of Industrial Economics, Beijing, for

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2.

3.

4.

~- their collaboration and help.

References Warner, Malcolm, 'Human resources management with Chinese characteristics', Inter- national lournal of Human Resource Manage- ment, 4 (l), Spring 1993: 45-65. See also Zhu, Ying, 'Major changes under way in China's industrial relations', International Labour Review, 134 (l), Summer 1995: 3749. Lansbury, Russell D; Ng, S. K. and McKern, R. B., 'Management at enterprise-level in Chi- na', industrial Relations lournal (Oxford), 15 (l), Spring 1984: 56-64. Schurmann, Franz, Ideology and Organization in Communist China, Berkeley, Calif: Univer- sity of California Press, 1966. See Lee, Lai To, Trade Unions in China: 1949 to the Present, Singapore: Singapore University Press, 1986.

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See Financial Times, 5 June 1995: 5. Financial Times, 21 February 1992: 4, 15 June 1992: 1 , 9 October 1992: 6. See also Naughton, Barry, 'Deng Xiaoping: The Economist' in David Shambough (ed) Deng Xiaoping: Portrait of a Chinese Statesman. Oxford: OUP, 1995, 1oc-102.

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14. Gurtov, Mel, 'Introduction', in (ed) Me1 Gur- tov, The Transformation of Socialism: Perestroika and Reform in the Soviet Union and China. Oxford & Boulder, Col: Westview Press, 1990, 1-20.

15. On the 'Iron-Rice Bowl' system, see Schur- mann, op cit, 1966, 250ff. See also Interviews at the Heilongjiang Provincial Academy of Social Sciences, Harbin, Summer 1993: these revealed interesting background data on possible Japanese influences on the system.

16. Cf. Whyte, Martin K., 'Bureaucracy and mod- ernization in China: The Maoist critique', American Sociological Review, 38 (2): 149-163.

17. Howe, Christopher, 'Foreword', in Korzec, op cit, 1992, vii-x.

18. Granick, David, 'Multiple labour markets in the industrial state enterprise', China Quar- terly, June 1991, no 126: 269-89.

19. Korzec, Michael, Labour and the Failure of Reform in China. London: Macmillan & St Martins Press, 1992.

20. Hsu, Robert C., Economic Theories in China 1979-1988. Cambridge: Cambridge University Press, 1991.

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21. Jiang, Yiwei, ‘The theory of an enterprise- based economy, Social Science in China, 1 (l), Spring 1980: 48-70. Dong, Fureng, 1986, ’On the labour system and whether labour is a commodity‘, Guangming Ribao, 4 October 1986: 4. Liu, Guogang (ed) Ways of Reform: Opening and Development of China‘s Socialist Economy, Beijing: Economic Management Press, 1987.

22. See Interviews, Institute of Industrial Econom- ics, Beijing, August 1993.

23. See Interviews in ten state-owned industrial enterprises in N.E. China, Summer 1993. Also see Warner, Malcolm, The Management of Human Resources in Chinese Industry. London: Macmillan, 1995. See also Warner, Malcolm, ’Beyond the Iron-Rice Bowl: Comprehensive labour reform in State-owned enterprises in North-East China’, in (eds) David Brown and Robin Porter, Management Issues in China: Vol 1-Domestic Enterprises. London: Rout- ledge, 1995, pp 214-236.

24. Leung, Winnie, Smashing the Iron Rice-Pot: Workers and Unions in China‘s Market Socialism. Hong Kong: Asia Monitor Resource Centre, 1988. See also Wedley, William C. (ed), Changes in the Iron Rice Bowl: The Reformation of Chinese Management. Greenwich, Conn.: JAI Press, 1992.

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mingong) numbered as many as 80 million by 1994 according to some estimates. See China Labour Bulletin, March 1995: 11. Many displaced agricultural labourers went to Town- ship and Village Enterprises, but large numbers sought employment in SOEs and urban collectives-see China Economic News, Vol16, June 1995: 1-2.

27. Beijing Review, 1 February 1993: 12. 28. Smith, Chris & Thompson, Paul (eds), Labour

in Transition: The Labour Process in Eastern Europe and China. London: Routledge, 1992. Thompson, Paul, ‘Disorganized socialism: State and enterprise in modem China’, in (eds) Chris Smith & Paul Thompson, op cit, 1992, 227-59. See also The Independent, 19October 1993: 16.

29. Beijing Review, 1 February 1993: 13. 30. White, Gordon, ’Labour market reform in

Chinese industry’, in (ed) Malcolm Warner, Management Reforms in China. London: Pinter, 1986: 113-26.

31. State Statistical Yearbook, Beijing: SSB, 1994: 99.

32. See Summary of World Broadcasts, London: British Broadcasting Corporation (henceforth to be referred to as SWB) 21 March 1992.

33. See Lee, Peter, Industrial Management and Economic Reform in China, 1949-1984. Oxford: OUP, 1988.

34. See ILO, Labour Law Documents, 4 (3), 1994: 7-20. See also People’s Daily (Renmin Ribao),

22 June 1994: 2, for the Chinese text. 35. Vogel, Ezra, One Step Ahead: Guangdong under

Reforms. Cambridge, Mass: Harvard Univer- sity Press, 1989.

36. Henley, John S. and Nyaw, M., ’Introducing market-forces into managerial decision making in China‘, Journal of Management Studies, 23(6), Winter 1986: 635-56. See also Walder, Andrew G., ‘Factory and manager in the age of reform’, China Quarterly, (118) June 1989: 242-64.

37. Gong, Y., ‘Chinese trade unions‘ function of democratic participation and social supervision’, Chinese Trade Unions, (2) Summer 1989: 2-5. On the 1994 Labour Law, see ILO 1994, op cit. See also Renmin Ribao (People‘s Daily), 7 July 1994: 1.

38. Chan, Anita, ‘Revolution or Corporatism? Workers and unions in Post-Mao China‘, Australian Journal of Chinese Affairs, No 29, January 1993: 31-61. See also Ng, Sek Hong, ‘A current note on the Chinese labour movement‘, International Journal of Employment Studies, 3 (2), October 1995, 61-75. See also China Labour Bulletin, April 1995: 1 4 . See also Howell, Jude, ‘Divided loyalties: trade unionism in China‘, China Review, Summer 1995, Nol : 22-24. See Feng Tongquing, ‘Workers and trade unions under the market economy: perspectives from grass roots union cadres’, Chinese Sociology and Anthropology (special issue), Vol 28, No. 3, Spring 1996, 1-96.

39. SWB, 15 February 1992. 40. Beijing Review, 15 June 1992: 20. See also

Beijing Review, 3 April 1995: 12-14. 41. Beijing Review, 15 May 1995: 13-17. 42. See China Daily, 20 August 1993: 4 and Renmin

Ribao (People‘s Daily) 20August 1993: 1, on enterprise reforms.

43. Beijing Review, 28 August 1995: 4-5. See also China Daily, 26 November 1995: 8.

44. See Child, John, Management in China During the Age of Reform. Cambridge: Cambridge University Press, 1994: 184-214.

45. State Statistical Year Book, 1994: 84. 46. Young, Susan, ‘Wealth but not security: atti-

tudes to business in the 1980s’, in (ed) Andrew Watson, op cit, 1992: 6M37.

47. State Statistical Yearbook, 1994: 84. 48. Leeming, Frank, The Changing Geography of

China, Oxford: Blackwell, 1992. 49. See China Enterprise Management Association

Newsletter, June 1995: 4. Also see Financial Times, 10 May 1996: 21

50. See also China Finance Association Newsletter, 31 July 1995: 1.

51. SWB, 6 May 1992. See also Hui, Chi, ’Market economy and Chinese trade unions‘, Chinese Trade Unions, No 2 1993: 2.

52. South China Morning Post, 9 January 1992: 6. 53. Jacka, Tamara, in (ed) Andrew Watson, op

cit, 1992: 136. See also recent issues of China

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Labour Bulletin, especially April, 1995: 6; as well as Internationat Herald Tribune, 23December 1995: 1 and The Independent, 3 January 1996: 9. Salaries may average around 500 yuan per month (€40 sterling) in such joint-venture factories, but conditions of work are poor and safety problematic.

54. Howell, Jude, ’The myth of autonomy: the foreign enterprise in China’, in (eds) Chris Smith & Paul Thompson, op cit, 1992: 205-26. See also Gong Ruo, ‘To establish trade unions faster in foreign-funded enterprises’, Chinese Trade Unions, No4, 1993: 2.

55. SWB, 21 November 1992. 56. See China Daily, 30November 1995: 4. See

The Independent, 30 June 1996: 14. 57. Howe, op cit, 1992: ix. See also Yu Yang,

‘Trade unions face changing role as reform deepens’, China Daily, 25 October 1993: 1.

58. See Zhang, Zaiping, ‘Social stability on enterprise efficiency: China’s new labour law’, China Review, Summer 1995, No 1: 25-26.

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59. See Verma, Anil, and Yan, Zhiming, ‘The changing face of human resource management in China: opportunities, problems and strategies’, in (eds) Anil Verma, Thomas A. Kochan and Russell Lansbury, Employment Relations in the growing Asian Economies. London: Rout- ledge, 1995, pp315-335. The above article cites enterprise data for 1992 and early 1993. It deals with four case-studies: two were SOEs and two JVs, all in Central China.

60. See Nee, Victor, ’Organizational dynamics of market transition: hybrid forms, property rights and mixed economy in China‘, Adminis- trative Science Quarterly, 37 (l), 1992, 1-27.

61. China will probably continue to ’reform’ rather than ‘privatise’ its state-owned sector: over 16,000 enterprises had been reorganized and 9,000 converted into joint-stock companies by the end of 1994, the latter not considered private. See China Daily, 30 November 1995: 4.

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