The social cracks in breaking China’s ‘iron rice bowl’
State firms have long provided not only jobs but also a range of welfare benefits
China has ordered state firms to smash the decades-old system of providing cradle-to-grave welfare support, known as the country’s “iron rice bowl”.
But the order, part of a plan to reduce financial pressure on bloated and heavily indebted state-owned enterprises (SOEs), is likely to be easier said than done as cities navigate the social and financial wrenches the changes will cause.
At the heart of soot-covered Pingdingshan in central China is the Pingmei Shenma Group, a state coal conglomerate that dominates the economy, society and air of the heavily polluted city in Henan province.
In addition to coal, the group also has chemicals and construction businesses. But it also has a startling number of other responsibilities.
It operates 41 hospitals and 18 schools and provides pensions, subsidised housing for workers, water, heating and power. It even runs a plush retirement home, complete with golf course, for its senior managers.
The fate of these facilities, landmarks for the city’s residents, is now unclear. If they are not closed down, much of the infrastructure will need to be renovated, which State Council researchers estimate will cost more than 1 trillion yuan (US$145 billion) nationwide.