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40 years of reform and opening up

Journey to prosperity: how a generation climbed China’s social ladder through 40 years of luck, talent and economic growth

  • Beijing’s move towards a market-oriented economy helped open doors for people like Chen Chaogen, who grew up a poor villager but now lives a middle-class life
  • Chen attributes the dramatic changes in his life to good fortune rather than his ability and hard work
PUBLISHED : Wednesday, 28 November, 2018, 7:02am
UPDATED : Wednesday, 28 November, 2018, 6:15pm

Growing up in a remote mountain village in the southwestern Chinese province of Sichuan, Chen Chaogen, 40, still remembers vividly how the family struggled to make ends meet.

The family had little more than cabbage for meals and Chen had to wear patched trousers to school as a child because they could not afford new ones.

Now a senior executive in a tea trading company in Chengdu, Chen lives a typical middle-class life – big flat, two children, luxury car and regular family holidays. Material shortage is the last thing he thinks about.

Looking back, Chen attributes the dramatic improvement in his life to the good luck of living in a growing economy rather than doing well in exams or making the right career choices.

“I have always worked hard at school and work and gradually made my way up, but I think that contributed very little to personal success,” he said. “Living in a time of change and strongly growing economy counted much more.”

Chen is one member of a crowd that has climbed the social ladder thanks to the reform and opening-up policy adopted in 1978, which steered China to a market-oriented economy. Along the way, as China embraced a role in the global production chain, unprecedented opportunities were created for social mobility through better education, fewer restraints on the flow of talent and more job opportunities.

Yan Se, associate professor with the Guanghua School of Management at Peking University, said the reforms enabled people to move up the socioeconomic ladder through peaceful means.

“In the past mobility was achieved through brutality and violence, but the reform and opening up opened doors for social mobility for many,” Yan said.

Within four decades, annual per capita disposable income rose from 171 yuan in 1978 to 25,974 yuan (US$3,737) last year, or an increase of 22.8 times if accounting for inflation. The increase in the average per capita income of rural residents was even more dramatic, growing more than a hundredfold from 133 yuan in 1978 to 10,488 last year.

At the same time, the share of the population living in absolute poverty – or the equivalent of annual income of 100 yuan in 1978 – fell from 26 per cent that year to 3.1 per cent last year.

A class above

The reforms allowed many to gain a higher education than their parents and become affluent professionals such as engineers, accountants or lawyers.

The average number of years of formal education for people aged 15 years and over rose from 5.3 years in 1978 to 9.6 years last year, with new entrants to the labour force averaging 13.3 years.

That was how Chen, a village boy in Fujiang township in Yibin, Sichuan, worked his way to be a successful businessman.

Starting life in extreme poverty, Chen and his family subsisted on what they grew, and it was common to have nothing but cabbage for the whole winter. Chen said that he had so much cabbage when he was young that he refused to eat now.

Chen’s mother, Yan Weijun, 67, said she could barely feed her three children on their crops of wheat, corn, sweet potato and peanuts.

“Life was so bitter. I looked after three children and I was always working till after midnight. Then I got up at 5am to start work in the field again,” said Yan Weijun, who became a farmer after finishing primary school. “Day in and day out, there was no end.”

Chen said he did not feel embarrassed at school because his classmates were just as poor as him.

But even then, he said, he had his mind set on being something other than a farmer, and worked very hard academically. He scored in the top 30 at his school and was admitted to a key high school on track to become a teacher, an “iron rice bowl” with a stable job that offered urban residency.

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But Chen’s academic performance opened more doors for him. Instead of becoming a teacher, he was admitted to Southwest University in Chongqing to study land resources management.

Like the traditional Chinese saying “a koi fish can become a dragon if it jumps across a gate”, Chen, being a top student with several honours under his belt, was recruited by the Administration of Land Resources in the city of Yaan to become a public servant – and attained an “iron rice bowl” job.

Chen was promoted twice and became head of his small office in 2009. The government offered him a small flat, about 25 square metres (270 square feet) and nearly 30 years old. He married another public servant in Yaan and, with a mortgage, bought another flat about four times the size in an old compound in 2011.

“It was only then that I finally felt I was not at the bottom of society and I could take a break in life,” Chen said.

His salary at the time was about 3,000 yuan, including allowances and bonuses, but with the birth of his second daughter in 2013, Chen felt the pinch again.

“We could only feed our stomach and were far from living an affluent life,” he recalled.

He decided to leave his stable job and join a private tea trading company in Chengdu as the deputy general manager in charge of finances. Some professional credentials – including being a chartered accountant, environmental assessment engineer and first-class construction engineer – came in handy.

Chen now lives in a 140-square-metre flat in a high-end residential area. His daughters are 13 and five, and he can take his mother and in-laws on family holidays.

Even with his non-stop striving for a better life, Chen attributed the improvement to China’s growing economy rather than his own work and talent.

“We can’t deny personal efforts, but this could never have been done without China’s economic growth,” he said. “Personal wealth is connected with national destiny.”

Chen said his company easily made more than 20 million yuan in profit on 200 million yuan in sales last year, but was having a hard time now as economic growth slowed.

Even residents who are not as well educated as Chen have found opportunities to move up the ladder.

“Being part of global production after the opening up means more opportunities for China, and its contribution was mainly labour,” Yan Se, from Peking University, said.

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By 2017, China had 280 million migrant workers who made a monthly income of 3,275 yuan (US$471), according to the National Health Commission. The annual disposable income per capita rose from 171 yuan in 1978 to 25,974 yuan last year, or an increase of 22.8 times if accounting for inflation.

Chen said his fellow villagers who were not as well-educated still managed to improve their lives, thanks to years of a booming economy.

“They became migrant workers and made 5,000 yuan to 8,000 yuan. They bought a flat in county centres and lived a life they could not had imagined before,” Chen said.

Securing the future

Zhang Tianrong, 52, from Anhui, came to work as a waitress in Beijing 18 years ago and became a shop assistant and then cleaning lady in the capital. She cleaned an office in the morning and two flats in the afternoon and made more than 4,000 yuan (US$575) a month.

With her husband making almost the same amount as a decorator in the capital, the couple have raised two children, one to be a kindergarten teacher and the other an insurance agent. They also built a three-storey house back in their hometown.

“I could only get so much produce farming the land no matter how hard I worked, but here in Beijing I can make more money as long as I am not lazy,” Zhang said. “I can get more opportunities and save more to buy a flat for my son.”

A basic social security net also improved public well-being even when people moved to cities.

China established universal public insurance in the late 1990s, and by last year it covered more than 1.3 billion residents. Some 900 million people were included in public pension programme. National life expectancy rose from 67.8 years in 1981 to 76.7 last year.

“I had a cataract operation three years ago and I paid less than 1,000 yuan of the more than 3,000 yuan [it cost] thanks to the public medical insurance,” Yan Weijun said.

But despite the abundance of goods and improved standard of living, Chen said he was not content with China’s food safety and air quality.

For his own children, Chen so distrusted domestic brands that bought foreign baby formula or had friends send it from abroad. His friend, an agricultural official, would tell him where to buy safe pork, and Chen would purchase a whole pig to freeze in pieces for half a year’s meals. Eggs came from chickens raised by his own family.

“China needs to show an iron fist and punish companies with bankruptcy if they violate the food safety code,” he said.

When it came to environmental issues, Chen is unhappy with the polluted air but understands the competing interests.

“My wife works in the environmental protection bureau, and I know how difficult it is to balance environmental protection with economic gains,” he said. “China is still developing; probably that’s the price we must pay.”

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That was where China needed to improve market reforms in the years to come, Yan Se said – in areas including financial and residency systems, land, labour and talent.

It was easier to make giant strides in reforming markets for consumer goods, and Chinese residents had benefited greatly from these changes, Yan Se said. Reform in other areas was needed to ease social discontent, he said.

One of those areas is income inequality, which has widened as the economy has grown. Last year, China’s Gini coefficient– a measure of income inequality rose to 0.465, still below the figure of 0.479 for the United States but any reading over 0.4 seen is regarded as severe.

The gap in disposable income is particularly stark between urban and rural residents, rising more than tenfold from 210 yuan in 1978 to 22,964 yuan last year.

But it is also striking between provinces. Average disposable income in the top-tier cities of Beijing and Shanghai was just short of 60,000 yuan last year, while in the western provinces of Gansu and Guizhou it was just over 16,000 yuan, according to the National Bureau of Statistics.

Yan Se said China should focus on improving the social security net and on technological innovation to create more jobs and opportunities to help people move up the socioeconomic ladder.

For Chen, he is confident his children will have a better life than his because of their more privileged starting point.

“I couldn’t pursue a postgraduate degree because my family was poor and I needed to work immediately after graduation to make money, but this will not happen to my daughters,” he said. “They have more financial support to learn whatever they want, and I’m sure they have a much different value of success when they grow up.”

Chen then had his mind set in not being a farmer any more and worked very hard at school. He scored top 30 in his school and was admitted to a key high school on the track to become a teacher, an “iron rice bowl” with stable job that offer urban residency.

Chen’s excellent academic performance opened more doors for him. Instead of becoming a teacher after graduation, he was admitted to the Southwest University in Chongqing to study land resources management.

“I could only get so much produce farming the land no matter how hard I worked, but here in Beijing I can make more money as long as I am not lazy,” said Zhang. “I can get more opportunities and save more to buy apartment for my son.”

A basic social security net also improved ordinary residents’ well-being even when they moved to cities.

 China established a universal public insurance in the late 1990s and by last year covered more than 1.3 billion residents. Some 900 million people were included in public pension scheme. National life expectancy rose from 67.8 in 1981 to 76.7 years old last year.

 “China need to show iron fist and punish companies to bankruptcy if they violated food safe code,” Chen said. But until then, Chen bought baby formula of foreign brands or had friends sent from aboard out of distrust of domestic brand. His friend in government in charge of agriculture would show him where to buy safe pork and he would buy a whole pig to freeze in pieces for half a year’s meals. Eggs came from chicken raised by his own family.