chapter  5
23 Pages

Public sector reform in China: who is losing out?

ByKJELD ERIK BRØDSGAARD AND CHEN GANG

Introduction Reform of the public sector has become an issue of great concern to the Chinese leaders as they realize that efficient public administration is a key to securing the regime’s governing capacity and ultimately long-term survival. The public sector in China is enormous, comprising 64.2 million people, and efforts to reform the system as well as to change the work habits and routines of the personnel staffing the administrative organs are of a herculean nature. The Chinese government, starting from the abolishment of “iron rice bowls” or lifelong employment in state corporations, has taken very different approaches to reform the personnel management systems pertaining to the state-owned enterprises (SOEs), public service units (PSUs) and the civil service. Our investigation of the implementation of these disparate reforms applied to various categories of public sectors reveals that, while tens of millions of iron rice bowls have been broken in state business to invigorate the economy, the party-state still retains many of those privileges for its own officials in an effort to bolster its own rule. Despite being politically and even at times economically efficient, such discriminatory policies are morally incorrect and perceived as unfair. As a result the policies have caused enormous implementation problems, especially in the reform of more vaguely defined PSUs. In these enterprises the misery experience by SOE employees, having already suffered from previous reforms, has led to a boycott of changes to the pension and medical schemes they enjoyed previously under the the iron rice bowl. Case studies have shown that unfairness and discrimination in the initial reform design are major obstacles to the implementation of policies aimed at transforming PSUs. Privileged treatment reserved for all civil servants obstructs further reforms of other public sectors, promising erosion of the popularity of the ruling party in the long run. A number of works on the Chinese civil service system have been published (Cabestan 1991; Lam and Chang 1995; Burns 2004; OECD 2005). However, there is a scarcity of studies on the reforms and changes that have taken place in the Hu Jintao Era and especially since the passing of a new Civil Service Law in Jaunaury 2006. Similarly, reform of public service units has been severely under-researched in Western and Chinese-language literature on the topic.