Academic journal article Public Administration Quarterly

The Paradox of China's Wage System Reforms: Balancing Stakeholders' Rationalities

Academic journal article Public Administration Quarterly

The Paradox of China's Wage System Reforms: Balancing Stakeholders' Rationalities

Article excerpt


This article examines the pattern of China's wage system reforms in the post-1978 era and evaluates the policy outcomes. It is found that there are considerable gaps between reform objectives in favour of promoting productivity and merit differentiating and the real consequences which have remained egalitarian. The authors argue that such discrepancies can be explained with reference to the interactive nature of policy implementation in China which, in this case, involves striking a delicate balance among three major stakeholder levels: central policymakers, local officials and managers, and rank-and-file cadres, each seeking to optimize three rationalities: economic, bureaucratic, and social distribution.


Addressing the directors of the personnel departments of a national conference on wage system reform on December, 1993, Li Guixian, a State Councillor and President of the National School of Administration of China, emphasized that the establishment and promotion of the new state civil service system had to proceed together with the implementation of wage reform. He said that "as the formation of socialist market economy accelerates and a persistent, rapid, and healthy economic growth continues, wage system reform is a major reform (in itself) and an important component in the personnel management system" (Ministry of Personnel, 1994:7).

Li's speech underlined the official thinking that there is an indivisible linkage between the wage regime and the personnel management system of China's cadre, now renamed "civil servants" for those working in government units. Indeed, wage policies have always served as indispensable tools to facilitate the changes in the personnel management system which, in turn, were shaped by state's economic policies and strategies. In line with the attempt to reform the economy and streamline the huge cadre bureaucracy, which in its heydays embraced personnel in government, party military, enterprise, service, and mass organization units, China's reformers began to depart from the previous regime of unified management and rigid topdown line control prevalent in the Maoist era.

An ambitious reform plan was unveiled by then Party General Secretary Zhao Ziyang at the Chinese Communist Party's 13' Congress in 1987. Apart from modernizing practices in the areas of recruitment, promotion, performance appraisal, job and pay classifications and training, other reform objectives included separating the state cadre system from other personnel sectors such as the party, military and the enterprises, resulting in disaggregation and the emphasis on "management by categories" even though the party would still exercise control of appointment under the nomenklatura principle (Chan, 1998:83-84).

Provisional regulations on the state civil service (State Council, 1993) were promulgated in August 1993, marking the advent of a new modernized civil service regime which was to put merit and efficiency as its foremost institutional goals. According to the Ministry of Personnel, as of the end of 1997, out of some 5.31 million state civil servants, 90.7% (4.82 million) were at provincial, regional, county, and township levels (Zhongguao Renshi, 7 April 1998). Of the 489,000 national-level civil servants, 454,000 were.. posted to the localities and overseas missions (Ibid.).

As far as the wage system is concerned, until about 1978, China had essentially followed a highly unified wage. regime, namely the "grade wage system" established in 1956 applicable across all sectors of employment within a centrally-planned state economy.' Originally founded on the Soviet model, the wage regime had from 1957 onwards moved towards a "rational low wage approach" featuring the reduction of wage differentials among cadre and between the urban and rural sectors (Takahara, 1992:41) as Mao and his radical supporters opted for a more egalitarian society.

Since the introduction of economic reform in late 1978, the wage system has experienced significant changes. …

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