Evolution of the structure of social strata in contemporary China

Contemporary China is in a process of transformation from a traditional agricultural and rural society to an industrialized, urbanized, and modernized society. In 1978, China started to reform and open up, and the transition from the planned economic system to a socialist market economic system got underway. Over the past 25 years, the reform of the economic system continues to deepen. The ownership structure has changed fr om single public ownership to a system of mixed ownership in which a variety of economic elements develop side by side, with public ownership as the mainstay. The industrial structure has also undergone profound changes and the national economy continues to develop steadily and rapidly. In 2003, China’s GDP exceeded 11 trillion yuan, eight times more than that of 1978, with an average annual increase of 9.4%. The economic aggregate has leaped to sixth place in the world. Along with the economic development and changes in the economic structure, the social structure has also undergone profound changes, including changes in the employment structure and urban-rural structur e. The structure of social strata - comprised of the working class, the peasantry, the intellectuals, and cadres - has gone through differentiation. Some social strata have become smaller in scale, and others have expanded through the differentiation. The status of some social strata has been improved, whereas those of some other strata have declined. In the meantime, some new social strata have emerged. The whole structure of social strata is moving in the direction of pluralism. The mechanisms of social differentiation and social mobility have changed, the channels of social mobility have increased, and the pace of mobility has accelerated. The political and economic relations between various social strata have undergone and are continuously going through various changes. The entire social structure is evolving in the direction of a modem structure of social strata compatible with the socialist market economic system.

Generally speaking, we put a great deal of effort into studying the reform of the economic system, adjustment of the economic structure, economic development and changes in the past, and achieved good results and made great contributions to the cause of socialist economic construction. This is, of course, necessary. However, when it comes to changes in the social structure and the structure of social strata, there is relatively little research on this equally important basic national condition. Moreover, due to the influence of some traditional

Evolution of the structure of social strata 135 ideas, there are still different views and many controversies on this aspect of research which have not been discussed and clarified, something that also hinders the study and understanding of this basic national condition. With the deepening of the economic system reform and the rapid development of economic construction, profound changes have taken place in all aspects of economic and social life, which requires not only new economic theories and policies, but also new social theories and policies to adapt to them. A correct understanding of the changes in the current structure of social strata, the status and characteristics of each stratum, the relations between them, the trend of their development, and the role of each stratum in the cause of socialist modernization will help deepen our understanding of the basic national conditions in contemporary China. It will also help us formulate conect development strategies, and economic and social policies, to coordinate the relationship between the state and various social strata, to properly handle the relationships among all strata of society, and further mobilize their enthusiasm, so that they can play their proper role, develop their potential, and promote the development and stability of the whole economy and society. This is very necessary for the development of socialist modernization.

In the light of this, the Institute of Sociology of the Chinese Academy of Social Sciences set up a research group in 1999 to study the changes in the social structure of contemporary China. Under the active support of the leaders and relevant parties, surveys and research on the changes of the structure of social strata were carried out. In the past five years, the research group conducted long-term in-depth surveys in 10 counties and cities, two large-scale state-owned enterprises, and one university. They collected materials from 11,000 questionnaires and nearly 1,000 interviews with people from various strata. In 2001, a nationwide sample questionnaire survey was carried out. Using probability sampling, 6,000 questionnaires were sent out in 72 counties, cities, and districts of 12 provinces, municipalities, and autonomous regions, and a large amount of data and materials were collected. Based on the data and materials obtained from the surveys and stirdies of theories of social structure and other relevant literature, the research group completed the first research report in August 2001. The Research Report on Social Strata in Contemporary China was published in book form in January 2002. A number of research reports were successively published later. Right now, the research group is writing the second research report entitled Social Mobility in Contemporary China and will try to have it published this year.² Based on the surveys and research in the past five years, we have formed an understanding of the changes in the structure of social strata in contemporary China in the following six points.

First, at the present stage, Chinese society has differentiated into a structure of social strata consisting of 10 social strata.

The criteria for classifying strata is based on occupation and the possession of organizational, economic, and cultural resources. In contemporary Chinese society, we can determine which stratum a member of society belongs to, his position in the social stratification structure, and his overall economic and social status on the basis of his occupation and possession of these three resources. The ciment state of the 10 social strata is as follows.

• 1 The stratum of state and social management. It includes leading cadres who exercise actual administrative authority in the party and governmental organs, institutions, and social organizations. In the process of China’s transition from a planned economic system to a socialist market economic system, they have the advantage of possessing organizational resources and their overall social and economic status is relatively high. This stratum amounts to about 2.1% in the whole social stratification structure.³ Most of the members of this stratum are in large and medium-sized cities and not so many are at the county level and below.
• 2 The stratum of managers. This stratum consists of middle and top managers of large and medium-sized enterprises who are not owners. This is a new stratum that has emerged after the 1980s. It is made up of four kinds of people: mid- and top-level managers in large and medium-sized state-owned enterprises; mid- and top-level managers of large and medium-sized urban and rural collectively owned enterprises; mid- and top-level managers of joint ventures, joint Chinese/foreign-owned cooperative enterprises, and exclusively foreign-owned enterprises; and mid- and top-level managers in large and medium-sized private enterprises. This stratum has the advantage of possessing economic and cultural resources and accounts for about 1.5% of the total employed population. With the continuous development of the economy, the managerial stratum will increase with each passing year.
• 3 The stratum of private business owners. It refers to people with private capital and fixed assets. They employ workers and operate for obtaining profits. According to the current policy, entrepreneur s with more than eight employees are called private business owners. This is a stratum bom after the reform and opening up, and amounted to 0.6% in 1999. Now they are more than 1%.
• 4 Professional and technical personnel. This stratum includes professionals engaged in professional work, science and technology, humanities and social sciences in state agencies, public institutions, and enterprises with various economic components. Most of them have received secondary and higher education with professional knowledge and technical know-how adapted to the development of modern economic and social undertakings, and have the advantage of cultural resources. In the social structure, this stratum accounts for 5.1%, and most of them are scattered in large and medium-sized cities with developed economy and culture. With the progress of China’s modernization drive, the ranks of professional and technical personnel will steadily grow.
• 5 Clerical people. They are full-time office staff who assist leaders of party and governmental organs, enterprises, and public institutions in handling daily administrative affairs. They are mainly middle and low-ranking civil servants in party and governmental organs, and grassroots management personnel and non-professional staff in enterprises and institutions under various types

Evolution of the structure of social strata 137 of ownership. This stratum is an important part of modem society and the middle echelon of the society, and accounts for 4.8% in the social stratification structure.

• 6 The stratum of individual industrial and commercial households. It refers to people with a small amount of private capital who are engaged and make a living in small-scale production, circulation, services, and other business activities. They participate in labor and run businesses. Some have professional skills and crafts, and some take on apprentices and hire a small number of helpers (no more than seven persons). They are called small proprietors, small employers, and individual industrial and commercial households. In some countries, they are called self-employed. This stratum is also new and came into being after the reform and opening up. It accounts for 4.2% in the whole stratification structure.
• 7 The stratum of business service personnel. It refers to people engaged in non-professional physical or non-physical labor in commercial and service industries. Their socioeconomic status is similar to that of industrial workers. Now some emerging service industries - such as finance, insurance, tourism, communication, real estate, and community services - are developing vigorously, which indicates that this stratum will grow substantially in the future. At present, this stratum amounts to 12% in the social stratification structure, of which about one-third are migrant workers.
• 8 The stratum of industrial workers. They are people engaged in manual or semi-manual work in direct or auxiliary production in secondary industries (industry, constmction). Since the economic system reform, the composition of the stratum of industrial workers has undergone fundamental changes. In 2000, the number of people employed in the secondary industry was 162.19 million nationwide; among them 76.4 million worked in state-owned enterprises, accounting for only 47.1%. Most of them were employed in non-public enterprises (such as joint ventrues, Chinese-foreign cooperative enterprises, exclusively foreign-owned enterprises, joint-stock enterprises, private enterprises, and individual industrial and commercial households). Especially since the 1990s, a large number of migrant workers have joined the stratum of industrial workers and become an important part of it. In 1999, industrial workers accounted for 22.6% in the social stratification structure, of which migrant workers were already the majority.
• 9 The stratum of agricultural laborers. They are laborers who contract collectively owned arable land and are mainly engaged in the production and management of agriculture (forestry, animal husbandry, and fishery), which is their sole or main source of income. In other words, they are laborers commonly referred to as fanners. According to our investigation, agricultural laborers accounted for 44% of all employees in 1999. With the advancement of industrialization and urbanization and the implementation of corresponding social policies, this stratum will continue to shrink.
• 10 The stratum of unemployed and semi-unemployed people. This stratum comprises people without fixed occupation. As a consequence of economicrestructuring, adjustment of industrial structure, and reform of state-owned enterprises, a large number of workers and business service personnel become unemployed or semi-unemployed. Many young people who are newcomers in the labor market are kept unemployed for a long time due to the lack of employment opportunities. In 1999, this stratum accounted for 3.1% in the whole social stratification structure. They are what the media has called the vulnerable groups in recent years, and they are at the bottom of society.

Second, a structure of social strata of a modem society has taken shape in China, but it is still in an embryonic form and is continuing to grow.

But why do we say so? First, with the reform of the economic system and economic development, a modem society’s industrial and employment structures are taking shape in China. In keeping with this development, the basic components of a modem structure of social strata are already in place, as evidenced by the presented 10 social strata. All social strata found in modem societies have already appeared in China, and some have reached a considerable scale. With the advancement of industrialization and urbanization, some social strata will continue to expand (such as the strata of managers, professional and technical personnel, private business owners, individual industrial and commercial households, and clerks), and some strata will continue to shrink (such as the stratum of fanners). However, the basic components will not change much.

Second, the order of social strata in the modem structure of social strata in China has already been established. The so-called order of social strata refers to the ordered position of each stratum in the hierarchy of social status. The order of social strata depends on the amount of organizational, economic, and cultural resources possessed by each stratum and its comprehensive strength. The more of the three resources a stratum possesses, the stronger its comprehensive strength, the higher its position in the hierarchy, and vice versa. The ordering of these 10 social strata is not arbitrary, but made in accordance with the three resources each stratum possesses and its comprehensive strength based on a large number of multifaceted investigations and analyses of various documents and data.

Third, the mechanism of mobility of a modem society is taking shape and gradually replacing the mechanism of traditional society.

Before the reform and opening up in 1978, stratification was based on identity and politics. Under the household registration system which separated urban and rural areas, people who were bom into fanners’ families could only engage in agricultural work and become fanners. Those who were bom into the families of workers and cadres would generally mm into workers and cadres. It was almost impossible for fanners to become workers and urban residents, or for a worker to become a cadre, because of institutional obstacles. This predetermined mechanism of social mobility limited people’s initiatives to achieve upward mobility through hard work. This was naturally very unfair and unreasonable. The country lacked vitality and dynamism to develop, which in mm hindered China’s economic and social progress. Since the reform and opening up, China has changed the practice of talking about social strata in terms of identity and of using class

Evolution of the structure of social strata 139 origins as the criterion for selecting cadres and talents. Although the household registration system has not been thoroughly reformed, there have been many improvements. Fanners have obtained the freedom to choose their occupation and can engage in various activities other than agriculture. Workers and cadres can switch jobs, go into business, and start enterprises. They have the freedom to choose their career. The channels of social mobility have become more and more diversified. Although there are still some institutional restrictions and obstacles, one who works hard can get the opportunity and possibility to move upward and change their original social status by virtue of their own ability and intelligence.

In a modem structure of social strata, although the order of all social strata has been determined, members of any strata can still through their own efforts to gradually change their social status from a lower to a higher position within the stratum. For example, ruiskilled workers can become skilled workers through their efforts to master skills and techniques. Or, one can move upward from one social stratum to become a member of another stratum. For example, young people of fanners’ origins can participate and pass the examinations to become junior college or university students. After graduation, they can become professionals or technicians, or cadres of state or social administration. Of course, more young people in the countryside may go out to work, run business, start enterprises, or become workers, individual industrial and commercial households, or private business owners. Original city workers and cadres have more opportunities to move upward, within their work units or leaving their work units, and gradually changing their own social status by studying hard and running business or enterprises. At present, China is carrying out large-scale economic construction. Industrialization, urbanization, marketization, and socialization are developing rapidly, and economic and social undertakings are flourishing. The entire occupational structure exhibits an upward trend, providing various conditions and opportunities for every citizen to move upward and improve their social status. There is a vast space for every citizen to realize their aspirations and the ideal of climbing up the social ladder.

At the present stage in China, although the pre-existing factors continue to have an impact, the influence of acquired factors is growing and gradually turning into the main factors affecting social mobility. In other words, opportunities for social mobility in China today are open for all citizens. They are no longer restricted by personal origins, status, family backgrounds, and household registration. As long as you work hard, you will have the opportunity to achieve the ideal of upward mobility.

Fourth, the current structure of social strata in China is naturally and spontaneously formed in the course of economic restructuring and development. It is still in the process of continuous changes, still unreasonable and incompatible with the requirements of socialist modernization.

Looking back, the formation of a modem structure of social strata in developed countries was a long historical process. Going through the First and Second Industrial Revolutions and after many social conflicts, and repeated efforts of social integration and social policy adjustments, the so-called olive-shaped modemstructure of social strata with a large middle stratum gradually came into being. In contrast, China wants to achieve the ideal configuration of a modern structure of social strata in a short period of time and by compressing two phases into one process. The difficulties and complexity involved are considerable. Various imbalances, frictions, contradictions, and conflicts are inevitable. However, if China wants to realize socialist modernization, such a rational and modem structure of social strata is indispensable.

After more than 20 years of gradual reform, China’s GDP has increased more than eight times. Industrialization has reached the intermediate stage of development, the socialist market economic system has been preliminarily established, and the market has become the main force for allocating resources. One should say that China’s economic system reform, economic restructuring, and economic development have achieved unprecedented success and a series of policies adopted are effective. China’s social system reform, the adjustment of social structure, and the development of social undertakings, by contrast, have lagged behind. Some social policies that should have been adopted have lagged behind (for instance, the establishment of a social security system), and others have hitherto not been introduced due to various reasons. The current structure of social strata is formed naturally under the impact of economic restructuring and economic development. One can also say that it is spontaneously formed. Although an embryonic form of a modem structure of social strata has taken shape, it still has the following characteristics and drawbacks.

1 At the present stage, the structure of social strata in China is in a process of constant change. Sometimes, the scale of a certain stratum expands rapidly while the economic and social status of some other strata should be improved and raised, but has for a long time stagnated. The entire structure of social strata is constantly changing and is difficult to predict by common sense. Of course, in a country' like ours, which is undergoing large-scale economic and social construction, it is only natural that the social structure is constantly changing. This has its advantages, but also its problems. When we study and analyze it, we need to select a certain point in time to cany out cross-sectional qualitative and quantitative analyses and obtain due assessment and understanding. The previously mentioned study of 10 social strata is the result of the analysis and research on China’s structure of social strata at the time point of 1999.

From 1999 to the present, in just a few years’ time, many' new changes have occurred in the structure of social strata in China. For example, there were only 1.509 million private business owners and 3.224 million investors in 1999. In our analysis of the 10 major social strata, we pointed out that the stratum of private business owners accounted for 0.6% in the entire structure of social strata. In recent years, the economic and social environment as a whole has been conducive to the development of private enterprises, and public opinion has also turned positive about the stratum of private business owners. Thus, this stratum has expanded rapidly in the past few years. By the

Evolution of the structure of social strata 141 end of 2002, the number of private enterprises had increased to 2.43 million households, and that of investors had exceeded 6 million. In the past two years, there has been new development.

The social group of migrant workers unique to China has changed a lot in recent year s. According to the data of relevant authorities, there were 80 million migr ant workers in 1999. In the past few years, as a result of the decline in income from farming, the poor performance of township and village enterprises, and economic recession, a large amount of rural labor force has moved to cities to work. By the end of 2003, according to the statistics of the agricultural sector, the number of migrant workers has reached more than 99 million. As a result, the strata of industrial workers, business service personnel, and individual industrial and conunercial households have expanded to varying degrees. According to the data of the fifth poprrlation census in 2000, among the total employed population in the secondary and tertiary industries, the proportion of migrant workers had reached 46.5%. Migrant workers accounted for 57.59% of the workforce in the secondary industry, and 37.03% in the tertiary industry. Migrant workers have become the mainstay of the stratum of workers. Although the sizes of different social strata in China have changed in recent years, the basic components of the social stratum structure has on the whole not changed, and neither has the order of the 10 social strata, except that the scales of some social strata have expanded, while those of some other strata have been further redrtced.

2 The current structure of social strata in China is still unreasonable and not compatible with the process and requirements of socialist modernization. A modernized country needs a reasonable modem structure of social strata. This structure should be compatible with and complementary to the modem economic structure, so as to enable a coordinated development of the economy and society. Viewing the historical experiences of countries that have already achieved modernization, the configuration of the structure of social strata in all these countries are olive-shaped, large in the middle and small at both ends. Being “small at both ends” means that the scales of both the strata with more organizational, economic, and cultural resources - and therefore the highest or higher social status - and the strata with fewer or almost no resources -and therefore lower or the lowest social status - are relatively small. By large in the middle, it is meant that the society has developed and fostered a large middle stratum. Those in the middle stratum possess a considerable variety of resources, enough for them to lead moderately well-off or even well-off lives. They are not only the backbone of political and social stability and an important force for the maintenance of a sustained economic development, but they are also the creators and consumers of advanced culture. Practice has proved that when such an olive-shaped configuration of the structure of social strata is formed in a country or a society, this country or society has achieved modernization, and economic and social undertakings can develop in a healthy, stable, and sustainable maimer. In traditional Chinese language, this society will enjoy long-term order and stability.

Comparatively speaking, China’s cunent structure of social strata is still far from a modem stratum structure. So far as the configuration of the structure is concerned, it is still a structure in which the middle and lower layers are too large and the middle and upper layers have not yet gained ground, while the scales of the highest and the lowest layers are still relatively small. Figuratively speaking, it is an onion-shaped structure of social strata. As mentioned earlier, China’s current structure of social strata is naturally and spontaneously formed under the impetus of economic development and against the background of the lag of social system reform and the absence of appropriate social policies. There are a lot of irrationalities. One of the most important aspects of its unreasonableness has to do with the scales of the social strata. This can be summarized into two aspects, namely the scale of the social stratum that should be reduced has not come down in size accordingly, and the scale of the stratum that should expand has not grown in size. The stratum that should become smaller in size refers to that of agricultural laborers, which is too large in our cormtry. hr developed countries, the industrial structure, the employment structure, and the structur e of str ata ar e basically similar in proportion. For example, In Japan, the primary industry accounted for 2.5% of tire GDP in 1990, in the employment structure, it accounted for 10% (1992).⁴ The stratum of farmers amounted to 7%. In China, due to institutional obstacles, such as the household registration system and the lag of urbanization, the proportion of agriculture in the GDP in 1999 was 17.6% and the people engaged in agriculture accounted for 50% of the total employed population.⁵ In that year, the proportion of the stratum of agricultural laborers was 44% in the structure of social strata (this was the result without taking into account migrant workers). The scale of the social stratum that should expand has not expanded accordingly. This refers to the too-small scale of the middle stratum (4¹Strictly speaking, the middle stratum in society is not a social stratum. Rather, it is composed of a number of social strata in tire social stratification structure. In some countries, the middle stratum usually consists of the old and new middle strata. The old middle stratum includes owners of small and medium-sized enterprises and famrs. They are properly owners. The new middle stratum mainly comprises whitecollar’ workers who are managers of small and medium-sized enterprises, civil servants, professionals and technicians, and clerical personnel, hr comparison, the middle stratum in China has not only emerged relatively late, but is also small in scale. According to the estimation of our research group, this middle stratum accounted only for about 15% in tire structure of social strata in 1999.⁶ In tire past thr ee years, due to the rapid development of the str ata of small and medium-sized private business owners, individual industrial and commercial households, and the stratum of professional and technical personnel, the size of the middle stratum has increased to 19%, which is roughly equivalent to tire size of the middle stratum in the United States in the 1950s and in Japan in 1975.

That the middle stratum in society is too small means that the social structure is unstable, which is an important reason for the emergence of many economic and social problems in China. A strategic task facing China’s

Evolution of the structure of social strata 143 economic and social development is to continue to deepen the reform and to adopt appropriate economic and social policies, so that the middle stratum will expand in scale and the stratum of agricultural laborers will reduce in size more rapidly in order to meet the needs of a healthy development of the cause of socialist modernization in China.

Fifth, in order to form a reasonable and dynamic structur e of social strata, there needs to be not only the impetus of economic restructuring and economic development and the push of the “invisible hand” to make it possible for it to evolve and grow naturally; there is also a need for the state to adopt appropriate social policies at the right time. In other words, there also needs to be a “visible hand” to regulate and guide.

At the present stage, changes in the structure of social strata have basically occurred under the influence and impetus of the reform of the economic structure and the sustained and rapid economic growth. The good thing is that the economic transformation and development has given birth to a number of new social strata adapted to the cause of modernization, forming an embryonic form of a modem structure of social strata. However, the formation of this structure has an obvious element of spontaneity, and therefore also many unreasonable aspects. The most unreasonable aspect is that the social stratum that should grow has not grown, and the social stratum that should become smaller has not become smaller. Looking back at the economic and social policies in the past 20 years, we can see that we adopted a series of effective policies in time to promote the reform and development of the market economic system and obtain a stable, healthy, and sustained high-speed development through macroeconomic regulation. That is to say, the visible hand of the state gave full play to the role of regulation and guidance. In contrast, in promoting the development and growth of a modem stratification structure, we have not adopted the same clear and conscious social policy as the economic policies of macroeconomic regulation and control. The absence of effective and timely social policies is the main reason for the element of unreasonableness of the structure of social strata. The visible hand of the state has not played the role as it should. Specifically, this features the following aspects.

• 1 Some social systems and policies that should be reformed have not been reformed and adjusted in due course - for example, the household registration system, which separates urban and rural areas and places the development of cities under strict control. It is compatible with the planned economic system. After the reform and opening up, the socialist market economic system was introduced. We should have reformed the household registration system and sped up the pace of urbanization. However, constrained by traditional ideas, the relevant decision-making departments have hitherto not fimdamentally reformed the household registration system. Urbanization is still subject to various constraints. As a result, a large number of fanners in rural areas are still stuck in agriculture, and migrant workers who have moved to cities to work and do business are still subject to various types of institutionaldiscrimination and turned into second-class citizens. This has also led to all kinds of social problems. Urbanization lags seriously behind industrialization, tertiary industries camiot develop, urban-rural relations are out of balance, and the gap between urban and rural areas is widening. These are the most important structural contradictions that need to be resolved urgently at present, and they are also the main reasons why a modem and rational structure of social strata has not developed.
• 2 The social policies that should be made have not come out in time. For example, the social security system is a safety valve and a stabilizer of a society. To implement the socialist market economic system, there must be a corresponding social security system. The social security system formed under the planned economy is no longer compatible. Our efforts to reform the old social security system and build up a new system are five to eight years late. Up to now, a new social security system has not yet been fully established, thus restricting and hindering the reform of state-owned enterprises. In particular, due to the fact that the social security system has not yet been well organized and the protection provided is inadequate, it has not played the role of protecting the vulnerable and poor strata, and cannot ensure the basic needs of these people. This is also an important reason for social instability in some areas. Another example is the social distribution policy. Under the market economy, competition and the pursuit of efficiency is inevitable. However, in order to foster a modem structure of social strata, the government should formulate necessary social policies, which should aim at fairness, regulate interest relations among various strata, and narrow down the income gap between urban and rural areas, among regions and various social strata, thr ough various redistribution methods. We should not let the rich become richer and the poor become poorer. We should guarantee the basic living needs of the poor, prevent serious polarization, and mitigate social contradictions. Our work in these aspects has lagged behind. Some important redistribution policies, such as inheritance tax and property tax, have not been introduced. The political and academic circles have now recognized that the gap between urban and rur al areas, between workers and fanners, as well as among regions, has widened and tends to continue to expand.
• 3 Since the reform and opening up, we have set things right and shifted the focus of our work from class struggle to economic construction. This is absolutely correct. Without this shift, China would not be as prosperous as it is today. Economic construction is the focus and comes first. However, to build a modern socialist country, economic construction should come first - but it should not be the only priority. Where there is a first, there shortld also be a second, a third, and so forth. Some people believe that when the economy develops, the cake becomes bigger, and the people become well-off, the social structure will be reasonable, society will be stable, and the country will enjoy long-term order and stability. Therefore, in the past few years, we have formulated this or that economic policy to promote healthy, stable, sustainable, and rapid economic growth. Our achievements in this regard

Evolution of the structure of social strata 145 are enormous. But we have not put our efforts in formulating corresponding social policies to guide and foster the development of a rational and modem structure of social strata. Some people even believe that economic policy can replace social policy and spontaneously produce the desired results that would have been produced by social policies. One can say that this is a serious misunderstanding in our policy considerations. Looking at the history of development in modem times internationally, to build a modem country, it is not enough that the per capita GDP reaches $3,000 US. In other words, it is not enough just to have achievements in economic development. A modem state or society is the sum of a series of comprehensive indicators. Building a modem country is a huge project of systems engineering. In some countries in the world, the per capita GDP has reached $5,000-8,000 US, and some people are quite well-off, but there has not formed a modem structure of social strata. As a result, when there is a disturbance, a financial crisis, decades of economic achievements will be lost in a few days or months, and these countries will become developing corurtries again.

Sixth, a prediction of changes in China’s structure of social strata in the next 20 years.

In 2003, China’s per capita GDP has already exceeded SI,000 US and is expected to reach $3,000 US by 2020. International experience has shown that this is a very crucial stage in the whole process of modernization and also an important stage at which profound changes occur in the economic and social structure and many economic and social contradictions arise. There are two possibilities: when successful, the economy will continue to develop healthily, society will enjoy stability and progress, and industrialization and modernization will be achieved smoothly; when unsuccessfol, although the economy has developed, the social structure will not be adjusted accordingly, and the relations between urban and rural areas will be uncoordinated. There will be a large gap between the rich and the poor, and the society will be polarized. Most people will not get the due benefits from economic growth. There will be sharp social contradictions, which will lead to social conflicts and political turmoil. The society will fall into the “Latin American Trap.”⁷ As a lesson from the past, we should take it as a warning.

I am cautiously optimistic about the development in the future. I agree with Professor Wu Jinglian that “China is in the process of passing big barriers.” From the perspective of social structural changes, in terms of China’s social restructuring, the reform of the social management system, the construction of the public sphere, and the development of social undertakings, some are passing barriers and others are not yet doing so. For example, China’s economic structure has reached the intermediate stage of industrialization, but the urban-rural structure, the regional structure, the employment structure, the distribution structure, and so on, are still at the primary stage of industrialization, and some are even in the pre-industrial stage. Specifically, I am optimistic about the prospect of economic development because China has already embarked on the track of developing a socialist market economy. But when it comes to the social structure, the social managementsystem, and the development of social undertakings, the patterns formed under the previous planned economic system have not been changed and their impact are still relatively large. Some have basically not been reformed (for example, the bifurcated urban-rural structure). So, the future development in the social sphere is more difficult, and if China is to become a socialist modernized country, reforms in these areas must be carried out.

The 16th CPC National Congress held in the winter of2002 set up the grand goal of building a moderately prosperous society in all respects in the corning 20 years. It put forward six requirements: the economy should be further developed, democracy should be further improved, science and education should make further progress, the culture should be more prosperous, society should be more harmonious, and people’s lives should be more well-off. This is the blueprint for building a moderately prosperous society. Among tírese six aspects, economic development is essential; tire focus is on the countryside and difficulty is in the society. The 3rd Plenary Session of the 16tli CPC Central Committee proposed to apply a people-oriented, comprehensive, coordinated, and sustainable outlook on development, achieving a coordinated development between urban and rural areas, among regions, between economy and society, and the harmonious development between humanity and nature, as well as the coordination of domestic development and opening up to the outside world. We should adhere to a road of development characterized by the development of production, affluent life, and good ecology.

In terms of social restructuring and social development, the next 20 years will be crucial. On the premise of sustained, stable, and rapid economic development, we should attach importance to social restructuring and give play to the role of the government in regulating and guiding to make China’s social structure change towards the direction of a rational, dynamic, and modernized structure of social strata. Drawing on the experience and lessons of social policy implementation in the process of modernization and considering the unbalanced situation of China’s development, we should attach importance and achieve the following social indicators in the next 20 years.

• 1 Urbanization. The urbanization rate in China was 37.7% in 2001. From now on, the average annual growth rate will be 1 percentage point, reaching about 58% by 2020.
• 2 Hie employment structure. In 2001, there were 730.25 million in the employed labor force in China. The employment structure of the three industries was: primary' industry 50%, secondary industry 22%, and tertiary' industry 28%. On the other hand, the share of the primary industry in the GDP that year was only 15.3%, which indicated that agricultural laborers were in surplus. From now on, we should accelerate the transfer of the agricultural labor force to secondary and tertiary industries. The average annual reduction of agricultural labor force should be 1 percentage point. By 2020, the agricultural laborforce should fall below 30%.
• 3 Gini coefficient.⁸ In 1978, the Gini coefficient was 0.22. This figure was a little too low and unfavorable for developing production and improving

Evolution of the structure of social strata 147 economic efficiency. After the 1980s, it has been increasing year after year, and in recent years, it has improved even faster. There are different opinions about how much it has gone up. Most scholars and politicians believe that it has exceeded 0.4, which shows that the difference has exceeded the reasonable range. From now on, we should suppress the high and raise the low, and reduce the coefficient to less than 0.4.

• 4 The income gap between urban and rural residents. In 2001, the ratio of urban residents’ disposable income to the per capita net income of fanners was 2.79:1; it expanded to 3.1:1 in 2002, and then to 3.23:1 in 2003. Relevant departments pointed out that urban residents also have invisible income, such as housing subsidy and social security. Not only do fanners not have such income, one should also deduct production costs. So, in fact, the actual gap between urban and rural areas is 5-6:1, and there is a tendency to further expand. This is the most important social problem facing China. Extraordinary measures should be taken to curb the widening of the gap between urban and rural areas and narrow it down. From 2003-2010, it will reduce by 0.1-0.12 percentage points every year on average, and from 2010-2020, by 0.05 percentage points every' year. By 2020, the income gap between urban and rural residents should be controlled at the level of 1.5:1.
• 5 The development of higher education. China’s basic education is relatively good, but high school and higher education are still lagging relatively behind, unable to meet the needs of economic and social development. After the expansion of university enr ollment in 1999, the total scale of enrollment has reached 19 million by 2003 with a gross enrollment rate of 17%. The 16th CPC National Congress proposed to “basically popularize senior high school education” by 2020. We should also develop high education actively and steadily and strive to raise the gr oss enrollment rate of high education by an average of 1 percentage point per year, reaching about 35% by 2020 and to bring the number of college students to 35 million. To achieve this goal of the development of high education, the basis is to further improve the nine-year compulsory education, especially to basically popularize high school education nationwide. Whether the above-mentioned goal of high education can be realized in the future depends on whether we can do a good job in popularizing high school education.
• 6 The scale of the middle stratum in society. The 16th CPC National Congress pointed out that the proportion of middle-income earners should be increased. Social middle stratum and middle-income earners are not the same concept, but, in many respects, their connotations are the same. According to the estimation of our research team, the middle stratum in the structure of social strata accounted for 15% in 1999. In recent years, due to the rapid development of economic and social undertakings, the number of private business owners, professional and technical personnel, and managers increased considerably. The scale of the middle stratum has enlarged to 19% in 2003. In the next 20 years, if it can increase at this rate, namely an average increase of 1 percentage point every' year, the scale of the middle stratum will expand to

38-40% by 2020, and then, a rational and vibrant modem structure of social strata will be formed. The employment structure will no longer be in the shape of an onion, rather an olive-shaped one, large in the middle and small at both ends. Compared with the scale in developed countries, the middle part is slightly smaller. Economically, on the basis of structure optimization and the improvement of efficiency, China will quadrapie its GDP over 2000, reaching $3,000 US per capita.

In the social sphere, if these six social indicators can be achieved, the grand goal of building a moderately prosperous society in all respects will basically be achieved. From then on, China has crossed the threshold of moderately developed countries. If we cany on for a few decades, by the middle of the 21st century, China will have basically achieved modernization and become a prosperous, democratic, and civilized modem socialist country.

Notes

• 1 This article was originally published in Lu, Xueyi (2005). New Theory of San Nong. Social Sciences Academic Press (China).
• 2 After that, the research group also finished the second research report entitled Social Mobility in Contemporary China and was published in 2004.
• 3 This was the data from 1999. If not otherwise indicated, following data are all from 1999.
• 4 McGraw, Thomas K. (1999). Modem Capitalism: The Winners of the Three Industrial Revolutions. Jiangsu People’s Publishing House.
• 5 China Statistical Abstract, 2002. China Statistics Press, pp. 16, 38.
• 6 See Research Report on Social Strata in Contemporary China (2002). Social Sciences Academic Press (China), p. 37.
• 7 hi the 1970s, the inequality and polarization between the rich and the poor in Latin America, and the imbalance of urbanization led to the deterioration of the environment, the large number of unemployed people and the lack of public services.
• 8 hi economics, the Gini coefficient (/'dji:ni/ JEE-nee), sometimes called Gini index, or Gini ratio, is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measurement of inequality. It was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper Variability and Mutability (Italian: Variability e mutabilita).