'Don't expect big-bang social reforms' from China's CCP

MS WANG Xiujuan, 26, left her native north-western Gansu province three years ago to come to Beijing with her husband and daughter in search of a better life.

She took on cleaning and babysitting work, while he found a construction job. The couple now make more than twice what they used to earn, she said, declining to disclose the figure.

But Beijing does not really welcome migrant workers like them.

Since they are from Gansu, their household, or hukou, is not registered in the Chinese capital, so their daughter cannot enrol in a Beijing public school and the family does not have full access to public housing and health care here.

"We are in Beijing and can't make use of the medical insurance we paid for in our hometown. Such a waste," said Ms Wang. "Luckily, we are still young and don't have any serious illness."

With the number of migrant workers exceeding 250 million and likely to mushroom into a social problem if left untackled, many analysts are saying it is time for China's hukou system to go.

It is one of several areas of social reform that will be closely watched when the Third Plenum, or third full meeting, of the Chinese Communist Party's (CCP's) 18th Central Committee starts on Saturday.

China's leaders are trying to strengthen the social security net so that the people do not set aside too much savings for health care and housing.

They are counting on domestic consumption to drive the economy in the years ahead, which means getting the people to spend more of their money.

But big-bang hukou reforms are unlikely at the Third Plenum, say observers, who believe that a breakthrough is more likely in areas such as social security.

As outlined by a proposal from the State Council's Development Research Centre, changes to allow Chinese citizens to enjoy access to benefits like health care wherever they go can become the basis for tweaking the hukou system, which ties benefits to where one's household is registered.

A social security card can be introduced so that migrant workers can have access to health care wherever they are, say observers.

"If the social security card can be used nationwide, it can provide a way out for the stagnating and difficult hukou reform," Dr Zhao Litao of the East Asian Institute at the National University of Singapore told The Straits Times.

Another area - the pension system - also needs to be changed so it can meet the needs of China's ageing population.

By 2050, 437 million Chinese are expected to be above the age of 60. The elderly will comprise 30 per cent of the population by then, compared to 14 per cent last year.

A corollary is to raise the retirement age from the current 60 years old for men and 50 for women, in blue-collar jobs.

"We think raising the retirement age is an essential reform," said Mr Richard Herd, chief China economist at the Organisation for Economic Cooperation and Development, at a recent talk in Beijing.

But many Chinese are opposed to such a change. In order for the government to win them over, observers note that there is first a need to integrate the existing segregated pension system, which has drawn criticism for giving an unfair advantage to public sector employees. These workers generally do not pay contributions like workers at private firms do, but enjoy up to 90 per cent of monthly wages after retirement, compared to at most 60 per cent for private sector workers.

But even in this area, change is likely to be phased in gradually so that those who are near retirement will not be affected.

"Someone who has been working for 25 years, who's about to retire in five years, you can't suddenly say you have to work for another 20 years," said Mr Herd.

Besides social security changes, other areas include income disparity and rural land reforms.

Farmers are barred from selling their land, resulting in land grabs by local governments, which buy at low prices to re-sell at much higher prices.

Some 64.3 million households, or 16 per cent of the total, have had their land seized or property demolished, a recent study by Tsinghua University found.

Now there are calls for farmers to be allowed to sell their land rights or use them as collateral for loans. But Beijing Institute of Technology economist Hu Xingdou is not too sanguine.

"There will be a lot of opposition. Local governments will lose a source of income as they won't be able to get hold of land easily," he told The Straits Times.

hoaili@sph.com.sg

Additional reporting by Lina Miao