E. P. PIVOVAROVA

Doctor of Economics

Keywords: China, global crisis, social problems

Almost unanimous was the conclusion reached by scientists from the Center for Economic and Social Research of the People's Republic of China at the Institute of the Far East of the Russian Academy of Sciences at a conference held in early 2009 on the possible impact of the global financial and economic crisis on the Chinese economy. This conclusion came down to the fact that due to the peculiarities of the economic policy of the country's leadership during all the years of market transformations, China will suffer significantly less losses than any other country in the "globalizing" world.

Today we can say that this conclusion and at the same time the forecast was justified.

SLOWLY BUT SURELY

Even in the pre-reform period, China carefully studied the experience of organizing social protection of workers, including in developed countries (Sweden, England, etc.), but in the end, the country's leadership chose its own ways of solving social problems that correspond to the peculiarities of China.

"First, to feed the people, and second, to build" - this socio-economic formula was adopted at the very beginning of market reforms. Although this formula already provided certain social guidelines for reforms, it was very difficult to implement such a policy setting in practice.

The country's poverty and backwardness, compounded by the de facto economic crisis on the eve of reforms, made it impossible to make significant investment and other investments in areas that would have ensured a rapid improvement in the material situation of workers.

And the program of modernization of the national economy, which requires the mobilization of financial and material and technical resources of the country for the needs of production with its insignificant growth, did not allow at the start of the reforms to direct the necessary material resources to increase the incomes of workers.

Under these conditions, China in the late 1970s mainly followed the path of providing workers with greater freedom to use the results of their work and opportunities to engage in independent entrepreneurial activities. Some indirect economic levers were also used to encourage this activity.

Farmers in the poorest and most backward regions of the country began to escape from starvation through family contracts, after which it spread widely to all rural regions of the country.

The city went the same way. The active development of individual and collective entrepreneurship, filling in existing gaps in economic structures, has rapidly improved the state of affairs in the field of public catering, retail, transport, construction and other services. As a result, this path has become the least expensive for the state, but the most valuable factor that has ensured the support of broad segments of the population for reforms and stability in society.

The strategy of socio-economic development of the People's Republic of China, outlined in general terms until the middle of the XXI century, provided for a very gradual expansion of the range of social tasks that had to be focused on in one period or another.

The ascent went from a priority solution of the most acute, urgent problems (to prevent famine, feed and clothe the people according to the most modest standards), to raising the standard and improving the quality of life. Tasks were set to feed the people in abundance, improve the situation with housing and transport, diversify services, improve the level of education and medical care, and help literary and artistic figures.

Taking into account the main specifics of Chinese society - a huge population with limited financial and material resources, the Chinese leadership set long deadlines for improving the people's lives and laid down modest parameters in the concept of well-being.

Even when defining purely economic tasks, taking into account the experience gained during the reforms, amendments were constantly made to improve the situation of the large poor population. The social factor made a difference in the pace and structure of transformation, as well as in the nature of economic progress. It also largely determined the scale and depth of market transformations.

While the Chinese leadership has made the development of productive forces a central task, it has managed to combine it in practice with the solution of social problems.

First, the economy was reoriented to the production of consumer goods and services (rapid growth in agriculture, light industry, and the service sector). Secondly, employment measures were taken (active development of village-volost enterprises absorbing excess labor force, creation of individual and collective farms, curbing the implementation of the adopted law on bankruptcy of enterprises due to fear of mass unemployment in cities). Finally, the quality of employees as the main productive force of society was improved by improving the system of education and professional training, borrowing foreign experience in production management and personnel training, etc.

Throughout all the years of reforms, the creation of market entities in the PRC was carried out not on the basis of destroying existing state structures, but mainly by filling in existing gaps through the development of various types of farms (collective, individual, private, joint Chinese-foreign). This not only ensured a rapid growth in the number of market entities, but also, changing the structure of the national economy by ownership, adjusted the structure of investment and production, while-

bringing it closer to the real needs of the people.

As a result, the PRC has become one of the few developing and transition countries where the social cost of market-based economic reform - namely, property differentiation, not fully guaranteed employment, and the replacement of the former free social services with a system of state, enterprise, and citizens ' equity participation in education, healthcare, housing, etc. - has proved feasible for many countries. population. The quality of people's lives has slowly but surely improved over the years of the reforms.

The latter circumstance was also the main condition for maintaining socio-political stability in the country and ensured national support for the reforms. And this is despite the fact that the country still lags behind many other countries in terms of national welfare.

THE EXPERIENCE CAME IN HANDY

When the global financial and economic crisis hit, the experience gained by the PRC over the years of market transformations was useful.

In 30 years of market reforms, the Chinese people, unlike the Russians, have not experienced either hyperinflation or a sharp drop in living standards. And the rise in prices in mid-2008 for some of the most popular food products (in particular, noodles, pork) greatly alarmed the population. People were afraid that the crisis would make life harder.

In an effort to stop the dangerous growth of unbalanced economy and socio - political instability that emerged in 2007-2008, the Chinese leadership has resorted to a lever that has been tested over the years of market transformations. Macro-regulation and macro-control became this lever.

As noted at the 2nd session of the 11th National People's Congress (NPC) in March 2009, in order to strengthen the country in the face of the global financial and economic crisis in 2008, China "adjusted its macroeconomic policy in a timely, firm and decisive manner."¹

By mid-2008, when rising prices for energy resources and grain became the main concern, the "primary task of macro-regulation" was precisely "curbing excessive price growth"². And in the autumn, when the global economy began to decline sharply, the main focus was on "preventing an excessively rapid slowdown in economic growth"³. For this purpose, a flexible financial, monetary, and credit and tax policy was implemented: within a short time, interest rates on deposits, loans, taxes, and housing transactions were repeatedly changed. At the same time, all tax, customs and financial authorities of the People's Republic of China strengthened control over the collection of taxes and duties.

As a result of such an active and flexible policy of macro-regulation and macro-control in China, the indicators of socio-economic development were already achieved and even improved in 2008. Gross domestic product (GDP) grew by 9% (estimated at 8%), consumer price growth was kept within 4.8%, employment in cities and towns increased by 11.13 million people (estimated at 10 million), the average per capita incomes of urban and rural populations increased by 8.4 and 8%, respectively. Registered unemployment remained at the level of 4-5%⁴

(however, unregistered activity increased, as many small businesses were closed, although new jobs were created.)

In line with China's policy of expanding domestic demand as the most important antidote to the crisis, the central budget's priority expenditure items for 2009 were agriculture (an increase of 27.5%), education (an increase of -23.9%), medicine and healthcare (38.2%), social security and employment (22.1%), science and technology (25.1%), environmental protection (18.9%) ⁵.

The main social problem for the PRC remains employment, because it is primarily associated with the possibility of improving the life of the population and the gradual elimination of poverty.

In the expenditure part of the central budget for 2009, special subsidies for employment were allocated in the amount of more than 42 billion rubles. RMB*, an increase of almost 67% in 2008, as well as encouraging government investment in large construction projects to provide farmers with jobs in urban areas.⁶

Regular surveys of cities and towns conducted in China show that about 20% of applicants in the employment markets cannot find a job, but these are usually low-skilled workers. However, the demand for qualified and highly qualified workers (in particular, engineers, economists, statisticians) is not met and, most often, it is 2 times higher than the supply ⁷. This, of course, is an incentive for training and professional development for the country's population.

Government agencies at various levels put a lot of effort into professional retraining of people who have lost their jobs and workers from the peasant environment, encourage enterprises to organize on-the-job training, etc.

A differentiated approach to addressing these issues has become one of the real ways to improve the employment situation and combat poverty in the PRC. Authorities at all levels focus their efforts on finding ways to improve the financial situation of the least affluent segments of the population (those who have lost their jobs, those who are poorly paid, those who do not have able-bodied breadwinners in the family, etc.).

This approach allows us to heal, albeit little by little, the most bleeding ulcers of society, reducing the number of the poor and disadvantaged.

It is noteworthy that it was in 2008 - 2009 that the introduction of the basic health insurance system for the unemployed population began on an experimental basis, the level of the average monthly subsidy per capita for low-income urban and rural residents increased slightly, the basic old-age pension benefit continued to increase for those who left enterprises, social insurance subsidies and socially useful work were provided to people who find it difficult to find a job.

Judging by the results of 2009, China managed to resist the global crisis and the country's internal social problems that are difficult to solve (regardless of their connection). This has been done and is being done, just as in the case of market reforms, gradually, through experimental testing.

Along with high GDP growth (in the first quarter of 2010, this figure reached 11.9%⁸), the incomes of urban and rural population are steadily increasing, the overall level of consumer prices did not exceed 4%, and for the 6th consecutive year, one of the highest grain harvests in the last 40 years was harvested ⁹.

The global crisis has had the most painful impact on employment. The number of jobs decreased by 8% ¹⁰. Groups of migrant workers and university graduates were the most vulnerable in this regard. But as a result of the very active policy of the central government, the situation began to improve in 2009, 9 million jobs were created again and the registered unemployment rate was kept within 4.5%¹¹.

While the improvement in key indicators such as production and consumption growth, accelerated social construction, improvements in the employment situation and price stability suggest that the economy is recovering and entering a new stage of growth, China's leading economic scientists emphasize that there are still many challenges.

The most serious of these include significant income inequality, limited growth in domestic consumption, persistent difficulties in securing employment, and a serious environmental situation.

At the same time, at the new stage of growth, which should be characterized by an increase in the quality indicators of socio-economic development of the country, it may be more difficult to solve these problems.

* $1 is equal to approximately 6.8 yuan (ed. note).

¹ People's Daily. 15.03.2009.

² Ibid.

³ Ibid.

⁴ People's Daily. 16.03.2009.

⁵ Ibid.

⁶ Ibid.

⁷ The data were obtained at the Institute of Sociology of the Autonomous Non-Governmental Organization of China during the author's research trip in September-October 2009.

⁸ Official website of the State Statistical Office of the People's Republic of China. National Bureau of Statistics of China. Further Expanding Momentum of China's Economic Recovery in the First Quarter of 2010. 15.04.2010 - http://www.stats.gov.cn/english/newsandcomingevents/t20100415_402634799.htm

⁹ Shehui lanpishu. 2010, p. 2.

¹⁰ Ibid., p. 31.

¹¹ Ibid.

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