The most serious problem arising from Chinas modernization reforms is the

discrimination of migrant workers in urban areas. Discuss.

After Chinas opening up in 1978 and CCPs encouragement of coastal areas to
develop faster than their interior counterpart, the problem of rural-urban migration
from the vastly backward inland area to the wealthy coastal provinces, and hence
regionalism, has arisen. While discrimination of migrant workers is a serious
problem as it weakens social stability, worsens labor and income disparity problem,
it the not the main problem that has sprout out of Chinas modernization efforts and
there is more than meets the eye. Hence, this essay seeks to argue that
discrimination of migrant workers is not the most serious problem as it is only
peripheral to the other root concerns of the CCP.
Discrimination of migrant workers in urban areas is a serious problem because it
causes social instability which may affect Chinas economic development. When
migrants travel to the urban areas, they become second class citizens. Those with a
rural registration are discriminated and segregated from the rest of the urban
population. They are excluded from social insurance such as pension insurance,
unemployment insurance and health insurance leading to social inequality. Majority
of the new migrants do not have urban hukou, and probably never expect to have it.
Thus the new migrants do not enjoy the social welfare benefits. Creation of migrant
enclaves in cities, unemployment and urban poverty thus upset social unity,
weakening the basis of economic growth. In cities where resistance is strong,
municipal government would have to spend extra funds to expand facilities and
public services to accommodate growth. For example, Shenzhen would at least have
to triple its police force to maintain social order at the minimal level, not to mention
updating other public facilities and services in the city.
However, the problem of discrimination created by modernization reforms and
hence economic imbalance is not an irreparable one and the Chinese government
has taken several measures to the problem of rural urban migration such that the
situation of discrimination against migrant worker may also improve. To encourage
citizens to stay in the west, the CCP has instituted preferential policies for the
development of the western regions to include more investment, preferential tax
rates and greater flexibility in development policies. Instead of promoting the west
as a labor intensive manufacturing base, the government has placed the focus on
creating new industries and environmentally-friendly technology to exploit natural
resources in the western region. Large scale infrastructure projects such as roads
and railways might help in transportation costs. One of such example is the QinghaiTibet Railway project. Another significant project is Chinas 3900km east-west
natural gas pipeline project, starting from Tarim of the Xinjiang Ugyur Autonomous
region to Shanghai.
Discrimination of migrant workers in urban areas is a serious problem because it
exacerbates labor problems which undermine Chinas manufacturing edge. The
selection of workers based on their place of birth undermines the workings of
meritocracy and promotes inefficiency in the workplace. Lack of healthcare
coverage, migrants workers also tend to take a longer time to recuperate, thereby
undermining workers productivity. Obstacles placed by employers and urban
authorities to exclude poorer and less educated migrants from entering labor

market further reduce their chances of upward mobility, creating a class of citizens
that is trapped at the bottom of the economic ladder, thereby wasting resources.
Preferential treatment towards locals has also resulted in higher cost of production.
With effect from One Child Policy which has created a class of workers with ever
higher economic burden, and over-qualified workers due to the improvement in
education enrolment, Chinese workers have also become more demanding for
better pay and treatment. As such, discrimination of migrant workers undermines
Chinas manufacturing edge as it harbors labor implications.
However, of the consequences of Chinas economic reforms, discrimination of
migrant workers is not the most serious problem in undermining Chinas edge in
manufacturing as it is not the root of in Chinas labor problem. The root cost of
rising cost of production in China lies in the supply side bottleneck due to the
depletion of labor as the number of entrants into the workforce decreases with
effect from Chinas One Child Policy. Wages today constitute around 30% of
manufacturing cost in China on average. Traditional labour-intensive companies
making goods such as shoes and located in southern coastal cities have been badly
hit by wage rises since 2008. Many domestic and foreign manufacturers were
pulling out of China and going into Southeast Asia instead, especially to Indonesia.
This was because wages were rising in China, with even migrants enjoying a 13%
rise in 2012. Minimum wage levels in the industrial south have spiked. There is also
structural mismatch as Chinese youth choose white-collar jobs , which are in
shortage, over industrial work.
Discrimination of migrant workers in urban areas is a serious problem because it
results in social segregation which worsens economic inequality. Discrimination of
migrant workers in urban areas virtually differentiates Chinese people into 2
classes: the urban citizens and the rural resident or farmers. No matter how long
they live in the city, or even if their children have been born and raised in cities,
they are not regarded as urban citizens. Their registration still classifies them as
rural residents, and so they are not entitled to the same rights and benefits that
urban citizens enjoy. Rural migrants are therefore only the cheap labor that
contributes to the prosperity of the cities but is not allowed to benefit from it. Since
1981, Chinas gini coefficient rose from 0.29 to 0.46 in 2005 to 0.477 in 2011 to
0.474 in 2012. Without social safety net, China lacks of countercyclical stimulus to
avoid the dreaded hard lining on migrant workers in times of economic downturn
and hence, is unable to correct the structural imbalance.
However, the discrimination of migrant workers is not the most serious problem
created by economic reforms as it only worsens but it is not the root cause of
income inequality. The implementation of preferential policies in coastal provinces
as early as the beginning of the 1980s has led to a rapid integration into the world
markets, huge inflows of FDI and the development of modern industrial sectors in
these provinces. Coastal cities provinces benefit from a higher percentage of arable
land, better condition for developing infrastructure, and easy access to sea. After
Dengs inspection off the SEZs in 1984, 14 ports cities were opened up. This
improved productivity as it provided competition to domestic firms. It also serves
as an effective channel for technology transfer that benefits coastal provinces.
Disparity came about in one-way mobilization of factor inputs, imbalance of stateowned enterprise development and difference of management among local

government. The relatively backward regions were subsidizing the growth of the
wealthy eastern regions, causing regional disparities to widen.
In conclusion, discrimination of migrant workers is a serious problem as it weakens
social stability, worsens labor and income disparity problem. However, it the not the
main problem that has sprout out of Chinas modernization efforts and there is more
than meets the eye. Therefore, discrimination of migrant workers is not the most
serious problem as it is only peripheral to the other root concerns of the CCP.