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 Qinghai-Tibet 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 state-owned
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.