The legacy of the mock dual economy: Chinese labour in transition 1978–1992

The article looks at labour transition in China as resulting from the gradually disintegrating institutional dualism (formed by the planned economy), and modified by various social dynamics. The structure of the planned economy is explained as a ‘mock dual economy’, an institutional framework aimed at achieving growth without creating poverty (a precondition for the socialist leadership) by appropriating rural surpluses for planned, targeted investment in urban growth sectors. The actual functioning of this institutional system, however, did not create sufficient growth. To solve the problem of systemic obstacles to growth, the reforms of 1978 (and even some earlier policies) created room for growth outside the planned sector. The persistence of state dominance in the economy and the institutional dualism led to a strong imbalance between the planned and the unplanned sectors, generating significant expansion of the private and other non-planned sectors. The labour migration is analysed within this context. Social structures and dynamics modify the labour transfer process, mainly through clientelism, family cycles, and administrative barriers. Clientelism is an important lubricant in the transition period of drastic price distortions (the official and free market price gap). The limited ability of families to exert a choice of strategy is seen as a source of growth-generating social imbalances and related family practices (marriage patterns and property management) open specific new market opportunities. The division of citizenship through the household registration system is a major determinant for the structure of the (reforming) Chinese labour ‘market’. The main conclusion is that labour transfer should not be viewed in exclusively economic terms, and that other strong determinants must be examined. Economic growth and successful labour transfer in China during the reforms are not attributable to the market forces per se.