A rotting core: the other side of China's miracle

John Lee
March 13, 2008

Ask Chinese parents around the world, parents like mine, what they want their kids to be when they grow up and the chances are they will say a "doctor" - the medical kind, of course, rather than a less practical PhD.

You would think that Chinese parents in China would pose no exception to this rule. But in a report to a Chinese parliamentary advisory body last week, Qiu Guixing from the Peking Union Medical College Hospital cited a survey finding that 78 per cent of Chinese doctors did not want their children to study medicine.

No, it wasn't better pay or benefits that doctors wanted. It was that being a doctor is becoming an increasingly dangerous profession in China. In the first 10 months of 2006, 5519 Chinese doctors were bashed by angry patients, compared with 3735 in 2004 and 2600 in 2002.

At the heart of the problem is China's failing welfare and social system. From being the most equal society just a generation ago, albeit on an extremely low base, China has now become the most unequal society in Asia. China's "economic miracle" benefits a rising middle class and other party insiders of about 150 million people - no mean feat - but more than 1 billion are being left behind and about half of these have seen their net disposable incomes stagnate or decline over the past decade.

Poor or non-existent access to basic health care is just one sign of these problems. Bashing doctors is a very unconstructive way to deal with frustrations, but it is the only outlet many Chinese feel they have.

The violence and social unrest overwhelmingly occurs in rural China, in a country with one of the worst urban-rural divides in the world. Violence is not just perpetrated against doctors - far from it. In the latest official figures, there were 87,000 instances of social unrest involving 15 or more people in 2006, up from just a few thousand in 2000.

This brings us to the party's announcement last week of a 30 per cent rise in rural social spending, including a hefty increase for rural medical services and insurance. The increased spending was largely applauded by senior policy makers in Beijing - and so it should.

But we should also be steeling ourselves for disappointment.

The Government is preparing to spend a record $US79 billion ($85 billion) on China's 700 million farmers, spending which consists of direct subsidies, improvements to production capabilities, education, culture and health.

The spending is about a sixth of the budget. In raw figures, it sounds like a huge number but let's put it in context.

China is largely a decentralised political and bureaucratic system. Local governments account for about three quarters of public expenditure, and even monies spent by the central government are largely administered by local authorities. In theory, local authorities should be better placed to efficiently allocate public resources.

But China is decentralising without building institutions that encourage public accountability. Judicial and administrative independence is too much a matter of personal courage and integrity rather than an institutional requirement. Under China's one-party system, local authorities are left to plunder public resources and are rarely prosecuted.

As a result, the level of corruption and misuse of public money is hard to believe. Fleets of cars for local officials alone cost over $US42 billion each year. Overseas trips and other entertainment costs (which the Chinese call "banquets") incurred by local officials amount to over $US70 billion each year. According to a 2005 China National Audit Agency report, local officials misappropriate about 10 per cent of the entire budget each year and the figures are rising. Finally, as a further blow to China's rural poor, local taxes and fees amount to between 20 and 40 per cent of net income, even though the law states that such "peasant burdens" cannot exceed 5 per cent.

And these are the same local officials who will be largely called upon to administer the billions to be spent on education, culture, and health in rural China.

To address the rising discontent with local officials, the central leadership instituted "open" elections at the village level that allowed independent candidates to run. This is the lowest tier of government in China but many believed it was a start. However, the formation of political parties independent of the Chinese Communist Party was still banned.

Given the overwhelming resources of the Communist Party, whose candidates enjoy the full machinery of the state, outright intimidation and even violence against independent candidates is the norm. Besides, even when independents are elected, the law still states that the village party official constitutes the "core leadership" of that village.

Some of the money will get to the people it was intended for but we can be sure that a significant part of it will not. Giving billions of dollars to unaccountable officials is a recipe for corruption and misappropriation.

Should doctors in China tell their children it is safe to take up medicine? Maybe they should wait.

Dr Lee is a visiting fellow at the Centre for Independent Studies and author of Will China Fail?.