Some journalists and commentators have characterized the Hu Jintao 胡锦涛 and Wen Jiabao 温家宝 leadership period from late 2002 to early 2013 as a “lost decade,”Footnote ¹ while others have seen it as a “golden age.”Footnote ² Those expressing disappointment lament the lack of progress with political reform, point to environmental degradation, rising corruption and growing income disparities, and criticize stagnating state enterprise reform.Footnote ³ Those hailing the achievements of the era have focussed on the sustained high levels of growth, expanding global trade and investment, and China's rise to become the world's second largest economy. In their book on the first five years of the Hu–Wen period John Wong and Lai Hongyi laud Hu and Wen's political achievements and their social welfare initiatives.Footnote ⁴

Much of the debate has revolved around economic performance and political issues, with far less attention paid to the Hu–Wen administration's social policies.Footnote ⁵ Nevertheless, echoing Wong and Lai's perspective, Tom Orlik has suggested that “[t]op of the list of achievements is improved public services and welfare provision.”Footnote ⁶ Indeed, over its decade in power, the Hu–Wen administration adopted a number of social policies aimed at reducing socio-economic inequalities between and within rural and urban areas and addressing the grievances of rural migrants. These initiatives included abolishing agricultural taxes, introducing legislation to improve the working conditions of migrant workers, and modernizing rural areas through a multi-pronged strategy of “Building a new socialist countryside” (shehuizhuyi xinnongcun jianshe 社会主义新农村建设). This involved extending rural cooperative medical schemes nationwide, and introducing rural pensions and social assistance. Other social policy reforms centred on extending social insurance beyond urban formal sector workers, reforming urban social assistance, and improving the legal framework protecting migrant workers in the workplace.

Thus under Hu Jintao and Wen Jiabao, the Party-state crafted a developmental direction that promised greater social inclusion and socio-economic levelling as captured in their rhetoric of “harmonious society” (hexie shehui 和谐社会), “inclusive development” and the aspiration to become a relatively prosperous “well-off society” (xiaokang shehui 小康社会). In doing so they built on the welfare reforms begun under Jiang Zemin and Zhu Rongji from the mid-1990s onwards, which Joe Leung and Xu Yuebin described as “the third turning point” in the post-1949 period of welfare provision.Footnote ⁷

This special section assesses the Hu–Wen era by answering three important questions about China's early 21st-century social policies: first, to what extent are Hu and Wen responsible for the social policies associated with their period in power? Second, what were the politics and policy processes shaping those social policies? Third, how effective were those social policies in improving lives and reducing inequality among rural and urban residents and rural migrant groups during the Hu–Wen period?

To address the first two questions the articles by Jude Howell, Jane Duckett and Wang Guohui examine the politics of key social policies introduced under Hu and Wen. They focus on the politics of the regulatory environment governing non-governmental providers of welfare, extending rural cooperative medical schemes (RCMS) and abolishing agricultural taxes. These articles use analytical frameworks that examine the influence of China's leaders and bureaucratic agencies as well as the role of other elite actors (central as well as local) and international agencies, institutional arrangements, bureaucratic bargaining, ideas, political and economic context and international events in shaping the goals, design and implementation of social policies. These analytical frameworks – detailed in each article – start with assumptions that the Party-state is not monolithic, that Chinese politics and policy processes are not isolated from global influences and events, and that processes of institutional change are usually gradual. It produces insights into policy processes despite the “black box” of elite decision making in China that arises from poor access to high-level political leaders and an absence of reporting on intra-elite political discussions or individual leaders’ personal perspectives on issues.

Regarding the first question about the role of Hu and Wen, Duckett argues in her article that they certainly supported the push forward in implementing the “new” rural cooperative health schemes. The decision to adopt those reforms had, however, been taken at the end of the Jiang Zemin period. Like Wang, she argues therefore that the discontinuities between different leadership periods have sometimes been overstated, and that factional politics cannot explain this policy. But she also finds other prominent explanations based on “rational” decision making and fragmented authoritarianism – to be inadequate. While these three classic approaches provide a useful entry-point to understanding elite policymaking politics, a focus on leaders and the central bureaucracy alone cannot explain the adoption of policies to tackle poverty and inequality. Instead, it is important to understand the influence of external factors, such as international organizations, global economic crises and the impact of China's entry into the World Trade Organization (WTO), in shaping social policies and reducing poverty and inequality.

In tackling the second question about the politics and policy processes shaping China's social policies, we reinforce the importance of incorporating both international and domestic factors into policymaking analysis. Duckett in her article argues that the influence of international actors is often overlooked in studies of policymaking in China. Through her close study of the development of the RCMS she demonstrates how international actors and events were an important force generating and sustaining ideas and shaping policy – a point also made by Wang. Howell, in contrast, considers the perceptions that security institutions have of the destabilizing role of international actors. Against the background of the Colour Revolutions and Arab Spring, security institutions are concerned about the influence that external donors can have on advocacy organizations, rights-based groups and cause-driven organizations and particularly that external agencies could harbour regime-destabilizing objectives.

On the domestic front, institutional bargaining can play a role in the making and unfolding of policy. Jude Howell shows how institutional bargaining affects the progress in advancing policies to develop a regulatory environment that could facilitate non-governmental actors to provide welfare services. She finds that tensions between institutions concerned with welfare policy and institutions engaged in ensuring social stability can influence whether the building of a civic welfare infrastructure advances rapidly or slowly, or even stalls. The dilemma here has been how to balance social control with opening up spaces for service-oriented non-governmental organizations to deliver services by facilitating registration and funding. From the perspective of security institutions such opening up could also create greater space for organizations critical of government and policy to flourish.

Duckett, however, finds bureaucratic bargaining only in the final months of policy formulation for new RCMS – though bureaucratic actors are significant alongside other actors in policy networks at earlier stages of the policy process. Wang meanwhile shows the interactions among central decision makers and local governments – and how, in a context of rural instability, leaders’ economic and fiscal considerations played a role. Both Duckett and Wang emphasize the convergence of multiple factors leading to policy decisions, rather than the personal experience or characteristics of Hu and Wen or their predecessors.

To answer our third question about the effectiveness of Hu and Wen period social policies, Qin Gao, Sui Yang and Fuhua Zhai then take a quantitative approach, analysing the China Household Income Project (CHIP) data to examine whether social insurance, social assistance, the New Socialist Countryside and measures to improve migrant workers’ conditions of work have reduced inequality and poverty. They find that social policies did curtail rising income inequalities, during the Hu–Wen period, with pensions and rural agricultural and livelihood subsidies having the most marked effects. But inequalities among urban residents shrank more than those among rural residents or migrants, and substantial urban–rural inequalities nevertheless remain. These findings add to the findings of Howell, Duckett and Wang, who argue from their policy studies that while Hu–Wen social policies certainly benefitted rural residents and migrants, their limitations mean that they did not transform the overall picture of inequality.

As well as answering the three core questions collectively addressed by this special section, the four articles also provide rich material on the content and evolution of previously neglected social policies and their outcomes. They make contributions not only to understanding social policy under Hu Jintao and Wen Jiabao but also to theories relating to institutional and bureaucratic change (Howell, with the concepts of “bounded adjustment,” “rule creation” and “opportunistic layering”), models of policymaking (Duckett, with “network authoritarianism”) and policy experimentation (Wang, with “principle-guided policy experimentation”).

In her article, Jude Howell argues that the Hu–Wen era deserves a more measured assessment than afforded by some critics. In particular, it should receive greater credit for its policies aimed at crafting a more positive environment for non-governmental welfare providers that could enhance their financial and provider capacity. Focussing on Hu and Wen's efforts to pluralize the field of social welfare providers as a strategy to enhance social welfare provision, Howell examines the politics of building a civic welfare infrastructure during their terms in office. Civic welfare infrastructure refers to the regulatory environment governing the civic building-blocks of welfare provision such as registered charities, foundations, unregistered NGOs, advocacy and rights groups, and community activism. She focuses on four key initiatives, namely, the revision of the regulations relating to foundations in 2004, experimental changes in the registration requirements for social organizations from 2008 onwards, policies relating to external actors supporting domestic social organizations, and finally the drafting of the Charity Law (eventually passed in March 2016 in the Xi era).

Howell's article starts out from the complex politics of competing motives and interests of state actors that shape institutional changes in building a civic welfare infrastructure. Different interests amongst state institutions in relation to social organizations have characterized the three main periods of governance in the reform era. In particular, the different priorities of welfare-oriented institutions such as the Ministries of Civil Affairs, Health and Education and of security-oriented institutions such as the Ministry of Public Security have shaped the development of the regulatory environment governing non-governmental actors. The horns of these two sets of institutions were locked over the dilemma of how to create a more enabling regulatory environment to encourage the development of non-governmental organizations that could assist with welfare provision, whilst reducing the risk of a more open society becoming a site for potentially regime-destabilizing non-governmental groups, often influenced by external forces.

In the Hu–Wen era (from effectively 2003 onwards), efforts to advance welfare reform by making it easier for potential non-governmental service providers to register continued to be stalled by concerns about the risks of instability. Against the background of the so-called “Colour Revolutions” in several former Soviet states in the early 2000s, the perceived external threat posed by foreign agencies such as foundations and NGOs meant the government became wary of easing the regulatory framework governing NGOs. Howell thus investigates three interweaving sets of inter-institutional politics centring on the tensions between security and welfare institutions: the politics surrounding the at times contradictory goals of the Ministries of Civil Affairs and Public Security in pursuing respectively goals of welfare provision and stability maintenance; state–civil society politics around the boundaries of permissible civic organizing; and the politics enveloping the domestic–external actor relationship.

In analysing the web of politics underlying reform processes, Howell also adds to understanding of the processes of institutional change in China. She argues that introducing new policies requires institutional change, that is, changes in the rules of the game that can alter the distribution of power and resources and bring about organizational restructuring. Her analytical framework here starts from the position that institutional change is generally gradual, building upon and adapting past rules and organizations, and creating new ones. Theories of gradual institutional change have identified categories of rule-changing processes such as layering, conversion and drift.Footnote ⁸ Howell refines these by adding intermediate categories of bounded adjustment, rule creation and opportunistic layering. These enable her to identify and analyse the processes of policymaking that serve to cement change.

On this basis, Howell draws attention to the array of institutional practices adopted to facilitate change when there is a vacuum of appropriate rules and a persisting legacy of increasingly redundant, and sometimes obstructive, rules. In doing so she posits the concepts of “bounded adjustment” (partial changes to existing regulations), and “opportunistic layering” (when local actors in a situation of institutional impasse respond to higher-level cues to execute rule change), as strategic means deployed by government officials to push forward policy change. By exploring the artful means used to effect institutional change in the arenas of four key initiatives she provides greater empirical texture to existing studies of adaptation in the Party-state. Despite the constraints faced by reformers in fashioning a more plural landscape of welfare provision, she demonstrates how during the Hu–Wen period a more robust framework was established for facilitating the state's instrumental use of civic organizations in welfare reform. The subsequent Xi leadership went on to use and extend this civic welfare infrastructure, rolling out a system for sub-contracting social welfare provision to selected social organizations across the country.

While Howell's article explores how bureaucratic politics, state–society relations and international factors shape the fashioning of a civic welfare infrastructure, Jane Duckett asks to what extent top leaders shape policymaking. Specifically, she investigates the role of Party General Secretary Hu Jintao and Premier Wen Jiabao in extending the flagship rural cooperative medical schemes (RCMS). She examines critically three key models of elite policymaking to explain the implementation of a revamped and extended policy of cooperative medical insurance for rural residents: factional power, rationality and fragmented authoritarianism. She reflects on how useful these contending models are for understanding the role of elite politics in shaping social policy processes.

The “new” RCMS of the Hu–Wen era can be traced back to the late 1950s. The scheme was extended further during the Cultural Revolution and reportedly covered almost 80 per cent of the rural population. Rural residents made “voluntary contributions” to the scheme that were automatically deducted by the rural collectives and were used to cover their basic health needs. When the reformers introduced the household responsibility system in the early 1980s across China, leading to the decollectivization of agricultural production and de facto disintegration of other social and welfare dimensions of former collective life, the RCMS was similarly allowed to collapse.Footnote ⁹ By 1984 it covered barely 5 per cent of the rural population. In the subsequent decades various alternative rural models of health insurance and user charges were tried out with the assistance of international organizations. In the early 1990s the Ministry of Health returned to the idea of the RCMS and initiated experimentation across the country, with the goal of extending it to all rural residents by the end of the decade. However, the RCMS policy, because it involved collecting contributions from villagers, conflicted with another policy aimed at abolishing the fees that local governments charged to villagers. After the Party-state centre prioritized abolishing fees, the 1997 Decision to adopt RCMS went unimplemented. But in 2002 the Party-state issued a further Decision and announced a new set of experiments that involved governmental as well as voluntary household contributions. Backed up by further detailed regulations and a national-level review of experimental outcomes in 2005, the Party-state called for its nationwide extension by 2008, ahead of plan. How then can these twists and turns in the destiny of this policy be understood?

Duckett argues that international actors and events influenced new RCMS, a key policy associated with the Hu–Wen administration. She draws attention to international organizations’ funding of RCMS projects and pilots in the 1990s; to the perceived impact of WTO entry on agricultural incomes and its effects on consumption and potential rural unrest; the role of external shocks, specifically the 1997 Asian Financial Crisis and SARS in 2003; and the World Health Organization's poor evaluation of China's health system in 2000. These activities and events generated ideas that fed into the policy processes underpinning social policy reforms, including the new RCMS. However, with China's economic and fiscal growth following WTO entry, Hu and Wen had both the funding and the commitment to drive forward this newly revised health scheme.

Guohui Wang's article is also concerned with rural reforms, specifically the shift from rural tax and fee reform (RTFR) to the abolition of agricultural tax in China. These were landmark reforms in China's rural development, redistributing resources between farmers and the state and lifting “the burden” of fees and taxes off the backs of farmers. The policy shift was more than an act of beneficence on the part of sympathetic state leaders. It had both a political dimension in its desire to quell growing social unrest in the countryside as well as an economic dimension related to the Asian financial crisis of 2007. It marked a dual recognition of the need to wean the macro-economy off over-reliance on an export-led strategy of growth and to expand domestic consumption through rural development strategies that aimed to raise the incomes, and hence, consumption of farmers.

Through his textured analysis of the policy process underpinning RTFR, Wang comes up with an alternative understanding of the role of experimentation in policymaking. He draws upon, challenges and further develops the work of both Sebastian Heilmann and Wang Shaoguang.Footnote ¹⁰ In his influential work on policy change processes, Sebastian Heilmann put forward a staged model of policy change, which he labelled “experimentation under hierarchy.” In this model Heilmann posited a primarily bottom-up process of policy initiation supported by central-level policy patrons. Subsequent experimentation in different provinces filters upward, leading to top-level endorsement and nationwide rolling out of the new policies. By contrast Guohui Wang, drawing upon his close study of RTFR, proposes an alternative model of “principle-guided policy experimentation.” He argues that central decision makers first decide upon the purpose and principle of the reform, based on earlier local experiments. Only after this is an inter-ministerial agency set up to develop an experimental reform plan, whereupon formal, top-down experimentation is promoted that ultimately leads to nationwide policy reform.

By focussing on the case of RTFR, Wang also demonstrates that contrary to Heilmann's contention that bottom-up experimentation applies only to economic policies, experimentation models can also apply to socially transformative policies, where there may be no obvious immediate benefits to local cadres. In this respect, his study gives further support to Wang Shaoguang's position that an experimentation-based policy model can be applied in social welfare reform. Wang Guohui suggests that in the case of RTFR central pressure through the cadre appraisal system was intensified to ensure local-level implementation. However, given the financial losses incurred by local governments as a result of the forfeited income from taxes and fees, central government was pushed to intervene with central compensatory transfers of payment to local government. With the central budget in deficit after the Asian financial crisis and the economy still in difficulty, the central government was reluctant to expand the reforms as this would require larger compensatory payments. However, the reforms were picked up again by the new pro-rural leadership of Hu–Wen, who could use the tide of rising economic prosperity subsequent to WTO entry to breathe new life into the reforms that were finally sanctioned in 2006.

Howell, Duckett and Wang's articles all highlight in different ways the relevance of international factors to domestic policymaking, a dimension that has been neglected in much of policy change research over the past three decades. External factors relate not only to the increasing vulnerability of China's economy to global economic cycles of boom and bust, as witnessed in the Asian financial crisis of 1997 and again in the global economic crisis of 2008, but also to the increasing exposure of China to a diversity of ideas, practices and policies from external actors. The significance of China's rapid growth following WTO entry underpins all three stories about social policy reforms, given that economic prosperity bolstered fiscal capacity to address issues of inequality, poverty and redistribution to help the main “losers” in the WTO deal, China's farmers. However, as Howell demonstrates, perceptions of unwanted external influence have also affected the pace of institutional change necessary to build the regulatory, policy and organizational infrastructure of social welfare provision. It is thus high time that China scholars turned their attention towards dissecting the complex dynamics between domestic and international factors in processes of economic, social and political domestic policy reform.

The final article of this special section examines the effects of social policies of the Hu and Wen Period. Gao, Yang and Zhai's article investigates the impact of key social policies on poverty and inequality amongst and between urban, rural and rural migrant groups and considers whether they have left a positive legacy. Drawing on data from the China Household Income Project (CHIP) 2002, 2007 and 2013, Gao and her colleagues explore whether policy reforms led to any changes in the size and structure of social benefits as well as the impact of the reforms on income inequality and the gap between rich and poor. In doing so, they examine the impact of four key sets of policies: the introduction of a comprehensive social insurance system and specifically pensions and health insurance; the introduction of a comprehensive social assistance system and in particular the Minimum Livelihood Guarantee (dibao 低保), along with various supplementary, temporary assistance programmes; the “Building a new socialist countryside” campaign that embraced the abolition of rural taxes in 2006, elimination of school fees in rural areas, various subsidies to farmers for production and welfare, and rural infrastructural investment; and finally, various initiatives to improve the working conditions of rural migrants and social insurance coverage, particularly the 2008 Labour Contract Law.

Past empirical evidence on the achievements of the Hu–Wen era in relation to poverty and inequality found that social insurance, and specifically pensions, had a greater impact on reducing income inequality than social assistance. However, the effects of social insurance were regressive, the benefits thereof being skewed to relatively better-off groups. Furthermore, earlier studies suggested that the “Building a new socialist countryside” strategy and the New Contract Labour Law did improve the situation of rural residents and migrants and narrow the income gaps between rural–urban migrant groups.

Gao, Yang and Zhai's findings endorse and deepen these broad conclusions by examining the size and structure of social benefits for different groups and the redistributive effects of various social benefits. Their results demonstrate that in terms of the share of social benefits in final income, the size for urban residents decreased between 2002 and 2013 but increased for rural and migrant families. However, the size of urban benefits remained considerably higher than for rural and migrant households and so the gaps remained. The politics of social policy in China and in particular the historically institutionalized discrepancy between rural and urban areas accounts for why the government did not push to reduce urban benefits further to reduce the gap. Aware that reducing urban benefits might induce protests, the government opted to focus on providing more for rural areas. As Gao and her co-authors note, a 2010 national survey revealed that with lower expectations rural residents appreciated such benefits, leading to a more positive appraisal of satisfaction with local government. Confirming previous findings, their article shows how pensions were the key element of social benefits, leading to demonstrable improvements for rural and migrant households by the end of the Hu–Wen era. Gao, Yang and Zhai conclude that the anti-inequality initiatives taken during the Hu–Wen era did lead to some redistribution and lessened the market-driven widening income inequality gaps. In particular the social policy reforms introduced in the second half of the Hu–Wen period of office reduced inequality amongst rural residents and migrants, though only to a small extent.

As Gao, Yang and Zhai note, given the recent introduction of these policies, further empirical research is needed to evaluate them fully. They conclude that the various anti-inequality and anti-poverty initiatives launched in the Hu–Wen period have left a progressive legacy – and principles of entitlement to public provision – that deserves recognition and further study. Nevertheless, they caution against an overly optimistic reading of the potential of such initiatives to tackle income disparities. Two fundamental features of China's social welfare system persist, namely, its fragmentation and unevenness. Furthermore, they underline the very limited role of explicit redistributive mechanisms such as social benefits in tackling income inequality amongst less advantaged groups, pointing to the fact that as of 2013 the post-transfer income inequality levels of all three groups studied were actually higher than before. Looking ahead to the future, they suggest that taming the market will continue to be a challenge for the government.