Perceptions of Subjective Economic Well-Being and Support for Market Reform among China's Urban Population

Abstract

This article examines whether subjective economic assessments have any impact on support for further market reforms among China's urban population, utilising a large survey of 10,716 people across 32 cities. The effect of subjective economic well-being on support for market reforms is an important issue for the Chinese government as it seeks to sell the benefits of increased globalisation and marketisation to its citizens. Our main finding is that people's assessment of the overall economic situation helps to explain support for market reform, although the relationship is weak, while people's assessment of their own economic circumstances does not influence support for reform. The findings are compared with those of similar studies for Central and Eastern Europe.

Notes

 1. It is important to note from the start that throughout this article we use the terms ‘winners’ and ‘losers’ in a relative sense. The ‘winners’ are those who are more likely to perceive an increase in economic well-being relative to others, while the ‘losers’ are those who are less likely to perceive an increase in economic well-being relative to others as a result of the market reforms. Therefore, it is possible that someone might be better off in absolute terms as a result of the market reforms but lose in relative terms.

 2. The cities sampled were Beijing, Tianjin, Shijiazhuang, Taiyuan, Huhehaote, Shenyang, Changchun, Harbin, Shanghai, Nanjing, Hangzhou, Hefei, Fuzhou, Nanchang, Jinan, Zhenzhou, Wuhan, Changsha, Guangzhou, Nanning, Haikou, Chongqing, Chengdu, Guizhou, Kunming, Lasa, Xi'an, Lanzhou, Xining, Yinchuan, Wulumuqi and Xiamem.

 3. In 2002 GDP per capita was 41,651 RMB in Guangzhou; 40,538 RMB in Shanghai and 28,280 RMB in Beijing (ZTN, 2003, p. 390).

 4. We implemented the version of the Hausman test proposed by Davidson & MacKinnon (1989), which carries out the test by running an auxilliary regression. We used household income as the instrument. In the second stage, the coefficient on the first-stage residuals for sociotropic was significantly different from zero at the 1% level (t = − 2.56), but the coefficient on pocketbook was statistically not significant (t = 0.68).

 5. Hausman tests suggested that the perception variables (ViewMigrant, HonGov, GovDuty, Inequality, Environment, SARS, Reunification and Crime) were exogenous.

 6. We use household income as an instrumental variable on the basis of previous studies which have found that income is not correlated with support for market reform in other transition economies — for example see Firebaugh & Sandu (1998).

 7. On the unemployment variable note, however, that chi-square tests and tests of the strength of association conducted in the last section indicate that the differences in unemployment status are not particularly meaningful across cells 1 and 2.

 8. Beijing Review, 20–26 March 1989, cited in Wong (1994). There are numerous other reports which give similar figures.

 9. http://www.minyi.org.cn/sqmy//sqmy040217-5.htm.

10. Note that the results in Tables 6 and 7 use robust standard errors to correct for heteroskedasticity. Heteroskedasticity is likely to be present in data with a skewed dependent variable.

11. In 2002 average wages in Shanghai were 19,452 RMB, while average wages in Beijing were 21,852 RMB. In 2003 average wages in Shanghai were 22,160 RMB, while average wages in Beijing were 24,025 RMB, http://www.minyi.org.cn/sqmy//sqmy040217-5.htm.

12. Beijing Youth Newspaper, 5 February 2004.

13. Current Life (Shenghuo Shidai), 20 July 2002.