The informal economy of the People's Republic of China refers to a range of informal economic activity that stands outside of the recognized systems of regulations, taxation, and licenses. Although the term is sometimes understood to describe marginal, unregulated, and even criminal activity, there is considerable overlap between the informal sector and formal economy, and the informal economy serves an important societal function in contributing to employment and economic growth.
The informal economy in China represents a large portion of domestic output, consumption and employment. Employment in the urban sector represents a major part of the Chinese economy: approximately half of urban Chinese workers belong to the informal economy as of 2004. [1] —a significant increase since the 1990s. It is described as fast-growing, dynamic, highly competitive, and it contributes substantially to economic growth. [1] However, there are serious concerns about the lack of protections afforded to workers in the informal sector.
In addition, China is a major part of the global informal sector, producing unregulated goods for consumption in Africa, Latin America, and elsewhere. [2] According to Roberta Neuwirth, China's rise as a global center of manufacturing owes, in part, to its willingness to trade in the informal economy, also known as system D trade. [3] In some regions in China, local governments have adopted policies designed to encourage the informal economy to alleviate unemployment. [4]
China's informal economy underwent significant changes following the establishment of the People's Republic of China (PRC) in 1949. In the early years of the PRC, the state aimed to suppress market activities and establish institutions that would bring economic life more fully under state control. However, contrary to intentions of the state, Chinese citizens continued to engage in market-based transactions long after the CCP's "socialist transformation" of the Chinese economy was ostensibly complete. [5] For example, in 1960s Chengdu, merchants were pushed out of the formal economy and into the illicit sphere when local official revoked their licenses but provided few alternative employment opportunities. [6] In other parts of rural China, there was a "a silent revolution" wherein "villagers surreptitiously reconnected with traditional practices... and cadres stood back and allowed villagers to go about their business." [7] Within the interstitial spaces of the formal Maoist economy, entrepreneurial actors, ranging from petty ration coupon traders to underground factory owners, continued building productive assemblages of capital, labor, and knowledge. Over time these private activities grew in scale and scope, and by the mid-1970s, had become pervasive and normalized at the grassroots level. [8] This informal economy constituted a substantial proportion of local economic output throughout the Maoist era, as much as 15 percent of tertiary sector GDP. [5]
As the country's economy was liberalized and reformed under Deng Xiaoping, the private economy was permitted to develop, and often emerged in the form of unregulated micro-enterprises, family enterprises, or individual purveyors of goods and services. [4]
Some of the causes accounting for the rise of the informal sector of the Chinese economy includes weak legal and social safety nets; international demand for ‘System D’ products; economic shifts such as urbanization and the decline of state-owned enterprises. [1]
By some estimates, nearly half of employment in urban China is in the informal economy. Many of these workers—approximately 120 million to 150 million — are migrant workers who are not registered to work in cities, and therefore lack a number of formal protections. [1]
State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises. The definition can also include the state dominance of corporatized government agencies or of public companies in which the state has controlling shares.
An informal economy is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countries, it is sometimes stigmatized as troublesome and unmanageable. However, the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s. Integrating the informal economy into the formal sector is an important policy challenge.
The time period in China from the founding of the People's Republic in 1949 until Mao's death in 1976 is commonly known as Maoist China and Red China. The history of the People's Republic of China is often divided distinctly by historians into the Mao era and the post-Mao era. The country's Mao era lasted from the founding of the People's republic on 1 October 1949 to Deng Xiaoping's consolidation of power and policy reversal at the Third Plenum of the 11th Party Congress on 22 December 1978. The Mao era focuses on Mao Zedong's social movements from the early 1950s on, including land reform, the Great Leap Forward and the Cultural Revolution. The Great Chinese Famine, one of the worst famines in human history, occurred during this era.
Industrialisation (UK) or industrialization (US) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive reorganisation of an economy for the purpose of manufacturing. Industrialisation is associated with increase of polluting industries heavily dependent on fossil fuels. With the increasing focus on sustainable development and green industrial policy practices, industrialisation increasingly includes technological leapfrogging, with direct investment in more advanced, cleaner technologies.
In the People's Republic of China, Deng Xiaoping formally retired after the 1989 Tiananmen Square protests and massacre, to be succeeded by former Shanghai CCP secretary Jiang Zemin. During that period, the crackdown of the protests in 1989 led to great woes in China's reputation globally, and sanctions resulted. The situation, however, would eventually stabilize. Deng's idea of checks and balances in the political system also saw its demise with Jiang consolidating power in the party, state and military. The 1990s saw healthy economic development, but the closing of state-owned enterprises and increasing levels of corruption and unemployment, along with environmental challenges continued to plague China, as the country saw the rise to consumerism, crime, and new-age spiritual-religious movements such as Falun Gong. The 1990s also saw the peaceful handover of Hong Kong and Macau to Chinese control under the formula of One Country, Two Systems. China also saw a new surge of nationalism when facing crises abroad.
In sociology, an ethnic enclave is a geographic area with high ethnic concentration, characteristic cultural identity, and economic activity. The term is usually used to refer to either a residential area or a workspace with a high concentration of ethnic firms. Their success and growth depends on self-sufficiency, and is coupled with economic prosperity.
In macroeconomics, the labor force is the sum of those either working or looking for work :
"Iron rice bowl" is a Chinese term for an occupation with guaranteed job security, similar to life tenure. Traditionally, people considered to have such positions include military personnel, members of the civil service, as well as employees of various state-owned enterprises.
The Shenzhen Special Economic Zone is a special economic zone (SEZ) of China. One of four special economic zones (SEZ) established in May 1980, it was the first SEZ created by Deng Xiaoping, and, like the other three zones, was modeled after Ireland's Shannon Free Zone.
The economic history of China describes the changes and developments in China's economy from the founding of the People's Republic of China (PRC) in 1949 to the present day. The speed of China's transformation in this period from one of the poorest countries to one of the world's largest economies is unmatched in history.
System D is a manner of responding to challenges that require one to have the ability to think quickly, to adapt, and to improvise when getting a job done. The term gained wider popularity in the United States after appearing in the 2006 publication of Anthony Bourdain's The Nasty Bits. Bourdain references finding the term in Nicolas Freeling's memoir, The Kitchen, about Freeling's years as a Grand Hotel cook in France.
Robert Neuwirth is an American journalist, author, and investigative reporter. He wrote Shadow Cities: A Billion Squatters, A New Urban World, a book describing his experiences living in squatter communities in Nairobi, Rio de Janeiro, Istanbul and Mumbai. His articles have appeared in The New York Times, The Washington Post, Forbes, The Nation, and Newsday. His second book, Stealth of Nations: The Global Rise of the Informal Economy, was published in 2011. In this book Neuwirth joins globe-trotting Nigerians who sell Chinese cell phones and laid-off San Franciscans who use Twitter to market street food and learns that the people who work in informal economies are entrepreneurs who provide essential services and crucial employment.
The social structure of China has an expansive history which begins from the feudal society of Imperial China to the contemporary era. There was a Chinese nobility, beginning with the Zhou dynasty. However, after the Song dynasty, the powerful government offices were not hereditary. Instead, they were selected through the imperial examination system, of written examinations based on Confucian thought, thereby undermining the power of the hereditary aristocracy.
The economic development in India followed socialist-inspired politicians for most of its independent history, including state-ownership of many sectors; India's per capita income increased at only around 1% annualised rate in the three decades after its independence. Since the mid-1980s, India has slowly opened up its markets through economic liberalisation. After more fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free market economy. The Indian economy is still performing well, with foreign investment and looser regulations driving significant growth in the country.
Labour in India refers to employment in the economy of India. In 2020, there were around 476.67 million workers in India, the second largest after China. Out of which, agriculture industry consist of 41.19%, industry sector consist of 26.18% and service sector consist 32.33% of total labour force. Of these over 94 percent work in unincorporated, unorganised enterprises ranging from pushcart vendors to home-based diamond and gem polishing operations. The organised sector includes workers employed by the government, state-owned enterprises and private sector enterprises. In 2008, the organised sector employed 27.5 million workers, of which 17.3 million worked for government or government owned entities.
There is considerable confusion in both Chinese and foreign sources over definitions of urban places and hence considerable variation in estimates of China's urban population.
Economic restructuring is used to indicate changes in the constituent parts of an economy in a very general sense. In the western world, it is usually used to refer to the phenomenon of urban areas shifting from a manufacturing to a service sector economic base. It has profound implications for productive capacities and competitiveness of cities and regions. This transformation has affected demographics including income distribution, employment, and social hierarchy; institutional arrangements including the growth of the corporate complex, specialized producer services, capital mobility, informal economy, nonstandard work, and public outlays; as well as geographic spacing including the rise of world cities, spatial mismatch, and metropolitan growth differentials.
The Chinese economic reform or Chinese economic miracle, also known domestically as reform and opening-up, refers to a variety of economic reforms termed "socialism with Chinese characteristics" and "socialist market economy" in the People's Republic of China (PRC) that began in the late 20th century, after Mao Zedong's death in 1976. Guided by Deng Xiaoping, who is often credited as the "General Architect", the reforms were launched by reformists within the ruling Chinese Communist Party (CCP) on December 18, 1978, during the "Boluan Fanzheng" period. The reforms briefly went into stagnation after the 1989 Tiananmen Square protests and massacre, but were revived after Deng Xiaoping's southern tour in 1992. The reforms led to significant economic growth for China within the successive decades; this phenomenon has since been seen as an "economic miracle". In 2010, China overtook Japan as the world's second-largest economy by nominal GDP, before overtaking the United States in 2016 as the world's largest economy by GDP (PPP). On the other hand, a parallel set of political reforms were launched by Deng and his allies in the 1980s, but eventually ended in 1989 due to the crackdown on Tiananmen Square protests, halting further political liberalization.
Martha Chen is an American academic, scholar and social worker, who is presently a lecturer in public policy at the Harvard Kennedy School and senior advisor of the global research-policy-action network WIEGO and a member of the Advisory Board of the United Nations University World Institute for Development Economics Research (UNU-WIDER). Martha is a development practitioner and scholar who has worked with the working poor in India, South Asia, and around the world. Her areas of specialization are employment, poverty alleviation, informal economy, and gender. She lived in Bangladesh working with BRAC, one of the world's largest non-governmental organizations, and in India, as field representative of Oxfam America for India and Bangladesh for 15 years.
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