Building China’s Eldercare Market: The Imperatives of Capital Accumulation and Social Stability

Abstract

The paper investigates China’s effort to create an eldercare market to shed light on how China’s economic reform entailed the creation of new institutions (e.g., eldercare market including eldercare labour market) and the reconfiguration of existing institutions (e.g., governance and regulation, the family, and the community). All this was needed for the market to flourish while maintaining and strengthening the regime. An urban eldercare market, including an eldercare labour market, was created by local governments (i.e., municipalities, districts, counties, and towns) with central government policy directives, in order to address China’s demographic aging and care crisis. However, once enough demand and supply were created, local governments turned to New Public Management (NPM) to operate publicly funded eldercare institutions. The paper argues that NPM has different rationalities in China than in liberal democracies; in China, they strengthen the Party and contribute to the durability of the authoritarian rule, rather than “shrink the state”. However, in China as in the West, bureaucratic logic hampers the implementation of NPM and the governance of the eldercare sector. The implication of bureaucratic logic driving the regulation of the eldercare sector is that care is not at the centre of eldercare. The paper also argues that the commodification and privatization of eldercare, in line with the global trend, was a deliberate government policy aimed at creating a positive condition for the market economy to flourish, but at the expense of social reproduction/care. Unlike many Western transitions to market provision, this one entailed the decline in the extended family as the main eldercare institution of the immediate past. However, the commodification and privatization of social reproduction have been incomplete and met with resistance, prompting the state to invest more in the sector to maintain social stability. Data for this paper derive from personal interviews with key informants and eldercare workers, official document analysis, and secondary literature analysis from Chinese scholars in mainland China.

1. Introduction

Demographic aging under China’s state capitalism1 has led to a “care crisis” in China: who cares, how care is paid for, and where care is provided have become critical policy questions. According to figures from the National Bureau of Statistics, by the end of 1 November 2020, those over 60 accounted for 18.7% of the total population; those over 65 accounted for 13% (Ministry of Civil Affairs 2021). The World Health Organization (WHO) estimates that by 2040, 28% of China’s total population will be 60 years of age or over (WHO 2015). “Actively responding to demographic aging” was declared a national strategy in the Communist Party Central Committee’s core economic and social planning documents for the 14th Five-Year Plan (2021–2025) and in long-term planning documents at the Party’s Fifth Plenum of the Nineteenth Party Congress in 2020 (Yu 2020).

A care crisis is inherent in capitalism (Fraser 2016), which is about “thing making and profit making”, while social reproduction is about “life making” (Bhattacharya 2020). These are not capitalist contradictions that the Chinese government can ignore. Eldercare concerns livelihoods and social stability, the Party’s two overwhelming and interrelated priorities. The state’s will to balance state capitalism’s imperative to accumulate and the state’s overriding need for social stability combine to form an enormous challenge.

The context for China’s care crisis is especially acute. Related to it is a decades-long low birth rate and low replacement-level fertility due to its strictly enforced one-child policy. This demographic crisis is especially acute in urban areas as a result of social, economic, and cultural changes (X. Zhu 2021; Rieffel 2021). The commodification and privatization of childcare since the 1990s added financial and care burdens on urban households, especially working women (Tian et al. 2020; Shi and Liu 2020; Yang et al. 2019; Du and Dong 2010). The government identified affordable childcare for 0–3-year-olds as especially important in contributing to a higher birthrate. Affordable eldercare2 and childcare at homes, communities, and institutions, (yilao yixiao) have, thus, become inter-linked policy matters in China’s 14th Five-Year Plan (National Development and Reform Commission Net 2021). The Chinese demographic crisis emerges not only in the context of China’s distinctive one-child policy, but also amidst “the global triumph of capitalism” (G. Wu 2017) and “the increasing privatization of social reproduction” (Bakker and Silvey 2008, p. 4), and the Chinese state’s offloading of social services obligations from danwei to families and individuals.

The wider economic reform process has thus far virtually excluded non-market solutions. The danwei (workplace) model of Maoist urban welfare and social service provision has ended, however limited it was, and eldercare historically counted as a private family matter in any case, not as public or workplace policy.3 In post-danwei China, the family/household4 has become the main institution for many Chinese to pool resources, share risks, and provide emotional support in an increasingly competitive, uncaring, and unequal society. The Chinese government has also resorted to the instrumental use of the Confucian tradition of filial piety to call on the Chinese people to continue or to revive eldercare responsibility (Yan 2021a). Filial piety is even enshrined in the Law on the Protection of the Rights and Interests of the Elderly (National People’s Congress Net 2019). Rural areas have an even more serious eldercare crisis due to migration, fewer adequate welfare benefits, and deepening rural–urban inequality (Chou 2011). However, an increasingly competitive labour market, rapid urbanization, high internal migration, mounting economic inequality, and smaller family size meant that the family/household as the main institution for eldercare provision has been under tremendous pressure for many urban people.

The Chinese state has also borrowed principles of New Public Management (NPM) in its social service delivery. However, contracted-out service delivery, auditing, and performance budgeting (all NPM features) play out under central Party control, not so much to create market-like efficiencies (a Western NPM rationale) but to strengthen the Party. As I mentioned earlier, China’s now-abolished one-child policy exacerbated the care crisis, with steadily smaller new generations available to provide care for steadily more aged relatives. Given past cultural and policy barriers to state-led eldercare, an eldercare market was essential, but had to be created from scratch.

The first section, below, contextualizes the Chinese government’s effort to build this eldercare market. Specifically, it sheds light on how economic reform changed the ways in which the state, market, society, and the family/household interrelated, and on the reform’s implications for care provisions, particularly eldercare provision. Relatedly, this section also examines the changing value attached to social reproductive/care labour in post-danwei China and its implications for those who do care labour, both unpaid and paid.

The second section highlights the NPM orientation of China’s eldercare service delivery models and argues that commodification and privatization of social reproduction/care remain incomplete and incoherent, primarily because of the state’s imperative to maintain social stability. The third section analyzes sectoral regulation and supervision to shed light on the difficulties that authoritarian regimes encounter in trying to turn the state from a notional omnipresence to a regulatory state using an NPM template. The paper concludes by arguing that the Chinese state’s determination to treat accumulation and stability as a project for China’s social system faces substantive challenges, unless the state invests more in public eldercare provisions, and unless eldercare workers receive a wage that includes their own social reproductive/care needs.

The paper utilized mixed-methods qualitative research to gather data on key stakeholders (eldercare workers, staff and mangers in long-term care facilities, policymakers on eldercare) in public and privately operated long-term care facilities (e.g., assisted living and nursing homes), and in seniors’ own homes in Shanghai. With government officials, I sought to explore the background to, and operationalization of, existing eldercare policy strategies at the municipal level. I was particularly interested in how policymakers articulate the role of paid eldercare workers in relation to the overall social care model, how (or whether) their pay and working conditions are taken into consideration, and the articulation of eldercare policy in relation to urbanization and migration. With staff in community organizations/shequ, I intended to investigate their role in the implementation of paid eldercare policies at the community level since some senior care facilities are operated at the community level either through public funding or through public–private partnership. With paid eldercare workers, I wanted to find out from them their experience of employment conditions, wages, previous labour market experience, and workers’ own reproductive (familial and care) responsibilities. I conducted semi-structured interviews with 13 eldercare workers, three government officials, eight managers of senior care facilities (i.e., long-term care and assisted living), and three community/shequ staff in charge of community/shequ eldercare in Shanghai. I also conducted official document analysis of eldercare policies that are publicly available on official government websites, and secondary literature analysis from Chinese scholars in mainland China. I searched Chinese Academic Journal Database (CNKI), probably the largest Chinese academic journal database in the world, for the following keywords: family (jiating), inter-generational care (daiji guanhuai), home eldercare (jiating yanglao), community/shequ eldercare (shequ yanglao), and xiaodao (filial piety). I relied on secondary literature analysis from Chinese scholars in mainland China to shed light on the impact of the end of danwei and the commodification and privatization of care on Chinese families and women in particular.

2. The End of Danwei and the Commodification and Privatization of Social Reproduction/Care

Social reproduction refers to “the activities and institutions required for making life, maintaining life, and generationally replacing life” (Bhattacharya 2020): it is what Bhattacharya calls “life-making” activities (Bhattacharya 2020). Writing on feminist political economy (FPE) approaches to the study of global political economy, Bakker and Silvey argue that “[s]ocial reproduction lends a unique perspective to understandings of transformation in the global political economy precisely because of its simultaneous focus on the caring and provisioning of the everyday and its relationships to policies and decisions made at the national and international levels of both formal…and informal…institutions.” (Bakker and Silvey 2008, p. 5) However, as Nancy Fraser argues:

every form of capitalist society harbours a deep-seated social reproductive ‘crisis tendency’ or contradictions: on the one hand, social reproduction is a condition of possibility for sustained capital accumulation; on the other, capitalism’s orientation to unlimited accumulation tends to destabilize the very processes of social reproduction on which it relies. This social-reproductive contradiction of capitalism lies at the root of the so-called crisis of care. Although inherent in capitalism as such, it assumes a different and distinctive guise in every historically specific form of capitalist society—in the liberal, competitive capitalism of the 19th century; in the state-managed capitalism of the postwar era; and in the financialized neoliberal capitalism of our time.

(Fraser 2016, p. 100)

In studying the substantially different context of post-reform China, the sometimes-hasty claims of Western FPE to universalism require careful consideration. Song Shaopeng, the prominent Chinese social reproduction scholar, argues that during the era of collectivism,5 the boundaries between production and social reproduction, work and family, economy and society, followed a different historical trajectory. China’s production (public) and social reproduction (private) partially overlapped (gongsi xiangqian), relative to the ideologically reinforced separation of the public and private in capitalist Western economy. Song argues that during the collectivist period, social reproduction was considered essential to production (and thereby the construction of socialism). Thus, “housework took on the nature of ‘the public’, and the state recognized the role and contribution housework made to production” (Song 2012a, p. 108). However, Song argues that capitalism and Chinese socialism shared productivist political economies, in that productive development and growth were and are overriding priorities, while social reproduction is subordinate to production (see also Zhou 2019). This productivist character of political economy and the gendered division of labour were left unchallenged during the period of collectivism, despite significant gains for women’s equality, thus paving the way for the post-Mao devaluing of social reproductive labour in the commodified and privatized eldercare market (Song 2012b).

The partial overlap of the public and private was facilitated in the cities during the Maoist period by danwei (workplace), where many urban people worked and lived (Song 2012b). Under the centrally planned economy, China’s danwei was not only a workplace, but also a political and social unit. Danwei provided workers with lifetime work and associated benefits (e.g., maternity leave, breast feeding rooms and daycare for women workers, hospitals, schools, dining hall services, and highly subsidized housing). It also forged workers’ social and political identity. The welfare system of that period was, thus, based on danwei, but it did not rest on a principle of universality. Under Mao’s China, welfare-benefit inequality and hierarchies continued and were entrenched between the rural and urban, as well as among SOEs, collectively-owned enterprises, and neighbourhood-run enterprises (Dillon 2015; Frazier 2015). While women workers in SOEs enjoyed danwei care services so that they could work in factories without having to carry the burden of care, women who did not work in SOEs or who were housewives (the latter called “workers’ dependents” (henceforth, zhigong jiashu) often had to provide unpaid labour and/or mutual help to provide care (Song 2012b, 2013; Zhou 2019).

We now pass over the later Mao period to consider the post-1979 period of reform. The market has been playing “the basic role in allocating resources” (zhiyuan peizhi zhong de jichu zuoyong) since 1992, when the 14th Party Congress formally decided to build a “socialist market economy” (Renmin Wang (People’s Net) 1993). The “socialist market economy” designation officially established a new status for markets in China’s economy. Reforming the SOEs started in the 1990s; it was intended to turn them into “modern” (that is, market-responsive) enterprises. This was an integral part of building a socialist market economy; as a form of reducing state “subsidies”, it was also one of the preconditions for China entering the World Trade Organization (WTO) (Liu 2007, p. 129; Solinger 2003). Reforming SOEs was based on the rationale of “optimizing workforce” (laodongli youhua zuhe) and of enterprises peeling away their social functions (boli qiye banshehui zhineng)—essentially externalizing the costs of social reproduction. Specifically, SOE reform meant laying off the so-called “surplus workforce”, the hiring of contract workers, the privatization of the means of production, and the commodification and privatization of social reproductive/care labour (Song 2012a, p. 100; Liu 2007).

The social functions of SOEs were considered a particularly important burden, preventing SOEs from focusing on their core production mandate. Reform meant the state-led redrawing of the boundaries delimiting the “economy” from “society”, “work” from “family”, “production” from “social reproduction”: “separation” (fenli) or “peeling away” (boli) were the keywords used in numerous Chinese policy documents. Applied to SOE reform, this “peeling away” was portrayed as an essential cost-cutting strategy that would help SOEs turn into autonomous and competitive modern enterprises (National Commission on Economics and Trade 2002). A typical SOE would normally provide its workers and staff what was called “from birth to death” benefits in a way that confused all these binaries: daycare, dining hall services, hospitals and schools, subsidized housing and utilities such as water, fuel, electricity and housing, and pension. Separating/peeling away SOEs from the “burden” of social reproductive/care provisions meant laying off a large body of workers with few other prospects, most of whom were women workers in their mid-40s.6 In other words, turning SOEs into modern enterprises meant “returning these social functions of enterprises to society”, instead of enterprises running “mini-societies”. However, in post-reform China, “society” also tends to mean “the market”.7 Although women accounted for about 40% of the pre-reform SOE workforce, about 60% of those laid off were women as they were considered as adding to the burden on SOEs. This was not only because these women were disproportionately in the job categories being “peeled away”, but also because of their social reproduction obligations at home (Liu et al. 2016; Liu 2007, p. 125). Further, women tended to work in “light” industries such as textile industries, which were among the hardest hit with the laying off of mostly women workers (Liu 2007, p. 143; Solinger 2003, pp. 78–79). Women were encouraged to “return home” to be full-time housewives (Liu et al. 2016; Song 2012a). (As mentioned above, even during the period of Maoist collectivism, the gendered division of labour remained intact with respect to the boundary between production and social reproduction, and social reproduction was considered to be secondary to production.)

During the reform process, those with less formal education tended to be laid off and had greater difficulties securing re-employment (Yao and Tan 2005). Social reproduction functions that were separated from the core enterprises were then subcontracted or privatized. Those who did social reproductive labour, paid and unpaid, were devalued and made invisible in care and social policy (Strauss and Xu 2018). In particular, the privatization of nurseries for children up to two years old has meant that since the 1990s families unable to afford childcare had to rely on the unpaid labor of mothers or of grandmothers near retirement. These women had to drop out of the labour market (Wang and Zhang 2018; Du and Dong 2010). On the other hand, “the wages of women with children are about 20 per cent lower than the wages of women without children” (Du and Dong 2010). Those grandmothers near retirement who took on grandchild care also lost paid labor hours, and hence earnings (Wang and Zhang 2018). Thus, social reproduction is offloaded to individual families (i.e., women), as well as the market. The commodification and privatization of social reproduction, thus, widened intersectional inequalities based on gender and class. Some of the women laid off were subsequently recruited by local governments to work as care workers, including eldercare, in re-employment projects. As part of the reform era, Chinese individuals were generally encouraged to stop relying on government for benefits to relying on themselves and their families. Despite an earlier extended phase of official disapproval in Maoist China towards the Confucian legacy of familism, a move that had then been considered to be a radical transition to modernity, policymakers and also the public had until recently continued to see the family institution in practical terms as the primary caregiving unit for the elderly, and institutional, paid options as a secondary or last resort.

It is important to differentiate familism from family institutions. “Familism refers to a familial mode of ethical values and social practices in many traditional societies. It emphasizes the primacy of family interests over those of its individual members and of loyalty to the family over allegiances to any outside social organizations” (Yan 2021a, p. 224). It was familism that the revolutionaries attacked, beginning with the turn of the 20th century. As Yan Yunxiang argues, a statist model of family better captures the Chinese Communist Party State’s role in reconfiguring and remolding the family to “enhance the power, prestige, and wellbeing of the nation-state” (Yan 2021a, p. 224). The Chinese Party-State, under Mao, eliminated the family/household as an independent economic unit, thus eroding patriarchal power within the family/household. In its place, the Party-State took over “most of the economic, political, and social functions of the family” through the urban danwei system and the rural commune system (Yan 2021a, p. 231). During this period, family matters were subordinate to state matters: “the family as a private sphere did not have its legitimate status” (X. Wu 2016, p. 175). However, family/household institutions continued to exist during this period: in household-based registration, allocation of subsidized housing, class labelling, accounting in rural collectives (Yan 2021a, p. 232). It also shaped the distribution of the value of unpaid social reproductive labour that housewives did in the family/household to facilitate a “high accumulation and low consumption” development strategy (Song 2006, 2012a, 2012b). (Notice that the family/household institution is restricted conceptually neither to the nuclear family nor to blood or marriage relations.) Institutional eldercare during the period was provided to urban people who had no ability to labour, no income, and no relative who could provide care (chengshi sanwu laoren). As Wu Xiaoying points out, “the idea of the family/household as a sphere of harmony, stability and mutual help has therefore never been challenged, rather, it was often used by the state instrumentally as its governance tool” (X. Wu 2016, p. 175).

Furthermore, the state’s embrace of the market, however, does not mean the retreat of the state. Rather, as Wu Guoguang argues, the post-cold war “global triumph of capitalism in the institutional sense” meant that “the state and the market as two different sets of institutions have now joined each other as collaborators in making possible their domination of human life, primarily within but not limited to the economic realm” (G. Wu 2017, p. 43). As mentioned above, the state has been offloading social responsibilities and shifting financial burdens to the Chinese individuals and their respective families/households to promote economic growth since the 1990s. During his southern tour in 1992, Deng Xiaoping stated that the idea of offloading social reproductive responsibilities to the family/household was based on the European experience. He also resurrected traditional Chinese family ethics as the institutional support for family/household-based social reproduction (Song 2012a, p. 101). More recently, in official statements, Xi Jinping considers the integration of the family/household and the state (jiaguo yiti) to be an important principle of social governance: a prosperous family/household, stable society, and strong nation-state are interrelated (F. Wu 2019, p. 16; Yan 2021b, p. 261).

This revival of development-oriented familism rests on more than government policy. In popular discourse, “the family is valued as the only reliable resource for ordinary people to cope with the increasingly competitive, risky, and precarious workplace in particular and social life in general” (Yan 2021b, p. 267). Evidence also shows intergenerational wealth transfer (i.e., financial assets and real estate) is on the rise, intensifying intergenerational class (im)mobility (Zheng 2019); and the proliferation of diverse forms of intergenerational relationships (e.g., close relations, instrumental relations, independent and supportive relations) based on life cycles, socio-economic status, and decadal generation gaps (i.e., the ones separating the experiences of those born in the 60s, 70s, 80s, and 90s) (Zen and Li 2020).

However, various studies have also shown that family/household-based care provisions have fallen largely on the shoulders of middle-aged women: some drop out of the labour market; others face increasing work-life conflicts (Zen and Li 2020).8 Further, as seniors live longer, thanks to medical advances and better living conditions, more and more seniors live with chronic illness that require regular institutionalized medical care (e.g., hospitals, long-term care facilities) (Feng et al. 2015; Xueping Chen 2014). Consequently, eldercare has increasingly exceeded the capacities of family institutions, and the integration of medical and elder care (yiang jiehe) has become China’s eldercare policy priority. Drastic changes have occurred to inter-generational family relations, captured by the revival of a notion of filial piety. Yan Yunxiang has conceptualized the general nature of this change as “descending familialism” (Yan 2016). The “descending” in question entails a shift from prioritizing the authority of elders within the family unit to the authority of young and middle-aged adults, all the while retaining a sense of obligation of younger generations to their elders (Xiao 2021; Wang 2017).

In contrast to the consequences of the (re)privatization of eldercare sector in industrialized countries, all this has meant in China that an eldercare market (both homecare and institutionalized care) had to be created from scratch in the last few decades. While enduring familism had meant that neither government policy nor social and familial morals made institutionalized care respectable, let alone a sign of “independence” or “dignity” for the elderly, competitive labour market, urbanization, migration, rapid demographic aging, and families/households with few children together exposed the mounting insufficiency of family/household-based care provision. The result has been a sector heavily marked by for-profit and private provision, in a policy context that the state increasingly shapes and regulates. Furthermore, care-sector hierarchies are closely tied to the new “descending familism”, as well as to the limited pensions of many pensioners hit by the reform-era lay-offs. As a partial consequence, eldercare workers are the lowest paid (maternity nannies are the highest paid) in the care labour market (Dong et al. 2017; Dong 2020), and elders themselves are increasingly expected to defer to their adult children in handling their overall eldercare obligations. In the next two sections, I will use Shanghai as an example of government-led building of eldercare market including eldercare labour market.

3. Outsourcing and Privatizing Eldercare Service Provision

Although a major host of youthful internal migrants, Shanghai is considered to be the first Chinese city to experience an “aging society” (i.e., accelerated demographic aging).9 The Shanghai government (i.e., the Bureau of Civil Affairs units operating at municipal and district levels) led in creating eldercare “supply”—primarily beds in seniors’ institutions and paid eldercare services in seniors’ own homes. It also financed the building and operation of seniors’ care facilities, and subsidized seniors’ home-care based on income (Q. Zhu 2017). Alongside physical infrastructure, “soft infrastructure” is needed, including the appropriate regulatory frameworks, sectoral standards and policies, staffing at each level of government down to community/shequ; staffing and recruitment of management and workers at care facilities; and new occupations such as needs assessors. Between 2000 and 2005, home and community care programmes started, and the Shanghai government formulated a target distribution of eldercare: 90% home-based, 7% community-based, and only 3% residential (or institutional). (Q. Zhu 2017) When I asked an official in the Shanghai Bureau of Civil Affairs to explain this target, I was told that the institutional care figure was based at that point simply on the city’s institutional ability to provide beds: to achieve even 3% residential care would mean doubling the existing 50,000 beds10 (Personal interview, 28 October 2018).

Government also began to subsidize seniors living at home with a coupon for help with household chores.11 Apart from serving seniors in its own right, this allowed community/shequ staff to check in on them, especially those who lived alone. The government subsidy to homecare for seniors responded directly to local media exposés in 2003, in which several lone seniors had died at home, their bodies found days after their death (personal interview, 2 June 2016). Shanghai, therefore, also decided on means-tested in-kind eldercare services to those families with Shanghai household registration (hukou),12 as well as a government-funded “minimum guaranteed income scheme” (dibao) (personal interview, 2 June 2016). While this created both supply and demand for eldercare, it also addressed a mounting urban unemployment problem, especially for those laid off from SOEs as well as collectively owned enterprises in the course of reform. Many of the latter unemployed, primarily women, were steered to paid domestic work, for instance helping with the chores of those who receive means-tested in-kind eldercare service (personal interview, 2 June 2016). Employment created through government’s re-employment projects were called “informal employment” (feishenggui jiuye) because these jobs are “forms of work characterized by limited social benefits and statutory entitlements, job insecurity, low wages, and high risks of ill-health” (Vosko 2005, p. 11). However, in contrast to internal migrant workers, those employed through the re-employment project enjoyed some government benefits and the dignity of association with community-owned and operated eldercare service centres (shequ zulao fuwushe). A group of three urban women who were recruited as eldercare workers through the re-employment project told me when I interviewed them in 2017, that urban women recruited through this government re-employment project were treated better by their clients because they were seen to be sent by government. Workers themselves could also tell people that they were working for the relatively prestigious local shequ/neighborhood committee, instead of working as stigmatized eldercare workers (personal interview, 2 June 2017). Even though the government re-employment project aimed at providing employment for those laid off from state-owned enterprises (SOEs) ended in Shanghai in 2011, those three urban women whom I interviewed and were still working as eldercare workers at the time of my interview, continued to enjoy the status: they enjoy government-funded social benefits, denied to those who do not have Shanghai hukou and those urban women who were hired after the reemployment project ended in 2011. However, they also told me that they were upset that they had been re-designated as dispatch workers from a private company starting in 2011. This was a consequence of the municipal government’s decision, under the directive from the Ministry of Human Resources and Social Security (MHRSS) to get out of municipal community/shequ social service deliveries and hand them over to private companies in 2011 (personal interview, 2 June 2017). The change made my interviewees feel they had lost social status (personal interview, 2 June 2017). When they had been hired by community/shequ offices, the latter had often acted as mediators between workers and clients (personal interview, 2 June 2017). When these workers became employees of a company, the provision of eldercare became profit-based, with the company making profits from government contracts, a point that I will elaborate below.

The institutional structure of paid care is more complicated and works across the public/private divide. For instance, China has fostered both privately owned, for-profit entities and publicly owned, but non-profit-operated ones. The non-profits drew inspiration from the NPM model of Public Private Partnerships (P3s) (Zhang 2016). However, caution is needed in interpreting this “non-profit” status, especially based on Western assumptions. Many so-called non-profits are actually for-profit companies with registered non-profit units, an arrangement that lets them meet government criteria for participating in P3s (cf. Zhang and Chao 2021). In the publicly owned, nonprofit-operated model, government provides the hard infrastructure (buildings and beds) or infrastructure subsidies, tax preference, and subsidies for operation costs, while the “nonprofits” deliver services and cover operating expenditures: their profits come mainly from user fees and rents. User payments are a substantial element in financing the sector. However, the question of who pays the remaining eldercare costs within government invokes the complex fiscal relationships between central, provincial, and local governments. Eighty-five per cent of China’s public expenditures fall to subnational levels, yet the central government controls most tax revenue. Moreover, local governments have historically not been authorized to borrow for capital investments (i.e., issuing special bonds). Local governments do control title to public lands, and the underlying title to virtually all public land under their jurisdiction. As a result of the revenue bind just mentioned, therefore, many local governments have turned since the 1990s to land revenue, and to land-based collateral to borrow money (Wong 2018, pp. 68, 72).

The fraught fiscal relationship between the central and local government levels, together with the increasingly alarming local debt levels, prompted a revision of the 1995 Budget Law with the issuance of the State Council Guidance Document (2016) # 49 “Promoting Reforms on the Central-Local Demarcation of Duties and Expenditure Responsibilities”. The latter document states that a rational demarcation of fiscal duties and expenditures between the central and local governments is the precondition for the provision of basic public services and safeguards their effective provision. This demarcation is presented as an important part of building a modern financial system and flowed from the goal of modernizing governance system and capacity (in the NPM-based sense of this term, given above). Overall, the document emphasizes the decision-making power of the Central Committee of the Party over fiscal duties of all levels of government (State Council 2016). The Revised Budget Law, amended in 2014 and 2018 and passed on 29 December 2018, authorized subnational governments to borrow to finance social infrastructure without accumulating already-heavy debt (i.e., by issuing bonds), and moderately increased central transfers to local governments (Ministry of Justice 2020). The CPC Central Committee and the State Council also issued Guidelines on Implementing Comprehensive Performance-Based Budget Management, which as the title indicates, were in line with China’s reception of New Public Management principles (CCP Central Committee and the State Council 2018). If the revised Budget Law and various regulations have alleviated some of the local governments’ financing burden for public services, funding eldercare services still reflects stark regional and rural/urban inequalities. It is, therefore, worth recalling that eldercare in Shanghai (as briefly outlined above) is the best funded in the country.

The guiding principle of seniors’ subsidies rests on the model of “social relief”; that is, its aim is to create a floor of services that the poor do not fall below. It is, therefore, means-tested rather than a universal entitlement. The wider rationale is to maintain social stability amidst mounting eldercare pressures. As a consequence, seniors with Shanghai hukou could receive means-tested domestic services: coupons for a certain number of hours for help with household chores (jiazheng), as described above, but not nursing needs (Personal interview, 2 June 2016). By contrast, Long-Term Care (LTC) services are needs-based, and provide nursing, but not domestic services such as cooking and cleaning to those who have Shanghai hukou. Shanghai piloted its long-term care (LTC) insurance in 2016, but this created some practical complexities. The Municipal Medical Insurance Bureau administers LTC, which is based on needs assessment of seniors’ physical ability. Eighty percent of LTC costs are covered by social pooling of resources, 20% of the costs are paid by clients (Shanghai Municipal Human Resources and Social Security Bureau 2017). Those who are on a government-funded “minimum guaranteed income scheme” (dibao) do not have to pay the 20% of personal costs, while those who have low income have to pay half of the 20% of personal costs. The subsidies are shared equally between municipal and district governments (i.e., civil affairs) (Shanghai Municipal Human Resources and Social Security Bureau 2017). Those who already received government subsidized homecare services, if qualified for LTC, do not qualify for homecare services at the same time. Some seniors were unhappy with this loss, as they prefer domestic help to LTC help (personal interview, 24 May 2017).

The social policy implications of this relatively generous programming are qualified by the main funding sources. In Shanghai, as elsewhere, eldercare funds come from the Welfare Lottery Public Interest Fund and fall under the Bureau of Civil Affairs. While public contributions through lottery ticket sales are obviously voluntary, the burden of this fund likely rests differently than funds would from general tax revenues—presumably poorer people purchase more lottery tickets. A portion of the Fund passes to Beijing, but the rest divides between revenues for the municipal and district. The lottery fund is earmarked to assist the elderly, the disabled, orphans, and the poor, though in Shanghai in 2019, eldercare tellingly captures about 77% of the total local distribution (Shanghai Bureau of Civil Affairs 2020b). Both municipal and district governments share expenditure responsibilities in these areas (“two-level financing,” roughly equivalent to shared-cost programmes in Western federations). These funding arrangements rest on a project-based funding model, intentionally following international “best practices” (see also Wen 2017). Projects that government selects to fund are also designated “actionable”, in that their execution is tied into the incentives of the cadre responsibility system, a point I discuss further below (Shanghai Bureau of Civil Affairs 2021a). Government funds only went to publicly owned and operated projects, and to projects publicly owned but non-profit operated.

The municipal government also used a funding model named “using awards instead of subsidy”. These projects award firms for projects that tend to emphasize recruitment and retention of eldercare workers with formal qualifications; technical training; and the operating costs of publicly owned but non-profit operated entities. Qualifications for award applications include having a license to operate and being in operation for at least six months, registering with the local Bureau of Civil Affairs for non-profit status, possessing independent legal personhood, and adopting the approved non-profit accounting system. Further, qualified applicant organizations had to pass an annual comprehensive evaluation, violate no safety regulations, cause no “notorious scandals”, and have no managers who broke laws or regulations (Shanghai Bureau of Civil Affairs 2018). Each qualified eldercare provider has to provide the necessary paperwork; once an application is approved, the provider signs a commitment letter (Shanghai Bureau of Civil Affairs 2018). I provide more on such regulation through contract in the next section. Except for government subsidies to seniors on dibao (minimum guaranteed income), the eldercare market operates on a fee-for-service basis, even for local government-built, but non-profit operated organizations. Consequently, the well-to-do can pay for high-end care, while the poorest receive government subsidies for very basic services. However, the working class and lower middle classes cannot afford even these services: their pension is too high to qualify for subsidies, but too low to afford paid eldercare.13

With this contextual information now laid out, the following sections outline some of the most recent eldercare reforms. Some of the most important aspects of reform include continuities with previous policy and noteworthy breaks. Providing affordable seniors care in urban areas first became a policy priority in 2019. The National Reform and Development Commission (RDC), the Ministry of Civil Affairs (MCA) and National Health Commission (NHC) jointly issued “An Action Plan on Inclusive Eldercare for Urban Local Governments and Enterprises” (National Development and Reform Commission 2019). The Plan currently operates in a few selected cities, with a view to expansion. Central government funds transfer annually to subnational governments, which in turn subsidize selected eldercare facilities to reserve certain beds for lower middle-class and working-class seniors. In return, participating cities provide preferential policies for land, financing, and taxation to cut operation costs. Eldercare providers that participate must provide quality eldercare services, for fees compatible with the pensions and disposable income of local residents (An et al. 2019).

To sum up, under the Chinese government’s NPM principles, P3s dominate the eldercare market. Since eldercare is a relatively new and culturally sensitive sector in the eyes of the public, and since care really could suffer under the aegis of material incentives for all agencies and organizations involved, the Chinese government now adopts “a deterrence regulation paradigm” to deter private rule breaking (Daly 2015; Reynaers and Parrado 2017; Walshe 2001). In addition, performance budgeting and the cadre responsibility system audit local officials’ performance in eldercare, as in other policy areas. The P3 paradigm attracts both domestic and international investors and enables for-profit projects, yet it also maintains state supervision and regulation. The state’s supervisory and regulatory roles take on even greater significance in China, since the Communist Party exercises a political monopoly in a symbiotic relationship with state and non-state institutions. As a matter of policy, the state and the party must be seen by the public to be the leading force in providing for its welfare. The Party, therefore, has a special incentive to ensure that service provision in these areas creates no notorious scandals or general moral offense.

4. Regulating the Eldercare Sector

Central to China’s economic reform is a larger regulatory environment for non-profit organizations in civil society and a tight alignment of non-profit mandates with Party-State policy and direction. Regulation of such social organizations today starts with their registration at a government-affiliated unit and at the Bureau of Civil Affairs. Associations, foundations, social intermediary organizations (e.g., business associations), consulting firms, and non-profit enterprises are mostly welcome, if they serve state goals, such as social service delivery. Religious and political non-governmental organizations, though legal in theory, have difficulties registering, and tend to operate “illegally” in China (Yu et al. 2018). In post-Mao administration, the regulatory function of contracts has acquired near-axiomatic status, very much like NPM patterns elsewhere. This approach has deep roots in the reform era. The earliest rural reforms that kick-started China’s economic reform period replaced collective farming with a household contract responsibility system. Lifelong employment for workers with associated social benefits (i.e., the Mao-era iron rice bowl) gave way to contract labour. The 1999 Bidding Law and the 2002 Government Procurement Law allowed government to contract out to the private sector the provision of support functions, social services, and public works. Governance through contract nominally shifts power relationships from top-down hierarchies to horizontal relationships. However, this horizontality is not necessarily a relationship between full equals, especially when the Party-State contracts with “partners”, but retains political-economic monopoly (Li and Yang 2020). Contracts in post-Mao China initially phased out collectivism and egalitarianism and encouraged individualism and competitiveness. Local governments (e.g., municipal, district, and county levels) now purchase senior care services by signing one- to three-year contracts between district governments or the Bureau of Civil Affairs, and service providers (social service organizations).

It is important to stress that this is not a fully free market in government-funded services. Local Bureaus of Civil Affairs list recommended social service organizations to receive contracts. Of course, depending on the particular locality’s list length, the bidding may not be as open and transparent as orthodox market efficiency theory would require. In any case, Chinese local governments prefer handing out contracts to such reliable, pre-screened “partners” (see also Li and Yang 2020). The pre-screening derives in part from the fact that such lists are also tied to the recently implemented national “social credit” system. This combination of socio-political surveillance and credit rating agency hands out punishment and rewards on the basis of trustworthiness, including access to public and private privileges and services. The system works on the basis of performance-based social credit scores. (More on this later in this section.)

On 21 December 2020, the State Council issued an Opinion on Establishing a Sound Comprehensive Supervision System of Quality Improvement for Eldercare Sector (State Council 2020). This Opinion comprises three main sections. The first clarifies supervisory priorities for quality and safety, personnel, fund management, “operational order” (i.e., the internal management of companies), and emergency preparedness. The second covers implementation of divided government-led supervisory authority. This required an eldercare provider to firm up its supervisory responsibilities, its head as the point person, such that overall, the eldercare sector exercises self-discipline and the public exercises supervision as well. The third section covers innovation in methods of supervision. Here, supervision follows a new model of random audits, random selection of the law enforcement officials responsible, and publication of both the process and results of supervision (National Audit Office 2015). Other elements of the model include selective, targeted supervision and social credit supervision. In addition, an early warning system to catch serious violations early based on information sharing, big-data analysis, and cloud technology is to be strengthened. Overall, these innovations are intended to achieve standardized, precise, and “intelligent” supervision, to minimize arbitrariness, and to achieve fairness.

This example demonstrates the faith that the Chinese government puts in data-driven and “social credit” supervision. Social credit deserves some separate consideration in this regard. The programme was initially “conceptualized as financial credit” to deal with “problems in the commercial and financial sectors”; in this, it closely resembled credit-rating schemes or Better Business Bureaus in liberal democracies. Credit in this sense was considered essential to successful market economy reforms, when it is mentioned for the first time in the State Council Guiding Opinions concerning the Construction of a Social Credit System in 2007 (State Council 2007).14 Social aspects of credit were added in a 2014 document of the State Council (2014), which stated that market economy and social governance are integral parts of the Social Credit System (SCS), based on laws, regulations, and contracts. The SCS now seeks to collect data on all citizens, and not just for economic reliability. It also tracks indicators of good general personal character and good citizenship, including political reliability. This last aspect has raised alarm outside China for its Orwellian potential, but it is entirely in keeping with the long-established Party function of overseeing its citizens’ moral probity. Here, however, SCS also acts as a tool for policy compliance by firms, not-for-profits, etc., in public–private partnerships (Jia 2020; Jiang 2020). On the national, public social credit information platform, one can check the social credit information of any social organization (National Development and Reform Commission 2021).

Since 2018, a unified social credit code has been set up for all organizations and individuals tracked, enabling a unified system of rewards and punishment nation-wide. Ultimately, the government hopes that the SCS will promote self-discipline and self-regulation of enterprises and social organizations (National Development and Reform Commission 2019, pp. 6–7). It also touts the SCS as an aid to in the State delegation of power, in streamlining administration, in strengthening regulation and supervision, and in optimizing government services. The single identification number for institutions that is attached to the SCS, equivalent to the Personal Identification Card each citizen carries, is the only access code needed for social service organizations nation-wide (Xinhua 2018). The social credit access code or number contains a wealth of information about the social service organization it identifies: basic information (i.e., registration, verification and case file), annual report and published information, administrative inspection reports (i.e., findings in the annual report of the relevant registration authority and relevant government organizations), administrative penalties, if any (i.e., penalty type and basis, results, evidence of legal violations, the date penalties were imposed, and the government units that handed out the penalties), and other information. The latter miscellaneous category includes how the organization is ranked after evaluation, any government awards, government projects awarded through bidding, qualification for public fund raising, and pre-tax deductions for publicly funded donations (Ministry of Civil Affairs 2018). Given the numerous regulations and supervisory relations alluded to so far, however, the documentary record is tellingly silent on the workload required to comply. At a long-term care facility in Shanghai, I heard that the two eldercare workers with the most schooling (junior high-school graduates) spent most of their time record-keeping (e.g., ledgers, records of disinfection, shift schedules, clients moving in and out) simply to comply with regulations (personal interview, 24 May 2017).

China adopts what is called a deterrence regulation paradigm. It “involves formal rules, measurement-oriented regulations, legal remedies, punitive damages, and sanctions. It assumes that organizations will break rules and try to get away with it” (Daly 2015, p. 30). In the absence of well-developed trust relations, such systems entail a considerable regulatory burden. In writing on deterrence regulation in nursing homes in the US, Walshe argues that such regulation “favors larger, multisite corporations over smaller, single-site, owner-operated businesses, because larger organizations can spread the fixed costs of regulation across a greater business volume and are more able to develop in-house skills in regulatory compliance” (Walshe 2001, p. 132). It is, therefore, suggestive that the Chinese central government supports the development of a few large and multisite chain eldercare operations (National Health Commission 2019).

A further disadvantage widely identified with low-trust regulatory systems in Western NPM systems is the often-stark divorce between rule compliance and the real service-delivery experience clients have. Regulations reflect bureaucratic logic and generate ever more data, but their increase does not clearly coincide with actual improvements in eldercare quality (cf. Daly 2015; Walshe 2001). Internally, the intense internal surveillance generates its own problems: staff in social service organizations often mentioned feeling “beaten up” by supervisors, and that their energy was spent mostly on providing ever more data as evidence of regulatory compliance (Xu 2017, p. 22).

Supervision of eldercare workers deserves particular attention, especially for those who provide homecare (both live-in and live-out) at seniors’ own homes—one of the eldercare categories most hidden from managerial regulation. These eldercare workers are primarily middle-aged women, mostly internal migrants. Their supervision combines high-tech surveillance and human inspectors who are hired by eldercare workers’ corporate employers. The inspectors visit homes and interview both the seniors and the eldercare workers. However, without on-site supervisors, surveillance technology monitors arrival and departure times, using an identity card scanner. The information platform software also monitors the homes where workers work, so as to catch any worker misconduct15 (Shanghai Bureau of Civil Affairs 2021b). To cross-check the surveillance technology—a nod to procedural fairness—hired home visitors also interview the workers. Some home visitors told me that they themselves scan cards upon arrival and departure. However, they themselves expressed the belief that their visits and interviews improved the quality of service (Personal interviews, 2 June 2017).

While compliance falls heavily on service providers, various departments (e.g., Civil Affairs, Finance, Health, and Market Regulation), each with its specific responsibilities at various levels of local government, undertake their own monitoring and administrative tasks. These include issuance of documents, Opinions, and orders based on central government documents, Opinions, and orders; and the supervision and regulation of those parts of eldercare that fall under their respective mandates. The mantra for supervisory authority is that “those who fund, supervise”. Supervisor department units inspect documents in paper or digital form, while community/shequ and eldercare facilities compile them. Local governments are also subject to budget performance management under higher-level government agencies (CCP Central Committee and the State Council 2018).

The cadre responsibility system still links central government policy priorities to performance-based evaluation at all levels of the Party and the State, cadre promotion, demotion, and remuneration through in the nomenklatura (Edin 2003a, 2003b; Gao 2015, 2009). Consequently, measurable and quantifiable outcomes tend to be favored, such as eldercare bed targets for a particular year. The Shanghai government, for instance, released the following actionable-item targets for municipal eldercare services in 2020: 7000 extra beds, 50 new community/shequ comprehensive eldercare service centers, and 200 new community/shequ dining service centres for seniors; and retrofits for 2000 beds for seniors with dementia. These targets are further subdivided among Shanghai’s sixteen districts (Shanghai Bureau of Civil Affairs 2020a). By contrast, “softer” targets, such as improving quality of life, cannot be quantified so easily, and are not readily operationalized in the position-responsibility system; accordingly, local officials tend to give them relatively low priority.

The Party’s cadre responsibility system works on an accountability chain moving upward, as individual cadres’ promotions are decided by cadres at one level above their own administrative rank. This is so, even though the numerous regulations, laws, and opinions issued with the purpose (for instance) of improving the quality of eldercare service deliveries—that is, of improving the experiences of those below the officials. Mentioning this tension between upward and downward accountability is hardly a new insight in the West or in China. However, such accountability mechanisms inside the Chinese system, moving upwards, has long resulted in the peculiar Chinese phenomenon of “a mountain of documents and an ocean of meetings” (wenshan huihai), a sardonic concept rooted historically in China’s bureaucratic empire. Control for the Communist Party State, as Franz Schurmann pointed out long ago, is “‘to check or verify’, and to exercise restraints or directions upon the free action of someone” (Schurmann 1968, p. 297). As Riles points out, “practices of documentation are without a doubt ubiquitous features of late modern life…the ability to create and maintain files is the emblem of modern bureaucracy” (Riles 2006, p. 5). However, documents arguably play a distinctive role in China relative to Weberian-inspired bureaucracies elsewhere. Document development starts at the very top. Meetings intended to study higher-level documents and to generate compliant lower-level ones usually repeat central government documents. Grassroots government officials (below the level of county) shoulder the burden of attending these meetings, reading and deciphering documents, and creating lower-level documents. This process itself is taken as evidence of compliance, and indeed as nearly equivalent to actual implementation.

This “formalism” entails obvious problems in actual implementation, a fact not lost on Chinese central authorities. Indeed, the problem of “wenshan huihai” struck them to be so severe that in 2019, the CCP Central Committee issued an official Announcement tellingly entitled “Resolving Prominent Problems in Formalism and Reducing Burdens for Grassroots Government” (General Office of the CCP Central Committee 2019). The CCP Central Committee designated 2019 as the year of reducing burden for grassroots government (jiceng jianfu nian). It also calls upon government cadres to establish a “correct” approach to political achievement and to combine “accountability upward” with “accountability downward”. Arguably, here lie notable limits to an authoritarian system that is also organized bureaucratically, but here, too, lies a distinctive counter-tendency to restore some contact with lower-level service delivery. On the negative side of the ledger, cadres are selected and appointed by authorities one level above the cadres’ administrative rank: the cadres are, thus, vividly accountable to those above them. However, at the same time, they are called by those very supervisors to be accountable to the public, who are supposed to benefit from government policies. Ironically, however, to combat “mountains of documents and oceans of meetings” itself, still more documents are issued and still more inspections “check and verify” compliance from above. The reason why the discussion in this section is important is that bureaucratic logic seems to trump over the care of seniors. Further, eldercare workers remain devalued and are at the bottom of the power hierarchy in the eldercare sector.

5. Conclusions

The present paper uses the state-led creation of China’s eldercare sector to understand how the Chinese state re-draw the boundaries of economy from society, production from social reproduction, and work from family in its embrace of the socialist market economy. The paper argues that the state’s redrawing of boundaries, among other things, has led to the commodification and privatization of social reproduction, which disadvantaged largely women in their labour market participation and wage earnings. With the end of the danwei system in urban China, the family/household replaced danwei as the sphere to pool resources, share risks, and provide emotional support. The state also encourages the Chinese people to take up personal and family responsibilities to succeed in the market economy; welfare is explicitly designed to cover those at the bottom of the society rather than to generate universal entitlements. Eldercare has been considered a family affair even during the period of collectivism. Institutional eldercare during the period was provided to urban people who have no ability to labour, no income, and no relative who can provide care (chengshi sanwu laoren). Although most of eldercare is done in the family/households, need for institutional eldercare provisions is increasing due to competitive labour markets, urbanization, migration, and declining family size. An eldercare services market was first created by subnational governments in order to address the looming demographic crisis, especially in big cities such as Shanghai. Very recently, it has emerged as a national priority, a break with long-standing hands-off government policy and social practice. As eldercare policy now manifestly affects people’s livelihoods, it puts social stability in play, such that governments of all levels have now been involved in its regulation. Based on reports and documents that were made publicly available, the numerous government documents regulating the sector themselves do make the state power and its benevolence visible to the Chinese people: they signal, in effect, that all levels of governments care about their welfare and wellbeing. However, as in the West, eldercare workers themselves who provide physical hands-on care work tend to be made invisible and their labour is devalued. Regulators are interested in inspecting documents and sites, and while cross-checking with multiple means helps to contain misuses, considerable staff contingents are busy producing documents. To centre care itself in the eldercare sector, the role of reporting hierarchies and their power flows deserve much attention in organizing service delivery. Further, as long as eldercare provisions are largely considered as consumers’ ability to pay, rather than as citizenship rights, care crisis will continue in China. The Chinese state faces a tremendous challenge in meeting the imperatives of capital accumulation and social stability.