Download Welfare culture

Compare Standard of living
China & japan
Qiaoling Bai
Liyao Jin
Yihua Pu
Yubei Tu
GINI INDEX
JAPAN
CHINA
Gini index
A measure of statistical dispersion intended to represent
the income distribution of a nation's residents.
Also measures the inequality among values of a
frequency distribution (for example levels of income)
and inequality of income or wealth.
The Gini coefficient is defined as a ratio with values
between 0 and 1.
The higher the Gini coefficient, the greater the
inequality.
Results of China
A general unfair wealth distribution
• rich-poor gap
Gaps in access to education
Barriers to employment
 Inequality between rural and urban areas
Why?
Kuznets Curve-inverted U curve
The law of development
Politics
Redistribution in Japan
Tax system
• Income tax
• Tax on capital
• Consumption tax
Social security system
• Welfare law
• Pensions-a three-stories building
*
Neo-Confucianism
Redistribution in China
National budget
Bank credit
Charges for services
Price change
Need to be perfected!
Example: French revolution
National
economic
development
Disposable
income
Price
Consumption
Preference
Expectation
Nation’s economic development
Disposable income
US$ 25060 (2009)
US$ 25147 (2013)
US$ 2862 (2009)
US$ 3140 (2013)
Price
CPI
2008
2009
2010
2011
2012
2013
2014
China
107
100.8
102
104.5
103
102
102.5
Japan
101
100.8
100
99.5
99
99.2
100.5
Inflation Rate (Annual change on consumer price index)
2008
2009
2010
2011
2012
2013
2014
China
7
1
2
5
4.2
2
2.5
Japan
0.8
0
-1.3
-0.5
0
-0.2
1.3
Source: www.tradingeconomics.com
Chinese Food Price Index during 2009 to2011
Year
Food
Price
Index
Cereals
Meet
Aquatic
Product
Vegetable
2009, Dec
105.3
108.6
98.3
105.7
136.2
2010,June
105.7
111.73
101.81
106.47
114.55
2010, Dec
109.55
115.57
110.23
110.89
94.28
2011, June
114.44
112.41
132.26
113.9
107.32
2011, Dec
111.93
111.59
126.11
112.38
93.18
1. Long-term trade surplus which leads to the inflation pressure.
2. Non-staple food prices demonstration effect. In 2011, the rocketing price of
pork directly push the price level rapid rise.
3. Low interest rates. China always use low exchange rate in an effort to
enhance the competitiveness of the products until now. it’s can not be for a
long time.
Migrant labor riot in china
Workers near an entrance of Foxconn's troubled industry park in
Taiyuan, China.
Japanese kids rank sixth
Measured by 5 factors
 Education（No.1)
 Risk in daily life(low)
 Accommodation and
environment(quit good)
 Health and safety(pretty good)
 Materials level(low)
Endogenous growth model: Social capital
China
-Actually, China characteristic people's democratic dictatorship
system make china has strong social
Cohesion. Especially when face natural or man-made disasters,
government has hard power to handle it
Japan
-Compared with china, Japan has narrow wealth gap. Especially
in social harmony part, Japan do better than China
Compare welfare between China and japan
Social security system
－endowment insurance system
－unemployment insurance system
－health care system
Welfare culture
－sense responsibility
－value of social equity
Difference in social security system
1.Retirement pension system for urban employees
China
-it does not include different level and security have huge
difference for region and occupy which intensified social
contradictions
Japan
- It is the dual construction of pensions: first level is national
pension insurance（provide a common "basic pension" to all
residents）, second level is Employees' pension
insurance(mainly for those who are employed by private
business corporations)
Difference in social security system
2. unemployment insurance system
 China
－the government do not offer fixed fees and just provide urgent assistance
when it is short of funds
-it use the uniformity of a single fees that enterprise pay 2% of the individual
salary, individual pay 1% of salary as unemployment insurance premium
Japan
-it us labor insurance system instead of unemployment insurance system, and
the expenses being paid by the government, the enterprise and the individual.
－the fees is different depend on riskiness of unemployment
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Difference in social security system
3. health care system
China
-it just stays at health care not health service, and only include
urban workers. Rural workers and unemployment nearly have no
health care（there is heavy burden for individual and family）
－it does not include mental health
Japan
-it has been moved towards securing universal health care and
cover many parts （include mental health）
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Welfare culture
1. Responsibility
China
－Some Executive department consider welfare plan as a
temporary work and not do well in accordance benefits costs
Japan
- People have a sense of responsibility which increasing welfare
do not affect successful development of enterprise
Welfare culture
2.Value of social equity
China
－there is no mature public facilities and good employment
environment for the disabled, and people are more or less have
discrimination for them
Japan
－Government aimed to construct happy life for the disabled
and popularize the social independency idea that the disabled
and everyone else live together normally
Happiness planet index
An important factor to reflect standard of living
 the extent to which countries deliver long, happy, sustainable
lives for the people that live in them
The Index uses global data on life expectancy, experienced
well-being and Ecological Footprint to calculate
22
Japan vs. china
Source：happiness report 2013
Happiness planet index
Japan rank higher than china in terms of happiness index.
However, it is not a absolute advantage because all East Asian
countries have low happiness index
 Therefore, there is a debate-If China changes welfare policies,
and becomes like Japan, would the Chinese people get happier?
• Yes, to some extent. And no more pressure of discontented
people inside of China for riots or revolution.
• No, not very much. Japan ranks very low in the Happiness
Index, compared to the level of income and the size of
economy
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• Social Welfare
• Pension, unemployment, working injury
• Wealth Inequalities
• Gini index
• Consumption
• Pricing, disposable in come, preference,
expectation
Domestic Demand
Exchange Rate
EXCHANGE RATE THEORIES
• Benefits of Avaluation of Chinese Yuan: making
Chinese Yuan more valuable.
Import
Exchange
Rate
Export
What can we do to improve
China’s situation?
27
Factors that matter in improving quality of life in china
• Distribution of income
• -Private consumption accounts for only about 36 percent of
China’s GDP.
• -Half of what it is in the U.S, two-thirds of what it is in Europe.
-Boost private consumption by distributing income fairly.
• Independence of the current“U.S supply
Chain”
• -Shift focus from export-driven to consumption
• -Focus on internal prosperity. Try to Maintain low costs for
domestic consumers not the U.S.
Factors that matter in improving quality of life in china
Total factor productivity
-Krugman’s argument
-Technological progress, input prices, human capital
• Exchange rate
-Chinese people are facing the rapid increasing on commodity
prices.
-why?
29
Benefits of Avaluation of Chinese Yuan: making
Chinese Yuan more valuable.
•
•
•
•
As a lot of Chinese goods are made with imported materials;
If Chinese currency value goes up
The import price of materials goes down
Thus the price of Chinese goods made with imported materials
will go down
• The Chinese can afford to buy more of Chinese goods at lower
prices.
• They become happier.
30
Cost of avaluation of Chinese Yuan
• The price of Chinese exports will become more expensive, not
in Yuan, but in U.S. dollars.
• Thus Foreigners will buy less of Chinese goods
• Exports falls
• Export Industry Company’s profits may or may not fall
• Less jobs and less national income
conclusion
To some extent, Japan has a better living standard than China’s
in terms of welfare system, redistribution system, and
consumption .
But China still can improve standard of living by learning from
Japanese experience and making it our own .
THANKS