Eli Friedman on How to Make Sense of China’s Labor Market

Eli Friedman is a Chinese labor expert and associate professor at Cornell University, where he also serves as chair of International and Comparative Labor at the school of Industrial and Labor Relations. He is the author of The Urbanization of People: The Politics of Development, Labor Markets, and Schooling in the Chinese City (Columbia University Press, 2022) and Insurgency Trap: Labor Politics in Postsocialist China (Cornell University Press, 2014). Dr. Friedman’s research has been published across peer reviewed journals, including China Quarterly, Industrial and Labor Relations Review, and Theory and Change.

This interview has been edited for clarity and brevity.

For those interested in China’s political and economic development, whether as casual observers or researchers, why is it important for them to read your book? What misperceptions about the Chinese economy might it clarify?

One of the biggest issues related to China’s political economy over the last almost 20 years is the question of economic rebalancing, which refers to many different things. Class inequalities, regional inequalities, and questions of ecological imbalances all come under that rubric. But as far as my research is concerned, the central problem is shifting from a model of development that is based on exports as well as investment-led growth to one that’s more based on domestic consumption. This is not a new issue. Wen Jiabao talked about it in 2003 and 2004. The central government has been making a lot of efforts to get their citizens to consume more so that they will be less dependent on those other sources of growth. 

One of the possible misperceptions that my research addresses is the idea that simply pouring more money into social services will single handedly increase domestic consumption or will get Chinese people in general to consume more. Now, of course, I do think that China needs to spend a lot more on social services. If you compare how much they spend to OECD countries, their spending on health and education is way below average, which is a big problem. But one of the things that the research reveals is that things that we might think of as public services are not actually distributed publicly, and there are these internal hierarchies that are based on your place of origin, as well as your class position. 

If you take lots more resources and pour them into the existing framework, they’re going to continue to be redistributed to people who don’t necessarily need them the most, which in turn means that people who are currently worst off are not primarily benefiting from increased public spending, such as on education. Therefore, they’re not going to have that kind of confidence in the social welfare system that would, in theory, allow them to spend more of their money. A major argument that’s been made, which I think is correct, is that one of the reasons that consumption in China is so low is because people are uncertain about the cost of education, healthcare, and retirement. They save money rather than spending it at present. Again, if you pour money into a setup that is quite unequal, it’ll still be diverted to elites. I think that’s one misperception my work addresses at the most general level. 

One other issue is about the nature of China’s education system. There’s this perception that China is really good at education, one that often comes with orientalist undertones about Chinese people being good at tests. What I’ve seen in my research is that China’s education system is really good for some people, but it’s actually a mess for lots of other people and in lots of places. 

The best work on this comes from Scott Rozelle and Natalie Hell, who have written a recent book called Invisible China that details the massive challenges, particularly in rural China, that the education system faces. This has significance for continued economic development because if people who come from under-resourced places or people who themselves don’t have much money are not able to access decent education on a broad base, that means that China’s not developing a workforce that in the future will allow them to continue to move up the value chain. 

I’ll just give you one example of how these misperceptions manifest, even though this is not really in the wheelhouse of my research. The Programme for International Student Assessment (PISA) gives a standardized test, and then they compare scores internationally. A couple years ago, they came out with this really stunning finding, which was that China had the best standardized test scores of any country in the world. When you look at how they actually captured the data, they were only looking at test scores from within the city of Shanghai. Then, when you looked even more carefully, not only were they only looking at test scores within Shanghai, they were only looking at the test scores for people who were considered Shanghai residents, which is people who had hukou within Shanghai. They were excluding all of the migrant workers, who constitute a huge swath of the city’s population. 

The PISA headline created a lot of alarmism in the United States and some other countries that ‘China’s coming for us’, that it’s this massive regime of amazing test takers. What we see if we look a little bit more deeply is that both nationally, in terms of regional inequalities, but also within cities, there continue to exist huge educational inequalities. The education system is actually quite elitist: for a certain slice of Chinese society, for people who happen to be born in the right cities and in the right zip codes, there is indeed a very strong public education system, but for vast swathes of the population, it remains quite inadequate. While others have identified this dynamic, my work uncovers the consequences of this highly unequal system for those that are excluded from the elite spaces of nominally public education. 

I remember seeing that PISA research, and China was in the top tier for test scores, but like you said, it was just Shanghai residents. But I think it was also in the top tier for education inequality, which just speaks to your point more. 

Exactly. I don’t have these numbers on hand, but I think probably if you put the city of Shanghai against the city of New York or the city of Los Angeles, Shanghai would probably do better. We can get into the comparison with the United States. They’re very different systems, but there is a way in which, again, for a certain segment, it’s a good public education system. But if we’re concerned with this society as a whole, then it becomes a lot more complicated. 

The idea of the ‘inverted welfare state’ was particularly fascinating to me, where those in China who need state welfare the least have the most access to it. This could be said to be true in the U.S. as well, where students who are already wealthy live in areas with the best public schools, the best teachers, and go on to top-tier universities. How is the ‘inverted welfare state’ unique in China, especially for migrant workers and their children?

Every country has its own special system of education inequality. I should be clear to say that China is by no means unique in this, but I do think it is important to really specify how that inequality functions in different settings. It functions very differently in China than it does in the U.S. 

With respect to China, the first thing to note is the role hukou plays in education inequality. If you come from outside of this city, it is not a formally segregated system where they say, “If you’re not local, you cannot access.” They say, “You can get into these public schools if you meet a certain set of criteria.” That set of criteria heavily favors people whose parents already have high levels of education, have a lot of money, and who are able to purchase property within the city (of course, Beijing has an astronomically expensive real estate market), and people who have contributed extensively to the local tax base and to local social security programs. Everyone else, although they’re urbanized as labor and can physically occupy the space of the city, can only send their children to these privatized schools for migrant children. From an American perspective, it appears to be the opposite of what we have, where in Beijing if you have lots of money and resources, you can get your kids into public schools, which are the good ones. If you don’t have those resources, you have to send your kids to private schools. 

Of course, if you have a private school that’s only serving a poor and working class community, they don’t have very many resources and so the schools are a mess in various ways. That’s why I call it the “inverted welfare state.” It’s a negative means test where you have to demonstrate that you already have all of these means, and then you can access the public services. Everyone else is left to the market. 

Now, of course, the U.S. is different for all sorts of reasons. But one of the things that might be useful is to imagine a wealthy person moving from outside of Beijing into the city. Then imagine a wealthy American who’s moving from somewhere to New York City. 

One of the very first things that all people who have children are going to think about is, “Where am I going to send my kid to school?” In Beijing, the main thing you want to do is get your kid into a public school, except if you’re super elite then you want to send them to these very expensive, international private schools. I can say a little bit more about those in a minute, but the overwhelming majority of people really want to get their kid into public school. 

In the United States, if an affluent person moves to New York or really any big city, they are faced with a different set of problems. You can live within the formal bounds of the city, and you’re probably not going to want to send your kid to public school because the public schools in every major American city have sustained decades of underfunding and institutional undermining. It doesn’t matter if you’re in a city with fabulous wealth like New York or Los Angeles or San Francisco, the public schools are not the top choice. You’ll live in that city and then you’ll spend money to send your kid to a fancy private school. That’s one option. The other option is you live outside the boundaries of the city in some suburb. And this is, I think, what you were just getting at, and the way that that privileged public education is guarded in the U.S. is primarily via the real estate market. Anyone who can afford a house that costs $2 million (or whatever the median housing price is in your city) cuts themselves out of the city proper so they can have their own suburban public schools. The U.S. also has a long history of racialized exclusion from schools and neighborhoods, and schools have in fact become more racially segregated in recent decades. So the social and economic mechanisms guarding those public schools in the U.S. are different, and they don’t need to have the same formalized evaluative mechanisms that they have in a city like Beijing. In both places, you have high levels of education inequality by class and social status, but the mechanisms are different. 

I did want to mention this issue of Chinese kids in elite private schools. Numerically, it’s not that big, but I think it’s pretty interesting because one of the things that I try to draw attention to in the book is that when we think about migrants to cities like Beijing, we’re oftentimes thinking about rural to urban migrants who are in blue collar jobs and are relatively impoverished, but all kinds of people move to Beijing. Lots of people go there for college. People go there and work for tech startups. It’s actually, from a class perspective, a relatively diverse group. You have a lot of people who are pretty well off who are still excluded from, in particular, the university education system, because there’s a hard cut off. Even if you can get your child into primary or secondary school, they cannot take the university entrance exam within Beijing, unless they have Beijing hukou. A decision that a lot of people make who are relatively well off is that they put their children on these tracks to go to international schools from a very young age. 

They do English immersion. They do prep for a U.S. or British University. Then when it comes time, they don’t even bother taking the university entrance exam in China, they just apply to foreign schools. So there’s this weird way in which the hukou system in China sometimes works as an indirect subsidy to U.S. universities because they’re sending all of these Chinese students abroad who have been excluded from their own public system. In turn, they’re paying full freight, sometimes to go to public schools in the U.S., and plugging budgets left by decades of austerity. 

The introduction to your book opens with a quote from a migrant worker in Beijing who describes the feeling of native Bejingers mocking him, saying, “They can’t live without outsiders.” To what extent is it true for China’s economy that it can’t survive without migrant labor? How dependent is China on the work of rural migrants opposed to sectors that employ white collar workers?

Chinese cities are deeply and profoundly dependent on migrant workers, and the modern Chinese city that we see today with all of its high rises, luxury stores, fancy restaurants, and globally competitive corporations would not be possible without this labor force that is pulled in from the rural hinterland. That’s just a fact. I don’t think that anyone who is looking at urban economies in China really disputes that. 

If we look nationwide, there are about 300 million migrant workers in China, which is to say people who are living outside their place of hukou registration and therefore not guaranteed access to social services. That constitutes roughly a third of the total workforce of China. So, it’s not an absolute majority, but in many industries, it is an absolute majority. Migrant workers are the backbone of China’s working class.  

They tend to be heavily located in jobs that urban residents deem undesirable. These are the jobs that are the lowest paid, that pose bodily risks, that come with fewer legal protections, et cetera. For example, the construction industry is almost entirely migrant workers. If we look at all kinds of childcare services and nannies, those are almost entirely migrant workers. Manufacturing is a little bit more varied because you do have some higher end, more capital intensive forms of manufacturing that will still hire urban resident workers. But a lot of manufacturing, particularly the export-oriented, more labor-intensive, less well-paid forms of manufacturing is overwhelmingly migrant workers. 

One of the things that I point to in the book is that, even when we think of classic urban industries or the kinds of industries that Chinese cities hope will power their economy in years to come – things like finance, tech, even government, higher education, the arts, these sorts of white collar jobs that are relatively well-paid – these are mostly not employing migrant workers. But if we look at all of the social infrastructures that are necessary to make those industries flourish, they also cannot function without migrant workers.

Consider a typical white collar worker working in finance or tech in Beijing. If they want to have a child, they’re going to need a nanny because they’re working these crazy hours. They’re probably also going to have a domestic worker to clean their house. They’re going to live in a gated community that has a security guard. The people who will deliver their food via Meituan or Ele.me are almost exclusively migrant workers. All of these things are necessary in order to allow that white collar person working in finance or tech to wake up in the morning, be clothed, be fed, get to work on time, and for them to return home at the end of the day. It’s all supported by this infrastructure of migrant workers. The reason that quote was so evocative for me was because in a very literal sense, the people who are urban citizens, who have urban hukou, really cannot live without those migrant workers. They’re literally building their homes, feeding them, taking care of their children, et cetera. In this respect, all of the big cities – Beijing, Shanghai, Guangzhou, – they’re all similar in that respect. 

You make a clear distinction between the urbanization of labor, which China has seemingly excelled at in recent decades, and the urbanization of people, which China has failed at for rural migrants. Can you explain the difference between these phenomena and their implications for Chinese development? What are the processes by which these types of urbanization occur? 

The phrase “urbanization of people” is actually official government jargon. It’s something that you’ve seen officials including Xi Jinping use, and it’s in state media. For them the phrase basically means they want more people to move to cities and to settle down there. So the title is a reference to this discourse, but I’m using it in a more theoretical way which is really addressed to an urban studies crowd. 

Let me just take a step back and explain a little bit about the meaning that I hope to convey with the term. For me, it was really important to keep a distinction between three urbanization processes. There’s a book written by the geographer David Harvey called The Urbanization of Capital, which came out in the 1980s. He along with Henri Lefebvre and many other people in urban studies over the last 50+ years have promoted this argument that economic growth, at least in developed countries, was increasingly driven by a process of urbanization rather than industrialization over the course of the 20th century. 

Rather than thinking about the typical model we have of the industrial revolution that happened in England first, with big factories driving economic growth in the modernization process, increasingly we see that cities themselves, and particularly land in cities, are generative of capital expansion. It’s capital coming in and making use of that urban space that’s really driving those dynamics, rather than simply material production in factories. 

Looking concretely now at the case of China and what’s happened over the last 40 years of economic reform, what we’ve seen is a clear process of the urbanization of capital. This has happened more from the early 21st century. Of course, China has always been a manufacturing powerhouse, but if you look at manufacturing’s contribution to the economy, either in terms of percent of GDP that comes from manufacturing or the percentage of the workforce that’s absorbed by manufacturing, that peaked a long time ago. The number of people that were absorbed by manufacturing in China as a percentage of the total workforce is much lower than it was in places that industrialized earlier, like Taiwan, South Korea, and Japan, but also significantly lower than it was in Western countries, like the U.S., England, or France. China’s growth in recent decades has been predicated on real estate speculation as well as investment in infrastructure. China has really accelerated this process called the urbanization of capital. 

The second urbanization process I emphasize is the urbanization of labor, something that China has also accomplished over the course of the last 40 years. In the 1960s, 1970s, and into much of the 1980s, if you were from the countryside, you couldn’t just show up in a city and say, ‘I’d like the job’. There was no legal basis for that, and there was in essence no labor market in China. Over the course of the 1980s and 1990s the state went about creating a labor market through a series of legislative and institutional reforms, and it is a market that is overwhelmingly urban. We now have 300 million people who’ve left rural areas to come to the cities to find work. So labor has also been undergoing this process of urbanization. 

Finally, we have the urbanization of people which refers to a spatial relocation of all of the things that human beings need that are not work, such as a place to live, education, healthcare, elder care, and pensions. All these things that are necessary in the normal life cycle for human beings but are not directly related to your work. In the reform era these processes were not urbanized, so you have this disjuncture where rural people are brought into the cities as labor, as workers, but not as full people, and all of those things like subsidized housing, education, healthcare, et cetera, are still in the countryside. 

The consequence of this is that it creates this real tension for people where a part of their life is supposed to be back in the countryside, but in order to survive, they need the wages that they can only get in the city. The succinct way that I think about this is that there’s a real contradiction between the fact that China has created a national level labor market, but that social services are organized at the level of the city. That’s the fundamental problem that drives this whole analysis forward. 

I think you described it as a tethering to but also an expulsion from the city, right? 

Exactly. Tethered as workers, and then they’re expelled when they want to access education or any of these other things necessary to fully realize your humanity. 

There’s no denying that China’s ever-expanding megacities have enormous populations reaching tens of millions. Is there truth to the fears that China’s cities will reach ‘carrying capacities’, a claim municipal governments have used to justify expelling migrants and enacting harsh citizenship laws?

To put it bluntly, no, there is no truth to it. There’s a couple of ways to approach this question. The crudest, and probably not the best way to go about making this point, involves looking to  absolute numbers. Beijing is indeed a very large city. But one confusion that people often encounter when they look at these population numbers is that they’ll see the city of Beijing has 23 million people, and that the city of Shanghai has 25 million people, and conclude that they are three or four times bigger than New York. But China’s city population includes a prefecture that is spatially vast, it includes all of these suburban areas and even rural hinterlands. A better comparison, when we look at that headline number for what the population of Beijing is looking at the metro regions. 

New York’s metro region has around 20 million people. Beijing is a little bit bigger, but there’s plenty of other cities that are bigger still, most importantly, in East Asia. The Seoul metro region is bigger than Beijing. The Tokyo metro region is much bigger, with more than 30 million people. I mean, China does everything on a much bigger scale. There’s no natural limit on how big an urban region can be. There are natural limits on commuting times, but all big urban conglomerations have sub-regional patterns of movement, you don’t need to be able to commute from one periphery to the other every day. All that is just a way of saying that these urban areas could conceivably get larger and there are larger cities in other parts of the world that function perfectly well. 

I think the more important thing, and this is something that I detail in the book, is to show that actually Beijing’s birth rate within the city is way below replacement and is very, very low. They actually do need people to come in, as a shrinking city is a city that has all kinds of other problems. If you look specifically at the question of access to education, and that’s one of the justifications that they give for kicking migrants out, there are many fewer children enrolled in primary education now in Beijing than there were in the 1990s. They could manage it back then, and the city’s tax revenue had a 37 fold increase from 1994 to 2016. Beijing is a much, much wealthier city than it was 30 years ago, and they have fewer children enrolled in the schools. From a fiscal standpoint, they absolutely have the capacity to do this. 

So, what is the justification? It’s a political decision that they’ve made, and they have this notion that migrant workers, at least certain kinds of migrant workers, are not contributing to developing the city in the direction that they want, where they imagine very tech-oriented, high-value added forms of production. They imagine these rural migrant workers to be ‘low end, as they call them. It’s a very elitist conception of how the city ought to operate. 

Are the children of migrant workers truly just a politically-overlooked segment of the population, caught between two worlds but belonging to neither of them, or is this cycle of poverty to some extent carefully calculated in order to ensure the next generation of low-wage workers?

It’s not conspiratorial. In fact, if you look at what the central government says, the policy since the early 2000s has been referred to as the ‘two primaries’, which is to say that the children of migrant workers are to be primarily located in public schools and that the financing for their education is to be primarily borne by the receiving areas. They also have a policy for educational equalization that the Ministry of Education has been pursuing for years now to equalize opportunities both by class and by region within China. The rhetoric from the central government is pretty good. 

The problem is that China’s education system is very decentralized, like many of the fiscal systems that exist in China. If you look at the financing of education, the relative contributions from the central government have fallen, and the percentage of expenses borne by localities has increased really dramatically. Basically what that means is that the amount of money that’s being spent on education, which bears some relationship to the quality of education that children are getting, is dependent on whether you happen to live in a wealthy place or not. China has very geographically uneven economic development. Localities are encouraged but not required to provide education to migrant children. If they don’t do it, there’s really not going to be any repercussions. So, I don’t think it’s conspiratorial. The system produces these outcomes where they’re trapped between these two places. The receiving areas say, “Your parents are welcome to come here and work. We’re not obligated to provide education to you. Why should we, this other place (your hometown) is obligated.” 

All that being said, there are some things which, while not conspiratorial, are caused by people making very bad decisions. The clearest example of policies clearly reinforcing tendencies toward reproduction of class inequalities is migrant youth being channeled away from academic secondary schooling and toward technical training. 

China has nine years of compulsory education. After grade nine, you take the high school entrance exam, and then you get tracked out. You can go on the academic route, which then leads to university, or you can go on the technical route and you go to a trade school. A lot of these cities have basically said that the children of migrant workers cannot go down the academic route, but the city will open up somewhat subsidized technical education for them. They can go to these trade schools, learn to be a welder, or an electrician, and be trained for blue collar jobs. That does look a little bit more like making a conscious decision that university is just not for this segment of the population. Therefore, white collar jobs and upward social mobility are not for them. But they do recognize that they have this need for this more menial labor and so they draw them and funnel them directly into that direction. There, I think you do see policies that are, in a pretty straightforward way, reproducing those inequalities across time. 

In countries like the U.S. and those in Western Europe, prejudice with respect to labor is increasingly understood along racial lines, with nearly half of the younger working class in the United States being people of color. In China, however, it seems that there is “othering” within the Han majority. Is this the case? Are China’s ethnic minorities disproportionately affected by migrant labor practices? 

I’ll start with the question about ethnic minorities first, and then we can come back to the othering of the Han because that’s a little bit more complicated. In China, absolutely, there is racism, and that racism certainly predates market reform. That form of social division and social hierarchy, with the Han occupying the top echelons of the society, has been refracted into the labor market quite clearly. There’s all kinds of statistical evidence from field experiments, where they send out job applications and they’ll use a Han Chinese name, and then they’ll use a Tibetan name, a Uyghur name, and a Mongolian name. There’s no question that those minorities get many fewer callbacks. In China, your ethnicity is listed on your national ID card. When you apply for jobs, it is normal for people to ask your ethnicity. 

With respect to the question of migration, it’s different for different minorities. China has 56 ethnicities (the Han plus 55 ethnic minorities). There are certain groups that are disproportionately affected that have incredibly intense controls on their bodily movement that Han people do not. The clearest example of that, of course, is the Uyghurs, and is similar for Tibetans as well. But going back to 2016 and 2017, when the emergence of those camps in Xinjiang first came to light, one of the things that they were doing was they were going around to coastal cities in China, in the eastern part of the country, very far away from Xinjiang, and they were rounding up Uyghurs and basically saying, ‘You’re not allowed to be here anymore. You have to go back to Xinjiang. This was part of a coordinated national effort to concentrate the population. People have referred to the camps as concentration camps. It’s not Nazi Germany and there’s no evidence these are death camps, but they’re clearly trying to concentrate people within particular areas. Uyghurs are absolutely not free to just leave Xinjiang and go to Beijing or even go to places like Xi’an or Chengdu to try to find jobs. They cannot do that anymore. The same is true for a lot of Tibetans. There’s some ethnicities where control is not nearly so tight. If you’re ethnic Korean, if you’re ethnic Zhuang, or some of these more sinicized groups then the controls are not nearly as intense. 

All that being said, 92% of the population is Han, and so when we look at the core of the Chinese workforce, it is Han people. That’s a first major distinction when we think about China’s rapid development from the way things worked in the United States. If we look at the history of the United States, there’s always been a racialized workforce of Black, Indigenous, Asian, and Latino people that constituted big chunks of the workforce who have been subjected to forms of exploitation and dehumanization that would be unacceptable for white people. It varies from region to region and across historical periods, but racially subjugated populations have been a foundational element in American capitalism. So even if the form of racialized exploitation has some similarities, China is different in that only 8% of the population are minorities.

One of the arguments that I make in the book is that the social hierarchy that we see in the U.S. that’s based on race, which underlies all of this labor exploitation, is organized in China around spatial divisions. It’s not Black and white, but instead is people from the city of Beijing and people from rural areas from outside of the city. Those social and spatial differences function in something of a similar way as race does in the American context. The fact that it’s not racial in China matters, this social division is indeed more porous. You have children, they grow up in Beijing, they can pass for Beijingers in a way that’s distinct from racialized differences. That being said, if you come from rural areas, there are all kinds of markers that distinguish you from someone who grew up in the city of Beijing. Speech is the most obvious one, but the clothes you wear, the way you present yourself, and the kinds of foods you eat are all things that mark a social difference that’s really quite important. 

How is this “othering” within the main racial group in China compatible with Xi Jinping’s plans for the Great Rejuvenation of the Chinese Nation?

A lot of people in political science have talked about in the post-Tiananmen era how the Chinese state has pursued ‘performance based legitimacy’ which is to say, they’re not elected, and it’s not a revolutionary government anymore. It’s mostly people who are born after the revolution who are now in power. They need other sources of legitimacy. They’ve largely depended on the fact that China has incredibly fast economic growth, that most people’s material well being is improving year to year. But that’s not happening anymore because economic growth is slowing dramatically, so they’re looking for other sources of legitimacy. 

One of the things that Xi Jinping has hit on is ethnonationalism. A key slogan that’s associated with Xi Jinping is the “Great Revival of the Chinese Nation.” In all sorts of ways, the state has been emphasizing a pretty intense form of ethnonationalist pride, which is predicated on a sense of historical grievance and an idea that China needs to secure its rightful place in the world as the dominant power in Asia, if not the dominant power in the world. That’s the basic idea, but with ethnonationalism, in many different places around the world, comes a sense that if you are a member of that race, the state should be taking care of you. I see a real tension in that political rhetoric, because China’s continued economic success, at least given the model that they’re using now, is actually predicated on delineating a certain segment of the Han race that can be sacrificed, that can be moved out of the city if they don’t want them there, whose children can be denied access to public education, who can be given jobs that don’t enjoy legal protections, and who won’t have adequate access to healthcare. And the state’s position is essentially that this spatially-differentiated population must be sacrificed in order to secure the overall flourishing of the race. 

When I was doing my research and I talked to migrant parents whose children were excluded from access to public education, some of them were just sort of like, “Well, what can we do?” That’s a very common response when there aren’t a lot of options and it’s an authoritarian state. You can’t say, “I’m going to mobilize and start an organization.” But a lot of people saw it as really unfair and frequently turned the nationalist rhetoric on its head against the state. I heard folks invoking the myth that all Han people have this common blood lineage, which is very common, of course, in ethnonationalist discourse. They’d say, “We’re all also supposed to be descendants of the dragon. How come my children are not counted as children of the city and these other children are?” I do think that there’s the possibility of it boomeranging on national leadership if they don’t take it seriously. 

I should also just be clear that my position is not that ethnonationalism is good if you take care of the members of the dominant race. That is the basic impetus behind the fascist movements, which were very bad to people who are not considered part of their ethnicity, and indeed there are strong parallels if we look at the current treatment of Tibetans or Muslim minorities in China. But in theory, ethnonationalists are supposed to take care of people who are part of their ethnicity. 

Turning to the U.S.-China trade war for a moment, what are the implications of the trade war and high U.S. tariffs on Chinese goods for migrant workers? 

The short answer is, I don’t know, but I can speculate a little bit. Many of the tariffs have been in place for a couple years, and we have a little bit of data on how it’s affected trade patterns. It’s possible that Zero-Covid is actually going to have a more damning effect on foreign investment in China than the trade war. There was some relocation of investment away from China. Many global corporations that sell to the American market intensified a strategy that had existed even before Trump was elected, which was this China Plus One strategy, which allows them to not have their entire supply chain located in China. It’s also clear from trade data that Vietnam has been the big winner, and that Vietnamese exports have gone way up. 

I imagine that between the trade war, Zero-Covid, and the geopolitical situation, American companies are going to be a little bit more reluctant to put down big investments in China. But all of that is to say that there will probably be less manufacturing – again, this is just accelerating a trend that predates all of this – which has absorbed a lot of migrant workers, and that the pressure on the Chinese government to do real economic rebalancing is only going to continue to increase. They want to be less dependent on American consumers. They’ve known this for 20 years, but they haven’t made a lot of progress. I think that this will be yet another push in that direction. Making that shift, where they’re less dependent on wage repression, is not just a question of getting the policy right. I think the fact that they’ve seen the problem and have more or less accurately diagnosed it but have failed to address it suggests that it’s a political problem. 

It is a political problem because there are certain interest groups that really benefit from that setup. Creating a situation where all of the citizens of China, irrespective of race and irrespective of region, have access to decent social services, which would at a minimum mean abolishing hukou and dramatic rebalancing in terms of fiscal capacities away from the largest cities and to smaller cities and rural areas, would give China something of a better foundation so that they could withstand the pressures that are coming from the trade war from the recently enacted forced labor bill on Xinjiang. 

But that also means that you have to go to the city of Beijing and the city of Shanghai and say, “We’re going to take your social security funds away from you, and we’re going to centralize it at the national level.” Cities would lose control over billions of dollars in some cases. That’s a political fight. People often say that Xi Jinping is the most powerful leader since Mao. Maybe he is, but you have to expend a lot of political capital to make that happen, so we’ll have to see. 

Thank you so much. I really appreciate you taking the time to speak with me today.

Thank you for having me.

You can buy Eli Friedman’s book, The Urbanization of People: The Politics of Development, Labor Markets, and Schooling in the Chinese City (Columbia University Press, 2022), on the Columbia University Press website