Post date: Feb 07, 2013 2:7:28 AM
Although it's already the second month of 2013, it's not too late to make a new year's resolution in terms of Chinese time. The first thing is to pick up my writing on the China study group. The second thing is to comment on economic issue or social event from my point of view.
Since it's three days away from the Spring Festival (春节), Chunyun might be the right topic to start with on this occasion. Wikipedia has a general introduction on this issue:
http://en.wikipedia.org/wiki/Chunyun
If you could understand the complexity of this seasonal migratory social behavior, you must have a deep insight into China's economy. The first question is: why do Chinese people travel from their work place to their parents family to spend the Spring Festival? Chinese people care about SF as a family holiday as Christmas in the western society. But where does the family bound come from? As far as I know, the loyalty to the family was developed and promoted by the Confucianism. The emperor then made use of it since it's easier to control the family head than every individual. To further implement it, the family register system was invented bewteen 2100 BCE to 1600 BCE. This system has been further developed and completed for many dynasties until nowadays. In the modern China, the governors are still following this ancient, or traditional, institution to manage the economy. The dinosaur age philosophy is still the mainstream of the social protocol.
If Chinese people care so much about the family tie, why do billions of people work at somewhere far away from their home? The answer is the severe unbalanced regional economic growth and uneven distribution of social resource. When Deng proposed the economic reform in the 1980s, he took the short cut to improve the national income. He invested all the national resource to the regions with higher capital stock and geographic advantage since the marginal return of the investment is higher. In another word, he sacrifice the social equality in exchange of high speed economic growth. The slogans in Deng's time said, "In order to achieve a rapid economic growth, it's necessary to let a small group of people and several cities become rich first,""The vast majority should understand the need of the country and hence sacrifice themselves." It's not a surprise that many people travel to other cities to get jobs.
The most confusing part of this Chunyun phenomenon is the price of the train ticket. The government manage to fix the price of the train in spite of the high demand during the SF period and even the high inflation these years. The sticky price assumption is 100% true here! Before 2007, the peak time price was allowed to go up by 15% to 20%. Under the pressure of the majority's dissatisfactory, the ticket price has not been allow to change since 2007. Why does the government ignore the law of supply and demand? I don't think the government is stupid or dumb. I'd rather say that it's another short cut taken by the government. To support the high speed growth in the richer region, cheap labor from poor regions is indispensable. To solve the excess labor in the poor region is also challenging. Cheap train tickets mitigate the conflict and potential social issues caused by inequality. The cheap train ticket targets cheap labor with high price elasticity accurately. On the other side, the air ticket price is very competitive that it completely reflects the seasonal feature of the demand. The high way transportation is also relatively competitive that the prices vary according to the demand.