17 September 2019
China's rigid state system is fraying, with the bureaucracy losing a growing number of high-level officials to the private sector. Photo: Xinhua
China's rigid state system is fraying, with the bureaucracy losing a growing number of high-level officials to the private sector. Photo: Xinhua

Why a crack in the rice bowl benefits the private sector

“Iron rice bowl” used to mean cradle-to-grave job security in China’s state sector, but nowadays, a growing number of those lucky enough to get government employment are opting out.

The latest example is a 40-year-old official who quit his job as head of the management committee of an industrial park in Zhongshan, a prefecture-level city in the Pearl River delta, for the private sector.

Such a move would have been unthinkable in the decades before Deng Xiaoping launched China’s economic reform, which meant a job in the state bureaucracy came with power, privilege, wealth — and most of all, security.

Although most civil servants earned well, many lived beyond their means, and the pursuit of a certain lifestyle incompatible with their income drove them to corruption.   

The shift did not happen overnight but became most pronounced in the months following the most crippling restrictions on official conduct under President Xi Jinping as part of an unremitting campaign against graft that has already felled senior cadres.

Since last year, fewer candidates have taken the civil service examination, a prerequisite to government employment, according to the Economic Observer. That is a sign government jobs are losing allure.

In contrast, the private sector is seeing an influx of former cadres.

The Observer reports that a local realty developer offered the Zhongshan official a job as its executive president with a generous package. He will oversee the development of a large commercial project near the industrial park where he worked for 15 years.

In September last year, a senior administrator at Guangzhou Municipal Public Security Bureau resigned to join Gree (000651.CN), a leading home appliance manufacturer, as its senior vice president.

Also, a vice director in Guangzhou’s Nansha development zone left his job for Transfar (002010.CN), a maker of chemical products based in Zhejiang.

And a 38-year-old deputy mayor of Pingyang, a county-level city in Wenzhou, gave up his iron rice bowl for a career in trade and logistics.

Observers say many cadres are beginning to feel the heat from the anti-corruption drive. There have been salary cuts, fewer benefits and severely restricted access to government amenities including cars.

The benefits that come with a government job are disappearing and functionaries with something to hide find themselves increasingly exposed to potential corruption investigations.

For many of them — and for a whole lot of others — the private sector is a safe haven and a lucrative alternative. 

Former government officials are especially prized in the private sector for their knowledge of the inner workings of China’s sprawling bureaucracy.

Unlike Hong Kong, mainland China does not prohibit state workers from taking up employment within a certain period of their departure from the service. Nor is the mainland terribly bothered by potential conflict of interest. Many say it’s not in the cadres’ vocabulary.

The Zhongshan official, for instance, has insider knowledge about land auctions and infrastructure plans which he could use for the benefit of his new employer.

Some mainland media including state-run China News Service describe the trend as a third wave of attrition by officials.

The first emerged in 1992 when Deng ushered in China’s market-oriented economic reform. China Business Times estimates that there were altogether 100,000 officials who left their jobs and went into business.

The second came in 2001 when private entrepreneurs and factory owners were allowed to join the Communist Party and take up posts in the government at the same time.

Then there was the wave of redundancies after each change in the bureaucracy and in the economic cycle, especially in coastal regions where state-owned firms had given way to a buoyant private economy.

In Zhejiang alone, it is said that 125 directorate-grade officials or above left the government during 2000-2003.

– Contact the writer at [email protected]


EJ Insight writer