China: Macao to spend over $1.5bn on public subsidies including Wealth Partaking Scheme

China: Macao to spend over $1.5bn on public subsidies including Wealth Partaking Scheme

The Macao region of China will spend more than 1.2 billion euros this year on public subsidies, including their Wealth Partaking Scheme, which functions as a very low-level form of basic income.

As reported by the Xinhua News Agency, the official press agency of the People’s Republic of China, the Macao region will be spending over 12bn patacas (1.2 billion €), the local currency, on various forms of public subsidy.

This will include the Wealth Partaking Scheme, which offers 9000 patacas (900 €) per year to every permanent resident, and 5400 patacas (542 €) per year to every non-permanent resident.

Other Macao public subsidies include regular payments to elderly and disabled people.

 

More information at:

Macao to spend 1.61 bln USD on public subsidies next year: chief executive“, XinhuaNET, 14th November 2017

CHINA: UNDP holds basic income roundtable in Beijing

CHINA: UNDP holds basic income roundtable in Beijing

In a sign of the major progress Universal Basic Income (UBI) has made in Asia, the United Nations Development Program in Beijing hosted a roundtable discussion on basic income last week. Professors from China’s most influential universities spoke at the roundtable about the potential for a basic income pilot program in China.

Patrick Haverman is the UNDP Deputy Country Director for China. Haverman said he wants to work with academia and government to determine if basic income experiments in different areas of China are feasible.

“With the Sustainable Development Goals firmly focused on the need to ‘leave no one behind’, careful consideration of a wide variety of responses will be essential,” Haverman said during his opening remarks. ”It is very important that we can foster collaborative discussions around potential options to address poverty and inequality into the future, and the role of UBI should not be overlooked.”

The roundtable also discussed the benefits and likely challenges of implementing a Universal Basic Income in China. A large topic was how UBI could improve on the dibao system, which is China’s means-tested unconditional cash transfer program. Dibao currently has issues with targeting the subsidies toward people in poverty, which many participants at the roundtable noted UBI’s universality could potentially alleviate.

Shi Li, a professor at Beijing Normal University, said Chinese people in poverty receive the dibao because of poor targeting. In his research, Li and other researchers found that nearly 88 percent of poor residents in China do not receive dibao stipends. Remarkably, administrative costs of means-testing were three times more than the actual transferred amount.

The large size and economic disparities across the mainland mean it may be difficult to implement a national UBI that is not adjusted based on residence, others noted.

The event was co-hosted by the International Labour Organization, which presented on the potential disruption of automation on employment during the roundtable. Haverman said an advantage in China is that smartphone penetration is high and many businesses now accept digital payments. This means it may be most efficient to send basic incomes to digital wallets.

“Almost everyone has a phone, so if we find a pilot zone I think we should take a look at it,” Haverman said.

Furui Cheng an associate professor at China University of Political Science and Law’s Business School, said the China Basic Income/Social Dividend Research Network is working with UNDP to plan the next steps for a pilot program in China.

Cheng said they are looking to work with local governments and raise money from technology companies.

“Basic income is the probable alternative for the future global social security system, which is facing unprecedent challenges now,” Cheng said. 

“We shall learn the experiences of global existing basic income experiments as much as possible, and we welcome any suggestions from any supporters,” she said.

Zhiyuan Cui, a professor at Tsinghua University, has written how China could emulate the Alaska Permanent Fund to implement UBI. Cui explained that Jay Hammond, the Alaskan governor who created the Permanent Fund, said he often felt “closer to Beijing than Washington DC.”

Yang Tuan of the Chinese Academy of Social Sciences said the size of China means it would be a good place “to come up with many types of experiments” for basic income.Tuan, who supported the implementation of dibao when she was working for China’s social security system, said the economic dynamics of China have changed since dibao started.

“(In the past) I have been against western mechanisms of social security,” she said. “But today I think the context of China is different.”

According to Haverman, the UNDP is planning to release up to three more working papers, addressing topics such as financing UBI in China, as well as its effect on work hours.

 

To see UNDP China’s press release, go here.

To see the original UNDP China working paper, go here.

To inquire about the UNDP project contact Cheng Furui: cfr1978@163.com

MACAU: Over 543,000 receive unconditional cash grants under 2017 Wealth Partaking Scheme

MACAU: Over 543,000 receive unconditional cash grants under 2017 Wealth Partaking Scheme

The Government of Macau has completed the most recent distribution of its annual wealth dividend, providing most residents of the city with an unconditional cash grant of about US$1,200.

The Macau Special Administrative Region (SAR), an autonomous region of the People’s Republic of China, is a resort city with lucrative tourism and gambling industries (described by Lonely Planet as the “Vegas of China” and a “mecca of gambling and glitz”). Macau is a host to many gambling and betting establishments and is said to rival Malasyain online gambling scene as well – such as the popular Kiss918 app. Those who can’t make the trip out to Macau or Vegas may want to see what gaming options they have available to them online – they could look into the afformentioned gambling apps or try something similar with sports betting sites like www.bangthebook.com. That said, the city’s lottery industry has helped to finance its Wealth Partaking Scheme (WPS). Initiated in 2008 and renewed each successive year, the WPS provides a cash dividend to all Macau residents.

All holders of a Macau Resident Identity Card are eligible to receive the WPS payments, including both permanent and non-permanent residents have been, although payments to permanent residents have been higher in each year of the program’s existence. Some people have chosen to take said payments and, instead of going to the local options, go online to www.paybyphonebillcasino.uk and similar options online. Considering the comfort of staying inside from this, it makes sense.

According to the Macau SAR government, the purpose of the scheme is to “share the fruits of economic development with general public”. However, researchers such as Bruce Kam Kwan Kwong argue the underlying motive of the scheme was simply to “stabilize the political atmosphere” in the face of large May Day protest rallies and other civil unrest.

On July 3, Macau SAR announced the 2017 WPS, under which permanent residents were entitled to 9,000 patacas (about US$1,200 or €950) and non-permanent residents to 5,400 patacas (about US$670 or €570). The amount of the payment has remained unchanged since 2014 (when the amount was increased from 8,000 patacas in 2013 and 7,000 patacas in 2012).

Disbursement of the payment was completed on September 15, with a total of 688,079 checks having been distributed (278,558 by direct transfer and 409,521 by mail). As of September 17, 264,758 of the mailed checked had been honored. Between honored checks and direct transfers, over 543,000 residents of Macau have already received the 2017 WPS dividend. (The Macau SAR government’s announcement does not state how many of these checks were sent to permanent versus non-permanent residents.) As of its 2016 census, Macau has a total population of 650,834.

For additional details concerning the disbursement and eligibility of the 2017 WPS, see Furui Cheng’s July 27 report in Basic Income News: “Wealth Partaking Scheme: Macau’s small UBI“.

Is Macau’s Wealth Partaking Scheme a Basic Income?

The answer is contentious, and, in part, a matter of semantics [1]. Certainly, the WPS shares salient characteristics of a basic income: it is paid in cash, universal and unconditional for all residents, and not means-tested. (Unlike, for example, Singapore’s Growth Dividend, the amount of the WPS dividend does not vary according to income level.)

On the other hand, it may be dubious to say that the WPS provides “regular” payments to residents. As a matter of fact, the WPS has been distributed annually since the scheme’s initial enactment in 2008. However, it is not guaranteed, and it might be more accurate to describe the annual payments as successive one-off grants. Karl Widerquist explained Basic Income News report on the 2014 dividend, “The government has now set the president that the Wealth Partaking Scheme will be in effect every year, but each year it has been created with one-time legislation without a promise of renewal. The amount, timing, and existence of the redistribution have to be renegotiated each year.” This continues to hold true in 2017.

Furthermore, while the most “official” definitions of ‘basic income’ (including BIEN’s) do not stipulate that the amount of the payment is stable, it might be argued that this it is implicitly accepted that it must be so (perhaps pegged to inflation on GDP). The amount of the WPS has historically not been stable, and was even cut significantly in the second year of the program’s existence (from 4,000 to 3,000 patacas for permanent residents).

Finally, the most contentious semantic dispute in the basic income community, arguably, is that regarding whether the term implies that the amount of the payments is high enough to secure at least a basic subsistence-level existence. Even if the WPS qualifies as a basic income on all other criteria (although this itself dubious), the dispute renders the final verdict a matter of definition. The amount of 9,000 patacas per year is far too low to meet minimal living expenses. According to Numbeo’s cost of living calculator, for example, the average monthly rent for a one-bedroom apartment is about is well over 7,000 patacas in the city center and about 6,000 patacas outside of the center [2]. For comparison, the average monthly net salary is over 14,000 patacas, and Macau’s only current minimum wage legislation, for cleaners and security guards, establishes a minimum salary of 6,240 patacas per month. Thus, on some definitions of the term (although not BIEN’s), Macau’s WPS would thereby fail to count as a basic income (although it might still be called a “partial basic income”).

At the least, Macau’s WPS, like Alaska’s Permanent Fund Dividend, is an example of a universal dividend program with some salient similarities to a “pure” basic income (the latter of which exists nowhere in present physical reality).


[1] While BIEN has voted to establish a specific definition of basic income, I have recently argued that an inclusive, umbrella organization should abstain from accepting a singular definition of ‘basic income’.


[2] The average price of draught beer is 35 patacas, meaning that the 2017 WPS would not even be sufficient to finance a daily draught beer.


Reviewed by Russell Ingram

Photo: Casino in Macau, CC BY-NC-ND 2.0 Bailey Cheng

China: Association for Promotion of UBI established

China: Association for Promotion of UBI established

Photo credit to: Basic Income Asia Pacific.

Zhang Chao and Gan Lin, high school seniors from the Chinese province of Zhejiang and founders of UBIForALL (Association for the Promotion of Universal Basic Income) recommend establishing a Universal Basic Income (UBI) city in an “undeveloped” area in China. Their prime motivation is to promote, research and develop literature on basic income, intended to be implemented within the Chinese (mainland) reality.

They wrote in August, shortly after having released UBIForALL on the 18th of July 2017: “I’m fully convinced that UBI will take its seat finally (…) so we either accept the UBI completely or suspend the process of UBI.”

The plan for these UBI cities involves buying inexpensive land, funded by governments, wealthy individuals, or unions, and possibly taxes on robots. It also suggests building infrastructure with volunteers and populating the city with UBICERS, who would be receiving the UBI and a special education in order to eliminate poverty and give a new sense of direction and purpose. Using high tech services such as driverless cars and other innovations for sustainable work, the city would avoid the inevitable crisis, when human beings, due to unemployment, are turned into members of an “useless class”.

“UBIC is a big social experiment both in psychology, economy, technology and the promotion of UBI”, Zhao and Gan conclude.

 

China’s unconditional cash program: Implications for basic income

China’s unconditional cash program: Implications for basic income

The People’s Republic of China has created the largest unconditional cash transfer program in the world. It is called dibao, meaning Minimum Livelihood Guarantee. A recently published book is taking a fresh look at how effective dibao is at improving the livelihoods of impoverished Chinese people.

Dr. Qin Gao is on the faculty of the Columbia University School of Social Work, where she researches poverty, income inequality, and social welfare programs in China.

Gao has done extensive work researching dibao, and has released the book “Welfare, Work, and Poverty: Social Assistance in China,” which evaluates how well dibao has achieved its goals of lowering the amount and intensity of poverty in China.

The UBI Podcast recently interviewed Gao on her new book about the dibao program and asked her to give her thoughts on universalizing dibao.

Dibao is important to understand for basic income researchers because it demonstrates on a large-scale how basic income operates when it is not universal (since it includes a means test).

The dibao program allows each locality to set its own dibao standard (essentially the poverty line). Anyone below that standard is technically eligible for dibao assistance. The assistance in theory gives an individual enough money to reach the dibao standard. Eligibility for dibao is based on individual income, so one individual in a household could qualify, while another may not, Gao said.

For example, a dibao standard in Beijing, China is 900 RMB per person per month. If an individual made 700 RMB per month, dibao would provide 200 RMB in assistance to reach the dibao line of 900.

While some may worry that officials will cut off dibao assistance once an individual goes over the line, Gao said the reality is more complicated.

“In reality, many local officials are very considerate of the fluctuation in people’s incomes and other family situations. For example, education needs, health care needs. So many localities actually have initiatives to not discontinue people’s dibao benefits right away if they have income that’s higher than the local dibao line,” she said.

Some localities may allow a family to stay on dibao for three months after extra income is earned to make sure they have job security and they “do not fall back into poverty right away.”

Once a family receives the cash, it is unconditional, meaning there are no (direct) behavioral conditions to continue receiving the money.

Gao said the evidence that dibao creates a poverty trap, where families remain under the poverty line intentionally to receive assistance, is not strong.

Some localities have families update their income and wealth information every three to six months. Certain villages will even publish the names of recipients to allow for public feedback on whether a family should qualify for dibao. Based on the feedback, localities will randomly select people to verify their income information.

“So it’s a very systematic and stringent process,” Gao said.

For some villages, allowing others to comment on a family’s poverty situation may further stigmatize the dibao and other forms of welfare.

“Because the dibao is an unconditional cash transfer, so by design the policy requires applicants to tell the truth and other community members and neighbors to share the responsibility of monitoring. That is part of the design of this program,” Gao said.

While on paper, the dibao is technically an “unconditional cash transfer,” the way dibao measures wealth creates its own form of conditions.

Depending on the locality, dibao recipients may face a myriad of asset tests that prevent them from owning pets, a larger than average home, a car, or luxury items. Expensive private schools and schools abroad are off-limits. In the past, even a cellphone was a disqualifier.

“I think now, many localities are more lenient on that, especially on the cell phone. But there are certain luxury goods (so-called), that you’re not supposed to have. That also features into the feedback from the neighbors and community members. They would get critical and jealous if you have certain luxury goods that they don’t have but you are getting dibao,” Gao said.

In Gao’s book, she also analyzes the subjective well-being and social participation of dibao recipients. She found dibao recipients “tend to be more isolated, and less active in their social participation” than similar peers.

Dibao recipients may feel stigmatized from participating in these activities, such as going to the movies, since it is not a “culturally acceptable use of the dibao income,” she said.

After China’s transition from a planned economy to a market-based economy, society’s expectations about how families earn their own living changed. Now it is expected that people “earn a living through their own work.” Although, Gao said China is currently going through a debate about who “deserves” welfare.

“Previously people had guaranteed jobs, but many people during the economic transformation were laid off so able-bodied adults couldn’t support themselves through jobs anymore. And that group is making up about half of the dibao population,” Gao said.

One area of concern for policymakers is ensuring the dibao is reaching the “proper recipients;” that is people in poverty. There are reports of targeting errors in administering dibao “because of misreporting or difficulty to capture the real income or assets situation in rural areas.”

“The targeting error is real and local officials are very aware of it, but that will stay with the program because of the variations of family conditions and income,” Gao said.

The dibao standard is often used as a criteria for other welfare as well. This means that qualifying for dibao also gives a family access to a host of other assistance (including education, housing, and medical assistance). However, this could create a “welfare cliff” issue, where if a family exceeds the standard they may lose a lot more assistance than they gain as income.

“I think this is one of the policy design features of dibao that needs to be revised right now,” Gao said of dibao acting as a “gatekeeper” for other social assistance.

Overall, dibao has only reduced the rate of poverty to a “modest degree.” It is more effective at reducing the depth and severity of poverty, Gao said.

When asked about the potential to universalize dibao and remove the means-test, effectively creating a Universal Basic Income for China, Gao said this idea has been “very much on my mind recently.”

“I think the best possibility probably would be for certain more developed localities to experiment with such a program and see how it works,” she said.

As for creating a UBI program in China in the near-term, Gao said this would be challenging for many reasons.

“To make the dibao or a similar cash transfer universal all around China, I don’t think it’s very likely in the short-term, both in terms of fiscal challenges and also political and cultural challenges,” Gao said.