Jul 10, 2014

Should Sanya city obey directives and stop its unconditional basic income?

Sanya is a beautiful city on Hainan Island, in Hainan Province, in China.

Without much fanfare, Sanya has been distributing a small unconditional basic income to its residents. The Chinese calls this "all citizen dividend"The amount is about 60 rmb per month per resident. It has been doing this for 5 years. This unconditional payment is small, but to the poor, it is still a meaningful amount. The payment is about twice a year (every six months). Since 2011, this has been a regular payment and part of the operating budget. 

In 2014, the payments covering 6 months reach 620,000 people and total 223.2 million rmb (that is 360 rmb per person). Over 5 years, Sanya city has distributed 1.29 billion rmb. Early in 2014, Sanya distributed an additional 200 rmb per person. According to one estimate, the amount is about 1000 rmb per resident annually. According to China Labour Bulletin, the minimum wage in Hainan is about 1000 to 1150 rmb. So the unconditional "all citizen dividend" is about 1 month of minimum wage. As a percentage of salary, this Sanya payment looks comparable to or even better than the Alaska Permanent Fund Dividend  (US$900 in 2014).

Many people admire this Sanya city system and suggest that this could be done in other cities all over China. They highlight that this is really people equally sharing in the city's progress. Others say that returning wealth to the people is the right and just way to go. An analyst suggests that Xiamen city has a strong budget and can easily afford a similar "all citizen dividend" for its residents.

According to this online survey, 22695 (83%) support this unconditional cash distribution while 4396 (17%) are against it. If this survey is representative of people around the world, there is great hope for an unconditional basic income in many countries.

However, Sanya's unconditional basic income is under threat. 

A writer proposed that the payments should be legislated so that future payments will be according to the law instead of depending on the politicians' "mood and sense of generosity." Shortly after, in July 2014, Sanya announced that the payments will be modified and will no longer be unconditional. It will become a traditional targeted welfare payment. This is attributed to a directive from the Hainan Provincial government. As a result, only about one third of the residents will get paid, with a drastic drop in the total payment. 

Some see the Provincial directive as a defensive response to the popularity of Sanya's unconditional basic income. The central governments are afraid of more demands for other cities, provinces, or even at the national level. Some see the Provincial directive as a regression in the country's progress.

In comparison, Macau's unconditional cash payment has not be curtailed by the central government since Macau is a semi-autonomous "Special Administrative Region".

At this moment, it remains to be seen how the Sanya system will evolve eventually, and whether other cities will want to do the same.

References (in Chinese)

三亚给居民发“红包”:改革发展红利 人人有份
In fact, universal citizen dividend is not only a simple form of cash distribution. Tsinghua University Professor Cui believes that China can learn the Alaska and the UK approach. Place 50% of the 166 state-owned enterprises' profits as the principal of a fund. Then, each year, 50% of the fund's investment income can be used for the universal citizen dividend.

According to Statistics, the average food consumption expenditure for Sanya urban residents in the year 2012 was 7,604 yuan. A subsidy of 720 yuan can still be useful.

三亚5年发物价补贴12.9亿元 外地网友称羡慕 作者:蔡东成
According to statistics, Sanya price subsidies payments started from the second half of 2010. Up to the additional subsidy on the eve of Spring Festival in 2014, the total price subsidies paid is approximately 1.29 billion, benefiting approximately 4,637,900 people*payment. Among them, the 2010 payment 1, the standard amount is 180 yuan per person / half a year, reaching 511,200 persons, totaling  92,016,000 yuan; 2011 payments 1 and 2, the amount is 510 yuan per person  / year, reaching 1,110,800 persons*payment (double counted for 2 payments), totaling  281,209,400 yuan; 2012 payments 1 and 2, the amount is 600 yuan per person  / year, reaching 1,159,600 person&payment (double counted for two payments), totaling 347,891,700 yuan; 2013 payments 1 and 2, 720 yuan per person / years, reaching 1,232,400 person*payment, totaling 443,649,200 yuan; Spring Festival eve 2014 an additional payment of 200 yuan per person price subsidies, reaching 623,900 people, totaling 124,793,600 yuan. In other words, qualified residents of Sanya receive government price subsidies each year of nearly a thousand dollars.

全民发钱是朴素的收入分配调节 作者:叶祝颐
In my opinion, the government distributing money to everyone not only allows people's income to run ahead of prices to offset the impact of CPI growth, allowing the people to have a direct share of the fruits of development, but more importantly, it embodies the government's public responsibility. And about distributing dividends to the people, the state-owned enterprises, especially the monopolies, should bear this responsibility. Ministry of Finance has asked the central enterprises to improve the proportion of profits paid. Why not put the central enterprises profit for the wealth of the people, to improve people's livelihood?

It is worrying that this government-issued "bonus" initiative has not formed into a fixed or statutory system. The local government did not implement a legislation for it. In future, whether this will continue or not depends on the government policy-makers' "mood" and "generosity level", rather than the public opinion and institutional arrangements. With this situation, the public has to worry for the future of Sanya city's "resident bonus".

评论:三亚的全民红包为何玩不下去 作者为上海媒体人士

除了三亚,他们也发全民红包 编辑:朱碧怡

What we are hotly discussing is: will other cities follow up after Sanya? In Liaoning province, the old industrial base, will any city follow suit?

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