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                      China in a period of social transformation
                      LI Peilin        2012-11-12

                      From Durkheim to Weber, Parsons and Wall erstein, and from Rostow to Chenery, Lewis and Kuznets, sociologists and economists have formulated all kinds of social transformation theories, such as the transition from traditional to modern society, from pro industrial to indus trial society, from the periphery and semiper ipheral countries to the core, from a poor (low income) to a wealthy/middleincome country, from a lessdeveloped to a developed country, and so on. In some sense, however, China's reform practice over the past dec ade goes well beyond these theories.  While  China's social transformation shares certain common features with that of other countries it has unique character istics: the transformation of social structures was carried out with the transformation of the economic system, while the whole social trans formation process showed a tendency to spread from rural to urban areas. The people finally aban   doned fixed thinking for an economic break   through and acquired new perspectives of over   all social development. China finally began to    change from a product economy for selfsuf  ficiency and semiefficiency to a planned corn   modity economy, from an agricultural to an  industrial society, from a rural to an urban   society, from a closed and semiclosed to an  open society, from a homogeneous and unitary  to a heterogeneous and diversificd society, and  from a moral to a legal society. The new experi ence of China's social transformation has attracted the attention of scholars from various disciplines across the world, especially sociol ogists and economists. 

                       

                      Transformation from a selfsufficient and semisufficient product economy to a planned commodity economy 

                       

                      Before the reforms, the developmental level of Chi na's commodity economy was rather low. The highly concentrated planned econ omy, to a large extent, was a product economy associ ated with a low level of pro ductivity. In essence, it was still a natural or deformcd natural   economy.   The urban and rural economics were operated not by market mechanisms but by administrative plans in the whoic proccss from raw material supply to product circulation. In rural areas, the nature of the natural economy was more obvious. Except for the suburbs of some metropolitan areas and a few developed coasted regions, the majority of rural arcas were selfsufficient and semisufficient with a very low commodity output, and the rural cconomy was a closed economic system where production was  mainly  for  selfsufficiency.

                       

                      After the reforms, the commodity economy was adopted as a new social factor, which gave rise to enor mous changes in the traditional economic struc ture. These changes were revolutionary in nat ure. And through these changes, the other aspects of society have been transformed.

                       

                      The most remarkable characteristics of economic transformation in the rural areas are: (1) the household responsibility system gradu ally turned farmers into relatively independent commodity producers with autonomy of pro duction, exchange, consumption and manage ment, which greatly motivated them for econ omic activities; (2)the development of non agricultural sectors in rural areas replaced the former singlesector economic structure, and the nonagricultural industries (e.g. manufacturing, construction, transportation, commerce, and service industries) experienced rapid develop ment. By 1989, the proportion of nonagricul tural product value in thetotalrural product value increased from 31.4 per cent in 1978 to 54.9 per cent; (3) on the basis of rapid agricul tural development, the government reformed the system of state monopoly for the purchase and marketing of agricultural and sideline prod ucts existing since 1953, and adopted the new system of contract purchase and free marketing for the surplus products beyond state orders. In marketing, the government let the prices of the overwhelming majority of agricultural and side line products (except for grains, cotton, and edible oils) float freely with market demands, and raised state purchase prices for agricultural and sideline products several times; (4)the rural markets were opened up, and commodity circulation in rural areas is prospering. By 1989, the number of rural markets increased from 33,302 in 1978 to 59,019 and the trade value increased from 12.5 billion yuan in 1978 to 125 billion yuan; (5)the rural economy and the consumption of rural residents broke the closed circle of selfsufficiency and semisufficiency. The commodity output of agricultural and side line products increased from 45.2 per cent in 1978 to 52.0 per cent in 1989, that of consump tion goods increased from 50.4 per cent in 1980 to 68.6 per cent in 1989, and that of food consumption increased from 31.1 per cent in 1980 to 52.3 per cent in 1989. Now, the rural residents are producing mainly for society at large, rather than for their own consumption.     

                       

                      The transformation of the economic st ture in the urban areas has two aspects, being the reform of the highly concentrated planning system and the other the introduction of competition mechanisms, closely related to each other. Reform in the urban areas orig inated with the delegation of power and profits to the enterprises by the state. After the adop tion of a taxation system and various forms of management contract systems, enterprises no longer 'eat out of the big rice pot'. Rather, they become economic actors with more autonomy of management, and the state cuts down on command plans for them. Except for a few products and labour services crucial to national development and people's life which are still under the control of state command plans, all the others are regulated by the directing plans of the state and market demands. From 1979 to  1989, the number of products on the state com mand plans administered by the StatePlanning Commission decreased from about 120 to about 60, and materials distributed by the state decreased from 256 to 26. The proportion of industrial output controlled by state and province level command plans decreased from 80 per cent in 1984 to 16 per cent at present, that by state directing plans increased to 43 per cent, and that by market demands increased to 41 per cent.     

                       

                      Based on the reform of the highly concern trated planning system, a socialist commodity market system was established. Along with the perfection of the commodity market for con sumption goods, a market for the means of production (e.g. capital, raw materials, tech nology, information, and labour) also came into existence. In some regions and cities, real estate and stock exchange markets also emerged. In 1989, the proportion of production materials allocated by state plans decreased to less than 20 per cent, and in Shenzhen it was less than 5 per cent; the proportion of products sold at fixed state prices accounted for 56 per cent, and the proportion of materials bought at fixed state prices accounted for about 65 per cent.

                       

                      Transformation from an agricultural to an industrial society

                       

                      Industrialization is a necessary condition for modernization. In this sense, the transformation from a traditional to a modern society in essence is the transformation from an agricultural to an industrial one.     

                       

                      Viewed from thc general law of economic development in the developing countries, the transformation of economic structure usually takes three paths in chronological order: first, in the direction of output value structure, that is, the proportion of agricultural output value in the gross national product decreases to less than 50 per cent; second, towards urban and rural population structure, that is, the pro portion of urban .population increases to over 50 per cent of the national total; third, towards employment structure, that is, the proportion of the labour force employed in nonagricultural industries increases to over 50 per cent. In China, the transformation of output value struc ture occurred in 1956, when the proportion of net agricultural output value in the national income decreased to 49.8 per cent. For the whole period from 1953 to 1986, thc annual growth rate of net agricultural output value was 2.9 per cent and that of net industrial output value was 11.1 per cent. In 1989, the net indus trial output value reached 624.1 billion yuan, which accounted for 47.6 per cent of the national income, and the percentage of net agricultural output value in the national income further decreased to 32 per cent. The urban and rural residence structure is also approaching thc turn ing point. After organizational changes in rural administration and occupational changes among the rural residents are taken into consideration, the actual number of urban residents still showed a substantial increase, the proportion of the total population accounting for about 30 per  cent. The transformation of employment struc ture also showed significant progress. In the total labour force, the proportion working in primary industries decreased from 70.7 per cent in 1978 to 60.2 per cent in 1989. Nevertheless, since 1985, the proportion of the agricultural labour force has been stagnant at around 60 per cent.     

                       

                      In the process of transformation from an agricultural to an industrial society over the past decade, village and town enterprises have made important contributions. In 1978, the proportion of agricultural output value in the total rural output value still accounted for 68.6 per cent. After the beginning of reform, village and town enterprises arose as a leading force in rural development and became the backbone of the rural economy. In 1987, the total output value of village and town enterprises reached 459.2 billion yuan, overtaking agricultural output value and accounting for 50.8 per cent of total rural output value. In 1989, the total output value of village and town enterprises reached 842.28 billion yuan, which accounted for one quarter of the gross national product and 58.0 per cent of the total rural output value, while the number of employees in village and town enterprises reached 93.668 million, or 22.9 per cent of the total rural labour force. It is clear that industrialization in a traditionally agricultural society has started.    

                       

                      Another important sign of transformation from an agricultural to an industrial society is the development of tertiary industries. According to the standard adopted by the World Bank, the proportion of tertiary industries in the gross national product should be above 45 per cent in a modern society. At present, this proportion in developed countries has reached over 60 per cent, that in middleincome countries about 50 per cent, and in lowincome countries an aver age of about 40 per cent. Over the past decades, China's tertiary industries have stayed constant. In fact, China did not even adopt the classifi cation of the three industry levels in output value statistics until 1985. In the 1980s, China's tertiary industries sped up and showed a tend ency to overtake secondary industries in growth rate for the first time. By 1989, the proportion of tertiary industrial output value in the gross national product increased from 23.0 per cent in  1978 to  26.5  per cent,  the  number of employees in tertiary industries stood at 99.29 million, and the proportion of employees in the national total increased from 11.7 per cent in 1978 to 17.9 per cent. This means that the proportion of employees in tertiary industries only accounted for 18 per cent of the national total; but they produced 26.5 per cent of the gross national product. If we include govern mernt organs, mass organizations, the arme forces, courts, police, prisons and similar insti tutions amongst tertiary industries, as many Western countries do in their statistical data. then the percentage of China's tertiary industries in the gross national product is much higher than it appears to be in both output value and number of employees. Even so, it remains lower than the average level for lowincome countries World development experience shows that industrialiimtion and urbanization are closely related to the development of tertiary industries, In urban as in rural areas, potentials for the development of tertiary industries in China are high and the future is bright. Transformation from a rural to an urban society Urbanization is a necessary companion of indus trialization. As the levels of labour division and cooperation increase, as economic relations become closer, and commodity exchanges popu lar, market, transportation, communication and other facilities for production and life undergo rapid development. The migration of people to urban areas and an. increase in urban population become a natural trend. Urbanization is also one important sign of modernization not only because urban areas have the advantage of scale effects for economic activities but also because they are the centres of modern life.     

                       

                      The process of urbanization in China has been rapid since the beginning of the 1980s. From 1952 to 1979, the average growth rate of urbanization was 3.4 per cent. In 1952, the proportion of urban population in the national total was 12.5 per cent and by 1980 only a marginal increase to 19.4 per cent. In the period from 1980 to 1989, however, the proportion of urban population according to statistics jumped from 19.4 per cent to 51.7 per cent. Although this figure does not represent the actual pro portion of urban population in the national total because of the changes in the base, a rapid increase in the organization level is certain. According to the statistical methods used in the fourth national census, city population refers to residents in districts and subdistricts, and town population refers to residents in townships. Thus, taking the changes in administrative defi nitions into consideration, census results showed that the proportion of urban population in the national total was 26.23 per cent in 1990. How ever, if we count those rural residents who are engaged in nonagricultural occupations and those in the rapidly developing regions of South China, the actual urban population most likely has reached about 30 per cent. In other words, total urban society has been substantially changed.      The speedy growth of urban population is, to a great extent, the result of the rise of towns. Among the five categories of urban areas (i.e. metropolitan, large city, medium city, small city and town),the increase of population living in towns was the fastest.     

                       

                      The rapid rise of towns is, first of all, fuelled by the development of a commodity economy. Ever since ancient times, there has never been a single town without commodity exchange activities. From its very beginning, the town emerged as the transfer point for commodities and the distribution centre for agricultural and sideline products. From the end of the 1970s, the reform beginning with the introduction of the household responsibility system promoted the development of nonagricultural industries, and the specialization, socialization and concen tration of nonagricultural industries in turn promoted the prosperity and development of towns. In the vast countryside, the town is becoming the centre for enterprises, commodity circulation, finance, transportation, communi cation and information exchange, and is playing a critical role. In addition, viewed against the development  of  cities,  although  barriers between urban and rural areas still exist (e.g. population registration which restricts geo graphical mobility, the grain and nonstaple food supply system, the housing, the education system, medical care, employment, social secur ity, labour protection etc.), in some cases they arc greater. Reform has to a great extent broken down the restrictions that the former economic structure imposed on the circulation of pro duction elements, the prosperity of urban lifc itself demands the circulation of the labour force between urban and rural areas, and especially, the transfer of the rural labour force becomes an irrestible trend. Furthermore, the develop ment of free trading and floating purchase and marketing for agricultural and sideline products provides means of subsistence and market con ditions for farmers to work and live in urban areas. According to statistical data, the transfer of rural labour during the period from 1981 to 1987 is the fastest, the annual transfer recorded being of 9.9 million people. After 1984, how ever, the transfer of rural labour to urban areas slowed down. From 1988, there has been a new trend for the rural labour force to leave urban areas and return home.    

                       

                       Cities still have the potential to support increases in population. At present, the popu lation density in China's eight largest cities is about  1700 people  per square  kilometer, whereas in the 30 largest_foreign cities with a population of 2 million or above, the average population density is about 3300 people per square kilometer, about double that in China. In other words, as the infrastructure and service facilities for life in the city improve, the support and concentration capacities in large cities still have ample margin for growth. However, if we take into consideration that China's large cities carry a heavy burden of population and arable land is relatively scarce, urbanization in China should develop medium and small cities inten sively.

                       

                      Transformation from a closed and semiclosed to an open society

                       

                      The closure and semiclosure of Chinesc society in the past have many causes. The smallpeasant economy characterized by selfsufficiency and semisufficiency determined the closcd nature of traditional Chinese society. After the Song Dynasty, the government adopted a closeddoor policy to maintain declining royal power. And from the ban on maritime trade with foreigncrs under the Ming Dynasty to singleport trade with foreigners (in Canton) under the Qing Dynasty, the closeddoor policy remained as the basic national principle. Furthermore, the vast and rich natural resources made China's low level selfsufficiency possible. The confrontation with the West after the Opium War further strengthened the preference of Chinese society for a closeddoor policy. After the founding of the People's Republic, the government made great efforts to develop international trade, but for a rather long period, China was isolated from the West, which forced it to develop economic relations with other socialist countries instead. Unfortunately, China and the Soviet Union broke their friendly relations in the early 1960s, and China was forced once again tb choose the path of selfreliance and selfsufficiency for national development.    

                       

                       The decision to open up to the outside world taken at the Third Plenary Meeting of the Eleventh National Congress in 1978 represented a turning point in China's history. A decade thereafter, an allround, multilevel and multi channel opening pattern has been adopted. (1) Socalled 'allround' opening refers to the opening not only to the developed countries in the West but also to socialist, SouthEast Asian and Third World countries, and not only in coastal but also in inland regions. (2) Socalled 'multilevel' opening refers to opening to the outside world in four hierarchies and temporal order from south to north, from east to west, and inland from the coasts. Shenzhen, Zhuhal, Shantou and Hainan constituted the first level of opening, the 14 coastal cities constituted the second level, the Yangtse River Delta, the Pearl River Delta, the Southern Fujian Triangle, Liaoning Peninsula, Shandong Peninsula and the 13 economic and technological open zones constituted the third level, and inland consti tuted the fourth level. So far, the first three levels have included the two stategoverned cit ies (Shanghai and Tianjin), 25 provincegov erned cities and 67 counties with a total popu lation of 150 million. (3)The socalled 'multi channel' opening means that China is expanding foreign trade, absorbing foreign funds, introduc ing advanced technology and management tech niques, developing international labour serviccs and cooperation, promoting international tour ism and communications through all forms and channels of external connection. Since the beginning of reform,  China  has  absorbed US$18.98 billion of direct foreign investment, established over 20,000 foreign enterprises, bor rowed US$ 45.82 billion in foreign loans and invested in 550 construction projects (including civil airports), railroads, highways, ports, oil fields, electricity networks and chemical plants). In 1989, the number of tourists from abroad multiplied approximately 13 times over 1978.    

                       

                       Opening to the outside world greatly stimu lated the development of foreign trade. For the three decades from 1950 to 1979, total foreign trade value only accounted for 10 per cent of the national income. By 1989, however, it has risen to 31.7 per cent. For the decade from 1978 to 1988, China's national income increased 2.9 times,  whereas total  foreign trade  value increased 9.8 times. By 1990, total foreign trade value rose from US$38.1 billion in 1980 to US$115.4  billion,  of which export  value increased from US$18.1 billion to US$62.1 billion. And the composition of export products, also underwent enormous changes, the pro portion of manufactured goods in total export value increased from 49.7 per cent in 1980 to 74.5 per cent in 1990.     

                       

                      The transformation from a closed or semi closed to an open society is not only charac terized by opening to the outside world, but also by opening to the domestic world, indicated by greater social mobility. The level of social mobility is an important demarcation between a closed and an open society and between a traditional and a modern society. In the past, Chinese ideology viewed social mobility and stability as conflicting notions, tended to stress the importance of structural stability in social organization and management, and made every effort to restrict social mobility. As a result, birth place, family origin and job assignment often determined one's lifelong occupational status. The relaxation of government policies and the reform of education, employment and income distribution systems made the mobility of labour more rational. At present, there is a floating population of about 20 million. In Beij ing alone, it is over 1 million. It is inappropriate to call farmers in the cities 'blind floaters' because, with  the  development of human society, it is a natural feature of social mobility and labour transfer for farmers to come to the city for employment. It is no good to try to prevent the farmers from entering the city. Rather, the government should make the best of the situation and try to solve the problem by organizational reform, especially by promoting the growth of the city and by narrowing the gaps in organizational structure between the city and the countryside.    

                       

                      Opening to the domestic world depends upon two important information communication channels, one being commodity circulation and the other, mass media. In 1989, national total retail value reached 810.14 billion yuan, which was an increase of more than four times over 1978 (155.86 billion yuan), the increase of rural retail value being much faster at 4.6 times over 1978. The increase in the quantity of commodity circulation is not just an economic phenomenon; since commodities are carriers of technology and information, it also spreads modern technology, life styles and social values.     

                       

                      The development of mass media also played an important role in the opening of Chinese society. It connected the formerly closed countryside and cities with the outside world. According to statistical data, ownership of radios and television sets was only 7.8 and 0.3 per hundred households respectively in 1978: ten years later, it increased to 23.9 and 13.2 respectively. In 1989, the coverage of national radio broadcasts reached 70.6 per cent and that of television reached 75.4 per cent of the population. From 1978 to 1988 the number of television stations increased from 32 to 422 across the nation and that of radio stations increased from 93 to 461. Through radio and television, the formerly isolated, vast country side was connected with the whole world, which gave rise to great changes in the knowledge structure and social expectations of farmers, the younger generation of farmers becoming less and less satisfied with the restrictions of the countryside.

                       

                      Transformation from a homogeneous and unitary to a heterogeneous and diversified society

                       

                      The transformation from a homogeneous and unitary to a heterogeneous and diversified society is not a temporary and transitional phenomenon, but a natural trend of social devel opment and an ongoing process of change in the social structure. This process should be with the rise of the social integration level (in essence, it is the rise of the social absorption capacity). Since the reform, the acceleration of social differentiation has exhibited new patterns with the development of the national economy.     

                       

                      In terms of the ownership of the means of production, the old concept that the 'purer' the public ownership the better has been aban doned, and a new structure of coexistence of multiple ownerships, with public ownership being the leading force has emerged. Generally speaking, before the reform there were only two forms of public ownership: state ownership and collective ownership. The reform broke the economic structure of monopolypublic owner ship. As a result, individual ownership rapidly developed and private ownership of units with more than seven employees subsequently came into existence. After the establishment of the special economic zones and the opening of the coastal regions, joint ventures and independent foreign enterprises emerged. In the meantime, public ownership itself also assumed several forms and a number of economic organizations crossing urbanrural lines, ownerships, regions and economic sectors emerged. Now, the new economic system is composed of the multiple economic elements of state ownership, collec tive ownership, individual ownership, private ownership, and joint ownership (including joint ownership between the state and collectives, between the state and individuals, between col lectives and individuals, between China and foreign countries, between overseas Chinese and businessmen in Hong Kong and Macao, and between foreign companies).      The changes in the ownership structure and the finer division of labour brought changes to the occupational structure, reflected not only in occupational classifications but also in the life style, income, educational level, consumption patterns,  interpersonal  contacts and  other aspects among different occupational groups. The high homogeneity in the occupational struc ture before the reform has been changed, and it is developing towards increasing diversification. So far, there have emerged the major occu pational groups of workers, cadres, farmers, intellectuals, professional staffs, company man agers, individual labourers, and private com pany owners. Within these subgroups can be distinguished, for example, those working in state enterprises, urban collective enterprises, village and town enterprises,and private enterprises. The diversification of occupational structures gave rise to the diversification of interest demands. As a result, problems of inter est dissatisfaction and conflicts among different occupational groups become more and more evident.     

                       

                      Since the beginning of the reform, 'farmers' by the conventional definition have experienced the most obvious changes. No doubt, China is an agricultural nation. But for a long period we were used to saying that 80 per cent of the Chinese population are farmers. This statement needs specific analysis. 'Farmers' as used in the past, refers to all 'rural residents' who do not rely on commodity grains supplied by the state. But in fact, 'farmers' by the conventional defi nition have experienced profound changes in terms of occupational differentiation. 'Rural residents', to a great extent, has become only a concept to indicate household registration of residence, and they have been differentiated into eight occupational strata with different interests: agricultural labourers, rural workers (working in either village and town or urban enterprises), private employees, rural intellec tuals, rural individual businessmen, rural private company owners, village and town enterprise managers, and rural administrators. At present, the distribution of the active rural population is as follows: farmers account for about 5557 per cent of the total, workers in village and town enterprises for about 24 per cent, rural private employees for about 4 per cent, rural intellec tuals for about 1.52 per cent, rural individual businessmen for about 5 per cent, rural private company owners for about 0.10.2 per cent, village and town enterprise managers 3 per cent, and rural administrators about 6 per cent.  

                       

                      In step with structural differentiation among occupational groups, the organizational structure also changed. Before the reform, the organizational structure prevalent in China was characterized by a high concentration of power with a combination of party leadership and administration and a combination of adminis tration and management. Under such a system, the state used administrative means to organize industrial and agricultural production. After the  reform, power was distributed between the party leadership and administration and between  administration and management, and enterprises were delegated more power than before, thereby forming a new organizational pattern with diversified forms and specialized functions. The most prominent change is that of enterprise organization, as is shown under the following three headings.

                       

                       1. Structural transformation of enterprise organization Stateowned enterprises were transformed from product producersto commodity producers, from executors of state orders without financial autonomy to independent economic actors with all the rights and responsibilities for their econ omic activities. With the separation of property ownership from production operation, various new management systems were adopted. One of them is the contract system, under which the total wage mass floats with the economic success of the enterprise if it pays state taxes and carries out designated technological transformations. The second is the lease system, still on trial, designed mainly for small modest enterprises with profits. At present, there are still a number of difficulties in evaluating the ownership enterprises. The third new management system is the jointstock system, which is in the explo ration stage. The practical intention is not just how to amass idle funds from the public and the workers, but more important, how to make the enterprise the legal owner of its property with the state as the ultimate owner. At present, since most enterprises enjoy autonomy of oper ation, full responsibility for profits and losses, selfaccumulation of capital, and selfregulation

                       

                      2.  Extensive expansion of enterprise organizations     

                       

                      (a) Banks, credit unions, insurance com panies, supply and sales associations, and postal and telecommunication services have aban doned their former administrative patterns and adopted enterprise management systems, and they are becoming important economic means for macromanagement and regulation;     

                       

                      (b) various types of crossregional and crossindustrial enterprise groups take an active part in organizational activities of economic life as economic actors;     

                       

                      (c) some newspapers, magazines, pub lishing houses, radio stations, television stations and other nonprofit organizations have also adopted enterprise management systems. 3. The spread of enterprise organization in rural areas This is reflected not only in the development of village and town enterprises, but also in the fact that many productionrelated service organiza tions adopted enterprise patterns and manage ment systems. In some of the southeastern regions with a high level of economic develop ment, agriculture has become a production branch or 'workshop' in a comprehensive enterprise group.     

                       

                      Types of communities are more diversified than before. In addition to the original three regional patterns existing in eastern, central and western parts of China, communities are internally differentiated, the gaps in develop ment levels among them are enlarging, and the differences of interest among communities are becoming more evident. In terms of develop ment models, they have chosen different paths through the development of village and town enterprises, commerce, tourism, foreign trade, ports, joint adventure etc. Transformation from a moral to a legal society Morality and legality are two aspects of the same thing, the former being internal selfregu lation and the latter external coercion. But for a long period morality has been a characteristic of Chinese society. People tended to judge the rationality of actions by the morality of human cooperation and took the function of law to be merely punishment. And they did not dis tinguish moral rules from private laws or public affairs from individual actions. Besides law and contract, individual feelings and social status were also important factors in the assoication of people for public action. The whole social structure was like a network, made up of individ ual feelings, by which kin, relatives, friends, countrymen, and colleagues formed a number of small mutualbenefit circles. This characteristic still has significant influence on society. Abnor mal phenomena (e.g. private letters, solici tation, bribery, commissions) are still prevalent. In many counties outlays for board and lodging for guests reached nearly 1 million yuan a year, and in many enterprises the 'public relations outlays' usually ranged.fromtensto hundreds of thousands yuan. Interpersonal interaction based on personal feelings and social status has created numerous contradictions between policy and law and between.rationality and legality.      However, this situation is being changed gradually. Chinese society is in the process of transformation from a moral to a legal one, which in essence is also the transformation from personal rule to rule by law. Since the beginning of the reform, the Chinese government has formulated criminal law, criminal lawsuit law, civil law, civil lawsuit law, state organization law, business contract law, enterprise law, trade mark law, patent law, Sinoforeign joint adven ture enterprise law, export enterprise law, fore ign business contract law, income tax law, enterprise law, bankruptcy law, environment protection law, forests law, marriage law, mili tary service law, inheritance law, minority nationality regional autonomy law, nationality law, compulsory education law, administrative lawsuit law, nationality law, compulsory edu cation law, administrative lawsuit law, and a number of other important laws. From 1978 to 1990, the National Congress and its standing committee passed more than 70 laws. In the same period, the State Council formulated more than 700 administrative laws and regulations. In addition, the provinces, autonomous regions and stategoverned cities formulated more than 1,000 local laws. Law has become the criterion for people to judge matters, and the forme rule without law has been completely changed However, the existence of laws does not mean that all affairs are handled~bY law. According to survey and estimate/results, only about 5 per cent of the laws and regulations formulated far are playing a role in social life, and on about 5 per cent of the laws are known to the people.     

                       

                      In the rural areas where lineage and geo graphical relations exist as ties in the social network, occupational relations are becoming more and more important with the development of the economy and the opening of the society Large numbers of farmers left their villages an homes to work in village and town enterprise or engage in business and service industries. and they established their connection with the outside world through occupation relations. Far mers learned how to do business through con tract, agreement, credit certificates,bills and other legal documents. According to statistical data, the number of notarized business contract reached 2 million a year after 1985, of whid those signed by rural residents account for large proportion. In 1987, 1,896,752 busines, contracts were notarized, of which agriculturn (including farming, forestry, husbandry, fisher and sideline production) contracts and produce purchase and sale contracts accounted for about 30 per cent.      The popularization of economic laws and regulations is a major indicator of a society abiding by law. With the development of the commodity economy, China has establishe legal order by and large, and has regulate the responsibilities, rights and benefits among economic actors through various laws. They include the laws governing business credit, bank credit, state credit, stock certificates, lease and contract agreements, labour agree ments etc. As the economy becomes more an more socialized under the control of currency and credit, laws become more imperative Now, laws are playing an important role in the fields of macromanagement, enterprise organization, market order, contract, securi ties, tax, bankruptcy, and the protection consumers. From the beginning of the reform economic laws and regulations accounted for over 50 per cent of the national and local laws and administrative regulations.     

                       

                      In the process of social transformation, the legal values of people have also changed. The conventional sense of rule by person, the sense of separation beween right and responsibility, and the dislike of lawsuits are all weakened. People are liberated from traditional beliefs, moral norms, administrative orders, authority's wish and other modernization proceeds, laws will break down thc conventional demarcations of "punishing crime" and 'maintaining order' and become the 'software' of organizing and creating a new society.

                       

                       Note *This article was prepared as part of a 'Social Development Report' of the Social Development Research Group of the Chinese Academy of Social Sciences.      

                       

                       Li Peilin is Senior Research Fellow and Director of the Section of Industrial of Industrial Sociology at the institute of sociology of the Chinese Academy of Socilal Sciences, 5 Jianguomennei Street, Beijing, China.His