United Nations Development Assistance Framework China 2016-2020 Foreword (signatures)



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United Nations Development Assistance Framework China 2016-2020

United Nations Development Assistance Framework

China 2016-2020

Foreword (signatures)

The Government of China and the United Nations system in China are pleased to present the new UN Development Assistance Framework (the Framework) 2016-2020, which provides a basis for partnership between the UN and China over the course of the next five years.


The Framework is a result of a consultative process involving the Government of China, the UN system and other major stakeholders. The Framework serves as a strategic document designed to enable the UN System to provide an integrated response to assist in addressing national development priorities and challenges in China.
On behalf of the Government of China and the United Nations System in China, we express our gratitude to the many national counterparts, UN staff and other stakeholders who contributed to this Framework. We look forward to working together within this Framework over the next five years for the benefit of the people of China.
Executive Summary

Following 35 years of rapid and unprecedented economic growth, China has now entered a new and more complex stage of development. This stage is focused on improvement of the quality and depth of socio-economic growth and more even distribution of national prosperity to create a sustainable and harmonious society. “The Chinese Dream,” as articulated by Xi Jinping is the goal of becoming a moderately prosperous society by 2021 and a fully developed nation by 2049, marking the 100th anniversary of the founding of the People’s Republic of China.


In November 2013, the Third Plenum of the 18th Congress of the Chinese Communist Party laid out China’s development agenda for the next 5-10 years, outlining a comprehensive deepening of the reform process, suggesting a transformation of government and the way it relates to the economy, to the private sector and to society at large. Combined with the concrete targets set out in the 13th Five Year Plan, this will be the path China will follow to achieve “The Chinese Dream”.
Despite China’s remarkable achievement in poverty alleviation and extensive gains in development, the country is facing multiple challenges. Today, China is simultaneously straddling several development stages, facing growing inequity, environmental challenges, climate and disaster risks, and an unprecedented societal shift characterized by a rapidly aging population and shrinking workforce, mass urbanization, and a mobile but structurally disadvantaged migrant population. There is also growing pressure to find the appropriate balance between domestic reforms while assuming an increasingly active role in global collaboration.
The vision is clear and the goals are set, but the challenges to comprehensively deepening reform to achieve the China dream will be many and complex and will require fundamentally new and innovative ways of thinking.
The UN has been a strong and trusted development partner of China for over 35 years, and is well positioned to continue its support to China throughout this critically transformative period by providing high-level policy input, and crucial innovations to address specific challenges, supporting normative work, and by promoting global exchange. To this end, the UN will draw upon its comparative advantages; an extensive repository of expertise, strength in working with all levels of government, access to global networks, and utilization of its capacity as an impartial convener for dialogue.
The purpose of the UNDAF is to articulate the high level priorities of the UN system in China between 2016 and 2020 in support of China’s development goals.  Following a consultative process to align national development priorities with areas where the UN holds a comparative advantage, and in anticipation of the emerging post 2015 agenda three priority areas were selected. These are: 1) Poverty Reduction and Equitable Development 2) Improved and Sustainable Environment and 3) Enhanced Global Engagement. The implementation of the UNDAF will be significantly influenced by the substantial social and demographic shifts taking place in China; an aging population, rapid urbanization and related mass migration. These shifts will impact all three areas and will fundamentally affect the way China implements reform.
Outcomes for each priority are laid out in this Framework and describe the intended changes over five years to which the UN aims to contribute substantively. Activities will be implemented through individual agency programmes developed with their national counterparts. Joint programming will also be pursued by multiple agencies in areas of common interest. All programmes will be framed by the overall strategic direction and focus outlined in the UNDAF. The primary methods through which the UN intends to deliver its support, systems for coordination as well as plans for monitoring and evaluation are also described.
Introduction

Over the last 35 years, China has experienced profound economic and social transformation, achieving extraordinary success in human development and poverty reduction. The economy has grown at an average of 9.8% per year since economic reforms began in 1978, per capita incomes have increased fifty-fold over the same period and 500 million people have been lifted out of poverty. The Human Development Index (HDI) increased from 0.423 in 1980 to 0.719 in 2013, a change of 70%, placing China in the high human development category at 91 out of 187 countries and territories. By 2013, China had achieved several Millennium Development Goals (MDGs) ahead of schedule and was on target for several more however, universal access to reproductive health, and decent work for all had not been achieved, and reducing biodiversity loss was progressing slowly1. This extraordinary socioeconomic development has also resulted in China becoming the second largest economy in the world in 2010, increasing China’s profile and influence globally.


However, unprecedented economic growth and tremendous achievements at the national level have been accompanied by serious environmental impact and large domestic disparities, including uneven access to social services and opportunities for development, between the industrialized eastern seaboard and the interior and far west, between urban and rural populations as well as within urban settings, between the residents and migrant workers, between women and men, and between the young and the elderly.

The Chinese Government is well aware of the challenges borne of ‘unbalanced, uncoordinated and unsustainable development2,” and has set out a path to deepen critical aspects of reform to address these challenges.



National Development Priorities and challenges

The overarching vision for reform and development in China is laid out through the Third Plena of the Central Committee of the Communist Party of China. Specific development priorities and targets are laid out through Five-Year plans. The 12th Five-Year plan covers the time period 2011-2015 and the 13th Five-year plan (2016-2020) is currently under development.

The Third Plenum of the 18th CPC Central Committee in November 2013, laid out a vision for a comprehensive deepening of reforms in the areas of 1) Economy, 2) Governance and law 3) Social systems 4) Ecological civilization and 5) Cultural systems.

In particular, the goals articulated in the Third Plenum of the 18th Congress placed an emphasis on addressing rising inequality and creating an environment for more sustainable and balanced growth. The economic vision put forth an increased role for the market, fiscal and tax reforms to improve bureaucratic efficiency and governance, as well the need to promote innovation and industrial transformation, and to continue to rebalance the economy towards domestic consumption as a key driver of growth.


The vision for society emphasized the development, improvement and expansion of social protection floors; pension and health insurance; income distribution and higher employment quality; integrated development of urban and rural areas, including hukou3 reform and land title. In the area of governance and legal systems there is a call to promote institutionalized consultative democracy and reform the judicial system. And the approach to the environment is holistic, aiming to improve China’s natural resource management, through better regulation and accountability, promoting green low-carbon technology reducing pollutants and greenhouse gas emission.
Review of the UNDAF 2011-2015, repositioning the UN in China and aligning priorities

The UN Development Assistance Framework 2011-2015, signed by the Government of China and 24 UN Agencies, set out the UN’s collective goals for the period covered by the 12th Five Year Plan and focused work on three areas based on overarching national priorities of 1) ensuring sustainability, 2) reducing disparities, and 3) participating in the global community. It also took into consideration three important UN cross-cutting approaches: gender equality, the role of civil society, and the human-rights based approach.

A review of the UNDAF indicated that while the three focus areas have remained highly relevant the extensive monitoring framework has seen less practical application, as detailed programme planning and evaluation continued to be undertaken at Agency level. This led to a broad consensus within the UN Country Team (UNCT) and the Chinese Government for the development of a more strategic framework with greater flexibility and practical application.

Given the changes in China’s development assistance needs as a Middle-Income Country (MIC) and against the background of decreased development assistance from bilateral agencies to China and the UN, a repositioning process was undertaken by the UNCT in 2011-2012 to determine how to maximize UN impact in China. At the same time the Government of China also held an internal consultation on the future of the UN in the country. The result was recognition of the long and fruitful collaboration between the UN and China where the Government reaffirmed its continued support for UN presence in the country.


Based on an exercise to align national development priorities to areas in which the UN holds a comparative advantage, informed by the repositioning process and the experience implementing the previous UNDAF, while keeping the post-2015 agenda in mind, three priority areas were conceived and have been laid out in this Framework.
The first two priority areas; Poverty Reduction and Equitable Development and Improved and Sustainable Environment are prioritized on the domestic reform agenda. The third priority area; Enhanced Global Engagement, is an important area of interest for the Government of China, with the aims of working with countries in international affairs, promoting global and regional dialogue and expanding South-South cooperation to assist developing countries. The UN holds expertise and capacity in the three priority areas.
The priority areas are discussed in the context of the important demographic shifts that are taking place in China. A shrinking labour force, an aging population with specific public health needs and a rapidly growing urban population will place significant pressures on social services systems, infrastructure and the environment.
The UN Approach

In addition to technical expertise and capacity that the UN brings to support China in these three priority areas, the UN also holds unique strength in its distinct approach to development.


The UN, in providing support as part of the UNDAF, will apply key programming principles such as ensuring national ownership and development of national capacity, a human rights based approach, gender equality, environmental sustainability, transparency and accountability. These principles provide the basis for development cooperation that is both effective and sustainable.
Gender equality is a core development objective of the UN and a condition for equitable development, as structural barriers to women’s education and economic opportunities slow national productivity and create higher economic costs4. The UN system will promote gender equality throughout its development programming and will support China’s development and implementation of policies and practices that promote gender equality.
While the United Nations System works for the benefit of all people living in China a special emphasis is placed on those who are disadvantaged and vulnerable. These are people who are subject to discrimination, or disadvantage because of their gender, age, ethnicity, sexual orientation, employment or household registration status, physical or mental impairment, disease, poor socio-economic status or the location in which they live. In the context of China the vulnerable and disadvantaged can be defined as; children and youth, women and girls, elderly, the unemployed, minorities, migrants and refugees, people living with HIV and other diseases, persons with disabilities, female sex workers, the rural and urban poor and populations living in a fragile environment.
The UN encourages the participation of beneficiaries of development, particularly the vulnerable and disadvantaged, in the development process.

Societal shift fundamentally affecting priority areas


Demographics in China are shifting at a rate never before seen in human history. The fertility rate has dropped sharply (1.66)5 due to 35 years of a strict population policy, and is far below the 2.1 needed to sustain a growing population6. There is a persistent unbalanced sex ratio at birth, reaching 117.60 by 2013. Life expectancy is rising (74.8)7, as result of improved economic growth, better access to health care, and a reduction in child mortality. Rapid urbanization of society will have two-thirds of the population living in cities by 2030, and an estimated 236 million people are classified as internal migrants (2012)8.
The population of people age 60 and over will increase from almost 15%9 in 2013 to 23.4% in 203010. Aging, and urbanization, will accelerate the epidemiological shift from communicable to non-communicable diseases already representing 82%11 of the total disease burden in the country. This will have enormous implications with regard to delivery of health services and will increase demand on both preventative, curative and long-term care. The age shift will also put increasing pressure on pension systems and family structures, where on average one child will be responsible for two parents and four grandparents. An unbalanced population sex structure with a surplus of men and scarcity of women may have an important impact on social structures and stability.
The number of working-age adults (15-64) for every pensioner will drop from 7.9 in 2008 to 2.4 by 205012, with the working age population dropping from 910 million in 2013 to 850 million in 2050. This leaves a shrinking working-age population to pay for increasing health and pension benefits for a growing elderly society. Higher dependency will have to be paid for by higher incomes. The 12th five-year plan aims for income per capita to rise by at least seven percent in real terms per year. Wage inflation, however, needs to be off-set by higher productivity, requiring investments in the human capital and education systems needed to service the higher-value industries and services that constitute a transformed economy. China’s value added per employee is still only 1/7th of the average OECD country, and lower than middle-income countries such as Thailand or Colombia.
Currently 52% of China’s population live in cities, projected to reach 70% by 2030. Urbanization will increase demands on the environment, on services such as education and health care, and on infrastructure such as housing and mass public transit. It will also have implications for labour market development. Not only more jobs will need to be created in cities, but also better jobs to meet the growing expectations of a burgeoning middle-class. The youth (15-24) of China are driving urbanization and make up 31.7% of the migrant population nationwide. This young population, away from the family network, is also more vulnerable particularly in the area of sexual and reproductive and mental health. Hukou reform and the equalization of entitlements for migrants will be extremely important for sustained urbanization.
Smart urban development and adaptation of social systems to accommodate the population shift will be complex to plan, but critically important to economic growth and social stability.




Priority Areas


  1. Reduction of Poverty and Equitable Development


The Third Plenum of the 18th Chinese Communist Party Congress, “We will uphold the direction of reform towards the socialist market economy, put the promotion of social fairness, justice and improvement of people’s lives as the starting point and ultimate goal.”
Providing robust social protection floors, developing a strong human capital base, creating equal opportunities, respecting cultural diversity, underpinned by a fair and effective judicial system is the basis for a stable, dynamic and resilient society. Advancing equitable development is fundamental to lifting the remaining 84.513 million Chinese citizens out of poverty and transforming the economy.
Rationale

China has lifted over 500 million people out of poverty over 35 years through economic development and job creation. This is a remarkable success, yet there are still 84.5 million people or, 6.2%14 of the population living in poverty based on the national rural poverty line of 2300 RMB15 net income per year. There are millions more living just above this threshold and at risk of slipping back, the majority of whom are located in rural and ethnic minority regions.


Inequality in income distribution, household wealth and human capital is growing in China, with a Gini coefficient of 0.473 in 2013 indicating that the gap in income distribution is large and characterized by interprovincial inequalities, and an important urban rural divide, with urban households earning on average three times as much as rural households. There are also earning gaps between men and women and between different age groups. Unequal development is not only a result of unequal access to decent employment, but also of unequal access to quality social services and support, such as education, health care, and housing.
Equitable development in China

Category

Figure

Year

Source

Population living in poverty

(using national rural poverty line 2300 RMB net income/year)



84.49 million people (6.2% of the population)

2013

National Bureau of Statistics

GINI coefficient for income distribution

0.473

2013

National Bureau of Statistics

National HDI

0.719

2013

Human Development Report, 2013

Ranking HDI

91

2013

Human Development Report, 2013

Enrollment rates of primary school age children

99.72% (F), 99.70% (M)


2013

2013 National Educational Development Statistics Bulletin, Ministry of Education (Chinese)

Gross enrollment ratio in pre-school education

67.5%

2013

2013, National Education Development Statistical Statement

Population access to water

80% (rural)

2014

Ministry of Environmental Protection

Population access to sanitation

74% (rural)

2013

National Health and Family Planning Commission

Gender pay gap between men and women.

Women in urban and rural households earn 67.3% and 56% of men’s wages.

2010

Third Survey on Chinese Women’s Social Status (ACWF and National Bureau of Statistics)

Women labour force participation rate (aged 15 and above)

63.8%


2012

Human Development Report, 2013

Share of women employed in the non-agricultural sector

39%,

2013

World Economic Forum

Global Gender Gap report, 2013



Share of women employed in informal employment

36%

2013

World Economic Forum

Global Gender Gap report, 2013



Sex ratio at birth

117.60

2013

National Bureau of Statistics

Violence against women (% estimate)16

24.7%

2011

Third Survey on Chinese Women’s Social Status (ACWF and National Bureau of Statistics)

Unemployment

4.08% urban17

2014

Ministry of Human Resources and Social Security

% increase in health expenditure as % GDP over 10 years

0.6% (4.8%-5.4%)

2002-2012

World Bank

Population coverage of health insurance

95%

2012

Ministry of Health

% out of pocket expenditure of total health expenditure

34.3%

2012

National Bureau of Statistics

% of low-income households experiencing catastrophic health expenditure

8.9% (2013 survey data will be available 6 November 2014)

2008

National Health Service Survey Data

Pension coverage

79.7%18

2013

Ministry of Human Resources and Social Security

Increasing human development and reducing poverty is predicated on the existence of well-functioning systems and social institutions that protect and empower people. Ensuring that these systems and institutions are equitable requires expanding accessibility, increasing transparency and accountability, so that they benefit the entire population including the most vulnerable and disadvantaged people. Over the last ten years the country has gradually introduced a basic social protection system. Some of the programmes under this system, such as basic health insurance and pension, have now expanded to universal institutional coverage, however services and financing methods are often fragmented, benefits are low, especially in rural areas, and often not portable, meaning that migrants do not benefit from full access. Importantly, the quality of education and health care, particularly in hard to reach areas, is uneven.


Enrollment in the nine year compulsory education system is nearly 100%, but drop-out rates in rural areas are likely significant. The quality of education varies considerably and so does access to and affordability of other levels of education, such as pre-school and upper secondary and higher education. There has been progress in legislation on women in the workplace, but implementation is irregular and there are many areas that still must be addressed; widening pay gaps, prohibited occupations for women, and an unequal retirement age19. There remains a persistent unbalanced sex ratio at birth (117.60),20 women are particularly underrepresented in the highest public offices, and violence against women is estimated at (24.7%)21 indicating that there is a long way to go before gender equality is achieved22.
Basic health insurance has been expanded to cover 95% of the population and the level of insurance has been raised since nationwide health-care reforms were launched in 2009. Since the launch of the Reimbursement for Major Disease Program for urban and rural residents in 2012, the problem of excessive medical bills has been partially alleviated, but catastrophic medical expenditure is still an issue23.

At the 4th plenary session the China Communist Party Central Committee passed a ‘Decision concerning Several Major Issues in Comprehensively Advancing Governance According to Law’. The ‘Decision’ outlines areas for reform with the aim of governing the country according to a sound, fair, and transparent judicial system based on the constitution, and ensuring the right of fair process and safeguarding the protection of human rights. The ‘Decision’ also highlights the importance of legal capacity development and supervision. Although the reforms have yet to be implemented, advancing governance according to law will be critical to further equitable development of the country.


Registered unemployment is low in urban areas, minimum wages have been raised, and population coverage of basic unemployment and pension insurance is expanding. However, China will face challenges in job creation in cities as the population urbanizes. It will need to address a structural mismatch in skills of the current labour force and the needs of new and developing sectors of the economy as well as enhance productivity. One pathway is to further formalize the informal economy that employs a large majority of the nation’s estimated 26324 million rural migrant workers. Regulation of fair labour practices can help combat the type of inequality that undermines the equity of opportunity, support higher employment quality and contribute to harmonious labour relations. As the agriculture sector continues the gradual transition from small household farms to larger commercial farms, it will also be important to address the skills and stability of the rural labour force, to ensure a profitable and sustainable agriculture sector which will enhance food security.
The planned shift to domestic consumption and to inclusive, income-led growth will only be possible if disparities are reduced and robust social protection floors discourage the population from excessive saving. This implies innovation on all levels, from institutions to financing mechanisms to design and delivery of services, particularly as the population ages in major urban centers.
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