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During the period of the command economy government health workers were paid the same salary throughout China. Over the past twenty years the government has managed a gradual liberalisation of the labour market, as part of the transition to a Ίsocialist market economy,. This paper explores this process in the health sector.

One consequence of the economic reforms is that the differences between average incomes of residents in rich and poor regions and employees of profitable and unprofitable enterprises have grown substantially. Government has found it impossible to maintain uniform pay levels, particularly in the face of a radical devolution of its own financial management. It has permitted individual facilities to pay bonuses out of revenues generated from user charges and the sale of drugs. This has enabled personnel in successful facilities to earn much more than colleagues in less well endowed facilities. On the other hand, governments in poor localities do not even pay the basic salaries, any more. Health workers have increasingly resorted to informal methods of earning an income. Doctors quite commonly accept cash gifts from patients. The government considers this to be unprofessional behaviour and has used a combination of moral pressure and loss of professional privileges to discourage it. There is evidence that some doctors also accept kickbacks from drug suppliers or facilities seeking referral patients. These are criminal offences.