Abstract:

Since 1979, social protection in China has undergone fundamental institutional transformations. This presentation provides an overview of the state of the literature on social policy in the PRC, the institutional change which has characterized social protection in the reform period, and an outlook on future developments. Social protection under the planned economy was characterized by a division between urban and rural areas, decentralization, and companies functioning as enclosed mini-welfare states. In the course of economic reforms, urbanization, marketization and migration have generated substantial frictions with the institutional legacies of planned-economy social protection. The examples of health and pension insurance illustrate the pattern of institutional change that resulted from these frictions: a process of gradual functional integration. This process adapts social protection to marketization through the creation of insurance systems pooling risks between companies and households; it adapts previously separate urban and rural insurance systems to urbanization by integrating them; and it adapts insurance to migration by improving the portability of benefits from the decentralized and formally enclosed local insurance systems. Functional integration is also driving forward a dualization of social protection in China, with relatively generous benefits for people in regular, formal employment, and merely basic protection for the remainder of the population. While we enter the second term of the Xi administration, China’s social protection system keeps reproducing economic and political inequality rather than counter-balancing it. Current policy initiatives aim at attenuating inequalities related to employment status, locality, and the urban-rural divide. However, the potentially contentious nature of social redistribution raises questions regarding the degree to which these reforms can achieve their envisioned outcomes.
 
 
Picture: Pedro Szekely， Shanghai, China, CC BY-NC-ND 2.0, https://flic.kr/p/YkeqME