Social Protection in China

Social Protection in China ---- Reform & Development in the Background

of marketization, globalization & urbanization

Prof. Xinping Guan (Nankai University, China)

The Background --The 30-year Economic Reform

Before the reform, China had a low economic development with a higher welfare protection The economic reform: to provide more economic opportunities and economic security for Chinese people by marketization and a more open economy

2. The main trends of Socioeconomic Changes in China in the last three

decades Marketization: The economic system reform Globalization: The open-door policy Urbanization: rural-urban migration

II

Institutional Transition in Social Protection

1. The Social Protection systems before the reform

Changes in the urban social protection system

The food guarantee

Food market

The job guarantee

Labor market

Public health care

Semi-commercial

Partly user pay

Public education, etc

“Labour insurance”

“Social insurance”

Welfare housing

Housing market

Social Relief for the “Three Nos”

Before the reform

After the reform

Social Assistance for all the poor

2. The social protection transition during the reform

Changes in the rural social protection system

Public (collective) farmland

Household farmland responsibility

Public health care

Commercialized

Public education

Public education

Collective care

Social assistance

“Five Guarantee”

“Five Guarantee”

Disaster Relief

Disaster Assistance

Before the reform

After the reform

3. Characteristics of social protection transition

Partial marketization of social services The decline of the governmental social expenditure in the period of the reform

From the traditional universal model to a more selective welfare

system: ---- more targeting Institutional gap within the urban reduced, but the rural-urban gap enlarged, and Rural welfare declines

4. The socio-economic explanations

Market reform: to have an institutional coordination between welfare and economic systems, and to apply the market mechanism in welfare system. Globalization: social policy falls into a dilemma when China enters into the globalizing world economy. -- to enlarge the social welfare programs to deal with the increasing social problems; -- to reduce social expenditure

The political system: the social policy is more sensitive to the

political/social instability and complains from the worse-off groups. Neo-liberal impacts Ideological changes during the process of market reform and globalization

International Economic Competition Caused by Globalization

Government’s Flexibility in Social Policy

Social Problems Caused by Marketization and Globalization

Economic Growth

Social Stability

5. The achievement and problems in the economic and social transition

in the last three decades

The Achievement A long term economic development and the increase of income per capita Decline of poverty rate (by both market reform and the public actions) Higher living quality and better provisions in education, health, etc. for most of Chinese people

The Problems -- Higher inequality (The growing Gini Coefficient) --

“Absolute poverty” still remain, while “relative poverty increase -- Social protection to the vulnerable groups has been relatively decline as a result of the government’s social expenditure, especially in health care, etc. -- Unable to solve the social problem caused by urbanization and the rural labor migration -- Latent problems in the future “ageing society”

III

The New development (since 2002)

Background 1) The government’s stronger responses to the negative consequences of the economic and social reform in 1990s (inequality, Poverty, etc.), and the intension to solve the problems by a better social protection system 2) The changing politic-ideological environment: More emphasis on social equity More “human-centered” policy orientation “Harmonious society”

3) New economic situation: Rapid economic growth and the governments’

growing financial capacity 4) Rapid industrialization & urbanization after entering into WTO ---- Causing more rural-urban migration The changing pattern of economic development: ---- From the current labour-intensive to the technology-intensive

2. The new ideology and principles of social protection

From the economic-centered to the “harmonious society” guided More emphasis on social equity and the human-centered principle More claims of government’s responsibility and people’s rights in social protection To pay more attention to the social protection to the vulnerable groups

To reinforce the government’s intervention, and increase the

government’s social expenditure

Source: China Statistic Yearbook (2007)

3. Some new actions in social protection

The reinforcement and enlargement of the urban pension system The improvement of social assistance system The further reform of the health care system The better provision of housing benefits in cities The starting actions to include rural migrant into urban social protection

IV

The new social protection agenda for the next decade

1. The socio-economic changes next Structural change in economic pattern--- may cause more laid-off Urbanization: More rural people move into cities Ageing population: Higher need in welfare provision

2. The challenges for the next decade

Social inequality and the relative poverty Continuous action against absolute poverty The balance of economic competition and social protection Better social protection for the vulnerable groups: The unemployed, rural migrants, the disabled, etc. Higher needs in social welfare provisions for the emerging “aged population”

3. Policy choices in discussion (Institutional arrangements of social

protection) -- How and to what extent the government should intervene?

Welfare vs. Market Universal vs. selective Government vs. NGOs Equality vs. Efficiency Social governance: Global, national, and local

4. Some significant tasks for the next decade

Back to the middle way and have a developmental welfare system Increase social protection for the rural people, including the rural migrants, based on a urban-rural integrated social protection system Preparing for the future ageing society

Thanks

The development in specific areas of social policy

1. The Development of Social Assistance since 2002

The Urban Minimal Living Security

The Rural Minimal Living Security

Current social Assistance systems in China

2. Social Insurances

Pension: the current system was established in 1997, and reformed and improved since 2001; To valid the personal account by central government’s expenditure. The development of the social insurance programmes of medical insurance, unemployment, occupational injury and maternity. But the rural social insurance is still in no progress.

2. The new trends for the next decade

Back to the middle way Towards a urban-rural integrated social policy system Preparing for the future aging society

Thanks