Social Protection in China ---- Reform & Development in the Background of marketization, globalization & urbanization Prof. Xinping Guan (Nankai University,

Social Protection in China

---- Reform & Development in the Background of marketization, globalization & urbanization

Prof. Xinping Guan (Nankai University, China)

1. 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

The food guarantee

The job guarantee

Public health care

Food market

Public education, etc

Labor market

Semi-commercial

Partly user pay

“Labour insurance” “Social insurance”

Welfare housing Housing market

Social Relief for the “Three Nos”

Social Assistance for all the poor

Changes in the urban social protection system

Before the reform After the reform

2. The social protection transition during the reform

Public (collective) farmland

Public health care

Household farmland responsibility

Public education

Commercialized

Public education

Collective care Social assistance

“Five Guarantee” “Five Guarantee”

Disaster Relief Disaster Assistance

Changes in the rural social protection system

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

Social Expenditure to GDP(%）

0

0. 5

1

1. 5

2

2. 5

3

1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997

Year

Socia

l Exp

endit

ure t

o GDP

(%)

• 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 an

d 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 impactsIdeological changes during the process of market

reform and globalization

International Economic Competition Caused by Globalization

Economic Growth

Social Stability

Social Problems Caused by Marketization and Globalization

Government’s Flexibility in Social Policy

• 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

5. The achievement and problems in the economic and social transition in the last three decades

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 s

ocial 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)

1. 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 technolog

y-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)

Social Expenditure to GDP(%）

0

1

2

3

4

5

6

Year

Soci

al E

xpen

ditu

re to

GD

P(%

)

3. Some new actions in social protection

1) The reinforcement and enlargement of the urban

pension system

2) The improvement of social assistance system

3) The further reform of the health care system

4) The better provision of housing benefits in cities

5) 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

YearPeople covered(Millions)

Increase rate to

previous year(%)

Total expendit

ure (billion Yuan)

Increase rate to

previous year(%

From Central Gov.

(Billion Yuan)

Increase rate to

previous year (%)

2000 年 4.026 51.4 2.72 76.6 -- 　 -- 　

2001 年 11.707 190.8 6.25 129.8 2.3 　

2002 年 20.536 75.4 11.26 80.2 4.6 100.0

2003 年 22.350 8.8 15.3 35.9 9.2 100.0

2004 年 22.008 -1.2 17.29 13.0 10.2 10.9

2005 年 22.328 1.5 19.07 10.3 11.2 9.8

2006 年 22.409 0.3 22.21 16.5 　 　

2007 年 22.709 1.3 27.48 23.7 16.0 　 　

The Rural Minimal Living Security

YearPeople covered

Increase rate to

previous year(%)

Total expendi

ture (billion Yuan)

Increase rate to

previous year(%)

From Central Gov. (Bilion Y

uan)2000 3.002 13.0 — —  

2001 3.503 16.7 — —  

2002 4.047 15.5 — —  

2003 396.8 -1.2 — —  

2004 496.4 25.1 — —  

2005 776.5 56.4 — —  

2006 1509.1 94.3 6.01 —  

2007 3451.9 128.7 10.41 73.2 3.0

Current social Assistance systems in ChinaProgrammes Urban Rural

MLS Local 1992, National 1997, reformed in 2002

Local 1994, National 2007

Medical Assistance National 2005 National 2003

Housing National 2004, 2007 --

“Five Guarantee” -- Firstly in 1950s, reformed in 2006

Disaster relieves  -- The new regulations from 2004-2006

Temporary assistance for the burgers

National 2003, to replace the old “taking-in & sending-back” practice

Juridical Assistance National 2003

Other governmental  

Non-governmental  

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 expen

diture.

• 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