Design of a developing Welfare System in the People's Republic of China. What kind of System do the Social Policies represent?

Term Paper (Advanced seminar), 2020

17 Pages, Grade: 1,0


Table of Contents

Table of Contents


The Development of the Chinese Welfare State

Theoretical Approach - Definition of „Welfare“ State

The Current Chinese Welfare System



Legal Text and Provisions

Web Sources


After Chinas Economic Rise in the 1990 and its development into the worlds largest producer of goods as well as becoming increasingly influential in world politics China also started to join the family of countries which have a reasonable and widely available comprehensive System of social protection and social welfare in place to grand their citizen the ability to prosper and providing basic needs, as well as fundamental social support.

In 2010, the National Peoples Congress adopted the first national Social Insurance Law, representing the Culmination of a process of radical social reform and fundamental change in the sphere of Governmental Activities. To Represent the different Goals and Policies of the Welfare System being build in China it is important to understand what kind of welfare regime is being build in the Peoples Republic of China.

China has been a politically unique Country over the last 75 Years. It is one of only five remaining communist states in the world, besides Laos, Cuba, the Democratic Republic of Korea and Vietnam and besides some notable economical achievements from Vietnam, China is the only Communist State which had been economically Successful.

The Characteristics of a Communist State include centralized Power in the hands of a party elite which is presumably motivated, to act in varying degrees by some kind of socialist ideology of statism and social justice.

While the Peoples Republic of China has maintained its political uniqueness, the economic uniqueness of China shed over the last centuries. Mostly because China turned its back on isolationism and adopted due to Reform and Opening Up in the late 1970 and an open socialist market economy, this was enabled by following the Ideology of Deng Xiaopings1 „Reformation and Modernization“ Polices commonly know as „^^^^“ Ideology in Chinese Politics, this Phase still has not Ended regarding to the Communist Party of the Peoples Republic of China Ideology.

In 2010 the National Peoples Congress, Chinas de facto Parliament adopted the first National Social Security Insurance Law, representing the culmination of a progress of radical social reform toward a Welfare State. When analysing comparative welfare state literature, two main theoretical Approaches to explain welfare state developments are commonly expressed. One, primarily sees the Welfare State as a reaction to external and internal economic forces and, notably the level of development the so-called economic hypothesis (Wilensky, 1975).

The second theory, pictures the welfare state primary as a product of political driven action due to power relations and could be referred as the political hypothesis (Korpi, 1983). As ist is obvious these Theories acting antagonistic toward each other. The economic hypothesis would lead to expect a reactive welfare state in China similar to that of other market economies at roughly the same level of development, also know as a welfare state of necessity. It is necessary to take into consideration that the Chinese Social Security Reforms were described as designed to absorb the shock of entitlement collapse e.g loss of employment, to deliver relief rather than development and support short-term consumption rather than reduce long-term poverty or vulnerability as well as to deal with symptoms rather than causes (Cook et al., 2003). Furthermore the Asian Development Bank classified the Chinese Welfare System as confirming most closely to a conservative welfare system (ADB, 2002). While focusing on the political hypothesis the expectation would be a pro-active welfare state in the Peoples Republic of China that is different from that in economically similar countries, because of its normative purpose. Current Reforms are a stage in a political directed development towards a genuine welfare society, an ambition realized over the next decades and possibly be centenary of the „2049 Revolution“2 (Zheng, 2008).

By Considering these two propositions derived from the above mentioned theoretical approaches for welfare state development it is important to focus on the development of the Social Policies in the Peoples Republic of China as well as trying to implement the Current Social Security System of the Peoples Republic of China into the theoretical approaches for the Policy Design of Welfare States, because only then the Policy Goals and the Design of the Welfare System can be retraced and comprehended. Since the Welfare State is a transnational phenomenon and mainly perceived as a functional response to problems created by a capitalist industrialization, urbanization and demographic changes it is important to also keep the historical background of the Peoples Republic of China in mind, before analysing its current Social Policies (Jaeger & Kvist, 2003).

Therefor only when taking the development as well as the current social policies directives of the Peoples Republic of China into consideration the Research Question about if China does replicate or reproduce a conventional Welfare State or if it does develop a kind of Welfare State of its own, concerning the Country's History and Political Structure, possibly something that could be described as „socialist“ Welfare State, can be answered.

The Development of the Chinese Welfare State

When focusing on the structure of the Welfare State in the Peoples Republic of China it is important to consider the Country's History, since a short Synopsis is already given in the Introduction, this section will focus to give a more detailed overview and summary of the developments in the Peoples Republic of China regarding Social Policies and Social Initiatives as well as their historical context with the intention to depict the developments and actions. Beginning with the formation of the People's Republic of China in 1949 a socialist economy was developed (Wong, 1999).

This means the adoption of a universal lifelong employment policy in the cities, which was archived by organizing able bodied citizens into different work units, so called („danweis“), through job assignment by the government. These „danweis“ provided comprehensive welfare packages for workers, the term „danweis“ therefor refers to state- owned enterprises, state agencies, government departments and other public sector organizations. This systems, essentially working groups, could be described as a self­sufficient „mini welfare state“.

The „danwei“ system was composed of three elements, job tenure, an egalitarian wage and a welfare package (Lu, 1989). More than 80% of the urban labor force was covered by the „danwei“ system, until economic reformation in 1978 (Wong, 1999).

In rural areas, farmers were organized into communes based on collective ownership of land, through farmers working for those communes daily necessities were distributed (Wong, 1999). And for urban residents who did not belong to danwei, some social relief programs where set up to take care of their basic needs. For the poorest rural households, a „five guarantee“ system was funded and developed by rural collectives with the intent to cater for their basic needs (Chan et al., 2008). This welfare system, though characteristic by a sharp urban and rural devision as well as low level provision, provided basic social protection for workers and farmers (Leung & Nann, 1995).

The above mentioned vision of social security came to its merit, when it broke down, during the Cultural Revolution between 1966 and 1976. China started major reforms towards a socialist market economy in 1978. The provision of social security by guaranteed access to jobs or land was discontinued (Leung & Nann, 1995). It was accepted by the leadership that a market economy cannot function without the support of some kind of social protection and that the kind of social protection that could function in conjunction with a market economy had to be put in place instead of the old provisions. This understanding however took nearly a decade time evolve. The first reforms which can be described as systematic reforms toward a welfare state took place in the late 1990s, initially as locally limited experimentations3.

Consolidation towards a more inclusive system started towards the end of the decade and progresses into the new century, under the ideological guidance of Hu Jintao, the Chinese Communist Party (CCP) General Secretary (2002-2013) and Premier Minister Wen Jiabao (2003-2013) enunciated through their slogans „building a harmonious society“ and „putting people first“. The outsourcing of social responsibility form work and production units as stated in the old „danwei“ system was pursued in a process of trail and error. The „danwei“ system was dismantled early on while a new system emerged gradually, tentatively much later. The interim period was shaped as a period of policy neglect, social chaos and misery (Stepan, 2008).

The Leaders of the Peoples Republic of China believed that social problems would be resolved as a result of economic growth, but in the initial reform period they also believed that social protection, to the degree that the „danwei“ System had archived was contrary to economic growth. In the initial Years after 1978, futil measures were taken to restore the structures of social protection that had been destroyed during the Cultural Revolution (Stepan, 2008).

Most of these Messures were counterproductive and up against market reforms, in the subsequent years the PRC found itself in a social limbo with little effective provisions for those who were not lifted out of poverty by economic growth. Although the economic growth was wide reaching many were left behind in destitution.

Mostly rural Areas were affected due to the dismantling of collective structures, meant that social protection evaporated for the farmers affected by economic growth. This evaporation included the cooperative Health Care System, because rural clinics became private and the farming population was left without access to basic medical care. In urban Areas the policy of full employment was also dismantled and replaced with a system of individual contracts and enterprises were freed from employment and welfare responsibilities. As of 1986 many workers were laid off and many employers were unable to honour wage and social obligations, resulting in increasing poverty in the working population (Leung & Xu, 2015). Furthermore due to the misery in rural areas many migrated towards cities, those mostly lived on subsistence wages and without access to any social support, which made in result Education, Health Care and Housing widely unaffordable for many Citizens.

The resulting economic hardship gave rise to widespread and serious social unrest, including strike actions throughout the country during the late 1980s and 1990s, on a regime­threatening scale. These actions were seen as a threat to regime stability and also beyond any what has been recognised outside of the Peoples Republic of China, besides the Tiananmen Massacre (Leung & Xu, 2015). The new Constitution of 1982, with subsequent amendments and additions, introduced various social rights, including the right to assistance from the state, the right to education, women's rights and the rights of the elderly, of children the disabled. Nevertheless, the lawmakers started their first phase of serious social reform only in the early 1990s, their goal was to resurrect comprehensive measures for the traditionally privileged groups: the public sector and urban formal sector workers.

These reforms were backed by legislative and administrative policy indicators, e.g the concept of Social Security was first used in a policy document in 1986 known as the „Seventh Five Year Plan“. For these Groups, urban social assistance, health insurance and pension funds were operational by the end of the 1990s. In 1993, the CCP issued a general decision on „the establishment of a socialist market economy system“ in which social security was identified as „normal sustaining mechanism“ and the main components of a social insurance system were outlined.

In 1989, under the Administrative Procedure Law, Chinese citizens gained the right to sue government agencies, a right that has subsequently been used extensively. In 1994, the State Council issues a „Seven-Year Priority Poverty Alleviation Programm“ as well as including Workers Rights into the Labour Law. In 1995 Development Programms for Women and in 1996 the Law on the Protection of Senior Citizen Rights was enacted.

In 2002 and 2003, experimentation with rural pension insurance and rural medical insurance was intensified. Migrant Workers in the Cities were already, in principle, given Access to pension insurance in 1999 and due to the extension of experimentation with social security, also to work insurance in 2002. In the same Year Migrant Workers were recognized as being part of the working class status wise and the right to equal treatment alongside urban residents when applying for work. Urban education departments were obliged to recognize schools for Migrant Children and to offer equal access to education for all urban population.

The early 2000s also saw the establishment of a social work profession and social work education in China. In 2006, agricultural taxes were abolished.

In 2007, free compulsory education was introduced for rural children and in 2008 extended to the whole country. Also in 2007 the leadership pledged to extend the minimum Subsistence Guarantee to rural China also in 2007, the People's Congress passed a Law on the Protection of Disabled Persons and a resolution on The Rights of Disabled Persons Law. However, Law, does not have the same meaning in the PRC as in a rule-of-law system, but these pronouncements are nevertheless significant.

These Reforms have radically changed the structure of the support system. At the beginning of the reform period, urban households had up to 40% of their income from social benefits, mostly made up by Food and Housing Support. By 2007, the share of social benefits in urban household income was down to 20%, mostly made up from social insurance, with Housing and Food benefits almost eliminated (Gao, 2012).

In the political Report to the National Congress of the Chinese Communist Party (NCCCP), in 2007, General Secretary Hu Jintao articulated the theme of social development and the right of all citizens to education, employment, medical care, pensions and housing. Also the Premier, under Hu Jintao, Wen Jiabao stated, in 2010 „the main responsibility of the government is to ensure social programs are operated for the benefit of the general public and that the needs of the public for basic public service are met“. Hu Jintao in his 2012 political Report to the NCCCP again stressed the importance of social development, with the key objective to guarantee and improve peoples livelihoods and to satisfy their increasing material and cultural needs. Xi Jinping, the newly elected General Secretary of the CCP in 2012, articulated providing good life for the people as the Communist Party overall objective. The Policy Process to replace the old „danwei“ structures by a social security system is happening incremental and stretches already over more than three decades (Zheng, 2008). Among the main problem areas are the distribution of responsibilities between newly emerging private enterprises and the Public sector (Darimont, 2009).

Theoretical Approach - Definition of „Welfare“ State

To be able to put the development and the current social policy setting in to perspective it is important to first give an overview about what the term „Welfare State“ does mean, only then the current Social Policy System in the Peoples Republic of China can be attributed to a specific or a mixed Version of the Welfare State definition.

The General Understanding of a Welfare State is a form of government in which the state protects and promotes the economic and social wellbeing of its citizens, based upon the principles of equal opportunity, equitable wealth distribution and public responsibility for citizens unable to avail themselves to the minimal provisions for a good life.

The different forms of a Welfare State are mostly defined upon the different policy designs, therefore the Model of a Welfare State is divided into three main under-categories; the residual model, the industrial achievement and performance model as well as the institutional redistributive model (Titmuss, 1974).

This Typology was later empirically ratified with the categories renamed into liberal (or residual), conservative (or corporatist/industrial achievement) and democratic (institutional redistributive) (Esping-Andersen, 1990).

These three types can be attributed to the form of the country's regime therefore a liberal regime/liberal welfare state is characterized by modest, means teste assistance and targeted at low-income/working-class recipients. The liberal type of welfare state encourages market solutions to social problems, either by guaranteeing only minimum or by directly subsidizing private welfare schemes (Esping-Andersen, 1990).

The Conservative Welfare State are shaped by traditional values and tend to encourage family based assistance, also Social Insurance typically exclude the non-working family members and benefits encourage motherhood. In Conservative Regimes, State assistances will only step in when the family capacity to aid its members is exhausted (Esping-Andersen, 1990).

In Social Democratic Regimes, universal systems promote an equality of high standards, rather than equality of minimal needs. This implies immunization of citizens from market dependency, which reduced thee division introduced by market-based access to welfare and also the reliance on family support is depleted. This results in a commitment so a heavy social burden, which introduces an imperative to minimize social problems, thereby aligning the system's goals with the welfare and emancipation of those it is supporting (Esping­Andersen, 1990). This baseline Typology of a simple three model scheme has changed over the Years, mainly because welfare capitalism changed substantially from the 1990s and that the regime differences, identified in data from the 1980s have been modified in a trend of convergence (Gilbert, 2002).

Furthermore other classifications have been suggested based on alternative social policy observations, including health care systems (OECD, 1987), social assistance (Gough et al. 1997) and family policies (Guo & Gilbert, 2007) and these approaches tend to cluster countries differently than in the above mentioned typology. Nevertheless, it is still the main groundwork for the definition of a countries welfare system even though today various alternatives and overlapping definition exist.

Therefor different approaches, based on Esping-Andersens Typology, developed some of them are overlapping between two typological definition of welfare states others are a division of one theoretical definition of the Welfare State, like the Southern European Model which has been by a high degree of polarization in income protection systems and has gone hand in hand with deeply segmented labour markets, fragmented and marginal social assistance, and low priority to family support (Leibfried, 1993; Ferrera, 1996).

After having presented the Groundwork of the Welfare State Definition it is important to set these Definition of Welfare States into the Context of the Social Security System Peoples Republic of China to define how the Chinese Welfare State Constitutes. Academic Literature often states that East Asia does not strictly fit into a single category and may should bee seen as a hybrids of liberal and conservative Models (Ngok, 2017).


1 Former Paramount Leader and Head of the Communist Party of China (1978-1989)

2 Economic Development Plan and Social Policy Directive

3 e.g Special Economic Zones like Shenzhen or Shanghai

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Design of a developing Welfare System in the People's Republic of China. What kind of System do the Social Policies represent?
Bielefeld University  (Fakultät für Soziologie)
Social Policy of Developing and Transitioning Countries
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social policy, china, pcr, welfare system, Analytics, Esping-Andersen Andersen, peoples republic of china, East Asian welfare system, policies, politics, Chinese welfare system, development, sociology, politik, sozialpolitik, south east asia, social insurance, socialist, social
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Kolja Bockermann (Author), 2020, Design of a developing Welfare System in the People's Republic of China. What kind of System do the Social Policies represent?, Munich, GRIN Verlag,


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