Home OPINIONS Beyond a welfare state

Beyond a welfare state

China’s social security system provides essential guarantees for public wellbeing, safeguarding social fairness, and enhancing welfare. It serves as a safety net, a regulatory mechanism, and a shock absorber for the economy. The Chinese Party has always prioritised social security and public wellbeing, with proposals for increasing pay packages for workers since 1922. Since the 18th National Congress of the CPC in 2012, the CPC Central Committee has given even higher priority to the development of China’s social security system.

The Political Bureau, Standing Committee, and Central Commission for Comprehensively Deepening Reform have all held meetings to review and deliberate the general plan on basic old-age insurance reform and guidelines on deepening medical insurance reform. The government has established unified basic pension schemes, aligned pension schemes for government staff, and merged basic medical insurance schemes.

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China has established a fully functional social security system, covering over 1.36 billion people with basic medical insurance and nearly 1 billion with basic old-age insurance. This system has laid the groundwork for better lives, poverty fight, and achieving the First Centenary Goal of building a moderately prosperous society. However, the system faces deficiencies due to urbanization, population aging, and diversification of employment modes. These include inadequate integration of schemes, coverage gaps for rural migrant workers, underdevelopment of supplementary schemes, and under-management of social security schemes.

The system’s capacity for providing public services is limited, and social security funds are exposed to deficit risk in some localities. To address these deficiencies, China should step up income redistribution, strengthen mutual aid functions, and increase coverage. To meet diverse needs, a multi-tiered social security system should be developed that is sustainable, fair, and unified, covering both urban and rural areas. Building a social security system with Chinese characteristics is essential, as countries differ in development stages, social conditions, and cultural identity.

The Chinese government has prioritized improving people’s wellbeing and promoting social equity in its efforts to develop the social security system. This includes fostering a sustainable, multi-level system that covers the entire population and guarantees basic needs. The government has addressed development issues through reforms and innovative thinking, dismantling institutional barriers, and seeking truth from facts.

The plan for China’s social security programs during the 14th Five-Year Plan period (2021-2025) includes four principles: applying systems thinking, adopting a strategic perspective, being more mindful of risks, and taking a broader view of the outside world. These principles aim to ensure access to childcare, education, employment, medical services, elderly care, housing, and social assistance, while also avoiding blind expansion of welfare programs in Latin American countries and pan-welfarism in Nordic countries. The economy and social security are interlinked, with a small boat suitable for shallow waters and a large boat for deeper waters.

China’s social security system is entering a new phase of systematic, integrated, and coordinated reforms. To ensure the system’s stability, it is crucial to understand the relationships between various aspects and to boost planning and coordination. Addressing social security-related issues and addressing challenges is essential. The system should develop an old-age insurance system, improve financing and adjustment mechanisms, expand annuity coverage, promote third-pillar pension plans, and develop commercial medical insurance. The provincial level should manage basic medical insurance, unemployment insurance, and workers’ compensation systems, and clearly define fiscal powers and expenditure responsibilities.

Rural social assistance should be incorporated into planning for rural revitalization strategies. The “law of large numbers” in social insurance is essential for fostering a new development dynamic. As population aging and chronic diseases become more common, the system must adhere to integrated reform of medical treatment, insurance, and medicine supply. The direction, pace, and intensity of reform must be determined, and public opinion should be steered to ensure a stable approach.

To promote the healthy development of social security, we must strengthen legislation, law enforcement, judicial practice, and observance of the law. We should step up social security-related legislation, improve the system for supervising social security funds, and crack down on illegal conduct. We must also strengthen refined management of social security at five levels, from the central government to provinces, cities, counties, and townships. We should adapt to population movements and employment changes, improve social insurance registration and transfer, and accurately identify eligible individuals.

We should also use the Internet, big data, cloud computing, and other information technologies to advance digitalization of social security services. We should ensure access to traditional methods of delivering services for groups like the elderly and disabled people. We should give full play to social security’s role in epidemic prevention and control, stabilizing the order of economic and social development. We should phase out temporary relief policies and review successful practices in epidemic prevention and control. Finally, we must keep the social security system unified and standardized, encouraging localities to continue innovating.

Stephen Ndegwa
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