Social policy tailored to different stages in past 70 years
The Chinese social security card Photo: FILE
Since the founding of the People’s Republic of China (PRC) in 1949, the Communist Party of China (CPC) and the Chinese government have placed importance on ensuring the wellbeing of the people and improving their lives. Due to different socioeconomic conditions and institutional systems in different stages of development, the formulation and implementation of social policy has changed constantly over the past 70 years.
In planned economy period
In the early years after the PRC was founded, the task to recover and develop the economy was extremely daunting. Ensuring basic living conditions for ordinary people was the focus of the task.
Against this backdrop, cities gradually established social relief systems for the aged, the weak, the sick and the disabled, while the countryside carried out land reform granting each household land and the essentials for production to guarantee the basic living conditions for farmers.
From then onwards, the government strived to promote the construction of the industrial system and instituted economic and social systems suited to industrialization. The construction of a contemporary social security system was also incorporated.
In 1951, the Government Administration Council (1949–54) promulgated the Regulations on Labor Insurance, forming a basic institutional framework for the social security of enterprises’ employees.
In the planned economy system before reform and opening up, a fundamental institutional framework for ensuring people’s welfare was brought into being, covering minimum standards of living, employment, education, health care and housing as well as the needs of children and disadvantaged groups in urban and rural areas.
In the countryside, collective economic organizations were the predominant means to guarantee the basic living conditions for farmers in all respects, while in cities, governmental and state-owned institutions played the major role.
Welfare policies in the planned economy system were inclusive, comprehensive and holistic. Relative to the economic development level, the overall welfare was in fact high. However, because the overall wealth was quite limited, it was difficult to further lift the welfare level. Moreover, there were notable structural and regional imbalances due to the urban-rural dual structure and ownership structure.
Before reform and opening up, the institutional system for people’s wellbeing was grounded upon a series of economic, political and social conditions. Given slow development and the short supply of basic necessities, the government had no alternative but to distribute living materials evenly through planning. Meanwhile, the government was highly motivated to advance industrialization, hoping to establish sound labor insurance systems to maintain the base of human resources for modern industrial development. At that time, public ownership and central planning laid an institutional foundation for a relatively complete welfare system. In particular, institutions in cities and collective economic organizations in the countryside provided effective supplies for the public welfare in urban and rural areas.
After reform and opening up
Since the reform and opening up in 1978, with the establishment and perfection of the socialist market economy system, significant changes have taken place relative to China’s welfare policies. The policies and actions to ensure and improve people’s wellbeing have varied from stage to stage.
At the beginning of the reform and opening up, or the late 1970s, the pressure on employment and housing mounted suddenly as large numbers of educated youth, or zhiqing, returned to cities from the countryside.
Facing critical resource shortages, the policy for the arrangement and distribution of employment and housing by the government and work units, or danwei, was hard to sustain, raising the urgent need for reform.
In the early 1980s, the reform to increase the right of autonomy for state-owned enterprises in cities forced local governments to revamp the pension and medical expense systems for employees of state-owned enterprises. In the mid-1980s, a wave of reforms of the labor employment of state-owned enterprises swept the nation. The reform of the pension insurance also began.
In the early stage of reform and opening up, the institutional basis for the welfare of rural areas also underwent great changes. The disintegration of the original collective economy seriously weakened the security and service functions of collectives, dealing a heavy blow to the welfare and public service system in the countryside.
Nonetheless, economic restructuring during the period substantially raised farmers’ incomes, compensating for the negative impacts generated by the weakening welfare and public services to a great extent.
With government support, a large part of the countryside continued to provide elementary and secondary education and ensured care for childless and infirm rural residents who had already been guaranteed food, clothing, medical care, housing and burial expenses. In addition, the household-contract responsibility system retained certain land security functions. The government even implemented massive poverty relief and development in poor areas.
These measures guaranteed and gradually ameliorated the basic living conditions for farmers. However, due to the disruption of rural cooperative medical services, the public health and medical service system was absent from most rural areas for more than two decades.
In the 1990s, the deepening of reform and opening up brought profound changes to the conditions, goals, concepts and institutions of welfare in China. In the context of building a socialist market economy comprehensively, the market mechanism was extensively introduced to the domain of welfare and social services. Such fields as employment and housing almost became completely market-driven.
The extensive introduction of the market economy played a big role in galvanizing economic growth and contributed to remarkable achievements in ensuring people’s wellbeing. By increasing job opportunities, raising laborers’ incomes and augmenting the supply of social services, it turned around the situation and the shortage of basic life necessities and social services.
Meanwhile, the introduction also affected the accessibility of social services. Despite the increase of supply, high prices made those services nearly inaccessible to middle- and low-income families, who faced high costs and difficulties in getting medical treatment.
The general reduction of inclusive welfare restricted social policy from effectively narrowing the income gap, leading to a rapidly widening income gap and increasingly prominent social contradictions in the last decade of the 20th century. Particularly in the countryside, the intertwining of slow growth and public service shortages resulted in serious problems related to agriculture, rural areas and rural residents, calling for new reforms.
Into the 21st century, the CPC and the government made timely adjustments to the goals and strategies for economic and social development based on the achievements and problems of the last decade of the previous century.
In 2002, the government proposed the action plan “Social Construction” to further safeguard and improve people’s welfare. Later it was incorporated into the overall layout of coordinated economic, political, cultural, social and ecological advancement.
In the decade since 2003, a series of social policies were unveiled, improving the social relief and insurance systems and establishing the housing security system for urban and rural areas; expanding the coverage of many important welfare systems, including realizing the full coverage of pension and medical insurance; stretching the supply of services in education and health care; narrowing the gap in social policy between urban and rural areas, between regions, and between groups; and substantially increasing the investment of public finance in social welfare.
In 2017, the total budget expenditure of public finance in education, health care, social security and employment, housing guarantees, and rural poverty reduction accounted for 9.53% of the GDP, up from 5.23% in 2003. The increased investment of public financial capital gave a huge boost to people’s welfare.
Experience
The review of Chinese welfare policies reveals first that China always gives priority to people’s livelihood, whether in periods of slow or rapid economic growth. In the planned economy system, welfare policies ensured people’s wellbeing through planned distribution, and in the period after the reform and opening up, the market mechanism was leveraged to expand supply. In the past decade, especially since the 18th CPC National Congress, more importance has been attached to improving people’s welfare.
Second, welfare policies fit in with economic development levels. Before reform and opening up, the government had to adopt the approach of planned distribution to ensure the basic living needs of each family due to backward economic development and a shortage of essential goods. In the first two decades after the reform and opening up, the government introduced the market mechanism to stimulate growth, thereby reducing its own burden. The market system not only significantly increased the supply of products and services but also motivated people to engage in labor. However, it also gave rise to imbalances in living conditions.
Since the start of the 21st century, the CPC and the government have continued to enable the market mechanism to work and increase the supply of products and services, while strengthening efforts to ensure and improve people’s wellbeing by formulating and implementing various social policies.
Furthermore, different models of development have determined different models of social policy. Since the reform and opening up, in the export-oriented economic model, labor costs had a great bearing on growth, so it was difficult to substantively elevate the overall standard of living.
Nonetheless, as the labor-intensive development model evolved into a technology-intensive one, the impact of labor costs gradually diminished while the quality of labor improved. In this scenario, extensively formulating and implementing social policies not only advanced people’s welfare but also accelerated economic development.
In the future, considerations on how to efficiently handle the relationship between social policy and economic development and what level of social welfare China should attain in the future should be highlighted to avoid the welfare trap. It is equally crucial to further clarify the relationships of responsibility among the government, market, families and society, to enhance the function of social policy in promoting social equity, and to improve the efficiency of social policy.
Guan Xinping is a professor from the Social Construction and Management Research Institute at Nankai University.
edited by CHEN MIRONG