In order to promote economic
development and social stability, and to gradually raise the living standards and social
security benefits of the general public, the Chinese government has made every effort to
establish a sound social security system that corresponds with the socialist market
economy system. After years of exploration and practice, a social security system has been
basically set up, consisting mainly of social insurance, social relief, social welfare,
social mutual help and special care for disabled ex-servicemen and family members of
revolutionary martyrs, and featuring the raising of funds through various channels and the
gradual socialization of management and services.
Reforming the Social Security
System
Since the early 1980s, the
Chinese government has carried out a sequence of reforms in its social security system
with the goal of establishing a standardized social security system independent of
enterprises and institutions, funded from various channels, and with socialized management
and services, a system characterized mainly by basic security, wide coverage, multiple
levels and steady unification. Under this mandatory state basic security, people's basic
living needs will be met corresponding with China's economic development level, and the
social security network will cover all citizens step by step. Besides basic security, the
state will actively promote other types of social security so as to form a multi-level
social security system. Through reform and development, a nationally unified social
security system will be put into practice step by step. Through more than a decade's
efforts, basic social insurance policies have been formulated, and successively
promulgated and implemented, covering the vast majority of urban staff and retirees, and
in some regions even rural people working in cities are included. A social security system
that guarantees urbanites a minimum standard of living has been established across
Since the mid-1990s, the Chinese
government has undertaken reforms to the social security management system in order to
bring all social security systems under unified planning, and better manage and supervise
the use of social security funds. Social insurance, which was previously governed by a
number of administrative departments, is now under the centralized management of the labor
and social security administration departments. Labor and social security administration
departments at all levels have established offices to handle the daily routine of social
insurance. The handling of social insurance affairs that used to be the responsibility of
enterprises are gradually being transferred to social organizations, namely beneficiaries
now get their social insurance benefits from organizations in their own communities and
are subjected to the latter's administration. The Chinese government has strengthened
administrative and social supervision over social insurance funds. These funds have been
orbited into special accounts and a system has been set up, whereby revenue and
expenditure are managed separately and the funds are used for specified purposes only.
Labor and social security administration departments at all levels have established
supervisory organs to examine and supervise the collection, management and payment of
social insurance funds. They also investigate and punish those who violate the pertinent
laws and regulations. In addition, the Chinese government has adopted a large body of
measures to increase the sources of social security funds, such as strengthening the
collection of social security funds and raising the ratio of such funds in the overall
financial expenditure. In 2001, the central finance allocated 98.2 billion yuan to be used
for social security payments, 5.18 times the figure for 1998. The Chinese government has
established a National Social Security Fund Executive Council specially responsible for
the operation and administration of the funds acquired from reducing state shareholding,
the funds put in by the central finance and social security funds collected from other
channels. The National Social Security Fund comes from the central finance appropriations
as well as from other channels.
Since 1998, the Chinese
government has adopted a "two guarantees" policy. The first is a guarantee of
the basic livelihood of the laid-off personnel from state-owned enterprises. Reemployment
service centers for those laid-offs have been established in all state-owned enterprises.
They give laid-off personnel allowances for basic living expenses and pay social insurance
premiums for them, with the required funds coming from the government budget, enterprises
and other sources (mainly unemployment insurance funds). They also provide job guidance
and organize reemployment training programs to help laid-off personnel find new jobs. The
second guarantee is to ensure basic livelihood for all retirees and that they receive
basic pensions in full and on time. To ensure the implementation of the "two
guarantees," the Chinese government has put forth three corresponding policies:
Laid-offs from state-owned enterprises can receive a basic living allowance from the
reemployment service centers for a maximum of three years; if they still haven't found a
job by then, they can receive unemployment insurance payments for a maximum of two years;
at the end of the two-year period, if they still haven't been reemployed, they can apply
for the minimum living allowance paid to urban residents. By 2001, the vast majority of
people laid off by state-owned enterprises were receiving a basic living allowance, and
retired personnel were receiving their pensions in full and on time. Thus the "two
guarantees" policy has played a major role in safeguarding the legitimate rights and
interests of laid-off and retired personnel, and in maintaining social stability.
The Old-Age Insurance System
Reform of the old-age insurance
system was initiated throughout
The basic Chinese old-age insurance system combines mutual assistance programs with
personal accounts. Employees of all urban enterprises may participate in the basic old-age
insurance program, and all enterprises and employees in towns and cities have the
obligation to pay the basic old-age insurance premiums. At present, about 20 percent of
the enterprise wage bill and 8 percent of personal wage should go to such insurance. Part
of the basic insurance premiums from enterprises is used to set up mutual assistance
funds, and the rest goes to personal accounts. The basic old-age insurance premiums paid
by the individuals go entirely to their personal accounts. The basic old-age pension is in
two parts: the base pension and the pension in personal accounts. The base pension is
covered by the mutual assistance funds, the monthly sum amounting to 20 percent of the
average social wage of the employees and the monthly pension in personal accounts come to
1/120 of the accumulated amount in personal accounts. Pensions in personal accounts can be
inherited. Those who started working before, and retired after, the implementation of this
new system are entitled to an additional pension for the transitional period.
Employees participating in the
old-age insurance program increased from 86.71 million in late 1997 to 108.02 million by
the end of 2001, after several years of implementation of the program. The number of those
enjoying basic old-age pension also increased from 25.33 million to 33.81 million, with
the average monthly basic pension per person growing from 430 yuan to 556 yuan. To ensure
the timely and full payment of the pension, the Chinese government in recent years has
tried to raise the basic old-age insurance fund under the mutual assistance program
gradually to the provincial level, coupled with a steady increase of the financial input
in that direction. From 1998 to 2001, the subsidy outlay for this from the central finance
alone attained the grand total of 86.1 billion yuan. Now basic old-age pensions are mostly
delivered through social service institutions, such as banks and post offices. In 2001, 98
percent of these pensions was delivered in this way. The existing old-age security system
for employees and retirees from government institutions remain unchanged.
In 1991,
The Medical Insurance System
In 1988, the Chinese government
began to reform the free medicare system in government institutions and the labor
protection medicare system in state-owned enterprises. In 1998, the government issued the
Decision on Establishing the Basic Medical Insurance System for Urban Employees, enforcing
a basic medical insurance system for urban employees throughout the country.
To ensure that employees covered
by the insurance program enjoy basic medical service and the service charges do not
increase too rapidly, the Chinese government has strengthened its administration of
medical services by specifying a list of medicines, medicare service items and standards
of medicare facilities to be covered by basic medical insurance and evaluating the
qualifications of the medical institutions and pharmacies that provide basic medical
insurance service, and allowing those who participate in the program the right to make
their own choices. To support the reform of the basic medical insurance system, the
government has also initiated a reform of the medical institutions and the medicine
production and circulation system. A mechanism of competition between medical institutions
and a market operating mechanism for medicine production and circulation have also been
set up for "better medical service at lower cost."
Apart from the basic medical insurance, a system of mutual help in the case of
large-amount medical costs has been set up throughout the country to cover medical costs
in excess of the maximum coverage under the mutual assistance program. The state has also
set up a medical subsidy program for civil servants. Enterprises are encouraged to set up
enterprise supplementary medical insurance for their employees, where conditions permit.
The state will also, step by step, institute a social medicare assistance system to
provide basic medical security for the impoverished population.
The reform of the basic medical insurance system is being carried out steadily in
The Unemployment Insurance System
Shortly after the founding of the
People's Republic of
In 1999, the Chinese government issued the Regulations on Unemployment Insurance, pushing
the unemployment insurance system building onto a new stage of development. This system
covers all urban enterprises and institutions and their staff, whereby all enterprises and
institutions and their staff must pay the insurance premiums, the former paying 2 percent
of their wage bill and the latter 1 percent of their personal wages. Three conditions are
to be met to enjoy the benefits of the unemployment insurance: One full year of the
insurance premium has been paid; suspension of employment is not voluntary; and
unemployment has been registered and application for reemployment filed. Unemployment
insurance benefits consist mainly of unemployment insurance money, which the beneficiary
can draw every month, with the standard lower than the minimum wage but higher than the
minimum living allowance for urban residents. The period for drawing insurance money
depends on the length of period for which one has paid the premiums, the maximum being 24
months. If the employed person is ill during the period he or she is entitled to draw
unemployment insurance money, he or she is also entitled to medical subsidies. If the
unemployed person dies during this period, his or her family can receive funeral subsidies
and his or her dependents can receive pension for the deceased. In addition, the
unemployed person may receive vocational training and subsidies for job agency services
when drawing the unemployment insurance money.
In recent years, the coverage of unemployment insurance has grown continuously, with the
number of the insurance policy underwriters increasing from 79.28 million in 1998 to
103.55 million in 2001. The number of people who did not draw unemployment insurance money
was 3.12 million in 2001. With the improvement of the unemployment insurance system, the
basic livelihood guarantee system for laid-offs from state-owned enterprises is being
gradually orbited into this system.
The Industrial Injury Insurance
System
In the late 1980s, the Chinese
government began its reform of insurance covering injuries suffered on the job. In 1996,
the government issued the Trial Procedures for Industrial Injury Insurance for Enterprise
Employees, to be followed by the establishment of relevant systems in some of the regions.
In the same year, the Standards for Appraising Industrial Injuries and Disabilities Caused
by Occupational Diseases was adopted by the government department concerned, providing the
basis for such appraisal.
The Trial Procedures for Industrial Injury Insurance for Enterprise Employees states that
industrial injury insurance premiums shall be paid by enterprises instead of by employees
themselves. The rate of industrial injury insurance premium varies according to different
trades, and it may fluctuate with the situation of the individual enterprise. The rate of
premiums is determined on the basis of the level of industrial injury risks and that of
occupational danger in different trades. Based on the trade insurance rates, the specific
premium rate of the year for an enterprise is decided according to its actual number of
industrial injuries and risks and the outlays of the insurance funds in the previous year.
Payment of industrial injury insurance funds covers mainly medical costs sustained during
the treatment of the injury, and the injury or disability subsidies, pension for the
disabled person or family of a deceased person, and injury or disability nursing charge,
all of which are to be determined according to the degree of disability upon termination
of the medical treatment. By the end of 2001, the national average rate of industrial
injury insurance premium was about 1 percent, with over 43.45 million employees covered by
the industrial injury insurance scheme. Enterprises not having acceded to such scheme are
responsible for covering the industrial injury expenses themselves.
The Childbirth Insurance System
Reform of the childbirth insurance system started in some enterprises in
The Minimum Living Standard
Security System
In the early years after the
founding of the People's Republic of
Funds for this purpose are included in the fiscal budgets of the local people's
governments, which determine the minimum living standard according to the cost necessary
for maintaining the basic livelihood of the local urbanites. Urban residents whose average
family income is lower than the minimum living standard can apply for the minimum living
allowance. Investigation of the family's income shall be conducted before issuance of the
minimum living allowance, the level of which is calculated in terms of the difference
between the family per-capita income and the minimum living standard.
In 2001, there were 11.707 million urban residents nationwide drawing the minimum living
allowance, with 2.301 billion yuan for the minimum living allowance coming from the
central finance. In recent years, part of the rural areas has started to set up a similar
minimum living standard security system.
The Social Welfare System
The social welfare system is a
system established by the Chinese government to provide funds to ensure the livelihood of
senior citizens, orphans and the handicapped persons who are in extraordinarily straitened
circumstances. To protect the rights and interests of this special group of people, the
government issued the Law of the People's Republic of
The Special Care and Placement
System
This refers to the system aimed
at compensating or commending the special group of people who have rendered meritorious
services to the state and society. At present, more than 38 million people are included in
this category. To ensure their rights and interests, the government has issued the
Regulations on Honoring Revolutionary Martyrs, Regulations on Special Care and Treatment
for Servicemen and Regulations on the Resettlement of Ex-Servicemen in Cities and Towns.
These regulations stipulate that a regular and fixed-amount subsidy shall be given to the
key recipients, such as dependents of fallen servicemen, disabled revolutionary servicemen
and demobbed veterans, that dependents of conscripts be granted special allowances; that
medical costs be reduced or waived for disabled revolutionary servicemen and other key
special-care recipients; that demobbed soldiers shall enjoy a just-for-once job assignment
from the government and those who wish to find jobs on their own be given subsidy in one
lump sum. Special-care allowances to the tune of 29.2 billion yuan were allocated from
state budgets at all levels from 1996 to 2001.
The Natural Disaster Relief
System
The Social Mutual Help System
Mutual help among neighbors is
one of the Chinese nation's fine traditions. Issued in 2000, the Law of the People's
Republic of