China released on Tuesday a white paper on the country’s social
security programs and policies. Comprising ten sections, the
document explains what China has done in developing insurance
programs for old age, unemployment, medical care, workers’
compensation and maternity care, as well as social welfare, special
relief; housing security and social security in rural areas.
“As a developing country with a weak economic base and
unbalanced development between regions and between cities and
countryside, it is an extremely difficult task to establish a sound
social security system in China,” said Wang Dongjin, vice minister
of labor and social security, at a Tuesday press conference.
China began to reform its old planned-economy social security
system in the mid-1980s. A basic framework is now in place
corresponding to the market economy system, with the central and
local governments sharing specific responsibilities.
The full text of the white paper follows:
China’s Social Security and Its Policy
Foreword
I. Old-age Insurance
II. Unemployment Insurance
III. Medical Insurance
a>
V. Maternity Insurance
VI. Social Welfare
VII. Special Care and Placement
VIII. Social Relief
IX. Housing Security
X. Social Security in Rural Areas
Conclusion
Foreword
Social security is one of the most important socio-economic
systems for a country in modern times. To establish and improve a
social security system corresponding to the level of economic
development is a logical requirement for coordinated economic and
social development. It is also an important guarantee for the
social stability and the long-term political stability of a
country.
China is the biggest developing country with a large population
in the world, and its economic base is weak and the development
between regions and between town and country is unbalanced.
Establishing a sound social security system in China is an
extremely arduous task.
In light of China’s actual situation and adhering to the
principle of “putting people first,” the Chinese government
attaches great importance and devotes every effort to establishing
and improving its social security system. The Constitution of the
People’s Republic of China stipulates that the state shall
establish and improve a social security system corresponding to the
level of economic development. The Chinese government regards
economic development as the basic prerequisite for improving
people’s livelihood and effecting social security.
For a long time before 1978, when China adopted the reform and
opening-up policies, China had practiced a social security policy
corresponding to its planned economic system, providing social
security services to its people as best it could. Since China
established and improved its socialist market economy system in the
mid-1980s, a series of reforms have been introduced to change the
old social security system practiced under the planned economy, and
a basic framework of a social security system has been set up in
China corresponding to the market economy system, with the central
and local governments sharing specific responsibilities.
China’s social security system includes social insurance, social
welfare, the special care and placement system, social relief and
housing services. As the core of the social security system, social
insurance includes old-age insurance, unemployment insurance,
medical insurance, work-related injury insurance and maternity
insurance.
I. Old-age Insurance
China is now an aging society. As the aging of the population
quickens, the number of elderly people is becoming very large. This
trend will reach its peak in the 2030s. To guarantee the basic
living standards of the elderly and safeguard their legitimate
rights and interests, the Chinese government has continuously
improved the old-age insurance system and reformed the fund-raising
mode in an attempt to establish a multi-level old-age insurance
system marked by sustainable development.
Promoting the Development of a Basic Old-age Insurance
System for Employees in Urban Areas
l
Reforming the basic old-age insurance system for enterprise
employees in urban areas. In 1997, the Chinese government unified
the basic old-age insurance system for enterprise employees in
urban areas across the country by implementing a
social-pool-plus-personal-accounts scheme. Enterprise employees who
have reached retirement age as provided by law (60 for male
employees, 55 for female cadres and 50 for female workers) and who
have paid their share of the premiums for 15 years or more shall be
entitled to collect a basic old-age pension every month after
retirement. The basic old-age pension consists of two parts: base
pension and pension from personal account. The monthly sum of the
base pension is tantamount to about 20 percent of an employee’s
average monthly wage in that area in the previous year. The monthly
pension sum from the personal account is 1/120 of the total
accumulated sum in the personal account (11 percent of an
employee’s wage being deposited every month in the pension
section). The state adjusts the level of the basic old-age pension
with reference to the price index of living expenses for urban
residents and employees’ pay increases. In 2003, the monthly basic
pension for enterprise retirees covered by the basic old-age
insurance scheme was 621 yuan on average.
l
Expanding the coverage of basic old-age insurance. Initially,
China’s basic old-age insurance covered only state-owned
enterprises and collectively-owned enterprises in urban areas and
their employees. In 1999, this coverage was expanded to include
foreign-invested enterprises, private enterprises and other types
of enterprises in urban areas, as well as their employees. All
provinces, autonomous regions and municipalities directly under the
Central government can make provisions to include persons engaged
in individual businesses of industry or commerce in the basic
old-age insurance in accordance with the specific conditions in
their localities. In 2002 China expanded its basic old-age
insurance coverage to all those who were employed in a flexible
manner in urban areas. In 2003, the number of people participating
in the basic old-age insurance scheme across China reached 155.06
million, 116.46 million of whom were employees.
l
Undertaking experimental reforms in selected areas to improve the
basic old-age insurance system. In 2001, the Chinese government
began to carry out pilot projects along this line. The reform
includes: gradually establishing personal accounts so that funds
can be accumulated, and probing ways of preserving and increasing
the value of the funds; changing the way the base pension is
calculated and paid, whereby the amount of base pension is more
closely linked to the length of time of the employee’s premium
payment, and if an employee has participated in the basic old-age
insurance program and paid the premiums for 15 years, he or she
will be entitled to a higher rate of pension for every additional
year of payment; unifying the procedures of premium payment by
those who are employed in a flexible manner, whereby the base of
their premium payment is uniformly set at 20 percent of the average
wage of local employees. The pilot project was first conducted in
Liaoning Province, and has been expanded to Jilin and Heilongjiang
provinces in 2004.
l
Probing the reform of the retirement system of government agencies
and public institutions. In China the retirement and pension system
in government agencies and public institutions is different from
that applied in enterprises. In 2003, there were 670,000 retirees
who had joined the revolutionary ranks before October 1949 and
9,310,000 other retirees from these agencies and institutions. In
the 1990s, some localities in China began to probe the procedures
of reforming the retirement system in such agencies and
institutions. Pilot projects were conducted to raise the retirement
pension funds through the social pool program. By the end of 2003,
some 11.99 million employees and 2.58 million retirees had
participated in such pilot projects.
Raising Funds for Basic Old-age Insurance Through
Multiple Channels
As the aging of the population quickens and the number of
retirees increases steadily, the pressure on the payment of funds
for basic old-age insurance is becoming ever greater. In order to
make sure that basic pensions are paid in full and on time, the
Chinese government is raising such funds through multiple
channels.
l
Practicing joint premium payment by both enterprises and employees.
Generally the premiums paid by enterprises will not exceed 20
percent of the total wage bill of the enterprise, with the specific
proportion being determined by the people’s governments of
provinces, autonomous regions and municipalities directly under the
Central government. Individual employees pay eight percent of their
wages as premiums, whereas self-employed individuals and those who
are employed in a flexible manner in urban areas pay an amount
equal to about 18 percent of the average wage in their locality. In
2003, the basic old-age insurance premium paid by enterprises
nationwide totaled 259.5 billion yuan.
l
Increasing the subsidy outlay from the government financial budget
for basic old-age insurance funds. The state has called upon
governments at all levels to increase the momentum of restructuring
their financial expenditure and raise their input into social
security. In 2003, state budgets at all levels contributed 54.4
billion yuan toward basic old-age insurance funds, of which 47.4
billion yuan came from the central budget.
l
Establishing a national social security fund. In 2000, the Chinese
government decided to create a national social security fund. Its
sources include: funds acquired from reducing state shareholding,
stock ownership assets, funds
from the central budget, funds raised by other means
approved by the State Council, and investment returns. The national
social security fund is administered by the National Social
Security Fund Executive Council, and is operated on market
principles in accordance with the procedures and requirements
prescribed by the “Interim Measures for the Management of the
Investment of the National Social Security Fund.” The national
social security fund provides an important financial reserve for
the implementation of old-age insurance and other social security
programs. By the end of 2003, it had accumulated over 130 billion
yuan.
Promoting the Socialization of Management and Services
for Old-age Insurance
In the past, Chinese enterprises were responsible for both the
issuance of basic pensions to their own retirees and the
administration of those retirees. Now, to ensure that all retirees
receive their basic pensions in full and on time, and lessen the
burden of social affairs on enterprises, the government is actively
practicing the delivery of basic pensions by social service
institutions. At the end of 2003, the basic pensions of retirees
from enterprises were all delivered by social service institutions,
and 84.5 percent of those retirees were under the administration of
such institutions.
In 2003, the Chinese government began to implement an
information-based labor security project, or popularly called
“golden social security project,” in order to raise the overall
management level of social insurance and to meet the needs of the
floating labor force to continue with their social insurance
coverage once they change jobs. The goal of the project is to
realize computer-based networking of social security information
across the country. So far the networking of old-age insurance
information between the Central government and the provinces has
been initially effected.
Establishing a Multi-Level Old-age Insurance
System
In recent years, the Chinese government has made great efforts
to build a multi-level old-age insurance system. In addition to
participating in the compulsory basic old-age insurance,
enterprises with suitable conditions may set up annuities for their
employees. Both enterprises and individuals will contribute to this
annuity, which will be accumulated wholly for that specific purpose
and managed in the form of personal accounts. The enterprise
annuity funds will be managed and operated in accordance with the
market mechanism. In 2003, nearly seven million people participated
in the enterprise annuity program. In addition, the state also
encourages personal savings for old age.
The first two decades of the 21st century will be a critical
period in the development of China’s old-age insurance. The state
will further improve the basic old-age insurance system that
combines social pool and personal accounts, and gradually
consolidate the latter. Basic old-age insurance will extend to
cover all eligible employees in urban areas, and at the provincial
level the establishment and improvement of regulating funds for
old-age insurance will be carried out. Social pool at the city
level shall be improved and gradually raised to that at the
provincial level.
II. Unemployment
Insurance
While promoting the reform of the enterprise employment system
and setting up a market-oriented employment mechanism, the Chinese
government is speeding up the development and improvement of an
unemployment insurance system to guarantee the basic livelihood of
employees after they lose their jobs, to help them find new jobs,
and accelerate the combination of the basic livelihood guarantee
system for people laid off from state-owned enterprises with the
unemployment insurance. By the end of 2003 there were 103.73
million people who participated in the unemployment insurance
scheme, which provided unemployment insurance benefits of varying
time limits to 7.42 million laid-off employees throughout the
year.
Standardizing and Improving the Unemployment Insurance
System
In 1999, the Chinese government issued the “Regulations on
Unemployment Insurance,” which effectively standardized and
improved the unemployment insurance system.
l
Range of participation and premium payment. All enterprises and
institutions in urban areas and their employees must participate in
the unemployment insurance program, under which employers pay two
percent of their total wage bill and individuals pay one percent of
their personal wages as unemployment insurance premiums. When the
unemployment insurance funds in areas that have participated in the
social pool program are not enough, the shortfall shall be made up
by unemployment insurance regulating funds or subsidized by local
financial budgets.
l
Qualifying conditions for unemployment insurance. Laid-off persons
must meet three requirements to qualify for unemployment insurance:
having paid unemployment insurance premiums for at least one year;
not having terminated their employment voluntarily; having
registered as unemployed and being willing to be re-employed.
l
Rate of unemployment insurance allowance. The people’s governments
of provinces, autonomous regions and municipalities directly under
the Central government determine the unemployment insurance
allowance in their own localities, which shall be lower than the
minimum wage in their localities but higher than the minimum living
allowance for urban residents. Provisions regarding the time limit
during which one receives the benefits are as follows: An
unemployed person whose former employer and himself or herself have
continually paid unemployment insurance premiums for more than one
year but less than five years is eligible for benefits for up to 12
months; if they have paid the premiums for more than five years but
less than 10 years, the unemployed person is eligible for benefits
for up to 18 months; if they have paid the premiums for more than
10 years, the unemployed person is eligible for benefits for up to
24 months.
l
Other unemployment insurance benefits. If an unemployed person
falls ill while enjoying unemployment insurance allowance, he or
she is entitled to receiving medical subsidies. If the unemployed
person dies during this period, his or her family can receive
funeral subsidies as well as a pension. In addition, an unemployed
person may receive vocational training and subsidies for job agency
services when receiving unemployment insurance allowance.
l
Unemployment insurance provisions for farmers-turned-contract-
workers who are employed by enterprises and institutions in urban
areas. Their employers shall pay unemployment insurance premiums as
required, while the individual workers shall not. Those who have
worked for one year continuously, those who do not renew their
contracts upon expiration or those who terminate their contracts
before they expire can apply for a living allowance, which shall
come in a lump sum depending on the length of time they have been
employed.
Promoting Re-employment
While guaranteeing the basic livelihood of the unemployed, the
state actively looks for effective ways to steer unemployment
insurance in the direction of promoting re-employment. It has
strengthened the link between unemployment insurance services and
re-employment services. Through prompt registration of
unemployment, active provision of employment information and giving
comprehensive employment guidance and job agency services, the
state helps unemployed people to enhance their capabilities for
competitive employment in both skills and mentality. It also
increases the input of unemployment insurance funds into job agency
services and occupational training. Through organizing training
directly or purchasing R and D achievements, the government
provides all kinds of job skill training for the unemployed in
order to improve their capabilities for re-employment.
Guaranteeing the Basic Livelihood of Laid-Offs from
State-owned Enterprises
In 1998, in view of the increased pressure on state-owned
enterprises in re-positioning their redundant personnel and the
inadequate bearing capacity of the unemployment insurance, the
Chinese government created the basic livelihood guarantee system
for people laid off from state-owned enterprises.
l
Making sure that the laid-off personnel from state-owned
enterprises receive their basic living allowances in full and on
time. Re-employment service centers have been established in all
state-owned enterprises with laid-off personnel. After the latter
have registered at a re-employment service center, they shall
receive from it a basic livelihood allowance a little higher than
the unemployment insurance payment in their own locality. The
re-employment service center also pays old-age, medical and
unemployment insurance premiums for laid-off people. The centers’
funds for basic living allowance payment to laid-off persons and
their insurance premiums generally come from the following three
sources: one third from the local government’s financial budget,
one third provided by enterprises, and the remaining one third from
the social pool program (mainly from unemployment insurance funds).
From 1998 to 2003, some 24 million laid-off persons from
state-owned enterprises across China had registered at the
re-employment service centers, and nearly 19 million of them had
found new jobs. Those who had registered at the centers had
received allowances for basic livelihood in full and on time, and
the centers had also paid social insurance premiums for them.
l
Establishing the “three guarantees” system. Since 1998, the Chinese
government has put into operation a system that provides for three
guarantees: basic livelihood guarantee for laid-off persons from
state-owned enterprises, unemployment insurance guarantee and
minimum living standard guarantee for urban residents. Laid-off
persons can receive a basic living allowance for up to three years.
If they still have not found a job by then, they can receive
unemployment insurance payments. If the per capita income of a
family is below the local minimum living standard, they can apply
for the minimum living standard guarantee for urban residents.
l
Integrating with unemployment insurance. With the steady
improvement of the unemployment insurance system and the increase
of the fund accumulations,
since 2001, the basic livelihood guarantee system for
laid-offs from state-owned enterprises has been integrated with the
unemployment insurance program. State-owned enterprises now have
ceased to establish any new re-employment service centers, and, in
principle, people newly laid off by enterprises have also ceased to
register at such centers. Instead, enterprises just terminate their
labor contracts according to
law, and the laid-off persons will then be entitled to
unemployment insurance benefits according to relevant
regulations.
For some time in the future, the problem of surplus labor force
and the problem of irrational employment structure will still
exist, and unemployment insurance will continue to face
considerable pressure. The Chinese government will make every
effort to expand the coverage of unemployment insurance, and
standardize fund raising and payment as well as its use and
management. While guaranteeing the basic livelihood of unemployed
people, it will give further play to the role of unemployment
insurance in promoting re-employment.
III. Medical
Insurance
In 1998, on the basis of previous trials, the Chinese government
promulgated the “Decision on Establishing a Basic Medical Insurance
System for Urban Employees,” promoting a national reform of the
basic medical insurance system for urban employees. By the end of
2003, some 109.02 million people around China had participated in
the basic medical insurance program, including 79.75 million
employees and 29.27 million retirees.
Establishing a Basic Medical Insurance System for Urban
Employees
China has adopted a basic medical insurance system for urban
employees that combines social pool and personal accounts. In
principle, the medical insurance is managed locally.
l
Insurance scope and premium. The basic medical insurance program
covers all employers and employees in urban areas, including
employees and retirees of all government agencies, public
institutions, enterprises, mass organizations and private
non-enterprise units. People employed in a flexible manner can also
participate in the basic medical insurance program. The funds for
basic medical insurance come mainly from premiums paid by both
employers and employees: the premium paid by the employer is about
six percent of the total wage bill, while that paid by the employee
is two percent of his or her wage. Retirees are exempted from
paying the premiums. The individuals’ premiums and 30 percent of
the premiums paid by the employers go to the personal accounts, and
the remaining 70 percent of the premiums paid by the employers goes
to the social pool program funds.
l
Payment standards. Medical expenses are shared by the medical
insurance fund and the individual: Outpatient treatment fees
(smaller amounts) are mainly paid from the personal account, while
hospitalization expenses (larger amounts) are paid mainly from the
social pool fund. The minimum and maximum payments from the social
pool fund are clearly set out. The minimum payment is, in
principle, about 10 percent of the average annual wage of local
employees, and the maximum payment is about four times the average
annual wage of local employees. The medical expenses between the
minimum and maximum standards are mainly paid from the social pool
fund, and the individual pays a certain proportion. Expenses paid
by retirees for medical treatment and medicine are reasonably lower
than those paid by people in employment.
Improving Medical Insurance Management and
Services
To standardize medical services and reduce costs, the state
simultaneously promotes the reform of the basic medical insurance
system, medical and healthcare system, and pharmaceuticals
production and circulation system. Catalogues have been made of
medications, medical consultations and medical services and
facilities covered by the national basic medical insurance
scheme. Efforts have been made to ensure that the insured enjoy
necessary medical services, to curb unreasonable medical expenses,
and to enhance the utilization efficiency of the basic medical
insurance fund.
A management method of the designation of medical institutions
and pharmacies allowed to provide services covered by medical
insurance has been put into practice. A competitive mechanism has
been established to select and designate medical institutions and
pharmacies that operate in a standard manner and provide good
services. Meanwhile, account settlement procedures have been
formulated and steadily improved for medical insurance handling
organizations and designated medical institutions.
Improving the Multi-Level Medical Security System
While establishing the basic medical insurance system, to meet
the medical demands of different types of people covered by the
insurance, the state has established and improved a multi-level
medical security system to reduce personal burdens on the insured
individuals. In local areas, a system of subsidies for large
medical expenses has been set up in accordance with actual
conditions to settle medical expenses exceeding the maximum limit
of the basic medical insurance payment, the funds for the subsidies
being raised mainly from individuals or enterprises.
The state encourages enterprises to establish supplementary
medical insurance for their employees, mainly for settling medical
expenses not covered by the enterprise employees’ basic medical
insurance. The part of the enterprise’s supplementary medical
insurance premiums that is within four percent of the total wage
bill is booked as the production cost.
A civil servants medical subsidy system has been established for
civil servants and employees of public institutions who formerly
enjoyed free medical services. The state is gradually establishing
a social medical aid system mainly funded by the government to
provide basic medical security for people with special
difficulties.
The reform of China’s medical insurance system faces many heavy
tasks. In future, the state will further expand the coverage of
medical insurance to steadily include eligible people in all kinds
of employment in urban areas in the basic medical insurance scheme;
strengthen and improve medical insurance management and services;
curb the irrational increase of medical expenses, and provide
better services for the insured; establish and improve a
multi-level medical security system, gradually lessen personal
burden on the insured, and realize the stable operation and
sustainable development of the medical insurance system.
IV. Insurance for Work-related
Injuries
The Chinese government has made great efforts to establish an
insurance system for work-related injuries that includes
work-related injury prevention, compensation and recovery. After
January 2004, when the
“Regulations on Insurance for Work-related Injuries” went
into effect, the coverage of such insurance has expanded
rapidly. By the end of June 2004, as many as 49.96 million
employees had underwritten this insurance scheme.
Establishing a Social Pool System for Insurance Funds
for Work-related Injuries
The state stipulates that all enterprises and all individual
businesses engaged in industry and commerce with employees must
participate in work-related injury insurance, and pay insurance
premiums for all their employees, permanent as well as temporary.
The individual employees do not pay such premiums. The work-related
injury insurance scheme adopts a social pool fund program with a
balance of revenue and expenditure, and collection determined by
expenditure. The social pool funds are established by cities at the
prefectural level or above. The government determines the
differential premium rates according to the degree of risk of
work-related injuries involved in different sectors, and sets
several premium rates within each sector according to the insurance
payments and occurrence rates of such injuries.
Defining the Social Security Benefits
The work-related injury insurance scheme adopts the principle of
“no-fault compensation.” The benefit items mainly include medical
expenditures for work-related injuries; injury and disability
subsidy, allowance and nursing fee according to the degree of loss
of the ability to work; funeral subsidy, pension for the keep of
family members and a lump-sum death subsidy payment, all of which
go to the directly-related family members of the deceased worker in
the case of death resulting from a work-related accident. The main
qualifying condition for insurance payment is that the employee has
been injured as a result of a work-related accident or has
contracted an occupational disease during his or her working hours
and within his or her workplace.
Exercising a Labor Ability Assessment System
The state has uniformly formulated and promulgated a national
standard for assessment of the degree of a work-related injury and
the degree of a disability caused by an occupational disease,
whereby to assess the labor ability of an employee suffering from
disability and whose labor ability has been affected due to a
work-related injury, notwithstanding its being in a relatively
stable condition after treatment.
The labor ability assessment includes rating of the degree of
physical impediment for labor and the degree of impairment to
self-care ability. A labor ability assessment committee, consisting
of representatives from relevant departments of the government,
trade unions and employing units, is formed in each
provincial-level city and city divided into districts to be in
charge of the assessment of labor ability of injured and maimed
employees. Application for labor ability assessment can be
submitted by the employing unit, the employee suffering from the
injury, or his or her directly-related family members, to the local
committee. Having received the application, the committee will
randomly choose members from its reserve of medical and health
experts to conduct the assessment, and give its assessment
conclusion based on the experts’ opinions.
Strengthening Work-related Injury Prevention and
Occupational Rehabilitation
The Chinese government actively promotes prevention of work-
related injuries and occupational diseases through improvement of
engineering technology, publicity and education, formulation of
safety regulations, implementing safety and hygiene standards, and
encouraging employing units to improve production safety by
manipulating their injury insurance premium rates. Following the
principle of “safety and prevention first,” the government urges
enterprises and employees to abide by the rules and regulations
concerning work safety and hygiene, and to strictly enforce the
state work safety and hygiene rules and standards, so as to prevent
accidents during work, and reduce occupational hazards.
The state actively explores methods of occupational
rehabilitation, providing injured workers with injury recovery,
psychological recovery, occupational training and employment
guidance. Occupational rehabilitation centers and hospitals have
been set up in some areas to help injured workers to overcome
physical and mental problems, regain their health and ability to
work, and return to their jobs.
V. Maternity
Insurance
In 1988, the state introduced a reform of the maternity
insurance system in some areas. At the end of 2003, there were
36.55 million employees covered by maternity insurance. In the year
of 2003, 360,000 employees received maternity insurance
benefits.
The maternity insurance system mainly covers urban enterprises
and their employees, and in some places women employees of
government agencies, public institutions, mass organizations and
enterprises. The premiums are paid by the employers participating
in the maternity insurance scheme, and should not be more than one
percent of the total wage bill. Individual employees do not pay the
premiums. Employers not having participated in the scheme will
still be responsible for providing maternity insurance benefits.
Employees giving birth to babies may enjoy a childbirth allowance
for 90 days according to law. Women employees who have given birth
to babies or had abortions shall maintain their original wages and
positions, and get reimbursements for their medical expenses
according to related regulations.
VI. Social Welfare
The Chinese government actively promotes the development of
social welfare, raising funds through various channels to provide
social welfare benefits for the elderly, orphans and the
disabled.
Social Welfare for the Elderly
In accordance with the “Law of the People’s Republic of China on
the Protection of Elderly People’s Rights and Interests,” the state
and the society have adopted measures to improve conditions for
such people’s livelihood, health and participation in social
development. Governments at all levels include services for elderly
people in their socio-economic development plans, gradually
increase investments in services for elderly people, and encourage
investment from all sectors of society, so as to enable such
services to grow in coordination with socio-economic
development.
In recent years, thanks to the promotion of the socialization of
social welfare undertakings, a social service system for elderly
people has gradually taken shape, with state- and collective-run
social welfare organizations for elderly people as the backbone,
those sponsored by various social sectors as a new growth point,
community welfare services for elderly people as support, and
services for elderly people living at home as the basis.
Today, there are 38,000 social welfare organizations of various
kinds for elderly people, with 1.129 million beds, or 8.4 beds for
every 1,000 people over the age of 60. In 2001, the state
introduced the “Starlight Plan – National Community Welfare Service
for Elderly People.” By June 2004, a total of 32,000 Starlight
Homes for Elderly People had been built or rebuilt in urban and
rural areas all over China, with a total investment of 13.49
billion yuan.
Social Welfare for Children
According to relevant laws and regulations, such as the “Law of
the People’s Republic of China on the Protection of Minors” and the
“Education Law of the People’s Republic of China,” the state
provides comprehensive welfare for children, including education
and planned immunization, and takes special care to ensure the
livelihood, recovery and education of children with special
difficulties, such as disabled children, orphans and abandoned
babies, by providing welfare projects, facilities and services.
Today, China has 192 special welfare institutions for children and
600 comprehensive welfare institutions with a children’s
department, accommodating a total of 54,000 orphans and disabled
children. There are also nearly 10,000 community services around
China for orphans and disabled people, such as rehabilitation
centers and training classes for mentally retarded children.
The Chinese government has decided that, starting from 2004, it
is going to carry out the “Tomorrow Plan – Operations and
Rehabilitation for Disabled Orphans.” The plan will cover a
three-year period and involve 600 million yuan in fund. Under the
plan, each year 10,000 disabled orphans will receive operations and
rehabilitation services. The aim is that by 2006 all the disabled
orphans with surgical operation indications in all the social
welfare institutions around China will have received effective
operations and rehabilitation services.
Social Welfare for Disabled People
The “Law of the People’s Republic of China on the Protection of
Disabled People” promulgated
by the state provides legal guarantees for disabled people’s
rehabilitation, education, employment, cultural life and social
welfare. The government helps disabled people to get employment by
running welfare enterprises, providing employment opportunities in
a certain proportion, and supporting the self-employment of
disabled people. Special care for disabled people is provided
through such welfare measures as temporary aid, concentrated
support and the running of accommodation institutions for disabled
people.
By the end of 2003, a total of over 4.03 million disabled people
in urban areas around China were in employment, and 16.85 million
disabled people in rural areas were engaged in productive labor;
2.59 million impoverished disabled people enjoyed guarantees for
their livelihood; 442,000 disabled people enjoyed concentrated
support and the “five guarantees” (of food, clothing, medicare,
housing and burial expenses) in various welfare institutions and
homes for the aged; 2.46 million disabled people were receiving
temporary aid, regular allowances and special allowances; and over
7.01 million impoverished disabled people were receiving assistance
to solve their problem of basic food and clothing. In 2003,
governments at all levels earmarked 1.5 billion yuan for services
for the disabled, and raised nearly 100 million yuan for social
welfare funds.
VII. Special Care and
Placement
The special care and placement system is one by which the
Chinese government provides materials and expresses compassion
mainly for servicemen and their families. At present, such people
number over 40 million.
To protect the rights and interests of people eligible for
special care, the Chinese government has promulgated the
“Regulations on Commending Revolutionary Martyrs,” “Regulations on
Special Care and Preferential Treatment for Servicemen,” and
similar laws and regulations. The state sets different grades and
standards for special care and preferential treatment according to
the eligible people’s capacities and contributions, and with
reference to the level of economic and social development.
State compensation is provided to families of martyrs and
servicemen who died on duty or of illnesses, and wounded and
disabled servicemen. Regular and fixed living allowances are
provided for special cases such as demobilized veterans. Allowances
are universally distributed to the families of conscripts. Special
cases, including disabled servicemen, enjoy social preferential
treatment in terms of medical care, housing, transportation,
education and employment. In 2003, there were 4.65 million people
eligible for state compensation and subsidy, and government budgets
at all levels for such compensation and subsidy totaled 8.79
billion yuan.
The “Military Service Law of the People’s Republic of China,”
“Regulations on Placement for Demobilized Conscripts,” and similar
laws and regulations provide for the placement and resettlement of
demobilized servicemen. The government provides employment for
demobilized soldiers in urban areas, and grants a lump-sum subsidy
as well as preferential policy support for those who seek their own
employment. Demobilized conscripts from rural areas have their
difficulties in production, livelihood and medicare settled
according to their different situations.
Government and non-government organizations, enterprises and
public institutions provide preferential recruitment for
ex-servicemen from both urban and rural areas. Secondary schools
and schools of higher learning provide preferential admission to
ex-servicemen. Appropriate care is given to wounded and disabled
ex-servicemen in terms of employment and livelihood. Arrangements
for placement and resettlement are made for demobilized,
transferred and retired military officers (including
non-commissioned officers). Now, relevant services have been
established by governments at all levels.
Proceeding from protecting the immediate interests of the people
eligible for special care and preferential treatment, as well as
ex-servicemen, the Chinese government is determined to mobilize all
sectors of the society to continuously improve the special care and
placement system, increase the level of protection for people of
this category, promote legal and institutional guarantees for the
placement and resettlement of ex-servicemen, and protect the legal
rights and interests of the people eligible for special care and
preferential treatment.
VIII. Social Relief
Proceeding from the situation of national development, the
Chinese government has made the greatest efforts to provide the
minimum standard of living for the urban and rural poor, to provide
relief to natural disaster victims and to urban vagrants and
beggars, while promoting and encouraging all kinds of social mutual
help activities.
Guarantee of the Minimum Standard of Living for Urban
Residents
In 1999, the Chinese government promulgated the “Regulations on
Guaranteeing Urban Residents’ Minimum Standard of Living,” which
stipulates that urban residents with non-agricultural permanent
residence permits whose family’s per capita income is lower than
the local urban residents’ minimum standard of living can receive
basic subsistence assistance from the local government; those with
neither source of income nor working capability, nor legal
guardian, supporter or fosterer can receive in full the minimum
living allowance according to the minimum living standard of local
urban residents.
The minimum living standard is decided primarily on the basis of
urban residents’ average income and consumption level per capita,
the price level of the previous year, the consumption price index,
the local cost necessary for maintaining the basic livelihood,
other connected social security standards, the materials for the
basic needs of food, clothing and housing, and the expenditure on
under-age children’s compulsory education. Meanwhile, consideration
must also be given to the level of local socio-economic
development, the number of people eligible for receiving the
minimum living allowance and the local government’s fiscal
capacity.
Funds for this purpose are included in the fiscal budgets of the
local governments. For local governments that have very tight
budgets, the Central government will provide financial support. By
the end of 2003, there were 22.47 million urbanites nationwide
drawing the minimum living allowance, which was an average of 58
yuan per person per month. A total of 15.6 billion yuan for the
minimum living allowance was allocated from government budgets at
central and local levels in 2003, which included the 9.2 billion
yuan of the Central government’s subsidies to the disadvantaged
central and western regions.
Natural Disaster Relief
The state has set up an emergency system and a social relief
system to deal with abrupt natural disasters. Taking people’s lives
as the most important thing, the government has made timely efforts
to save and evacuate disaster-stricken people, and to lead them to
engage in self-relief production and mutual help. In this
connection, it has also mobilized all social sectors to render
help, so as to minimize as much as possible the casualties and
property losses brought about by natural disasters, and to ensure
that disaster victims can have adequate food, clothing and lodging,
and access to medical treatment. Governments at all levels have
enlisted expenditure in their budgets for the storage of
disaster-relief materials and for evacuating victims. In 2003, the
expenditure for such purposes from governments at various levels
reached 5.31 billion yuan, of which 4.05 billion yuan came from the
Central government.
Relief for Urban Vagrants and Beggars
On August 1, 2003, the state promulgated the “
Measures for the Administration of Relief for Vagrants and Beggars
Without Assured Living Sources in Cities.” Based on the
principle of “receiving aid of one’s own free will, and giving help
gratis,” relief for vagrants and beggars who have no assured living
sources in cities should be administered with compassion, and that
relief should be provided in accordance with the different
circumstances and needs of the recipients, so that they can receive
relief in terms of food, lodging, medicare, communications,
transportation to their hometowns and escort. By the end of 2003,
some 909 such relief administrative centers had been set up
throughout the country, offering help to 210,000 cases of urban
vagrants and beggars who had no assured living sources that
year.
Social Mutual Help
The state encourages and supports members of society to organize
and participate voluntarily in the efforts to give help to the poor
and needy, promotes the development of a social donation system,
sets up and improves regular social institutions, and a network of
offices and storage facilities to receive donations at any time
from the general public. By the end of 2003, there were some 28,000
social donation centers in large and medium-sized cities and in
some small cities with adequate facilities.
From 1996 to 2003, a total of 23 billion yuan in donations was
received from the general public (including goods converted into
money), together with 960 million pieces of clothing and quilts,
which helped an accumulative total of 400 million disaster victims
and poverty-stricken people. Governments at the grassroots level
also operate community services to provide care and services to the
poor and needy. Trade unions at all levels organize “heart-warming
activities” every year to offer help to badly-off families. From
1994 to early 2004, a total of 18.11 billion yuan had been raised
for this purpose, and 55.778 million sympathy visits had been paid
to families of poverty-stricken employees.
China’s trade unions at all levels also organize mutual help and
social security activities. By the end of 2003, some 18,000 mutual
help and social security organizations had been set up by the
nation’s trade unions, with 7.23 million people participating in
the social insurance program. Some 1,839 trade union organizations
had started such employee mutual help and social security programs
which covered 14.85 million participants, and six million cases
were given assistance.
IX. Housing
Security
The Chinese government actively promotes the development of an
urban housing security system which includes mainly the system of
publicly accumulated housing funds, the system of generally
affordable and functional housing, and the low-rent housing system
for the purpose of unremittingly improving urban residents’ housing
conditions. By the end of 2003, the average floor space had reached
23.7 sq m per capita for urban residents.
The System of Publicly Accumulated Housing Funds
The system of publicly accumulated housing funds is a
policy-based financing channel by which the Chinese government
tries to solve the housing problem of employees. The funds are
gathered monthly from government agencies, public institutions,
enterprises, mass organizations, private non-enterprise units and
their on-the-job employees in a certain proportion to the
employees’ salaries, and such funds belong to individual employees.
The publicly accumulated housing funds are deposited in devoted
accounts and are used exclusively for employees to purchase, build
and renovate their houses, and can be loaned to the employees for
these purposes. The publicly accumulated housing funds are
characterized by obligation, mutual help and housing security.
In 1994, this system was implemented in cities throughout China.
In 1999, the state issued the “Regulations for the Management of
the Publicly Accumulated Housing Funds,” and reissued them in 2002,
to ensure that the system functions in an institutionalized and
standardized way. Now, an administrative system has been basically
set up, which involves decision-making by the Administrative
Committee of the Publicly Accumulated Housing Funds, operation by
the Administrative Center of the Publicly Accumulated Housing
Funds, deposit in devoted bank accounts as well as financial
supervision.
The publicly accumulated housing funds can be booked as cost of
enterprises, and are exempt from personal income tax. The funds can
also enjoy preferential low-interest loan policy. By the end of
2003, a total of 60.45 million employees throughout China had
opened accounts for publicly accumulated housing funds, raising a
total of 556.3 billion yuan, of which 174.3 billion yuan was
withdrawn from the banks by employees for buying or building their
houses or for retirement, and a total of 234.3 billion yuan was
granted as personal housing loans to help 3.27 million employees’
families to purchase or build houses. The system of publicly
accumulated housing funds has played an important role in the
improvement of people’s housing conditions.
Generally Affordable and Functional Housing
System
In 1998, the Chinese government decided to build generally
affordable and functional housing. Affordable and functional
housing means housing for which the government provides
preferential policies, and sets the construction standards, the
selling price and the users’ qualification criteria. It is
policy-based, security-type commercial housing.
Households meeting the following requirements can apply to buy
or rent a suite of such housing: those having local registered
permanent residence permits (including servicemen eligible under
local resettlement standards) or those specified by the city or
county government; those with serious housing problems – without
housing of their own or with their current housing space below the
standards set by the city or county government; households whose
family incomes meet the income standard set by the city or county
government; and households meeting other conditions set by the city
or county government.
A low-profit principle is maintained for such housing when it is
sold or rented. Only after a specified length of time following the
purchase of such housing may the owner sell it at the market, and a
portion of the earnings therefrom must be turned over to the
government. The purchase of this kind of housing must be subject to
application, examination and public announcement, thus emphasizing
public transparency and strict supervision and administration. From
1998 to 2003, the construction of 477 million sq m of such housing
space was completed.
The Low-Rent Housing System
Since 1998, the Chinese government has made active efforts to
promote the low-rent housing system and to continuously improve
housing security policies. Temporary exemption of property tax and
business tax is applied to publicly owned housing and low-rent
housing lent out at prices prescribed by the government. Under the
guidance of uniform state policies, the local governments have set
up their own low-rent housing systems for urban minimum-income
households in accordance with the level of local economic and
social development.
Such a housing security system, supported mainly by the
government’s financial budget while the low-rent funds are pooled
from other channels, is practiced in many ways – with housing rent
subsidy as the major form, supplemented by the supply of basic
furniture and rent deduction. For households whose incomes and
housing space are below the standards set by the local government,
the latter should ensure that their basic housing needs are met by
application, registration and waiting one’s turn. In 2003, this
low-rent housing system for minimum-income families was established
in 35 large and medium-sized cities.
X. Social Security in Rural
Areas
The majority of the Chinese people live in rural areas, where
the economic development level is comparatively low. In the rural
areas the land, as a means of both production and livelihood, is
owned collectively where the contractual household output-related
responsibility system is practiced. Under the influence of China’s
traditional culture, there is a time-honored tradition of provision
by the family, security coming from self-reliance and help from the
clan. In accordance with the characteristics of rural
socio-economic development, the state’s social security measures in
rural areas are different from those practiced in cities.
Experimenting to Establish an Old-Age Insurance System
in Rural Areas
The old-age security in China’s rural areas is centered mostly
on families. In the 1990s, China began to try out an old-age
insurance system in some of the rural areas in accordance with the
actual level of local socio-economic development. In light of the
principle that “the premiums are paid mainly by individuals
themselves, supplemented by collectively pooled subsidies and
supported by government policies,” an old-age insurance system with
the accumulation of funds taking the form of personal accounts was
established.
By the end of 2003, the work of old-age social insurance had
been carried out to various extents in the rural areas of 1,870
counties (cities, districts). Some 54.28 million people had
underwritten the old-age insurance program, which had accumulated a
fund running to 25.9 billion yuan, with 1.98 million farmers
drawing old-age pension. In 2004, the Chinese government began to
experiment with a system that supports and rewards households that
practice family planning by having only one child or two girls in
some of the rural areas. Each person of such couple may receive a
minimum of 600 yuan a year from the age of 60 till the end of his
or her life. This reward will be provided jointly by the central
and local governments.
Establishing a New Rural Cooperative Medical Service
System
In order to guarantee that farmers’ basic medical needs are
satisfied, to alleviate their medical burdens and to address the
problem of poverty caused by illness or prevent them from getting
poor again because of illness, in 2002 the Chinese government began
to set up a new rural cooperative medical service system based
mainly on a financial-pool-against-serious-disease scheme. Farmers
can participate freely in such a cooperative medical system, which
is organized, led and supported by the government with funds coming
from the government, collectives and the beneficiaries.
At present, the system is being tried out in 310 counties
(cities) in 30 provinces, autonomous regions and municipalities
directly under the Central government. By June 2004, the system had
covered 95.04 million rural residents, with 68.99 million
participants and 3.02 billion yuan in raised funds, of which 1.11
billion yuan was in the form of financial subsidies from local
governments at various levels, and 390 million yuan was in the form
of Central government subsidies to the central and western
regions.
Practicing Rural Social Relief
The “five guarantees” system was initiated in China in the
1950s. In 1994, the State Council issued the “Regulations
Concerning the Work of Providing the ‘Five Guarantees’ in the Rural
Areas.” It stipulates that elderly people, disabled people and
minors meeting the following conditions in rural areas can enjoy
the “five guarantees” of food, clothing, housing, medicare and
burial expenses (compulsory education for minors): Those who have
no legal guardian to provide for them, or whose legal guardians are
unable to provide for them; those who have no working ability; and
those who have no source of income.
To take care of elderly people in the “five guarantees” category
who cannot look after themselves alone, homes for the aged have
been built, and have gradually become a major form of providing the
“five guarantees” for the elderly. By the end of 2003, there were
2.545 million people covered by the “five guarantees,” and 24,000
homes for the aged providing accommodation for 503,000 elderly
people in this category.
In view of the uneven economic development and the large
disparity in financial conditions between regions, the Chinese
government encourages areas with adequate capacity to establish a
system that guarantees the minimum standard of living for rural
residents. In other areas, the basic subsistence relief system
covering destitute households is practiced under the principle of
“government relief, social mutual help, offspring support and
stabilized land policy.” Meanwhile, medical relief is provided for
sick farmers who are in great difficulty. By the end of 2003, there
were 12.57 million poverty-stricken people in rural China who
enjoyed the minimum living allowance and subsistence relief for
destitute households.
Conclusion
After years of experiments and practice, a social security
framework with Chinese characteristics has taken initial shape.
However, China still has a long way to go to develop its social
security services to a satisfactory level. The aging of the
population will put more pressure on the old-age pension and
medicare expenditure, while the progress of urbanization will make
the establishment and improvement of a social security system
covering both urban and rural areas more urgent. More employees of
non-state-owned businesses and people employed in a flexible manner
will be covered by the social insurance system as employment forms
become more diversified. All this will raise new requirements for
the smooth operation of China’s social security system and for the
establishment of a long-term mechanism which will ensure the
sustainable development of the social security services.
To press ahead with the improvement of the social security
system is an important task for the Chinese government in its
efforts to build a moderately prosperous society in a comprehensive
way. The increase in China’s overall economic strength as a result
of the sustained, rapid, coordinated and healthy development of
China’s national economy, the implementation of the scientific
concept of overall, coordinated and sustainable development, and a
social security system suited to China’s national conditions and
established after many years of exploration, will pave the way for
China’s social security system to develop continuously. In the
years to come, the Chinese people will benefit more from the
nation’s development and progress, and enjoy more plentiful fruits
of its material civilization.
(China.org.cn September 7, 2004)