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Weaving a Strong Social Security Net

By CPC Leadership Group of the Ministry of Human Resources and Social Security Source: English Edition of Qiushi Journal Updated: 2022-07-12

At the 28th group study session of the Political Bureau of the 19th CPC Central Committee, General Secretary Xi Jinping, considering the overall development of the cause of the Communist Party of China (CPC) and the country, described the importance of social security to the long-term stability of the country, systemically addressed major questions on the direction, foundation, and strategy of China's social security programs, and put forward a series of new ideas, conclusions, and requirements, which have charted the direction of social security development and provided a fundamental guidance for our work. 

I. The significance of social security 

Social security is a basic safeguard for ensuring and improving people's wellbeing, maintaining social fairness, and bettering people's lives, and an important institution in promoting economic and social development and ensuring people share in the fruits of reform and development. This makes it a major issue of national governance. 

Between 2012 and 2021, the coverage of social security in China continued to expand. Participants in the basic old-age insurance, unemployment insurance, and workers' compensation schemes increased from 788 million, 152 million, and 190 million to 1.03 billion, 230 million, and 283 million respectively. Social security benefits also steadily increased in this time. The monthly pension for enterprise retirees rose from 1,686 yuan to 2,987 yuan per person, and that for rural residents and non-working urban residents increased from 82 yuan to 179 yuan per person. Average monthly unemployment insurance benefits rose from 707 yuan to 1,585 yuan, and the average monthly workers' compensation allowance grew from 1,864 yuan to about 4,000 yuan. Support capacity also increased, with an accumulated balance of 6.9 trillion yuan of the combined funds for the basic pension, unemployment insurance, and workers' compensation. The scope of basic pension fund investments continued to expand, and all funds enjoyed stable operations. The strategic social security reserve funds stood at roughly 2.59 trillion yuan, while the central government topped up social security funds with over 1.68 trillion yuan of state capital. Thanks to its tireless efforts, China has built a fully functional and distinctively Chinese social security system, the largest of its kind in the world—completing in mere decades a process that took over a century in many Western nations. 

China has now entered the stage of making solid advances toward common prosperity. As the focal point of ensuring the public wellbeing, social security will be a key lever for promoting common prosperity. As a safety net, it guarantees a basic income and basic medical treatment for people when they retire, lose their job, fall ill, suffer a work injury, or go on maternity leave, as well as a source of income for people with no or low income, or who are involved in accidents or disasters, thus ensuring people's basic right to subsistence, while also reducing the incidence of poverty and alleviating people's worries. As a means of regulating income distribution, social security uses the law of large numbers to spread risks among all members of society, thus helping narrow the wealth gap and promote social fairness. Social security can also serve as a spur for economic development by improving the structure of people's consumption and their consumption expectations, stimulating consumption demand, expanding domestic consumption, and promoting unimpeded flows in the domestic economy. In addition, the long-term accumulation of social security funds and their investment have helped strengthen capital markets and support economic development. On the new journey of building a modern socialist country, we must give better play to the role of social security in income redistribution and in meeting people's basic needs, so as to achieve clearer and more substantive progress toward common prosperity for all. 

II. The development circumstances and tasks 

As principal challenges in Chinese society have evolved and urbanization, population aging, and employment diversification have accelerated, the development environment for China's social security programs has changed significantly, creating new circumstances and tasks and highlighting shortcomings in the system. We must attach great importance to these issues and work earnestly to resolve them. 

In terms of urbanization, China has urbanized rapidly over the past 20 years. At the end of 2021, 64.72 percent of China's population or roughly 900 million people were permanent urban residents. In the national census conducted in 2010, this figure was under 50 percent, and just 36.09 percent in 2000. Rapid urbanization has seen rural labor transferring into non-farming employment on a vast scale and rural residents migrating into cities. This shift has been conducive to a rational distribution of production factors, and has been an important driver behind the rapid and sustained growth of China's labor productivity—a trend that is set to continue for some time. However, this trend requires that social security adapt to population flows into urban areas, and demands a coordinated approach to developing and linking up urban and rural pension insurance schemes. It is also important to note that the process of granting urban residency has lagged considerably behind other factors of urbanization. Registered urban residents account for just 46.7 percent of the population, almost 20 percentage points lower than the percentage of permanent urban residents. As a result, we need to give more attention to addressing the issue of unequal access to public services such as social security.


A staff member at the Wuqing branch of the Tianjin Social Security Center assists a member of the public with transferring her basic pension insurance account. CHINA SOCIAL SECURITY / PHOTO BY XUE CHANGJIE 

In terms of population aging, the process in China is defined by its accelerating speed and vast scale. In 2021, China was home to 267 million people over the age of 60, accounting for 18.9 percent of the population, which is an increase of 5.64 percentage points compared with 2010. Population aging creates huge market demand for elderly care, medical and health care, and leisure and tourism, making the silver economy a new area of economic and employment growth. But population aging also poses challenges for social security programs. China's potential support ratio has fallen as a result of longer life expectancy, a smaller working population, and an increase in the average number of years of schooling. In addition, China has a lower than average retirement age and thus people make pension contributions for a shorter time. In the 1990s, the support ratio of working people to retirees was 5:1. It is now 2.8:1. This falling ratio and the increase in obligatory pension payments will affect the balance of revenue and expenditure in social security funds over the long term. In addition, large population flows from the northeast, central and western regions to the eastern coastal region will also create regional imbalances in social security funds, leaving some regions with heavier burdens. This issue must be urgently addressed. 

In terms of employment, China has witnessed striking structural changes, with the non-public sector now serving as the main channel for absorbing new and excess labor, while over 200 million workers are now in flexible employment. Due to the rapid development of the digital economy, business models are upgrading at an accelerated pace, and new employment forms are constantly emerging. Statistics show that roughly 84 million people are providing services in the sharing economy. Such people are distinctive in terms of their labor relations, job positions, working hours, and incomes. These trends indicate that the social security system based on the "work unit" is no longer suited to an employment structure marked by increased decentralization and high mobility. Some people in flexible employment do not have any social security coverage or are not adequately covered, and cases of people slipping through the net, not renewing their coverage, or canceling it have emerged. We must move quickly to explore measures to better adapt social security to the needs of people in flexible and new forms of employments. 

It is also important to recognize many factors favorable to the development of social security programs in the new development stage. We have the political advantages of strong CPC leadership and commitment to putting the people above all else and promoting common prosperity, as well as the strength of the system of socialism with Chinese characteristics for pooling national resources behind major undertakings. These factors will enable us to more reliably and tangibly ensure the public wellbeing, see that the fruits of reform and development are shared more fully and fairly among all our people, and promote the steady and sustainable development of the social security system. China has also accumulated a solid foundation thanks to sustained rapid development; our national strength continues to increase; development of the public fiscal system has accelerated; we have a deeper understanding of the laws underlying social security work; and there is extensive support and expectation for social security among all sectors of society. These factors provide the important conditions needed to promote high-quality development of social security. 

III. Toward high-quality and sustainable development 

The CPC Central Committee with Xi Jinping at the core has set overarching goals for social security development and defined the principles, requirements, and tasks for advancing this work. We need to keep improving our sustainable, tiered, fair, and unified social security system that covers the entire population in urban and rural areas, weave a strong social safety net to provide people with comprehensive and reliable support, and continue increasing their sense of fulfillment, happiness, and security. 

We will actively yet prudently advance major social security reform, taking the institutional development as our guide. 

To address structural funding issues, we will take concrete steps toward national unified management of pension schemes, improve the mechanisms for dividing responsibilities between the central and local governments, boost systems cohesion and regulation, and continue to develop funding, operational, and informational flows as well as supporting systems. We will move forward with gradually increasing the legal retirement age. In line with the strategy for actively responding to population aging, we adopt a positive attitude toward aging, coordinate pension reform with the development of human resources, and encourage employment and entrepreneurship among seniors, thus improving the long-term mechanisms for responding to population aging. We will move faster to develop a multi-tiered, multi-pillared pension insurance system. While maintaining the orientation of the basic pension insurance system, we will continue to increase the coverage of enterprise annuities, steadily advance investment of occupational annuities through market-based channels in a well-regulated way, and develop a personal pension scheme that is compatible with China's national conditions and supported by government policy, is voluntary and market-based, and serves as an effective supplement to basic pension insurance, in order to meet people's diverse needs. To adapt to China's large population flows, we will standardize the pension schemes for enterprise workers and rural and non-working urban residents, and explore unified social security policies for urban and rural areas that are adapted to social mobility. At the same time, we will move faster to promote unified provincial-level management of unemployment insurance and workers' compensation schemes and increase the mutual support capacities of funds. We will develop an unemployment insurance scheme that functions to meet living needs, prevent joblessness, and promote employment and a workers' compensation scheme that helps prevent injury, facilitates convalescence, and provides compensation, ensuring these schemes better fulfill their functions of guarding against and mitigating risks. 

We will advance the campaign to extend social security access to all people and further expand the coverage of social security. 

We will work to register every citizen for the social security program, and record and update the information of all people taking part in social insurance schemes. We will establish a comprehensive, complete, accurate, and up-to-date social insurance database to support the push toward full coverage and precision management. We will improve the social insurance systems for key groups including migrant workers, personnel in flexible employment, and people in new employment forms, and enhance the reward and constraint policies for encouraging people to keep up their contributions, so as to promote continuous participation over the long term. We will encourage more eligible employers and employees to join social security programs, in an effort to achieve full coverage of all eligible people. We will ease residency restrictions to allow people in flexible employment to participate in basic pension insurance schemes in the locality where they work, and encourage more rural migrant workers who have the means to contribute to participate in employee social insurance schemes, so as to enable them to enjoy more rights and benefits linked with urban residency. We will improve the policies for protecting the rights and interests of people in new employment forms, steadily implement trials on providing occupational injury support to gig workers on sharing economy platform, and expand the coverage of unemployment insurance with small and micro enterprises as a priority, to ensure more comprehensive support is provided. We will bring public servants under coordinated management for workers' compensation scheme, and improve the pension schemes for rural and non-working urban residents as well as social security policies for farmers whose land has been expropriated. 

We will keep social security funds replenished and ensure all benefits are paid on time and in full. 

We will strengthen management over the premium collection process through coordinated steps. We will establish incentive mechanisms and strengthen social security audits to ensure collection of all contributions. Public f inance spending on social security will be increased, the social security responsibilities of each level of government will be well defined, and the composition of government spending will be adjusted to steadily increase the share of funding going to social security. Continuing to expand the scale of entrusted investment for basic old-age insurance funds, we will promote the entrusted investment of funds from the basic pension scheme for rural and non-working urban residents, in order to strengthen the capital-generating capacity of these funds and ensure their value increases. We will continue to allocate state capital to replenish strategic reserves of social security funds. Social security benefits will steadily increase in line with economic development, and the system for adjusting the basic pension will be improved to ensure retirees and elderly residents share in the fruits of reform and development. To ensure that pension benefits are received on time and in full, we will reinforce the primary responsibility of local governments for making payments, tighten management over revenue and expenditures, regulate the collection of premiums, and take coordinated steps in fundraising. We will steadily increase pension benefits for rural and non-working urban residents, and encourage people to contribute at higher rates in order to increase the balance of their personal accounts and make schemes more attractive. We will implement the mechanism for setting and adjusting workers' compensation benefits to ensure adjustments are made at regular intervals.


Huang Maoxiang, an 82-year-old previously poor resident of Gongqian Village in Suichuan County, Jiangxi Province, collects her pension at the village social security and financial services center. The county has opened such centers in 286 villages, making it possible for elderly residents to collect pension benefits right in their villages. CHINA SOCIAL SECURITY / PHOTO BY GAO MIN 

We will improve regulation to ensure every pension and every social assistance payment is protected. 

The number of people covered under China's pension scheme has increased by 100 percent in the last ten years. Total revenue and expenditure is almost 13 trillion yuan, up 200 percent in a decade. In addition, management links have multi-plied and the management chain has lengthened. The profile of people covered is also more diverse and the services we offer are more varied. Risks and hidden dangers in fund management have increased, and our regulatory capacity and measures have not kept pace with changes. It is imperative to improve the regulatory system for social security funds with law-based steps. We will follow a four-pronged risk mitigation and control approach covering policy, operation, information, and supervision and coordinating the four elements of staff, administrative arrangement, technology, and the general public, so as to tighten fund regulation and management. We will take a zero-tolerance approach to social insurance fraud as well as speculation, misappropriation, and embezzlement of social security funds, to ensure the safety of funds. We will improve education and management of personnel, strengthen punishment and accountability for internal staff, and regularly circulate warning notices, so as to enhance the knowledge and understanding of staff and give full play to their individual initiative. We will strengthen rules and norms, guard against policy risks, improve work procedures, and enhance regulatory mechanisms, to ensure that systems fulfill their basic and long-term governance roles. We will strengthen IT application, carry out regular screening for suspicious data, tighten the management of information systems, and promote interconnectivity and data-sharing, to facilitate regulation through information systems and online data. We will also promote society-based supervision and encourage all sectors to collectively keep social security funds safe. 

We will improve management and services and accelerate the adoption of all-purpose social security cards. 

As social security programs develop, it is important to improve the capacity of social security agencies, elevate their efficiency and service levels, and ensure public management and service functions are performed, so that the participants are served efficiently. We will improve the nationwide public service platform for social security, promote digitized operations, and innovate service models to realize comprehensive information sharing and full online availability of services, so that people are better served as data do more work. We will continue to promote resource integration and comprehensive service counters below the provincial level, improve the process for the transfer and continuation of workers' social security accounts, and explore the process of settling claims on a cross-regional basis. We will strengthen social security operations at the primary level, expand service teams, develop social security organizations in urban communities, towns, and townships, and improve operational conditions. Social security cards create convenience for people. At present, 1.35 billion cards have been issued, while e-cards have been issued to over 500 million people, the applications of which are being continuously expanded. We will leverage the comprehensive service function of social security cards and work toward ensuring that people can use their cards to access services online and offline throughout the life cycle, making them all-purpose cards for accessing resident services and state benefits. In the meantime, we will continue to improve both traditional service channels and intelligent services. Keeping the needs of seniors in mind, we will develop offline avenues to enable elderly people to authorize third parties to handle matters on their behalf. We will continue to make services more age-friendly and serve people with even greater compassion and warmth. 

(Originally appeared in Qiushi Journal, Chinese edition, No. 8, 2022)