Improvements in the Chinese Social Security System and the Reform of State-Owned Businesses

No.86
July 2000
Senior Fellow Yan Zhu

1. As one aspect of state-owned business reform, China is introducing a social security system into state-owned businesses. In doing this, China's primary goals are to release state-owned businesses from being a social burden, to decrease the burden of personnel costs, and to improve management results.
2. In regard to reducing redundant staff within state-owned businesses, self-supporting efforts and state-sponsored layoff plans are contributing greatly to the smooth reduction of personnel and the economization of labor costs by providing various safety nets, such as unemployment insurance.
3. While the implementation of annuity insurance and health insurance contributes to the stabilization of business management, at the present these policies have resulted in the burden of insurance costs rising above the pre-implementation levels for annuity and medical expenditures. Furthermore, the complete transferal of pre-implementation annuity and medical expenditures into a social security system is impossible, thus creating a double burden.
4. The introduction and adjustment of the social security system is vital to the reform of state-owned businesses, but various problems must be resolved in order for the system to operate sufficiently. Problems raised from the business side include social insurance burdens being too heavy and an increase in the delinquency of payments. From the side of social security policymaking and fund management, future issues include the establishment of a rational burden level, the national integration of the system, and expansion of the sphere of fund management.
5. It is undeniable that, in regard to the reform of state-owned businesses, the only effect that the social security system would have is to ease the burden of labor costs. The success of state-owned business reform lies in privatization and other radical reform policies.

More Informations

• Japanese
• Full text is not available in English for this report.
  The original Japanese full text is PDF here [82.5 KB].
  Please let us know the serial number of this report (86) to submit a request for translation.