Analysis of Social Security Expenditures by the Chinese Government

Since 2003, the Chinese government has been increasing its social expenditure and initiated new social welfare programmes to provide universal social protection and meet citizens’ welfare needs. This article uses the wider socio-economic and socio-political contexts to critically examine whether there is a new welfare regime on the rise in China, with a particular reference to whether the increase in social expenditure has really marked a new welfare philosophy or prompted the transformation of China into a protective welfare regime. By analysing prefecture-level data for government expenditures in education, health, social security and assistance programmes between 2003 and 2012, we show a continuation of the Chinese welfare regime in ‘paternalistic welfare pragmatism’ for two reasons. First, government social expenditures are set on the basis of the prefecture-level government’s fiscal capacity. Second, variations of welfare programmes are associated with the dichotomy between the urban formal and informal sectors.

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The Incidence of Social Security Payroll Taxes: Evidence From China

International Journal of Financial Research ◽

10.5430/ijfr.v9n4p1 ◽

2018 ◽

Vol 9 (4) ◽

pp. 1 ◽

Cited By ~ 1

Author(s):

Xinxin Ma ◽

Dongyang Zhang

Keyword(s):

Public Sector ◽

Social Security ◽

Private Sector ◽

Fixed Effects ◽

Transition Period ◽

Generalized Method Of Moments ◽

Medium Size ◽

Chinese Government ◽

Payroll Taxes ◽

The Public

The Chinese government enforced public security system reform in the economic transition period. Now, the enterprise’ social insurance premium, a kind of payroll tax, is nearly 40% of the total wage in China. It is thought enterprises may transfer the burden of payroll taxes to workers by reducing their wages. Does the level of an enterprise’s social security payroll taxes influence their workers’ wages? Using the Chinese Large and Medium-size Manufacturing Enterprises (CLMME) dataset to construct an enterprise panel data from 2004 to 2007, we employ an empirical study to provide evidence on the issue. We utilize the fixed effects model, random effects model and Generalized Method of Moments (GMM) method to address the heterogeneity problem, initial dependent problem and endogenous problem. It is found that in general, increased social security payroll taxes negatively affect the workers’ wages, which indicates that many enterprises may transfer the payroll taxes burden onto their workers. Increased social security payroll taxes may decrease the wage levels for workers in both the public sector and the private sector, but the negative effect is greater for workers in the private sector than in the public sector.

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How can China solve its old-age security problem? The interaction between pension, state enterprise and financial market reform

Journal of Pension Economics and Finance ◽

10.1017/s1474747202001026 ◽

2002 ◽

Vol 1 (1) ◽

pp. 53-75 ◽

Cited By ~ 26

Author(s):

ESTELLE JAMES

Keyword(s):

Social Security ◽

Financial Market ◽

High Rate ◽

State Enterprise ◽

Chinese Government ◽

Transition Costs ◽

Security Problem ◽

Soe Reform ◽

The Government ◽

Set Up

Like most countries, China faces a rapidly aging population and a looming social security crisis. Prefunding and unifying a fragmented system are at the heart of the government's projected reforms that are intended to prevent this crisis. The Chinese plan to set up individual accounts to deal with these problems is retarded by three key factors:1 transition costs must be covered in any move toward prefunding, and the Chinese government is still trying to figure out how to accomplish this;2 the current social security system is characterized by fragmentation and decentralized administration, which lead to principal–agent/ moral hazard issues that make it more difficult to cover transition costs, decrease early retirement and increase compliance;3 the funds that have accumulated have not been invested in diversified portfolios by competitive management and have not earned a high rate of return.This paper focuses on these three problems as well as the complex interactions between pension, financial market and state-owned enterprise (SOE) reform. We summarize the bold steps that the government has announced during second half of 2001 to link pension, financial market and SOE reform.

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