Welfare in China

Social welfare in China has undergone various changes throughout history. The Ministry of Human Resources and Social Security is responsible for the social welfare system.

Welfare in China is linked to the hukou system. Those holding non-agricultural hukou status have access to a number of programs provided by the government, such as healthcare, employment, retirement pensions, housing, and education. While rural residents traditionally were expected to provide for themselves, in 2014 the Chinese Communist Party announced reforms aimed at providing rural citizens access to historically urban social programs.

In pre-1980s reform China, the socialist state fulfilled the needs of society from cradle to grave. Child care, education, job placement, housing, subsistence, health care, and elder care were largely the responsibility of the work unit as administered through state-owned enterprises and agricultural communes and collectives. As those systems disappeared or were reformed, the "iron rice bowl" approach to welfare changed. Article 14 of the constitution stipulates that the state "builds and improves a welfare system that corresponds with the level of economic development."

In 2004 China experienced the greatest decrease in its poorest population since 1999. People with a per capita income of less than 668 renminbi (RMB; US$80.71) decreased by 2.9 million people or 10 percent; those with a per capita income of less than 924 RMB (US$111.64) decreased by 6.4 million people or 11.4 percent, according to statistics from the State Council’s Poverty Reduction Office.

Welfare reforms since the late 1990s have included unemployment insurance, medical insurance, workers’ compensation insurance, maternity benefits, communal pension funds, individual pension accounts, universal health care.

Furthermore, for many of the minority groups, there are some benefits available.

During July 2020, Beijing social security center put restrictions on the social security withholding and payment, which was allowed to be operational previously via third party organizations.

The Chinese retirement system has broad coverage, with almost 70% of urban residents covered by either the urban or rural pension plans as of 2022. However, it is not sufficiently funded to provide more than small benefits.

Corporate Social Responsibility (CRS)

Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. In China, CRS is an important measure that the central government uses to evaluate performance of local government. Local firms may strategically add CRS to build good relationships with local government. The theory of resource dependence suggests, firm behavior is profoundly affected by the government because of its control over critical external resources (Pfeffer and Salancik, 1978). Moreover, based on the principle of reciprocity in social exchange theory (Gouldner, 1960; Blau, 1964), governments and businesses may embark on resource exchange when they realize their goals are cooperative. The existing literature has found that companies that increase their investment in social responsibility may increase financial benefits and direct value to stakeholders (Orlitzky et al., 2003; Kopel and Brand, 2012; Lambertini; Tampieri, 2015; Nollet et al., 2016; Shen et al., 2016). Corporate strategic management of relationships with governments can bring advantages in terms of market competition (Schuler et al., 2002; Hillman et al., 2004; Yang et al., 2019). Therefore, the promotion incentives of local government officials may motivate firms to improve their social responsibility performance as a strategy to obtain more political resources.