The late 1990s registered a drop in the levels of poverty in the urban areas of the Republic of China as compared to the situation in the rural areas. Accredited statistics indicated that the estimate of people in urban areas below the line was four percent in 1995 and the figure declined to three percent in 1999. Among various strategies used to reduce the levels of poverty, the most outstanding one was the protection offered by the state and collectively –owned-enterprises (SOEs and CEOs) as well as family support (Slide 3). However, the concerns raised about the quandary of the households covered by these two sources of protection led to the establishment of the Minimum Living Standards Scheme (MLSS or Dibao) in Shanghai in 1993 (Slide 5), and after that extended to other rural areas. The MLSS’s target revolved primarily around households experiencing the traditional forms of poverty often referred to as “old poverty.” These included homes with no stable source of income, unemployment, and those with limited capacity to work (Slide 2). The Republic of China decided to make the MLSS the last resort to manage poverty. Based on the population of China, the government has adopted two primary social assistance provision approaches. The first approach is to establish a uniform social security system that covers everyone regardless of where he or she lives. The second option is to create a separate social security system for both urban and rural dwellers, which is majorly dependent on China’s economic situation (Zhang 10).
The social assistance concept often contributes to an integral part of the societal system. Different countries in the world employ different strategies for offering social assistance. Whereas some may provide material things, some governments opt to offer monetary value. Predominantly, social assistance is a means-tested approach that uses eligibility to determine the dependants. In the contemporary world, social assistance is primarily financed by public funds. Furthermore, different social assistance programs have attracted increased attention from governments and policymakers in various welfare states. The past decades have seen the Chinese government embrace the second approach of establishing social security for individuals living in rural areas. Since the government has continued to experience rising demands for help, most of the social assistance strategies have been forced to undergo revision. It means that the eligibility for social assistance has been restricted to individuals facing the risk of being unemployed and poor.
China consists of countries that have taken pleasure in experiencing prolonged economic stability at an average of nine percent annually. The establishment of market reforms in the early 1980s prompted this trend. Ironically, the success of the market reform increased the social problems in the country. For instance, the economic models in the state-owned enterprises (SOEs) have forced the conventional approach of the social security system inadequate and ineffectual. The past two decades have seen the Chinese government struggle to create more comprehensive, independent, and affordable social security system which will fit into the growing market economy as well as the social structure. Leung (57) establishes that the social security reforms should cover the retirement systems, unemployment, and medical insurance instead of dwelling on the pay-as-you- approach. It is logical to state that a successful social security system would promote economic reforms by enhancing productivity. Furthermore, it would facilitate social harmony whenever social tensions and conflicts are alleviated.
In writing a report addressed to the National People Congress in 2002, Zhu Rongji, a former Chinese premier referred to the disadvantaged groups as a vulnerable population because of the lack of employment. In a more comprehensive way, the vulnerable population consisted of the unemployed, the immigrants from the rural areas working in towns and cities, and those families living below the poverty line. Leung (88) states that the Chinese leaders and policymakers maintained the commitment of the government to eliminate the regional disparity. In the world of social order, social stratification is an important aspect when trying to maintain economic, political, and social balance. Social assistance programs offered by the government play a crucial role in the promotion of social stratification. This concept is evident in developing countries where marginalization is openly visible. In such countries, maintaining social stratification is restricted because most of the elite people are more concerned with personal gains thereby limiting the establishment of social security and strategy systems.
It is indeed evident that the program of social assistance has registered increased recipients. This has been prompted by the goal of the Chinese government to realize a socialist market economy. In layman’s language, this system represents a safety net for urban residents living in poverty and acts as a shock absorber in alleviating social conflict, which may arise because of the market-oriented reforms. The social assistance program is one of the high upfront components of the Chinese social protection framework because of the pledge to have two guarantees and three social protection clauses. When it comes to the clause of two guarantees, there is monetary compensation for laid-off employees, whereas the three protection clauses refer to the programs of social assistance, unemployment insurance, and living allowances for employees who have been laid off from work.
Since the number of the Chinese individuals who are registered for the scheme is drastically increasing, the program requires phenomenal expansion. In 1999, the government promised to expand the MLSGs because of three key reasons. The first motivating factor was the issue of the laid-off employees, which had become serious. The policy that advocated for the protection and the strengthening of the three social protection lines was introduced. The Minimum Living Standards Schemes can provide a safety net as the last defense for unemployed individuals who are not eligible to receive assistance or whose joblessness assistance has expired. Leung (15) argues that around ten percent of the people with eligibility rights to the assistance scheme did not receive their allowances in 1999. Similarly, some cases leading to the inability to contribute by loss-making SOEs forced some pensioners to miss their allowances. Moreover, the government of China is more committed to eliminating stereotypes such as “an individual should take care of their own baby” because they delay the realization of social and economic prosperity. All the local governments are obligated to offer full financial assistance, especially to the poor employees of the state.
The second motivating factor for the expansion of social assistance was the increase in expenditures, which sharply escalated after raising eligibility rights, thereby increasing the number of people in the assistance program. Thirdly, there has been rapid urbanization and industrialization which has increased the rural-urban migration. Unfortunately, the new residents experience problems while trying to get absorbed into the scheme. Such instances are indicators of the need for expansion.
Although there have been suggestions for expansion, it is prudent to acknowledge that the assistance scheme has experienced major setbacks amidst the successes as mentioned before. Some of the issues that have been identified in social assistance schemes include inadequate incentives to enhance and facilitate employment, incompetency at the managerial levels, rapid urbanization and industrialization, uncertainties in financial commitments, and a lack of proper eligibility procedures (Slide 9). It is not a secret that the MLSS program is likely to experience financial constraints. The increasing number of customers has created financial uncertainties not only for the government but individuals managing the scheme. Thus, this limitation has led to administrative challenges forcing, thereby, undermining the maintenance of the scheme. Some of the underlying issues that might arise due to financial constraints include the lack of transparency and motivation to run the scheme.
On the other hand, Midgley (57) asserts that there is a lack of a standardized and objective mechanism to determine the eligibility criteria (Slide 9). For instance, an individual who has migrated from the rural area to the urban setting after being supported by the scheme for the past one or two years, up to when he or she realizes stability registers in the urban scheme. In most cases, one will find that the more deserving individuals are denied the opportunity to receive social assistance because of crowding and a lack of finances. Currently, the assistance level is dependent on the financial capability of the local government instead of channeling the assistance expenditure towards helping people living below the poverty line. Consequently, the assistance scheme like any governmental benefit requires incentives. The government has become too reluctant to substitute this scheme and is encouraging people to invest in better systems. Since many recipients keep registering in the scheme, the Chinese government is forced to seek more funds to maintain the assistance scheme.
Some of the ways to tackle the issues affecting the scheme include solidifying the eligibility criteria through the provision of better incentives. Secondly, the central and the local governments introduce the concept of convenient transition, especially for the migrants. Besides, the government can introduce other assistance schemes to limit congestion and encourage a smooth flow of financial and physical services.
To sum up, the past three decades have seen China undergo major transformations in its social and economic systems. There has been a progressive transformation from a planned economy to a market reform which has significantly influenced the social security system. The establishment of social assistance has helped in the reduction of specific social issues. From the analysis, it is observed that rural and urban poverty has been intensified by increased layoffs and the costs for social services which include medical care, education, and housing (Slide 4). Furthermore, the establishment of the social assistance program in China was prompted by the heightened inability of the employment-based social security scheme to tackle the challenges of unemployment and the aging population. It is evident that the current social assistance system faces issues which need to be rectified to establish an articulate social welfare system in China. Strengthening of the social assistance should be considered a priority in developing countries.
Leung, Joe CB. “Social Security Reforms in China: Issues and Prospects.” International Journal of Social Welfare 12.2(2003): 73-85.
Leung, Joe CB.”The Emergence of Social Assistance in China.” International Journal of Social Welfare 15.3(2006): 188-198.
Midgley, James, and Kwong Leung Tang, eds.Social Policy and Poverty in East Asia: TheRole of Social Security. Routledge,2009.
Zhang, W., and S. Li. “Empirical Studies on Chinese Urban Poverty.” Journal of Economic Studies 10: 1992.