Social Security Development in China and Its Support to Economic Transition
中国社会保障70年：助推封闭型经济转向开放型经济
Abstract: In 70 years since the founding of the People’s Republic of China, China has successfully transitioned from a closed economy to an open economy with the watershed year of reform and opening up in 1978 and modernized its social security system accordingly. This paper divides the transition of China’s social security system into seven stages before and after 1978. The traditional social security system was predicated on the dominant public ownership, a highly centralized economy, and “full employment.” It was congruous with the ownership structure, income distribution, and labor systems under the closed economy. The modern social security system is developed to meet the needs of an open economy and promotes economic development by giving play to consumption and investment, facilitating labor flow, and boosting productivity. The modern social security system requires further supply-side structural reforms to promote the high-quality development of the open economy.
Keywords: closed economy; open economy; social security system; production factor;
labor market
JEL classification code: L60, O14N55; Q10
DOI: 1 0.19602/j .chinaeconomist.2019.7.0510.19602/ j.chinaeconomist.2019.1.01
2019 marks the 70th anniversary of the founding of the People’s Republic of China in 1949. It is also a decisive year for achieving the goal of building a moderately prosperous society in all respects. At this critical juncture, it is relevant to review the 70- year history of New China, including its social security system, draw upon past lessons, and identify the path for future improvement. This paper offers a summary of China’s social security development since 1949, compares its differences before and after the nation’s market-based transition, and identifies social security’s new functions under the open economy. In this manner, this paper explores the role of China’s modern social security system as a production factor in the development of its open economic system.
Notably, this paper follows a broad concept of social security, including contributory social insurance and non-contributory social assistance schemes and is not confined to discussions on the social insurance system.