Social Security Development in China and Its Support to Economic Transition
Zheng Bingwen 1 and Zhang Xiaoli 2
1 Institute of American Studies (IAS), Chinese Academy of Social Sciences (CASS), Beijing, China
2 School of Labor and Human Resources (SLHR), Renmin University of China, Beijing
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