Chinese party-state politics


published: 7.11.2023

Book: Unification of the Chinese Pension System. Pension Politics under Jiang Zemin and Hu Jintao (1991-2013)

In this book Matthias Stepan (Ruhr-University Bochum) provides an answer to the puzzle of how the Chinese pension system was unified against the odds of high levels of institutionalization of regional and sectoral pension schemes, strong vested interests in state-owned enterprises, and opposition of local governments. It opens the black box of policymaking in China and offers unique insights into the country’s pension politics. Unification was the result of experimentation-based policymaking, not strongman politics.

In the period from 1991 to 2013, old-age income arrangements for different groups of the Chinese population underwent a major transformation. The Chinese Communist Party (CCP) and respective state organs launched several reform initiatives that cumulatively resulted in a complete overhaul of the existing principles and structures in the provision of old-age income. In 1991, only urban employees in the public sector could expect a guaranteed income in old age. By 2013, nearly all Chinese citizens irrespective of their profession or household registration status (户口 “hukou” ) were covered under public pension schemes. The Chinese state greatly extended its funding commitment. Private, commercial retirement plans remain the exception.

The major transformation of the Chinese pension system was completed by 2013. However, pension reform is an ongoing process. Against the background of accelerated demographic ageing and persistent socio-economic disparities across China’s subnational units, financial sustainability remains the single biggest issue.

Chapter 8 includes a brief overview of Chinese pension reform after 2013, covering developments until the end of 2022. In 2018, an inter-provincial adjustment fund for social insurance pensions was set-up. According to final account figures for the fiscal year 2019 provinces transferred in total CYN 630 billion to the adjustment fund. After transfer payments of the adjustment fund to the provinces seven provinces were net contributors, three had an equal balance, and twenty-two were net beneficiaries. The economic powerhouse Guangdong made a net contribution of CNY 61 billion.