Advancing High-Quality and Sustainable Development of China’s Social Security Programs
Today, the Political Bureau is holding its 28th group study session on the theme of refining the social security system that covers the entire population. The purpose of today’s session is to advance high-quality and sustainable development of our country’s social security system by evaluating its current status, discussing existing problems, and setting clear approaches to making improvements while taking targets and tasks of the 14th Five-Year Plan into account.
The social security system provides fundamental institutional guarantees for ensuring and improving public wellbeing, safeguarding social fairness, and enhancing people’s welfare. It represents an important institutional arrangement for promoting social and economic development and enabling all people to benefit from the fruits of reform and development. It serves as a safety net protecting people’s wellbeing, a regulatory mechanism adjusting income distribution, and a shock absorber that helps keep the economy running smoothly. Thus, the social security system is an extremely important part of stable and effective governance.
Our Party has always attached great emphasis to social security and the improvement of public wellbeing. As early as 1922, the Party put forward proposals for increasing pay packages for workers, such as setting up factory insurance and protecting unemployed workers, in the manifesto of its Second National Congress. The Labor Law of the Chinese Soviet Republic, which was promulgated by the Provisional Central Government of the Chinese Soviet Republic in Ruijin, Jiangxi Province in 1931, dedicated a whole chapter to social insurance. In 1951, only two years after the founding of the People’s Republic of China, the Government Administration Council promulgated the Regulations on Labor Insurance in accordance with the requirement of “gradually implementing the labor insurance system” that was set forth in the Common Program of the Chinese People’s Political Consultative Conference. Since the launch of reform and opening up in 1978, the Party has steadily advanced the development of the social security system by regarding this as a basic public welfare project for improving people’s living standards, and achieved major progress in this regard.
Since the 18th National Congress of the CPC in 2012, the CPC Central Committee has given even higher priority to the development of China’s social security system and thereafter put it on a fast track. The Political Bureau and its Standing Committee, as well as the Central Commission for Comprehensively Deepening Reform have all held multiple meetings to review and deliberate the general plan on basic old-age insurance reform and guidelines on deepening medical insurance reform. This has laid out top-level design for the development of China’s social security system, and made related reforms more systematic, holistic, and coordinated. We have established unified basic pension schemes for rural and non-working urban residents, aligned pension schemes for staff of government offices and public institutions with those for enterprises, and established a system of central regulation for enterprise employees’ basic old-age insurance funds. We have taken steps to merge the basic medical insurance schemes for rural and non-working urban residents, fully implemented the critical disease insurance system for them, and established the National Healthcare Security Administration. We have worked to expand social security coverage in an effort to ensure access for all, reduced social insurance premiums, and transferred a portion of state capital into social security funds. We have also actively developed social welfare programs in areas such as elderly care, childcare, and care for people with disabilities. Through these efforts, all members of the public, regardless of their gender, location, or occupation or whether they live in urban or rural areas, have been provided with institutional protection against risks such as old age, illness, unemployment, work-related injury, disability, and poverty.
As it stands, a fully functional social security system primarily constituted by social insurance and supplemented by social assistance, social welfare, and benefits for entitled groups has been largely established in China. This is the world’s largest social security system, with over 1.36 billion people covered by basic medical insurance and nearly 1 billion people covered by basic old-age insurance. The system has laid solid foundations for the people to create better lives for themselves, provided strong support for securing victory in the fight against poverty, and set the stage for achieving the First Centenary Goal of building a moderately prosperous society in all respects on schedule.
While fully acknowledging the achievements made thus far, we must also be clear about the system’s deficiencies as the principal challenge in Chinese society has evolved and trends including urbanization, population aging, and the diversification of modes of employment are all gathering pace. These deficiencies mainly include the following: various schemes have yet to be optimally integrated, with transfer and linkage between them not entirely unimpeded; some rural migrant workers, as well as workers engaged in flexible employment and new forms of business are not covered by the system for various reasons, such as not having applied for any insurance, forfeiting the insurance they bought, or not paying premiums; basic security schemes led and administered by the government play a dominant role in the system whilst the supplementary schemes supported by non-government sectors especially market entities remain underdeveloped; the overall management of social security schemes should be turned over to higher-level authorities in view of the significant pressure on local authorities to balance their budgets; there are still unreasonable gaps between benefits received in different regions, urban and rural areas, and by different target groups under this system; the system’s capability for providing public services cannot fully satisfy the demands of the people; in some localities, social security funds are exposed to the risk of deficit. We must take these deficiencies seriously and make concrete efforts to address them.
At the Fifth Plenary Session of the 19th CPC Central Committee in 2020, blueprints were drawn up for China’s development over the next 5 years and as far forward as 15 years, including the goal of making more substantial progress toward achieving common prosperity for all Chinese people. Social security is one of the most pressing concerns affecting people’s immediate interests. With this in mind, we should step up income redistribution through the system, strengthen its mutual aid function, and bring more people under its coverage, so as to provide the people with more reliable and substantial guarantees. In order to meet the people’s diverse needs on multiple levels, we should continue to develop a multi-tiered social security system that is sustainable, fair, and unified, and that covers the entire population in both urban and rural areas, making the social safety net more tightly knit.
First, developing a social security system with Chinese characteristics
Countries differ widely in their stage of development, social conditions, and cultural identity. As such, it is only natural that there are various forms of social security systems. Learning from the experience of other countries in the development of social security does not mean that we should simply copy them. Instead, by taking China’s realities into account, making active exploratory efforts, and taking bold steps to innovate, we have succeeded in building a social security system with distinctive Chinese characteristics.
By leveraging the political advantages of Party leadership and China’s socialist system, we have pooled resources behind major undertakings and promoted the steady and sustainable development of the social security system. By always putting people first and pursuing common prosperity, we have made improving people’s wellbeing and promoting social equity the starting point and ultimate goal of our efforts to develop the social security system, thus ensuring that the people share more fully and fairly in the fruits of reform and development. By bringing the guiding role of institutions to bear, we have bolstered the development of the social security system with a view to putting in place a sustainable, multi-level system that covers the entire population and guarantees basic needs. By adhering to the principle of advancing with the times, we have addressed issues in development with reforms and innovative thinking, and resolutely dismantled institutional barriers, driving social security programs forward on a continued basis. By adhering to the principle of seeking truth from facts, we have done everything within our capacity to raise social security benefits on the premise of ensuring sustainable growth of the economy and financial resources, thus seeing that we do not become divorced from reality or try to work beyond the stage we are at. We must uphold and develop the successful experience described above, constantly looking back on it as we keep pushing forward.
Second, devising sound plans for China’s social security programs during the 14th Five-Year Plan period (2021-2025) and even further into the future
At the Fifth Plenary Session of the 19th CPC Central Committee, a blueprint for developing China’s social security programs during the 14th Five-Year Plan period was laid out, which must be studied on a per-item basis, incorporated into plans, and put into practice.
There are four principles that we must stick to when working out the plans. First, we must apply systems thinking. We need to have a good grasp of the requirements arising as we enter a new development stage, apply a new development philosophy, and foster a new development dynamic, and think about and plan for the development of social security programs as we push forward coordinated implementation of the five-sphere integrated plan and the four-pronged comprehensive strategy. Second, we must adopt a strategic perspective. In keeping with people’s expectations for a higher standard of living as well as the push to achieve well-rounded human development and common prosperity for all, we should secure new and consistent progress in ensuring access to childcare, education, employment, medical services, elderly care, housing, and social assistance. Third, we must be more mindful of risks. We should analyze the new situations and problems we may encounter in the future development of the social security system on the basis of assessing the trends toward population aging, rise of average life expectancy and average length of schooling, and changes to the workforce structure over the next 5, 15, or even 30 years. In this way, we can make our initiatives more predictive and proactive, and take precautionary measures in response. Fourth, we must take a broader view of the outside world. We should keep a close eye on the development of social security systems in other countries, and draw lessons and experience from them. This approach will help us avoid not only the blind expansion of welfare programs in some Latin American countries that has led them to fall into the middle-income trap, but also the pan-welfarism of some Nordic countries that has sapped their social vitality.
Under no circumstances can we forget the fact that economic development and social security are interlinked. The economy is like the water and social security a boat. Only a small boat can sail in shallow waters, while a large boat is suitable for deeper waters. If this objective law is violated, then the boat will run aground or capsize.
Third, deepening reform of the social security system
China’s social security system has now entered a new phase in which systematic, integrated, and coordinated reforms are carried out in a highly efficient manner. We must fully understand the relationships between various aspects of the social security system and between social security reform and reforms in other related fields, and boost our capacity for overall planning and coordination, so as to form synergy among various reforms. We should be more problem-oriented, and constantly promote reform by paying close attention to the social security-related issues that ordinary people are concerned about and by taking on the tough challenges that constrain development of the social security system. We must move faster to develop an old-age insurance system built upon multiple pillars and tiers, improve mechanisms for financing and adjusting benefits for basic old-age insurance and basic medical insurance, expand coverage of the annuity system, promote well-regulated growth of third-pillar pension plans, and vigorously develop commercial medical insurance so that we can meet people’s diverse needs. We should promote the unified management of basic medical insurance, unemployment insurance, and workers’ compensation systems at the provincial level, and define the fiscal powers and expenditure responsibilities of the central and local governments more clearly. We need to incorporate rural social assistance into overall planning for the rural revitalization strategy, and improve rural social assistance systems and regular assistance measures. We should improve systems for migrant workers, people in flexible employment, and people engaged in new forms of business to access social security, advance support mechanisms for demobilized military personnel, promote care and service systems for elderly people, and enhance social benefit mechanisms for supporting orphans and people with disabilities.
Since 2018, we have implemented the central regulation system for basic old-age insurance funds. Last year alone, eastern developed regions provided as much as 176.8 billion yuan to central and western regions and provinces with old industrial bases, thus effectively mitigating regional structural imbalances in social security funds and ensuring that pensions for retirees were paid on time and in full. However, the problem of regional imbalance has not yet been rooted out, and therefore we must move faster to bring about national unified management of basic old-age insurance funds. This is in line with the “law of large numbers” in social insurance, as well as a necessity in our efforts to foster a new development dynamic.
As population aging has accelerated and chronic diseases have become more common among elderly people, the development of medical technology has made more previously untreatable diseases treatable and controllable, putting more pressure on medical insurance funds. It is therefore imperative that we adhere to the integrated reform of medical treatment, medical insurance, and medicine supply. To do that, we should boost mechanisms for financing and adjusting benefits for insurance schemes, advance reform for state-organized bulk purchases of medicine and medical consumables, deepen reform of medical insurance payout models, improve price-setting mechanisms for medical services, and use medical insurance funds more efficiently.
In recent years, many developed countries and emerging countries with a high degree of population aging have introduced plans to raise their statutory retirement ages, but implementation has not gone very well. Some countries have experienced setbacks with such reform. We must have a rational grasp on the direction, pace, and intensity of this reform, strengthen efforts to steer public opinion on the subject, and maximize the consensus and joint efforts of the whole society, so as to advance the reform in a stable manner.
Fourth, promoting law-based development of social security
To advance healthy development of social security on a legal footing, we should bolster related work in all aspects of legislation, law enforcement, judicial practice, and observance of the law. We must step up social security-related legislation, moving faster to formulate or revise laws related to social insurance, social assistance, and social welfare, and ensuring that related rights, obligations, and responsibilities of governments at all levels, employers, individuals, and society are fulfilled in accordance with the law. We should improve the system for supervising social security funds through law-based methods to forestall and defuse risks to the operation of these funds and keep the funds secure. We must crack down on illegal conduct including insurance fraud, unlawful acquisition of insurance funds, or embezzlement of social security funds with a zero-tolerance stance, and protect every cent of money that people rely on to support them through old age or meet their basic needs and every cent of funds used for relief efforts or charitable endeavors.
Fifth, strengthening refined management of social security
We must improve the management system and service network for social security at five levels from the central government to provinces, cities, counties, and townships, and make greater efforts to refine management and improve services, so as to enhance the efficiency of social security governance. We should adapt to the trends of large-scale movement of population and rapid changes in employment, improve measures for social insurance registration and transfer, and refine mechanisms for accurately identifying people who are entitled to social assistance and social welfare, making it so that all eligible persons receive appropriate insurance, support, and benefits. We need to improve the national unified platform for social insurance-related public services, and make full use of the Internet, big data, cloud computing, and other information technologies to create new modes of service provision, so as to further advance digitalization of social security services. Furthermore, while pursuing the development of smart services, we should also ensure access to traditional methods of delivering services, so as to provide more considerate social security services for groups such as elderly and disabled people according to their specific needs.
Sixth, giving full play to the positive role of social security in responding to the impact of the epidemic
Since the sudden outbreak of the Covid-19 epidemic, social security has played an important part in helping us win our all-out people’s war against Covid-19, secure a decisive victory in building a moderately prosperous society in all respects, and meet our poverty alleviation objectives. At present, the virus is still spreading across the globe and our tasks in guarding against inbound cases and domestic resurgence remain heavy. We should give full play to the role of social security in epidemic prevention and control and in stabilizing the order of economic and social development. Based on the positive shift of actual conditions, we should steadily phase out temporary relief policies, such as reduction and exemption of social security payments, and smoothly align with withdrawal of other policies. It is essential that we review successful practices in epidemic prevention and control, and improve the emergency response mechanisms of China’s social security system against sudden major risks, so that we are not only able to respond to all the usual predictable risks from birth to old age, illness, and death, but also deal with unconventional risks that are difficult to predict.
Lastly, I would like to stress that we must continue to keep the social security system unified and standardized. When the system was first established, we encouraged localities to continue innovating and exploring. Now, after China’s social security system has gone through consistent development, we should ensure that further development adheres to the top-level design of the state and is unified throughout the country. We must strengthen binding constraints of the system, and bolster management and oversight on its operation. All localities must be aware of the need to think in big picture terms, fully implement requirements for institutional reform, and never launch local policies that violate regulations. Differences in social security levels between regions can be permitted for a certain period of time, but we must not be shaken from our goal of a unified system or allow local authorities to do as they please or bend the rules. Party committees and governments at all levels should deepen their understanding of the importance of social security by grasping the rules and working in a coordinated manner, and fully implement the CPC Central Committee’s decisions, plans and various reform programs, so that we can keep making new progress in improving the social security system that covers the entire population.