The phenomenal success of China’s market-oriented economic reforms since the 1980s has
been accompanied by a wide array of social problems. Moreover, economic reforms have
rendered the traditional work unit-based social security system increasingly inadequate and
inefficient. For two decades the Chinese government has been trying to develop a more
pluralistic, effective, and affordable social security system that will be compatible with both a
thriving market economy and a flagging socialist political structure. Social security reform
centers on the establishment of partially funded systems in retirement, unemployment, and
medical insurance, moving away from the current pay-as-you-go systems, and the development
of a basic social assistance program covering all urban residents. While the emerging system is
still struggling with a variety of transitional operational problems, the entry of China into the
WTO is looming as a formidable challenge to this social security system. Indeed, an effective
social security system would not only facilitate economic reforms by promoting productivity,
but also enhance social stability through the mitigation of social tensions and conflicts
(Ministry of Labor and Social Security, 1999). This presentation outlines the background and
recent reforms of the social security system undertaken by the Chinese government. It will
focus on the retirement and unemployment insurance schemes, as well as the social assistance
program.