Positive net result

LIN YAQI/FOR CHINA DAILY

Building a social welfare system compatible with the process of common prosperity

Common prosperity is an essential requirement of socialism, a key feature of China's modernization and a common expectation of the people. Creating a society in which prosperity is shared by everyone is a priority for China in the coming years. Social welfare refers to the social safety net a state weaves for its citizens to protect them against potential risks, which is realized through income redistribution and a series of institutional arrangements. A well-functioning social welfare system can allow all citizens to share the fruits of development and promote economic growth and common prosperity.

Common prosperity, also known as shared prosperity, requires continuous economic growth and improvements in people's livelihoods, the core of which is the comprehensive development of human beings. These can only be realized through sustained high-quality development. On that basis, the next step is to share rationally the wealth among members of society through efficient policy arrangements. The social welfare system is a fundamental institutional arrangement for common prosperity.

First, members of society are exposed to a variety of risks in real life. A solid and effective social safety net can safeguard people's basic rights to subsistence, and provide equal access to development opportunities for all members of the society, thus promoting the comprehensive development of people. Second, a sound social welfare system helps create a harmonious and stable social environment, thus supporting economic development and ensuring a country's long-term stability. Third, by providing direct assistance to the low-income population, social welfare can provide them with basic insurance against risks and boost their purchasing capacity, thus driving the consumption of the entire society, and spurring economic growth. Last, based on the principle of mutual assistance, a social welfare system can narrow the wealth gap between the privileged and the underprivileged, between those with high-incomes and those with low-incomes, and between different generations or different regions, thus creating a more equitable society.

Social welfare enjoys a long history in China. In the past, it came mainly in the forms of disaster relief and private philanthropy. For a long time, there wasn't a universal social insurance system. After the founding of the People's Republic of China in 1949, the country has built up a social welfare system, especially a labor insurance system, that helps workers fend off risks and provide employment benefits to employees in cities and towns.

In the rural areas, the country encouraged collective economic organizations to provide insurance through mutual aid and cooperation, such as the "five guarantees" (covering food, clothing, medical care, housing, and burial expenses) for vulnerable groups such as people who lost their working capacity, the disabled and senior citizens who had no source of livelihood and had no provider. There was also the rural cooperative medical system. But the level of social welfare in the rural areas was not high at the time. Since the reform and opening-up was initiated in the late 1970s, China has made a series of reforms in its social welfare sector, and has significantly expanded the coverage and quality of welfare services provided to citizens, thus greatly promoting the progress toward common prosperity.

In fact, during its transition from a planned economy to a market economy, China's old social welfare system encountered many problems. To adapt to the new situation, China has gradually established a new social welfare system running parallel to the old system for employees of government and public institutions, which safeguards the basic rights of salaried workers in the private sector and contributes to the establishment and development of a socialist market economic system. On that basis, China has further expanded the coverage of social welfare, with some benefits reaching all members of society.

By the end of 2020, nearly 1 billion people were covered by the basic pension insurance system, with the number of pensioners reaching 289 million people, nearly equivalent to the country's elderly population. By the end of 2021, a total of 1.36 billion people--more than 95 percent of the country's entire population--were covered by basic medical insurance. At the same time, China added a series of social welfare and assistance programs targeting underprivileged groups such as older adults, people with disabilities and children. The country has also eliminated absolute poverty through large-scale poverty relief efforts.

In the process of promoting common prosperity, the social welfare system is expected to assume a more important role. The current social welfare system is not adequate to meet the requirements of common prosperity. It is imperative to enhance the social welfare system's capacity to tackle poverty and promote the redistribution of income, and improve its adaptability to social and economic development so as to build a fairer, more sustainable and efficient social safety net.

China needs to improve its social welfare system. One of the problems that needs to be rectified is the unbalanced development of basic security and supplementary security. The role of basic security is to stabilize the expectations of people and boost their confidence in the country. And also, the country should enable citizens to participate in supplementary security programs and enjoy more guarantees against risks. Moreover, it is important to improve the old-age care system, and build a universal childbirth and childbearing allowance system. Social equity should be particularly emphasized here, and the basic security should be enjoyed by everyone and the treatment should be basically the same.

China also needs to improve the policy arrangement of social welfare programs. First, the development of China's social welfare system should adhere to the principle of "full coverage, basic needs first, multi-layer and sustainability". Among which, "basic needs first" is the most important. Second, we should give full play to the gene of mutual assistance in social welfare, which is key to the realization of social equality. Third, the balance and reasonableness of financing should be enhanced, and social members should be allowed to bear the cost of social security in a reasonable way.

Lastly, China needs to innovate the operational mechanism of basic welfare. It should be made clear that social welfare is not about giving out money to people, but more about providing benefits such as medical services, education and nursing to citizens reasonably and efficiently.

The author is a professor at the School of Public Affairs at Zhejiang University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn