Abstract:
Based on interviews with officials in China, this case describes the policy conundrum faced by the Chinese as they attempted to establish a post-socialist, financially viable old age pension system. Historically, in the Communist era, old-age pensions had been tied to the country-wide system of state-owned enterprises, which provided cradle-to-grave social services for employees. But the decision to force these state-owned firms to operate like Western for-profit businesses threw the pension system into disarray. The case describes competing policy formulations available to Chinese officials as they sort out how to provide pensions through state governments and, ultimately, through individual accounts.
Learning Objective:
The case frames both a series of political challenges--officials must be cognizant of who will bear pension costs in the short run--and the challenge of formulating a social policy which provides a safety net without undermining the competitiveness of emerging Chinese firms.
