ABSTRACT
Looking at the history of the last quarter of a century (1994 to present) of financing the welfare state system in Mainland China reveals an overlooked development on a grand scale that has affected the social welfare and social development of one-fifth of the world's population: the history of devolution of the Chinese welfare state system model from central financing to provincial, and particularly local government, financing. The year 2003 marked another watershed in welfare state system development in China, where the incoming Hu administration started to completely overhaul the social security system coverage, aiming for, and achieving within a couple of years, near complete health security coverage (with geographical and occupational, i.e. Bismarckian, differences kept in place). Since 2003, there has been a revolution (in the positive sense) in terms of welfare state system expansion, and with it the expansion of social security financing and social investments in health and education. Housing policy is the most prominent welfare state branch, and contributes the most, in terms of social harmony and overall social and economic welfare of the population, employing a complex system of rules and taxation benefits and, most important of all, access to relatively cheap housing loans for first-time buyers (which lifted many tens of millions of people out of poverty, from the bottom of society right into the upper working and middle classes). As is common and typical throughout all of East Asia, government regulation is preferred to government provision. Hence, the key twin elements of the East Asian welfare model are government regulation and a focus on investment in terms of education and health care services. The new welfare paradigm of social harmony (i.e. avoiding any kind of trouble, boosting support for the government and ruling party in any way possible) has guided Chinese social policy making in the last one and a half decades and can be expected to continue to do so in the years and decades to come.
