This chapter begins with a brief introduction of China's pension reform, and identifies the two puzzling features of the resultant pension system. The first puzzle is about the reform approach and the second puzzle about the Chinese pension system is its territorially fragmented structure. The chapter focuses on the economic and political environment in which the China's pension reform unfolds. It discusses how a political-economic account of the Chinese case contributes to the literature on the comparative political economy of the welfare state. A theory of welfare politics that incorporates political power has been provided by the new institutionalist model of social policymaking. Socio-economic changes determine the economic functions of social protection and social policy preferences of the Chinese workers and employers. The chapter also presents an overview of the key concepts discussed in this book.