This chapter reviews three sets of literature. They are the literature on the logic of industrialism in welfare state development, the Statist account of social policymaking and the theories on the positive impacts of social policy on skill formation. In the Chinese context, the political agent that plays a leading part in China's pension reform is the Chinese local state at the municipal level, which competes against its counterparts to promote local economic development. The discussion of the literature on the role of state institutions in social policymaking suggests that institution matters in shaping the social policy behaviours of political agents. A seminal contribution to the role of social policy and the welfare state in the functioning of the modern capitalist economy comes from the Varieties of Capitalism paradigm. The chapter explores how the agency of state actors is structured by political institutions and how such an institutionally shaped agency is articulated in the process of social policymaking.