This chapter shows how China's welfare state is partially responsible for its imbalanced economic growth model, characterised by an overreliance on export-led manufacturing industries and the laggard development of the service economy. It argues that the expansive Chinese pension system facilitates the expansion of the manufacturing sector by subsidising the training of workers with industrial specific skills, as this system is designed to do, but it has an unintended consequence. The political-economic logic has shown that China's pension system is dictated by the need of the Chinese economy. Rebalancing the Chinese economy, the overriding priority in Chinese government's post-crisis macroeconomic policy, therefore requires adjustments to the Chinese pension system. The chapter examines the structure of the Chinese economy through the lens of this study's political-economic framework. China's extensive social insurance system is likely to have contributed to an imbalanced model of economic growth, which is highly skewed towards manufacturing industries and lagging behind in terms of service economy development.