Analysis Of Financing Situation Of Old-age Social Insurance Reform In Rural China

Different from its counterparts in developed countries, the socioeconomic situation in rural China is deeply characterized by the backward economic development level and the transitional structural features, where economic and social factors are intertwined with each other and the old-age social insurance of rural residents deserves special institutional arrangements.Not only as a social institution, but also an economic establishment, old-age social insurance carries both micro and macro economic effects and reaches far into the social life. Due to its wide beneficial coverage and the associated gigantic expenses, it requires holistic institutional arrangement and specialized operation management. Beyond the field of social insurance, some relevant market-based and society-based institutions in economic arena are also necessary to guarantee the well functioning of the old-age insurance fund. The development of financial market is one case in point. On one side, how well the old-age social insurance runs is largely dependent on the extent of development of financial market in rural China. Financial market works as an infrastructure platform on which the development of old-age social insurance can either be promoted or impaired. On the other, as an important component of market economy of China, with its function of absorbing savings, smoothing consumption over time and providing available sources of investment, old-age social insurance in rural China also serves as an impetus to the further development of the financial market.Despite of series of experiments initiated from the 1980s, the current condition of the old-age social insurance in rural China can still be depicted by narrow coverage, low level of insurance, and the insufficiency of fund, which in combination lead to its termination in late 1990s. With the intention of free the state fiscal expenses from this burden, the majority of insurance fund comes from voluntary personal contributions and ancillary money of rural collectives. That institutional arrangement makes it prohibitively difficult to ensure sufficient fund supply and keep/increase the value ofany available fund. Therefore, it is worthwhile to theoretically explore the policy dilemma between public intervention with fiscal burden on one hand and personal account with insufficient fund supply on the other.This thesis starts from an investigation of the basic theory of old-age social insurance and the historical shift of its practice in rural China. Then it goes into the detailed analysis of the economic, demographical, cultural and institutional context of rural old-age social insurance, explores some feasible institutional arrangements with an emphasis on the financing aspect of it, and finally concludes with some particular policy implications and future prospects.