Transferring from the poor to the rich: Examining regressive redistribution in Chinese social insurance programmes

Social insurance promotes progressive redistribution through risk pooling and cross-subsidy. However, in China, risks and protection are mismatched, with benefits and protection accruing to the privileged while high-risk groups are inadequately protected. This article reports on a study of the sources of regressive redistribution in Chinese pension, health and unemployment insurance programmes, and discusses the possible cause of this redistribution paradox. It argues that the government has adopted different strategies for welfare reform towards different socioeconomic groups. For the core groups, such as public employees, reform has been characterised by replacing old programmes with new (i.e., a replacement strategy). For marginal groups, the government has handed off its responsibilities to individuals and the market (a retrenchment strategy). This political pecking order of welfare reform is the cause of distorted distributional outcomes. As social policy programmes continue to spread in developing countries, China's case illustrates that they may reinforce existing disparities rather than realise progressive redistribution, risk management and social inclusion.