Enterprise Reform and Social Security System in China

Abstract

Reform of state-owned enterprise has been at the top of the policy agenda in China. Very recently it was recognized that reform of the social security system is a pre-condition for successful reform of the state enterprise system. So far, enterprise reforms in China tended to focus on property rights and the governance structure of the firm. However, another independent and important issue is the weighty "social burdens" of state enterprises in China. Those burdens include providing jobs, education, child care, health, and other cultural services for both incumbent and retired employees. These expenses have emerged as a serious burden to the enterprises. The impacts of reforms on the social security system are regarded as substantial, having the following important implications for enterprise reforms.