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Social Security System Requires Improvement
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"It's an impending task to establish and improve the primary social equality guarantee system, considering both per capita national income and public finance," Professor Wu Zhongmin of the sociology research section from Chinese Communist Party School told China Economy Weekly recently.

According to him, investments in the livelihoods of ordinary people have increased year on year though, the figures for social security, public education and health respectively occupied 3 percent, 2.9 percent and 2.0 percent of GDP, higher than only a few countries like Cambodia and Zimbabwe.

At present 87 percent of rural residents have no access to any health insurance and have to bear high medical expenditure by themselves, Wu noted. The gap between their income and the costs is huge. 

He also found that expenditure on education, medicine and housing has ascended rapidly in recent year and accounts for 25 percent of residents' total expenditure. Money spent on education and health has increased respectively 7 percent and 5 percent compared with 1997.

Wu pinpointed a paradox in China -- low investment in people's livelihoods against high administration costs. 

Zhou Tianyong, vice director of the Research Section of the school made a comparison of the financial expenditure between the Chinese and US governments. In 2004, the administration costs of China made up 37.6 percent while in the US the figure was just 12.5; on the economy in China it took 11.6 percent, but 5.0 percent in the US; China spent 25 percent on its public service and social management and the US figure was 75 percent; on other areas China devoted 25.8 percent versus the 7.5 percent of the US.

Wu said the administrative expenditure of China was the highest in the world. Some 300 billion yuan (US$37.5 billion) has been spent annually on the vehicles of Chinese officials.

"As the market economy is taking up in China, government should properly fade away in this field and devote more attention to improving people's livelihoods," stressed Wu.

In the first half year of 2006, the financial income had reached 2 trillion yuan (US$0.25 trillion). Wu said that was a sound foundation for improving the lives of people.

"About 300 billion yuan, or one tenth of government's revenue, a year should be enough to guarantee the implementation of the endeavor," he said.

Professor Wu considered that the expenditure on the primary social equality guarantee system might comprise following two parts:

-- About 150 billion yuan (US$18.75 billion) a year in urban areas. This includes 60 billion yuan (US$7.5 billion) on various insurances which also cover migrant workers, 20 billion yuan (US$2.5 billion) on vocational training especially for migrant workers, 20 billion yuan (US$2.5 billion) for increasing unemployment insurance; 30 billion yuan (US$3.75 billion) for enlarging the number of basic living allowance beneficiaries, and the remaining 20 billion yuan (US$2.5 billion) for further investment in compulsory education.

-- About 102 billion yuan (US$12.75 billion) a year in rural areas. The endowment insurance takes 20 billion yuan (US$2.5 billion); health insurance costs 32 billion yuan (US$8 billion); education expenditure increases by 45 billion yuan (US$5.625 billion); the basic living allowance occupies 5 billion yuan (US$0.625 billion); and 15 billion yuan (US$1.875 billion) is required to improve the compensation for bereaved families.

( by Wang Ke, August 9, 2006)

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