Public Pension System in Transition Economy: Analysis on China’s Historical Pension Reform under Economic and Demographic Change

Mengyao LI


Purpose: With rapid economic growth and the world’s largest population, China has been on the path of pension reforms under unparalleled economic transition and demographic change since its first formal pension scheme established in 1951. This thesis aims to review China’s pension systems in three periods, 1951-1984, 1984-2000, and 2000-2010, with the research question on whether Chinese government’s efforts on pension reforms conformed to economic and demographic changes within each period.
Methodology and Approach: This paper is a literature- and evidence-based research, focusing on analyzing economic transitions, demographic changes and government reforms on pension systems from a historical perspective. Data are collected mainly from China’s official statistical yearbooks and international organizations’ reports, and are processed into supportive graphs.
Findings: China’s government-led public pension reforms from a purely pay-as-you-go (PAYG) based and State-owned Enterprises (SOEs) backed system to the multi-tires system were motivated by emerging economic reforms and demographic changes. However, despite some amendments were introduced under evolving economic and demographic circumstances and had made some achievements, the pension reform is incomplete to solve all the challenges.


Pension reform; China 1951-2010; Economic reform; Demographic change

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