Does a Universal Non-Contributory Pension Scheme Make Sense for Rural China?

Rapid economic growth in China during the past 25 years has been accompanied by increasing economic inequality. China’s old-age social security system has long been restricted to urban areas, leaving the 70 per cent of the population living in rural areas with little or no coverage. The lack of social security for elderly people in rural areas poses a threat to social stability and raises social justice concerns. This study is based in part on interviews conducted in rural northeastern China. It also draws on evidence from Chinese government documents, newspapers, and reports on relevant programs in other developing countries. For rural China we propose a variant of the universal non-contributory old-age pension model that takes into consideration rural–urban differences in cost of living. The proposed model would reduce the level of poverty in rural areas as well as the degree of income inequality between rural and urban areas while simultaneously promoting social and political stability.