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From World History Connected Vol. 9, Issue 1.
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China, Social Insurance and the Welfare State: A

Global Historical Perspective
Aiqun Hu
Social insurance and the welfare state have long been and remain of global interest. For
example, the controversy surrounding health insurance that began in the late nineteenth-century

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industrialized world burns even brighter today in the world's capitals.1 In the United States,
health insurance reform is currently a matter of hot debate, while China's long established dual-

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system of old-age insurance has recently become a major social issue. Most of the debates have
been carried out within a national context, however, which is understandable given that social
insurance issues have been always regarded as domestic in nature. But the development of
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social insurance and the rise of the welfare state have been deeply influenced by global patterns
and models, as seems to be clear from the evolutionary course of social insurance in China in
the twentieth century.
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Social insurance has been a world-wide phenomenon since its invention in Germany in the
1880s.2 Social insurance is defined as government-sponsored programs providing benefits and
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services in such contingences as old age, sickness, unemployment, maternity, and work injury.
It was first diffused from Germany to western and northern Europe, eastern and southern
Europe, then to Australia, New Zealand, major Latin American countries, Japan, North
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America, and then to the rest of the world after World War II.3 China began to consider social
insurance programs as early as 1923 and 1924, under the pressure of the International Labor
Organization (ILO) which was devoted to promote the German social insurance around the
world since its inception in 1919.4
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Social insurance has proved to be the historical core of the post-war European welfare state,
which is defined as state responsibility for securing basic welfare benefits for its citizens to
maintain a national minimal living standard. Since the 1980s social insurance, especially the
welfare state has been challenged by neoliberalism. In the case of old-age pension systems, in
mid-1990s the World Bank began its global campaign of privatizing social insurance-based
pension systems, especially in Latin America, Eastern Europe, and other regions and countries
in the world; proposals were also considered to privatize the US social security system in 2005
under the Bush administration.5 In China the World Bank-promoted neoliberal pension system
has increasingly directed China's pension reform since the mid-1990s.6 Nonetheless, social
insurance systems, especially those adopted in the western and developed countries have
remained the dominant form of social protection.7
 This article falls into four sections. The first section briefly surveys the concepts of social
insurance and the welfare state and analyzes the mainstream theories on the welfare state so as
to reveal their significance in terms of world history as embodied in the notion of social
citizenship. It also explores the long-lasting features of the German social insurance model and
the global spread of social insurance programs since the 1880s. The second section critically
surveys the literature on China's social insurance, arguing for the necessity of a global
historical perspective which can incorporate China into the mainstream welfare state debates.
The third section applies a global historical perspective to analyze China's labor insurance
under high-tide socialism (1949–1976), showing that China's social insurance was rooted in the
global social insurance movement which it learned from prevailing models elsewhere. The last
section discusses how China's experience of social insurance systems, both capitalist and
communist, may expand our understanding of twentieth-century China; it will also explore the
pedagogical applications of this research as a case study in policy diffusion among nation-
states.

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Social Insurance and the Welfare State in World History

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During the nineteenth century, the "social questions" caused by industrialization became the
major issues in the industrializing European states. The "social questions" included labor
conditions; public health, education and housing; and workers' risks like work injury,
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unemployment, sickness, old age, and the death of bread-winners that would lead to income
interruption or loss.8 At the beginning, it was workers themselves who organized mutual aid
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funds to provide sickness and death benefits to their members. In the 1850s, the European
states began to interfere in these existing voluntary funds, making these funds compulsory and
requiring employers to contribute to these funds on behalf of workers. But it was not until the
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1880s that modern social insurance emerged when Germany issued a series of social insurance
laws which established national compulsory social insurance programs.

The German social insurance established a model that has endured for more than a century
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and reproduced itself in various countries. This model included five basic elements. The first
element is coverage: from an individuals' perspective, it is about who has the right to
protection; from a society's perspective, it is about who needs to be protected in the interest of
the society as a whole. The second element is about the social risks to be covered. Should the
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government programs cover a comprehensive set of risks or only some of them? The third
element is on eligibilities and benefits: under what conditions can the insured receive their
benefits and how much should the benefits be? The fourth element is financing: who should
pay for the system? Work injury insurance is normally paid solely by employers while other
types of social insurance are paid by both workers and their employers. The state underwrites
any deficiency of the funding. The fifth element is administration: who should participate in
the administration: the workers, the employers, or the state.9 Historically, the tendency has
been towards centralized administration by the state.

When the German model was spread to the rest of the world, it inspired a socialist model of
social insurance as Lenin put forward his social insurance principles in 1912. As a negation of
the German capitalist model, Lenin proposed a system to be solely paid by employers but
administered by workers themselves. This system should cover all sorts of social risks and
provide full-wage compensations to both workers and their families. Lenin's principles became
the basis of the Soviet model of social insurance associated with Stalin in the 1930s.10 Both the
principles of Lenin and the Soviet model were spread along with the global communist
movement, while the German model spread around the world mainly due to the ILO's
promotion and learning/emulation among nation-states. In China's case, from the late 1920s
onwards the Nationalist government kept drafting social insurance bills following the German
model, while the Communists imitated the Soviet model in the areas they controlled.
Eventually the Communists established Soviet-style labor insurance in China in 1951, while
the Nationalists in 1950 set up German-style labor insurance in Taiwan after they lost the civil
war and retreated there. These two models—capitalist and socialist—existed well into the
1990s when a new global model of privatization (the Chilean model) spread in Latin America,
Eastern Europe, and other places.11

In the post-war era, Western countries consolidated their social insurance programs and
constructed the welfare state as we know it today. The term "welfare state" was first coined by

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Winston Churchill in 1941 as a contrast to the warfare state of the Nazis, and came into public
usage after the publication of The Beveridge Report in Britain in 1942.12 The nature of the

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welfare state is embodied in T. H. Marshall's notion of social citizenship, the final stage of his
three-phase evolution towards fuller citizenship.13 For Marshall, citizenship based on the
British experience includes three components: civil, political and social rights. The civil
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citizenship includes rights that are necessary for individual freedom, which was realized
through the long eighteenth century. Political citizenship includes the rights to vote and
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participate in sovereign parliaments, which was obtained during the nineteenth century. In the
second part of the twentieth century came social citizenship, which was defined as "the rights
to a modicum of economic welfare and security to…share to the full in the social heritage and
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to live the life of a civilized being according to the standards prevailing in the
society."14 According to Marshall, the nature of social rights is attached to the status of
citizenship, and a citizen by virtue of being a citizen should be guaranteed by the state a secure
level of social welfare. Thus, the term "social citizenship" can be defined as "the belief that,
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since all citizens are assumed to be fundamentally equal in status and dignity, none should be
so depressed in economic or social condition as to mock this assumption. Therefore, in return
for the loyalty and virtuous civic conduct displayed by the citizen, the state has an obligation to
smooth out any gross inequalities by the guarantee of a basic standard in terms of income,
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shelter, food, health and education."15

Yet, how is social citizenship actually realized by the state? Esping-Andersen's concept of
"de-commodification" provides a good answer.16 This concept asks to what extent a citizen
does not need to rely on the market for his or her basic needs in the circumstances of income
interruption caused by social risks. Thus, social rights can be measured by the levels of and
conditions for various benefits provided through various social insurance programs. For
instance, Walter Korpi measures social rights during sickness by the level of and conditions for
sickness cash benefits, with the purpose of finding out "the extent to which the normal living
standards of an average industrial worker are protected through legislated rights to cash
benefits during illness."17 Korpi's measurement is consistent with the concepts of social
citizenship and de-commodification. As Korpi put it, social rights of individuals are "an
outflow of their status as citizens."18

The growth of the welfare state in the 20th century is such a salient phenomenon in world
history that a huge amount of literature has accumulated on it since the 1950s and 1960s. This
literature can be categorized into two types: structural and institutional approaches. Structural
approaches focused on structures such as industrialization and modernization as the driving
forces.19 These theories argued that industrialization destroyed the traditional social protection
institutions such as families, churches and guilds, and thus created a need for the state to
provide social protection through social insurance and other forms. In the 1970s new studies
emerged, arguing that the structural studies ignored human agency in their explanation. Thus
these institutional approaches stressed the role of working class, middle class, political parties,
and bureaucrats in creating and maintaining the welfare state.20 Since the 1990s, the structural
approaches evolved to include globalization theories,21 while the institutional approaches
evolved to include power-resources theories.22 Meanwhile, the structural approaches that
emphasized economic factors led to the argument of convergence of welfare policies while the

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institutional approaches that focused on political actors led to the argument of divergence of
welfare policies. At the margin of the literature, there emerged studies focusing on the role of

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international diffusion in the origins of the welfare state. These studies refuted the mainstream
theories mentioned above either by quantitative or qualitative approaches, arguing that it was
international diffusion that played the most important role in the origins and growth of the
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welfare state in the western industrialized countries.23
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But these studies predominately focused on western industrialized capitalist countries
including Japan, while ignoring the rest of the world—including China, the largest non-
Western socialist state. Even the newly developed globalization theories and power-resources
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approaches, when extended and adapted to East Asia, Latin America, East Europe and
developing countries, excluded China in their analyses.24 China was further excluded from the
discussion on the East Asian welfare model as shown in the next section.
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Study of China and the Welfare State

Scholarship on China is understandably slow to engage in the mainstream welfare state

discourse, which is the same as those of other non-western and developing countries. It was not
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until the mid-1980s that scholars began to pay attention to the welfare systems in East Asia,
especially Japan and the "four little tigers" (China is not included), due to the rise of "Asian
economic miracle." Some of these studies have followed the convergence thesis, arguing that
East Asian welfare system would converge with the western systems. As Aspalter puts it, "it
can be expected that similar structures of social stratification (by class or be status), similar
social movements, similar power of comparable political parties, similar party coalitions, and
similar class coalitions and so forth make similar cross-national welfare state development
likely and support the convergence of social systems."25 The majority of these studies,
however, have treated East Asian social welfare as having its distinctive characteristics,
focusing on building an East Asian welfare model.26 This model is argued to have its roots in
Confucian values, which are, it is argued, decisively different from the Western welfare state
that is rooted in Judaeo-Christian values. The social rights which are the basis of Western
welfare state did not have such a role in East Asia, where corporate development was more
important than individual rights. Thus, the Western welfare state could not be emulated by non-
European societies. As Elmar Rieger and Stephan Leibfried put it, "Western values have
decisively shaped the social politics of Western countries and continue to do so, but they have
been unable to leave a decisive mark on social politics in East Asia."27 And "in fact, the
development of social policy in Europe and North America is—in a world-historical
perspective—highly idiosyncratic."28

Although China was normally excluded from the discussion of the East Asian welfare
model, numerous studies have addressed China's social security reforms.29 These studies are
not historical and have focused on the economic reform era (1978 to the present), putting social
security reform against the backdrop of economic system reforms.30 In the larger literature of
industrial policy, social security is often treated as supplementary.31 In the relevant literature,
social security is often treated as one of the unique features of the Danwei, China's work
units.32 There are some historical studies of China's social security, which were confined in the
framework of socialism and focused on the second part of twentieth century.33 Since the

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1990s, some scholars in China have produced historical studies on China's social insurance and
labor laws in the 1930s and 1940s, but most of them are merely descriptions of the concrete

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contents of the regulations and laws without much discussion of the social, economic and
political contexts, let alone the global debates.34 Recently, a few studies analyzed how Soviet
labor laws influenced those of China, but they only focused on the late 1940s and 1950s.35
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Thus, the mainstream scholarship on China has not yet joined the theoretical discussions on
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the welfare state. But Bin Wong's essay on citizenship in Chinese history is an
exception.36 Wong's essay was consistent with his book China Transformed, in which Wong
employed a two-way comparative approach to study Chinese history, in order to go beyond the
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dominating western-centered impact-response paradigm originated in the 1950s and the China-
centered perspectives which emerged in the 1970s in the US.37 Wong argued that theories and
concepts based on European experiences did not apply in China, not because of culture but
because of a unique Chinese historical trajectory which was qualitatively different from that of
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European experience. Employing Marshall's concept of citizenship to "help illuminate relations

between the Chinese government and the people it rules," Wong argued that it "did not exist in
quite the same terms in China."38 Instead, Wong argued that the Chinese state and elites
provided various popular social welfares—equivalent to the substantive content of European
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social rights—because of Confucian paternalism in late imperial China (1368–1911).

Thus, Wong argued that while European social rights were realized through bottom-up
social movements, the substantive contents of European social rights in late imperial China
were guaranteed from the top down by the state. Moreover, in the first half of the twentieth
century, when European social rights became an increasingly prominent feature of citizenship,
the Chinese state's ability to provide social welfare was in decline in its post-imperial period. In
the second half of the twentieth century, when the European welfare state matured after World
War II, China under communism provided extensive and substantial social and economic
rights, such as "the iron rice bowl," health care, housing, and subsidized prices on daily
necessities, to its urban citizens, and collective provision of basic subsistence, medical care,
and education to its rural peasants. Since the 1980s after the economic reform began, however,
the Chinese state withdrew its commitment of providing comprehensive benefits to its
citizens.39

Wong's narrative of the substantial social rights in China provided an excellent brief outline
of Chinese states' historical provision of social welfare to its people. However, such a narrative
has its fundamental flaws. First, the social welfare benefits such as emergency relief, soup
kitchens, public work, poorhouses, and orphanages provided by late imperial China were not
unique, instead, common in the contemporary world. The social welfare provided by late
imperial China can be categorized into two kinds: one was provision of emergency relief to
famine victims through the public grain granary system, soup kitchens, and public works
projects;40 the other was poorhouses and orphanages for the aged, blind, orphans, and others
who did not have any relatives and friends to fall back on. Except for the public grain
granaries, other measures widely existed in the world. For instance, the early modern European
states provided social welfare through their poor-law systems. In 1601 Britain issued its
famous English poor law, which was the first state legislation representing the most highly
developed state poor relief in Europe. The British poor-law system was financed by taxes,

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supervised by the central government and administered by local authorities. By the mid-
nineteenth century, this system had already grown into a very expensive one. In 1850 more

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than 1 million people (about six percent of the population) received relief in England and
Wales, among whom 123,000 were indoor paupers and 886,000 outdoor recipients.41 The
poor-law system was universal throughout Europe, and there was much borrowing and learning
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among the states.
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Second, Wong ignores the decisive differences between the social rights realized in Europe
in the second half of the twentieth century and the social welfare provided in late imperial
China. Like the poor law relief in Europe, imperial China's social welfare targeted at the poor,
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while European social insurance benefits, the core of European social rights, had nothing to do
with the poor but were for wage earners and employees who relied on
employment.42 Moreover, the financial sources for social welfare came from government
revenues and private donations, while those for social insurance come from the contribution of
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employers and employees with states subsidies in time of revenue deficits. Furthermore, social
insurance benefits, as rights based on recipients' payments, were adequate to maintain a
minimal living standard in the developed countries in the post-war era,43 while social welfare
benefits were often merger and stigmatized in both imperial China and in early modern
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Europe.44 Furthermore, Wong's statements on post-imperial Chinese states and Communist

China before and after the economic reform beginning in 1978 overlooked the new
developments in China's social welfare in the twentieth century, which will not be discussed
here due to the space limits of this study.45

This critical literature review calls for a genuine global historical perspective to study the
welfare state in general and China's social insurance in particular. This task is even more urgent
since modernization theory still prevails in the studies of China's social policy; and China is
still following global models in its social security reforms,46 although the policymakers are
rhetorically advertising "a socialist social security system with Chinese characteristics."47
Social Insurance in Twentieth-Century China: A Global Historical Perspective

What is such a global historical perspective to the study of China's social insurance in the

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twentieth century? Such a perspective should not only put China's experience in a global

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historical context, but also reveal its patterns and driving forces, and the implementation of the
adopted policy. Thus, a global historical perspective will empower us to treat China's social
insurance as part of the global diffusion of two major social insurance models since the 1880s;
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it will reveal the motives of China's policymakers in emulating certain global models, and
enable us to understand that global models only provided the basic framework while national
politics determined the timing and specifics of the adoption. This should allow us to realize that
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copying institutions from global models will normally lead to failure in implementation which
is subject to domestic politics.
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Here I will apply such a perspective to analyze China's labor insurance (1949–1976), which
serves as the baseline of the ongoing social security reforms since 1980s. Communist China
was established in October 1949, and a drafting committee on labor insurance was formed in
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November 1949. After about a year of preparation, the labor insurance regulation based on the
Soviet model was issued in February 1951. Communist China's adoption of the Soviet model
had its global historical roots, as discussed earlier in this article, but also was strengthened by
the Cold War which divided the world into two camps: capitalist and socialist. For ideological,
historical, and strategic reasons, China joined the socialist world led by the Soviet Union and
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followed the Soviet Union in every aspect of its state-building processes.48 As a part of
socialism, the labor insurance system was regarded as indispensible for China's socialist
construction. Thus, the motive of Chinese policymakers was to imitate the Soviet model of
social insurance to build socialism in China. More specifically, China wanted to show its
socialist allies that it had adopted a socialist labor insurance system as a symbol of being part
of the socialist world; also, China wanted to show its people that the new China was superior to
the old China, because the Nationalists were unable to adopt a labor insurance system.

During the concrete drafting process, Li Lisan played a critical role. Li was one of the
earliest party leaders in organizing the labor movement in the 1920s, and the highest leader of
the party from 1928 to 1930, when he was removed from the position and forced to go to the
Soviet Union. Li returned to China in 1946 with an excellent command of the Russian
language. In 1949 Li was appointed the Labor Minister and Chairman of the Trade Union
Central of the new China, and thus he was in charge of the drafting committee on labor
insurance. At that time, the international section of the Trade Union Central had four Soviet
experts who helped with the drafting process.49 Thus the national labor insurance system
followed all the essential principles of the Soviet model, but was also modified to fit into
China's circumstances, such as the low level of economic development, lack of administrative
resources, and shortage of government revenue.

Following the Soviet model, this labor insurance regulation did not require workers'
contributions; it did not provide unemployment insurance, but set up all other types of social
insurance; it put the trade unions in charge of its administration; it copied many details
regarding eligibility and benefits, including special treatment of trade union members, model
workers and hero veterans; it excluded those who were deprived of their political rights and
those who were deprived of civil rights.50 But Li also modified the Soviet system. For
instance, China's labor insurance was applied to all kinds of enterprises with more than 100
workers, due to China's poor administrative ability, and labor insurance funds came solely from

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employers' contributions without any transfer from the state budget, because of China's
shortage of revenue.

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Meanwhile, the Chinese policymakers claimed that China's labor insurance was part of the
international socialist social insurance system, which was inherently superior to capitalist
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social insurance.51 The reasoning was that the Soviet social insurance absorbed the essence of
the capitalist system while abandoning its shortcomings. While workers in capitalist countries
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had not only to contribute to the system for their own benefits but had also to support a parasite
class of government agents who ran the system, workers in the Soviet Union were not required
to pay and were in charge of the system. In addition, the officials claimed that unemployment
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was eliminated in the Soviet Union and thus there was no need for unemployment insurance in
socialist countries.52

Once the initial labor insurance system was established, it was subject to national political
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forces in its implementation. From 1951 to 1976, the evolution of the labor insurance system
can be divided into three stages: initial implementation of the system from 1951 to 1953;
perfection of the system from 1953 to 1956; and the weakening and breakdown of the system
from 1956 to 1976. From 1949 to 1953, the major tasks of the state were to consolidate power
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and rebuild the economy. The state used labor insurance to strengthen its political legitimacy,
because labor insurance was so welcomed by the workers, just as land reform had attracted the
peasants.53

In 1953 when the Party issued the "general line for socialist transition," the major task of the
state was to transform China into a socialist country. This started the first five-year plan
focusing on heavy industrialization, modeled on the Soviet experience.54 As a result, China's
labor insurance system was further perfected by moving in the direction of the Soviet system.
First, the stated objective of labor insurance was to "serve production."55 This was consistent
with that of the Soviet system, which was fundamentally different from capitalist social
insurance, which was to meet the workers' needs on a contractual basis. Second, the benefit
levels were significantly increased and eligibility was greatly liberalized in order to encourage
workers to engage themselves in the large-scale production. Third, labor insurance was
extended to retail stores and commercial enterprises to facilitate the socialist transition
processes. In such an atmosphere, in 1956 the national trade union proposed a universal social
insurance system for all workers and employees in all kinds of work units by following the
Soviet model.56

But the year 1956 turned out to be the turning point of learning from the Soviet model in
general and social insurance in particular. The Soviet-style industrialization proved to be too
costly and agriculture was being ignored. For labor insurance, two issues stood out: the rising
costs and the unbalanced coverage. For the first issue, it was particularly due to the rise of the
medical care expenses which was in turn partially due to exploitive usage.57 The second issue
of the unbalanced coverage referred to unequal treatment of non-permanent workers who
received much fewer labor insurance benefits or even no benefits at all. The result was workers'
revolts, worsened by the incidents in Hungary and Poland.58 For instance, in 1956 labor
disputes broke out in Guangzhou in which the workers used the 1956 Hungarian incident to
demand higher wages and benefits. In Shanghai many strikes broke out in May and June of

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1957, the number of which even surpassed those in 1919, 1925, and 1946.59 From September
1956 to March 1957, a total of 10, 000 workers (mostly temporary and contract workers) and

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10,000 students went on strike around the country.60

Despite workers' revolts, the Communist party in 1957 responded to the costly Soviet model
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by issuing its new general line of "building socialism more, faster, better, and cheaper." As a
result, in the following twenty years between 1958 and 1978 mass campaigns became a tool for
policy implementation because of China's weak administrative resources.61 During the Great
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Leap Forward, the party mobilized workers by political incentives rather than mere material
incentives.62 In such a political atmosphere, the previous trend of expanding the labor
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insurance system was restrained. In coverage, the labor insurance system was curbed by
initiating the worker-peasant system, and absorbing housewives and other urban laborers into
the small-scale street owned enterprises during the Great Leap Forward. The worker-peasants
were not eligible to labor insurance, while the workers in the small street owned enterprises
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barely received any labor insurance benefits. In eligibility and benefit levels, although there
were no official changes in the labor insurance regulation, the implementation became much
harsher. For instance, some enterprises modified the provisions of labor insurance regulation to
reduce the items covered and decrease the level of benefits. In 1958 some existing enterprises
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simply stopped paying labor insurance benefits, while some new enterprises did not even
bother to register for labor insurance. In financing, workers were even required to pay to the
system in some places.63 This meant a fundamental departure from the Soviet system, which
explicitly required that workers should not pay to the system. In administration, the Party
tightened its control over labor insurance in 1958, when the state council issued a decree to put
the Trade Union Central accountable to the Minister of Labor for its labor insurance affairs.

In 1960 the Great Leap Forward ended in a great famine in which more than 20 million
people died. From 1960 to 1965, the implementation of the labor insurance system was
liberalized as an overhaul of the practices during the Great Leap Forward. All kinds of labor
insurance benefits were increased. As Dixon put it, "sickness and injury benefits became more
generous, disability pensions increased, retirement benefits improved, and maternity leave on
full pay was reinstituted. Moreover, preferential treatment was given not only to model
workers and combat heroes, as in the 1950s, but also to cadres and other professional
people."64 But such increases in the benefits should be understood against the overall policy of
cutting back welfare expenditure in the early 1960s. Li Fuchun, a vice premier of the State
Council who was responsible for industry, indicated at this time, "As production inches
forward, wages and benefits move at a fraction of that."65 This policy continued. As a 1963
editorial in Laodong put it, "for the work on wages and welfare, we should continue the policy
that they could only be improved gradually after production and labor productivity has been
increased."66

After this short period of recovering, however, labor insurance beginning in the mid-1960s
was weakened in the socialist education campaign (1964–1966), in which class struggle was
applied to every aspect of labor insurance work to root out feudalism, capitalism and
revisionism.67 Consequently, labor insurance work was meant to "take China's own road
guided by Mao Zedong's thoughts, and should not follow rigidly the foreign doctrines and
foreign models."68 So it was just a natural result that the Soviet-style labor insurance which

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was criticized as being revisionist was to be destroyed once the Cultural Revolution began in
1966. From 1966 to 1969, there were no government organs to implement the labor insurance,

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as the General Trade Union and Labor Ministry together with their local agencies were
destroyed. Also, the labor insurance funds accumulated in the previous years disappeared
during the chaos. In the aftermath of the Cultural Revolution between 1969 and 1976, the labor
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insurance was only partially restored. In 1969, the Financial Ministry recognized the
enterprises' practice of not paying into the labor insurance funds, as they did during the
Cultural Revolution.69 As a result, pooling of social risks was abolished and the labor
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insurance system became a pure enterprise-based welfare system. At least in this sense, the
implementation from 1951 to 1976 of the labor insurance system that imitated the Soviet model
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was a failure.

Conclusion: Social Insurance and Twentieth-century China

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This article analyzed China's social insurance in the twentieth century in a global historical
perspective. It first discussed social insurance as essential to the modern welfare state which is
the most salient feature of the world in the twentieth century. It then pointed out that the study
of China remained disconnected to the mainstream debate on the welfare state. Thus, this
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article went on to propose a global historical perspective to analyze China's labor insurance
under high-tide socialism. These analyses laid the basis to explore the significance of the
lessons of China's social insurance in enhancing our understanding of China in the twentieth
century, and its pedagogical applications as a case study in policy diffusion.

First, it shows the necessity of employing a global historical perspective in studying

contemporary China. Throughout the twentieth century, various Chinese governments have
either learned from western capitalist models or Soviet socialist models in their state-building
processes, of which social insurance was part and parcel. A pure national perspective cannot
capture the complete picture. Moreover, when imitating global models, China always faced the
risk of not being able to implement the models effectively, due to its poor administrative
resources and domestic political manipulations. This explains why the labor insurance system
was weakened during the Great Leap Forward and finally broke down during the Cultural
Revolution. Labor insurance during the high tide of socialism was only one of the systems that
were emulated from the Soviet Union; other institutions, such as the legal and educational
systems, experienced the same ups and downs. Even today, the Chinese government is
diligently learning from all sorts of global models in building its economic and social
institutions. The lessons of labor insurance under the high-tide socialism should serve as an
example to consider.

Second, this article reveals the global origins of the complex relationship of cooperation-
conflict between the Nationalists and the Communists, the two major political parties
reorganized or established in the early 1920s with the help of the Soviet Union. These two
parties, under the mentoring of the Soviet Union, formed the first united front in 1924. This
cooperation did not last long, however, which ended up with the Nationalists' extermination of
the Communists in 1927. But the Communists survived, largely due to the Japanese invasion of
China, driven by the global Depression. This led to the establishment of the second united front
between the two parties in 1937. After the Sino-Japanese war (1937–1945) stagnated in the

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early 1940s, the Nationalists began to adopt a planned economy by following the wartime
global trend, which had profound legacies on communist China and Taiwan in the post-war

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era.70 But this legacy did not contradict the fact that the Nationalists established a capitalist
social insurance system in Taiwan in 1950, while the Communists adopted a Soviet-style labor
insurance the 1951.
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Finally, this study contributes to the literature on policy diffusion including the more
specific public policy studies in policy transfer.71 Both literatures have predominately focused
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on western and developed countries (except for Latin Americas), ignoring developing
countries, especially China.72 As David Marsh and J. C. Sharmon correctly pointed out that,
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the literature on policy diffusion stresses structure, policy emulation and quantitative
techniques, while the literature on transfer pays more attention to agency, domestic politics,
policy learning, qualitative analysis, and whether the transferred policy is effectively
implemented; and thus there is a need to integrate the strengths of both literatures while
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overcoming their shortcomings.73 In addition, both literatures have begun to pay more
attention to the role of international organizations in the diffusion and transfer processes,74
while historical analysis in both sets of studies is still rare.75
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In this respect, I would like to explore the pedagogical applications of this study, treating
China's social insurance as a case in the interactive diffusion of social policy among nation-
states, which are in turn embedded in an international system.76 The framework of "interactive
diffusion" addressed both structure and agency, mixture of emulation and learning, and
implementation of the diffused policy. More importantly, it looked at diffusion over time, that
is, the historical evolution of the diffusion of social policy; and it argued that in both learning
and emulation, it was domestic forces rather than global models that determined the process.
As the present study showed that the origins and evolution of China's social insurance in the
twentieth century was embedded in the global historical context of the diffusion of two modes
of social insurance around the world since the 1880s. It also revealed that the motive of
Chinese policymakers to adopt the Soviet model in 1951 was to be recognized in the socialist
world community. Moreover, Chinese domestic policymakers determined the specifics and
timing of the adoption, while the Soviet models provided basic ideas and framework
throughout the diffusion processes. For instance, Li Lisan certainly learned all the major
principles and emulated many of the detailed contents of the Soviet model. However, he also
modified system to fit in China's situations, especially China's poor administration ability, low
level of economic development, and the difficulties in China's state revenues. Furthermore, the
implementation of the Soviet-style labor insurance turned out to be a failure, due to China's
domestic political constrains. The periods of Great Leap Forward and the Cultural Revolution,
which emphasized the role of politics through mass mobilizations, destroyed the Soviet-style
labor insurance system which relied on stable institutions and professionals to survive and
sustain.

Aiqun Hu is an assistant professor of History at Arkansas State University. She can be reached
at aiqunxsh@yahoo.com, and/or aiqunhu@astate.edu

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Notes

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1
The author wishes to extend her heartfelt thanks to Phyllis Pobst of Arkansas State U., Marc
Jason Gilbert (the journal editor), Patrick Manning of U. Pittsburgh, and the reviewers for their
insightful comments and detailed corrections on the earlier versions of this article. Also,
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warmest thanks to Mr. Johan Cauwenbergh and Ms. Xiaolin Yi (officials of European Union)
for allowing me to use the EU-China logon and other related pictures.
is
2
See David Collier and Richard E. Messick, "Prerequisites versus Diffusion: Testing
Alternative Explanations of Social Security Adoption," The American Political Science Review
eg

69 (1975), pp.1299–1315; Peter Flora and A. J. Heidenheimer, eds., The Development of

Welfare States in Europe and America (New Brunswick, NJ: Transaction, 1981).
3
See Collier and Messick, "Prerequisites versus Diffusion."
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4
Aiqun Hu, "Social Insurance in Twentieth-century China: a Global Historical Perspective,"
PhD Thesis, Northeastern University, p. 147.
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5
See Mitchell A. Orenstein, Privatizing Pensions: The Transnational Campaign for Social
Security Reform, Princeton, NJ: Princeton University Press, 2008.
6
Aiqun Hu, "The Global Spread of Neo-liberalism and China's Pension Reform since 1978,"
Journal of World History. (forthcoming).
7
For social insurance programs in a specific country, see United States Social Security
Administration, Social Security Programs throughout the World (Washington DC: US Social
Security Administration, 2010).
8
Daniel T. Rodgers, Atlantic Crossings: Social Politics in a Progressive Age (Cambridge:
Harvard University Press, 1998), p. 216.
9
Gaston V. Rimlinger, Welfare Policy and Industrialization in Europe, America, and Russia
(New York: John Wiley & Sons, 1971); Gerhard A. Ritter, Social Welfare in Germany and
Britain: Origins and Development (New York: Berg Publishers, 1986), p. 57; Peter A. Kohler
and Hans F. Zacher, edited, The Evolution of Social Insurance, 1881–1981: Studies of
Germany, France, Great Britain, Austria, and Switzerland (New York: St. Martin's Press,
1982).
10
Rimlinger, Welfare Policy and Industrialization, p. 251.
11
Aiqun Hu and Patrick Manning, "The Global Social Insurance Movement since the 1880s,"
Journal of Global History (2010), volume 5, issue 1, pp. 125–148.
12
See Flora and Heidenheimer, eds., The Development of Welfare States.
13
H. T. Marshall, Class, Citizenship and Social Development (Garden City, NY: Doubleday,

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1964).

re
14
Quoted in Michael Mann, The Sources of Social Power, Vol.2: The Rise of Classes and
Nation States, 1760–1914 (New York: Cambridge University Press, 1986), p. 19.
te
15
Derek Heater, Citizenship: the Civic Ideal in World History, Politics and Education, third
edition (Manchester, UK: Manchester University Press, 2004), p. 272.
is
16
G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge: Polity Press,
1990).
eg

17
W. Korpi, "Power, Politics and State Autonomy in the Development of Social Citizenship:
Social Rights during Sickness in Eighteen OECD Countries since 1930," America Sociological
Review 54 (3, 1989), p.314.
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18
Ibid.
19
See Phillips Cutright, "Political Structure, Economic Development, and National Social
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Security Programs," The American Journal of Sociology 70 (1965), pp. 537–550; Flora and
Heidenheimer, The Development of Welfare States.
20
See Esping-Andersen, Three Worlds; Peter Baldwin, The Politics of Social Solidarity: Class
Bases of the European Welfare State, 1875–1975 (New York: Cambridge University Press,
1990); Theda Skocpol, "Bringing the State Back In: Strategies of Analysis in Current
Research", in P. B. Evans, et al, eds, Bringing the State Back In (New York: Cambridge
University Press, 1985); Theda Skocpol, Protecting Soldiers and Mothers, the Political Origins
of Social Policy in the United States (Cambridge, MA: Harvard University Press, 1992).
21
See Dani Rodrik, Has Globalization Gone Too Far? (Washington, D.C.: Institute for
International Economics, 1997); Fritz Scharpf, Governing in Europe: Effective and
Democratic? (Oxford: Oxford University Press, 1999); Mitchell Orenstein, Privatizing
Pensions: The Transnational Campaign for Social Security Reform (Princeton: Princeton
University Press, 2008).
22
See Alexander Hicks, Social Democracy and Welfare Capitalism: A Century of Income
Security Politics (Ithaca: Cornell University Press, 1999); Julia O'Connor and Gregg Olsen,
eds., Power Resources Theory and the Welfare State (Toronto: University of Toronto Press,
1998); and Evelyne Huber and John Stephens, Development and Crisis of the Welfare State:
Parties and Politics in Global Markets (Chicago: University of Chicago Press, 2001).
23
See Andrew Abbott and Stanley DeViney, "The Welfare State as Transnational Event:
Evidence from Sequences of Policy Adoption," Social Science History 16, No.2 (1992): 245–
274; Gregory J. Kasza, One World of Welfare: Japan in Comparative Perspective (Ithaca:
Cornell University Press, 2006).
24
See Nita Rudra, Globalization and the Race to the Bottom in Developing Countries: Who

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Really Gets Hurt? (Cambridge: Cambridge University Press, 2008); Stephan Haggard and
Robert Kaufman, Development, Democracy, and Welfare States: Latin America, East Asia, and

re
Eastern Europe (Princeton: Princeton University Press, 2008).
25
Christian Aspalter, Conservative Welfare State Systems in East Asia (New York: Praeger
te
Publishers, 2001), p. 26.
26
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Roger Goodman et al, eds., The East Asian Welfare Model: Welfare Orientalism and the
State (London: Routledge, 1998); Kasza, One World of Welfare.
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27
Elmar Rieger and Stephan Leibfried, Limits to Globalization: Welfare States and World
Economy (Cambridge, UK: Polity Press, 2003), p. 243.
28
Ibid., p. 253.
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29
See Nelson Chow, Socialist Welfare with Chinese Characteristics: the Reform of the Social
Security System in China (Hong Kong: University of Hong Kong, 2000); Ming-Kwan Lee,
Chinese Occupational Welfare in Market Transition (London: Macmillan Press, 2000); Tony
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Saich, Providing Public Goods in Transitional China (New York: Palgrave Macmillan, 2008);
and many more recent journal articles.
30
See "Special Section on Social Insurance in China," China Quarterly (2010) vol. 201, pp. 1–
57.
31
Andrew G. Walder, Communist Neo-traditionalism: Work and Authority in Chinese Industry
(Berkeley: University of California Press, 1984).
32
Xiaobo Lu and Elizabeth J. Perry, eds., Danwei: The Changing Chinese Workplace in
Historical and Comparative Perspective (New York: M.E. Sharpe, 1997).
33
John Dixon, The Chinese Welfare System, 1949–1979 (New York: Praeger, 1981); Ehtisham
Ahmad and Athar Hussain, "Social Security in China: A Historical Perspective," in Ehtisham
Ahmad at el, eds., Social Security in Developing Countries (Oxford: Oxford University Press,
1991).
34
Zongfu Yue and Jiahua Nie, "Guomin Zhengfu Shehui Baozhang Lifa" ("Social Security
Legislation under the Nationalist Government"), Shangdong Nongye Daxue Xuebao (The
Academic Journal of the Agricultural University of Shangdong), 2004, issue 2.
35
Guangyan Sun and Lingqiu Kong, "Sulianfa dui Harbin Jiefangqum Laodongfugui de
yingxiang,"("The Influence of Soviet Labor Laws on the Labor Law of Liberalized
Harbin"), Xuexi yu Tansuo (Study and Exploration ) (2009), issue 2.
36
Bin Wong, "Citizenship in Chinese History," in Michael Tilly and Charles Hanagan, eds.,
Extending Citizenship, Reconfiguring States (New York: Rowman & Littlefield Publisher,
1999).

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37
Bin Wong, China Transformed: Historical Change and the Limits of European Experience

re
(Ithaca: Cornell University Press, 1997). For criticism on China Studies in the US, see Paul
Cohen, Discovering History in China: American Historical Writing on the Recent Chinese Past
(New York: Columbia University Press, 1997). Second Edition.
te
38
Wong, "Citizenship," p. 97.
is
39
Ibid., p. 104, pp. 113–114.
eg

40
Janet Yi-chun Chen, "Guilty of Indigence: The Urban Poor in China, 1900–1949," Ph. D
Thesis, Yale University, 2005, p. 7.
41
Rodgers, Atlantic Crossings, p. 211.
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42
Ibid., p. 209, p. 216.
43
See Flora and Heidenheimer, eds., The Development of Welfare States, and many more
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works on the post-war welfare state.

44
Chen, "Guilty of Indigence," p. 6; See also Huge Heclo, Modern Politics in Britain and
Sweden: From Poor Relief to Income Maintenance (New Haven: Yale University Press, 1974).
45
For further discussion, see Hu, "China's Social Insurance in Twentieth-century China," pp.
58–59.
46
See the EU-China Social Security Co-operation Project, as shown in the pictures attached to
this article.
47
This phrase appears in all the official documents on social security reforms.
48
William Kirby, "China's Internationalization in the Early People's Republic: Dreams of a
Socialist World Economy," The China Quarterly (2006), p. 880.
49
Guo Jian, "Laodong Baoxian Danshengji" ("The Birth of the Labor Insurance"), Zhongguo
Shehui Baozhang (China's Social Security), 2009, issue 10, p. 12.
50
See "Zhonghua Renmin Gongheguo Laodong Baoxian Tiaoli" ("The Labor Insurance
Regulation of the People's Republic China"), Zhong guo gongren (Chinese Workers), Vol. 14
(1951), pp.3–6.
51
Li Lisan, "Guanyu zhongguo renmin gongheguo laodong baoxian caoan de jidian shuoming"
("Explanation of Several Points in the Labor Insurance Regulation of the PRC"), Zhongguo
gongren (Chinese Workers), Vol. 14 (1951), pp.6–8.
52
Zhu Xuefan, "Xin zhongguo de laodong baoxian" ("New China's Labor Insurance"), in

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Gongren Ribao (The Worker's Daily), 21 Feb.1951.

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53
There is a widely circulated story about how workers welcomed labor insurance
enthusiastically upon the issuance of the Labor Insurance Regulation.
te
54
Li Hua-yu, Mao and the Economic Stalinization of China, 1949–1953 (New York: Rowman
&Littlefield Publishers, 2006).
is
55
Li Xian, "Zai longdong baoxian de shiji gongzuo zhong guanche zongluxian" ("Implement
the General Line in the Practical Work of Labor Insurance"), in Laodong (Labor), Vol. 5
eg

(1954), p. 18
56
Guangdong Provincial Archives, Series 231–1–324.
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57
Yan Zhongqin, eds., Employees' Wage, Welfare, and Social Insurance in Contemporary
China (Beijing: China's Social Science Publisher, 1987), p. 314.
58
Also, in the winter of 1956–57, there was substantial peasant withdrawal from the
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agricultural cooperatives, which was called "small typhoon." See Frederick Teiwes,
"Establishment and Consolidation of the New Regime," in The Cambridge History of China,
Vol. 14, p. 140.
59
Elizabeth Perry, "From Native Place to Workplace: Labor Origins and Outcomes of China's
Danwei System," in Lu and Perry, Danwei, pp. 48–49.
60
Zhang Yunmei, "Lishun yu chongtu: Zhongguo gonghui yu dang-guojia de guanxi"
("Harmony and Conflicts: The Relationship between the Chinese Trade Union and the Party–
State"), in The Twenty-First Century Online, Vol.18, issue 9 (2003), p. 4.
61
Shiping Zheng, Party vs. State in Post-1949 China: the Institutional Dilemma (New York:
Cambridge University Press, 1997), p. 154.
62
Editorial, "Zuohao laodong gongzuo, cujin shengchang jianshe, jixu dayaojin" ("Do a Good
Job in Labor Work, Promoting Production and Continuing the Great Leap Forward"), Laodong
(Labor), issue 1 (1960), pp.1–4.
63
Dixon, Chinese Welfare System, p. 90.
64
Ibid., p. 95.
65
Quoted in Frazier, Making of Chinese Industrial Workplace, p. 215.
66
Editorial, "Strive to implement the general line of national economy," Laodong, issue 1
(1963), p. 4.

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67
Guangdong Provincial Archives, Series 231–1–249.

re
68
Editorial, "Laodong gongzi gongzuo yiding yao tuchu zhengzhi" ("Politics Must be Stressed
in Labor and Wage Work"), Laodong (Labor), issue 4 (1966), p. 3.
te
69
Committee of Guangdong Provincial Zhi, Guangdong Sheng zhi, p. 205.
70
is
See William C. Kirby, "Continuity and Change in Modern China: Economic Planning on the
Mainland and on Taiwan, 1943–1958," The Australian Journal of Chinese Affairs, no. 24 (July
1990), pp. 121–141; Morris L. Bian, "Building the State Structure: Guomingdang Institutional
eg

Rationalization during the Sino-Japanese War, 1937–1945," Modern China, Vol. 31, no. 1
(Jan. 2005), pp. 35–71).
71
For the relationship between policy diffusion and policy transfer, see Adam J. Newmark,
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"An Integrated Approach to Policy Transfer and Diffusion," The Review of Policy Research,
vol. 19 (2002), summer, pp. 152–178; David Marsh and J.C. Sharman, "Policy Diffusion and
Policy Transfer," Policy Studies, vol. 30, no. 3 (June 2009), pp. 269–288.
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72
For the early generation of studies on diffusion, see David Collier and Richard E. Messick,
"Prerequisites Versus Diffusion: Testing Alternative Explanations of Social Security
Adoption," The American Political Science Review 69 (1975), pp. 1299–1315; Abbott and
DeViney, "The Welfare State as Transnational Event. For the renewed interest in diffusion
studies since the 1990s, see articles in Annuals of the American Academy of Political Social
Science (2005), vol. 598; International Organization Symposium on the diffusions of
liberalism, International Organization (2006), vol. 60, issue 4; Kurt Weyland, "Theories of
Policy Diffusion: Lessons from Latin American Pension Reform." World Politics (2005), vol.
57, issue 2, pp. 262–295; Beth Simmons, et al, eds., The Global Diffusion of Markets and
Democracy (Cambridge: Cambridge University Press, 2008); Kurt Weyland, Bounded
Rationality and Policy Diffusion: Social Sector Reform in Latin America (Princeton: Princeton
University Press, 2007); Covadonga Mesequer and Fabrizio Gilardi, "What is New in the Study
of Policy Diffusion?" Review of International Political Economy (2009), vol. 16, issue 3, pp.
527–543. For studies in policy transfer, see Roger Rose, "Lesson Drawing across Nations,"
Journal of Public Policy (1991), vol. 11, issue 1, pp. 3–30; Dolowitz D. P. and D. Marsh,
"Who Learns What from Whom? A Review of the Policy Transfer Literature," Political
Studies (1996), vol. 44, issue 2, pp. 343–357; Dolowitz D. P. and D. Marsh, "Learning from
Abroad: The Role of Policy Transfer in Contemporary Policy Making," Governance (2000),
vol. 13, issue 1, pp. 5–24; the series of articles on policy transfer in Policy Studies (June 2009),
vol. 30, no. 30, pp. 237–311; and David Benson and Andrew Jordan, "What Have We Learned
from Policy Transfer Research? Dolowitz and Marsh Revisited," Political Studies Review
(2011), vol. 9, pp. 366–378.
73
Marsh and Sharman, "Policy Diffusion and Policy Transfer," p. 270.
74
For studies addressing the role of international organizations in diffusion, see John W.
Meyer, John Boli, and George M. Thomas, and Francisco O. Ramirez, "World Society and the
Nation-State," American Journal of Sociology (1997), vol. 103, issue 1, pp. 144–181; Rune

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Ervik, "The Battle of Future Pensions: Global Accounting Tools, International Orgnaizations
and Pension Refroms," Global Social Policy (2005), vol. 5(1), pp. 29–54; Orenstein,

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Privatizing Pensions;Adam McKeown, Melancholy Order: Asian Migration and the
Globalization of Borders (New York: Columbia University Press, 2008); and Hu, "Global
Spread of Neo-liberalism and China's Pension Reform," (forthcoming).
te
75
For the pioneering historical studies on diffusion, see Heclo, Modern Politics in Britain and
is
Sweden; Rodgers, Atlantic Crossings.
76
Thereafter, I would only use the general term "diffusion" to refer to both diffusion and
eg

transfer. For the framework of interactive diffusion, see Hu and Manning, "Global Social
Insurance Movement," pp. 128–129.
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