Government and Policy

Social payments tweaked for rising prices

By Chen Xin (China Daily)
Updated: 2011-03-04 08:40

BEIJING - China plans to change its system of distributing social aid to make needy people in both urban and rural areas better able to cope with a continuous rise in consumer prices seen since July.

Provincial governments have been asked to set up a mechanism linking relief payments with rises in local consumer price indexes (CPIs) by the end of the year , according to a recent announcement by the National Development and Reform Commission, the country's top economic planner, and other four ministries.

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Each government was required to identify a set of conditions that would cause it to put such mechanisms into effect. According to the announcement, the mechanisms should be triggered when residents' basic living costs or the local CPIs rise above specified levels.

When the mechanism goes into effect, supplementary subsidies will be granted to those already receiving local "minimum living-security" programs or unemployment insurance.

Governments will stop distributing the supplementary aid if the CPI falls below the trigger level and remains there for a time. But if the supplements last longer than expected, the amounts of minimum-living security payments should be increased, the announcement said.

The new mechanism aims at ensuring that social aid and related social-security programs keep pace with China's economic growth and the income increases enjoyed by the general populace, authorities said.

The minimum living-security system was extended to cities throughout China by 1999 and to rural areas in 2007.

The program caused residents to receive an average of 236 yuan a month during the first half of 2010, official figures showed.

And because of recent rises in CPI, some places have decided to raise their minimum living-security payments.

Guangzhou, capital of Guangdong province, will raise them by as much as 25 percent for both urban and rural residents starting in April, Yangcheng Evening News reported.

Lu Quan, an expert with China's Social Security Research Center at Renmin University of China suggested that more of the central government's budget be allocated to support the development of a minimum living-security system in rural areas, especially those in central and western regions.

The central government now pays for 70 percent of the security system in urban areas, while local governments pick up the remainder. In rural areas, the central budget pays for a smaller portion of the program, Lu said.

"In some eastern and coastal provinces, it's not difficult for local governments to afford," he said. "But in less-developed central and western places, the governments are coming under a large amount of stress."

Lu called for a more scientific means of setting the amounts of the country's urban and rural payments. Many places put their urban payments at 60 percent of the local minimum-wage amount. For rural places, though, there is no such rule of thumb, he said.