Shanghai University of Finance and Economics recently conducted a study into the 2008 provincial level governments’ social security accounting reports.
The study found that all 31 provinces publicly released the total income figures, total expenditures, and remaining balance of their public pension fund. But only three provinces disclosed partial information as to their investment activities—a matter people worry about the most. The study was reported on by Legal Daily on June 14.
In an April 19 speech at Peking University this year, Hu Xiaoyi, vice-minister of Human Resources and Social Security, admitted to trouble.
“As of the end of 2010, China’s basic social security fund for urban workers was at nearly 2 trillion yuan (US$309 billion), while the pension fund balance totaled 1.5 trillion yuan (US$231 billion),” he said.
“But the fund has not been transferred to individual accounts. On the one hand, workers’ individual accounts are mostly empty… Under the current situation of rapid inflation, [the fund] is actually shrinking and depreciating.”
Hu also said China’s basic public medical insurance system covers more than 1.26 billion citizens, and the basic social security system covers 360 million people, according to an April 21, 2011 Securities Daily report.
The public is not happy, but China’s Leninist political system means they cannot do anything about it.
Chengdu business owner Mr. Sun expressed his frustration over the lack of transparency to The Epoch Times: “There have been big cases of social security fund abuse. But in the end, isn’t the country paying for it? The fact is, we taxpayers are paying the bill.”
Where’d the Money Go?
Between 1986 and 1997, over 10 billion yuan (US$1.5 billion) of social security funds were illegally used, Southern Weekend reported in 2006.
In 2008 the Logistics Sci-Tech journal published an analysis by researchers Li Dan and Du Huizhu, looking into the investments of China’s pension funds: “By the end of 2005, the social security fund deficit reached 800 billion yuan (US$123 billion). At the city of Guangzhou 890 million yuan (US$137 million) from social security funds have been misappropriated for 12 years, and only 100 million yuan (US$15 million) have been recovered,” they reported.
Misuse of the funds have persisted for a long time, they wrote. “Many local governments use the social security fund for infrastructure investment, real estate investment, securities trading, as loan money, or for setting up companies and other non-legal operations.”
Party bureaucrats have used the money for new office buildings or stationary, while “some have even used it to redecorate the homes of local officials and for buying cars for personal use,” the report said.
Social Insecurity
China has 150 million people living on less than a dollar a day, and millions have no social safety net other than family to fall back on during illness, unemployment, and old age.
With the one-child policy enforced for over 30 years, China’s population is rapidly aging. In 2010, 12.8 percent of China’s population, or 174 million, were over 60 years old. By the end of 2015 that number is expected to reach 15 percent, peaking during the next 10 plus years.
Migrant workers make up the largest uninsured population in China because they lack the “hukou” residency papers required for social security.
High unemployment and discrimination against migrant workers and other low-income groups has long been a cause of simmering resentment and of recent large-scale protests against corrupt, abusive government officials.
Estimates of protests and riots, so called “mass incidents,” in China in 2010 are as high as 180,000. Beijing responded by allocating US$95 billion to public security, mainly police and domestic surveillance this year.
Spreading unrest, caused by China’s social ills, looms large over the regime’s 90th anniversary celebrations on July 1.
