Association for Public Policy Analysis & Management

For transitional countries from state socialism to markets, the privatization of welfare provision to relieve the fiscal burden stands opposite to the previous image of an omnipotent communist government. In order to maintain the regime support from the public during the reformist process of muddling through the dilemma of welfare privatization and governmental responsibility, the Chinese government has employed a strategy combining increme8ntal policy experimentation with official propaganda.

This article studies the effects of a case of welfare privatization — the old-age social insurance pilot scheme in Chinese urban areas — on the welfare preference and the regime support of the general public. The old-age social insurance reform is intended to share the responsibility of old-age care from the government to the market and individuals. The Chinese central government launched the three waves of social policy pilots in selected provinces. With the help of two nation-wide surveys (Chinese Attitudes toward Inequality and Distributive Injustice) conducted in 2004 and 2009, we collect over 5,000 random pooled cross-sectional data of residents in 8 treated and 12 control provinces.

Empirical findings show that the implementation of the social policy experimentation has strongly positively contribute to the citizens’ understanding on welfare privatization in general, by which people has accepted the underlined individual responsibility in providing old-age care. The duration of experiencing the pilot policy amplified the policy effects. We also verify that the official propaganda effect which emphasis omnipotent government and identifies a successful moderation of treatment effect of the pilot scheme on general public’s understanding of welfare privatization. Nevertheless, evidence on political trust demonstrates that the increased expectations for governmental responsibility encouraged by official propaganda in welfare provision might pose a threat to the government credibility in a long term.