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Matthias Stepan

China counts on non-state actors, from charities to private companies, for the modernization of its social service delivery systems. Given the CCP’s preference for maintaining operational and ideological control, this approach has limitations. This is part one of a four-part series based on a MERICS publication on social services in China.


In the 21st century, the Chinese government shifted focus from an almost exclusive obsession with economic growth and urban enterprise reform to “social development.” The aim is to close the gap between urban and rural areas, and between rich and poor. The inconsistent quality of social service delivery across localities or income groups is a deep-seated problem in China´s social system. Unequal access is another problem –the outdated urban residency (hukou) system, denies access to outsiders, making migrant workers and their families the most vulnerable social group in the Chinese system.

The Xi-Li administration counts on digital solutions (from tele-health to e-learning) to modernize the delivery of social services. The following two articles in this series (based on chapters of the MERICS publication “Serve the people. Innovation and IT in China’s social development agenda”) illustrate this approach in two sectors. Karen Fisher describes how digital technology has generated employment for disabled people. Barbara Schulte explains the more mixed results in Chinese schools, where the new technologies clash with traditional teaching methods and create a “digital divide” between producers and consumers of content.

Government signs up charities and companies

Faced with the enormous task of reforming China’s social service systems – from health care to education, from housing policies to poverty alleviation – the central government relies on direct provisioning only for guaranteeing a subsistence minimum for the neediest groups. At the same time, it has outsourced fundraising and implementation of digital and other innovative solutions to non-state actors from private companies to charitable organizations.

This has created a dilemma for the CCP, which has a preference for maintaining operational and ideological control. The leadership addresses this by closely regulating and monitoring these non-state activities. Local governments experiment with different contracting models. New legislation on charitable organizations for example, encouraged the founding of new charities, but also increased political supervision.

In 2015, the Central Committee and the State Council mandated state-owned enterprises (SOEs) to contribute to the fight against poverty. Three years later, 104 SOEs have contributed a total of 15 billion CNY to a centrally managed fund. 55 projects are already under way, reaching from modernizing agriculture, renovating run-down urban districts, over opening scenic remote areas for tourism to establishing new industries and industrial parks.

Private enterprises engage in projects through a program called, “ten thousand companies help ten thousand villages” (万企帮万村). Enterprises support the marketing of local products, sponsor educational activities or provide scholarships to students from remote areas. China’s tech giant Alibaba has even established its own poverty relief fund.

The state can delegate fundraising, but not implementation

Yet while raising finances is one thing, providing high-quality professional services is another. China struggles to attract staff to remote places or to improve working conditions, training and remuneration of staff in hospitals and care facilities, as well as educational institutions.

It remains to be seen if the commercial and non-profit organizations can provide solutions to such complex issues in a strictly regulated operating environment that discourages bold initiatives. This is the control dilemma: the Chinese leadership tries to avoid direct social service provisioning beyond guaranteeing a subsistence minimum for the neediest groups. On the other hand, its preference for maintaining operational control stands in the way of outsourcing social service delivery.

The articles in this series are based on the MERICS Paper on China: "Serve the people. Innovation and IT in China’s social development agenda.”