Like China’s broader market-oriented reforms, its social insurance system has followed a dual-track model since its inception. While this approach has reduced political resistance and relieved fiscal pressure on the government in the short term, it has left fundamental long-term liabilities unresolved and contributed to greater fragmentation and inequality within the system. More importantly, stricter enforcement of mandatory social-insurance contributions can significantly raise employers’ labor costs, potentially dampening private investment and exacerbating financial pressures across the system as a whole.

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