main elements of the employee social security system. Wage employees who are not covered by the employee system, including part-time employees, as well as self-employed workers, can opt to contribute to the system by reporting themselves as “flexible workers”. In this case, they choose their contribution amounts within a predefined range.

**Table 3: Typical contribution rates to the employee social security system, as a share of monthly wage**

|**Program**|**Contribu**<br>|**tion rates**<br>|
|---|---|---|
||Employee|Employer|
|Pensions|8%|18 – 20%|
|Medical insurance|2%|6 – 10%|
|Work-related injuries|--|1-2%|
|Maternity|--|1-2%|
|Unemployment insurance|0.5-1%|0.5-2%|
|HousingFund|5%-12%|5%-12%|

**The resident’s social security system** (also known as Rural and Urban Resident Scheme) is a complement of the employee’s social insurance system and covers only medical insurance and basic pension insurance programs.<sup>8</sup> In 2018, 55% of contributors of pension schemes contributed to the resident’s social security system. The resident programs are targeted at unemployed individuals, as well as at wage employees and self-employed workers who are not contributing to the employee system. These individuals can enroll voluntarily in both programs and can choose their contribution amounts within a predefined range. In addition, there are two groups of individuals covered by both resident’s programs whose contributions come exclusively from the local government: adults under 60 years of age who are not covered by the employee’s system who either live in households with incomes below the Dibao line or are disabled. The total amount collected from contributions to the resident’s program is lower than the contributions collected by the the employee’s system (338 billion RMB compared to 7523 billion RMB; see Appendix Table A2).

# Total Current Expenditure

China’s total public expenditure in 2018, including spending from central and local governments, was 22,090 billion RMB, which represented 24.5 percent of total GDP. Around half of this amount (37 percent) was allocated to social expenditure, about three-fifths to non-social expenditures (60 percent) and the remaining 3.4 percent to debt servicing (Table 4). Note further also that this category excludes spending through the Government Fund Budget (GFB) which is the source of most spending on infrastructure. The fiscal incidence analysis carried out here focuses mainly on allocating the social expenditure to households. The other categories, for instance infrastructure and defense included in non-social expenditure, are excluded from the analysis due to the difficulty of allocating their benefits to individuals. Within the social expenditure category, there are four subcategories: (i) education expenditure, (ii) health care expenditure, (iii) social insurance, social assistance & labor, and (iv) housing assistance.

> 8 These resident programs were at first exclusively for rural residents ( _rural hukou_ ), starting in 2003 in the case of the medical insurance program and in 2009 in the case of the basic pension insurance program. Similar programs were created for urban residents in 2007 and 2011, respectively. The urban and rural pension insurance programs were integrated in 2014, while the medical insurance programs were integrated in 2016.

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