Structural Changes in the Labor Market and Social Security System in China:From the Viewpoint of Flexicurity

The global financial crisis triggered by the subprime mortgage crisis in the United States in 2008 revealed the unsustainability of China’s export-led growth regime, which supported the country’s rapid economic growth for over 20 years. Today, the Chinese economy has been forced to break away from export-led growth. Furthermore, the large financial investment made to compensate for the decreased export demand has helped China maintain high economic growth after the effects of the financial crisis started to wane in 2011. Thus, in recent years, the Chinese economy has had to transition from export- and investment -led growth to consumption-led growth. In this paper, we analyze the most important factors promoting the change from export- and investment-led growth to consumption-led growth in China’s economic growth regime. That is, we examine the correlation between the recent structural changes in the reproduction of labor force in the labor market and the social security system. Especially, we focus on the changes in the income-labor nexus due to labor market reforms and the present state of the Chinese social security system from the view point of flexicurity, which increases flexibility and security simultaneously.