The socialist market economy in China has brought about impressive economic growth. It has also resulted in serious social problems such as unemployment, deteriorating family relations, prostitution, and poverty among the disadvantaged groups. This paper discusses a welfare model proposed by the Chinese Government to contain the destabilizing effects of the social problems and to serve the newly adopted market socialism. The authors argue that although this welfare model is still very much residual by western standards, it is a big step forward in building a modern Chinese welfare system.

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