Preface

The Third Plenary Session of the Eighteenth Central Committee established the goal of establishing a more equitable and sustainable social security reform and was further confirmed in the 13th Five-Year Social Security Construction Plan. More reliable，more fair and sustainable social security should be achieved both through the social security system construction and by the whole society to work together to give full play to the role of the government，company and person. To be better and more effective to realize implementation of social security at great length to secure government responsibility is an important system guarantee. The scope and depth of government involvement in social security has always been an important topic for human answering the way of modern social security. Fiscal expenditure on social security is the concrete manifestation of the responsibility of the social security. The implementation and reflection of fiscal responsibility in the construction of social security system not only are related to the financial resource and financial sustainability in social security，but also to a certain extent determine the social security system orientation and positioning. Fiscal expenditure on social security and its decentralization are the two borders of building social security government responsibility：fiscal expenditure on social security builds the central government in social security field and market boundaries，which is the specific embodiment and quantification of government responsibility；fiscal social security decentralization builds the boundaries between the central government and the local government and reflects the boundaries between “finance and government” in different governments in social security field.

In this book，we make the fiscal expenditure on social security and its decentralization status as the object of study，deeply research the important function of finance in the process of social security construction in different times，analyze the current level of fiscal expenditure on social security，project structure and expenditure equity，and assess the financial decentralization of fiscal expenditure on social security under China characteristics decentralization. This book also focuses on the main problems in the current fiscal expenditure on social security level and decentralization.

Throughout the practice of social security reform in other countries，the government finance has played an important role and influences in it. So it is with China's social security reform practice，which plays an important role promoting in several important nodes on the financial system reform for social security development. In the planned economy period，because the social security is mainly in the form of unit security，the direct social security which the finance provided is more temporary，and the disaster rescue expenditure was once the most important project. With the opening of reform，in order to stimulate the enthusiasm of local governments to delegate powers and benefits，financial resources were gradually concentrated to the local government. In the 1980s，the “princes' finance” under the decentralized system in the last century decided the characteristics of decentralization，fragmentation，pattern diversification and low level of overall in early social security reform，and also resulted in dependence on the later social security reform path. In 1994，the reform of the decentralization system raised the central financial strength，laying the economic foundation for the reunification of the follow-up social security system and the return of the social security government responsibility. The establishment of public finance in 1998 provided the system guarantee for the reform direction of “comprehensive coverage，urban and rural integration” of social security. The reopening of the financial system reform in 2016 further standardized the division of social security rights between the central government and local governments，which would help the social security system to be more reliable and more sustainable.

After 1998，the indicator of China's fiscal expenditure on social security level rapidly grew，but the relative level of indicators was growing slowly and the level of expenditure was significantly lower than the OECD countries. Fiscal expenditure on social security structure is not reasonable and every internal structure of each expenditure project also needs to be optimized. In the aspect of equity of fiscal expenditure on social security，urban and rural equity and regional equity have been improved to a certain extent，among which the regional differences in fiscal expenditure on social security are more serious，and the degree of regional fragmentation is even worse than that of urban and rural fragmentation.

The important reason for the scientific assessment and international comparison of fiscal expenditure on social security level in China lies in the non-completeness and non-comprehensiveness of the financial supply side of social security expenditure. China's government revenue is not equal to fiscal revenue，the basis of this system has affected the real level of fiscal expenditure on social security，and has been an obstacle to the international comparison of fiscal spending on social security level. China has a large part of government revenue free of public revenue，which makes public expenditure is only part of the government expenditure. The real level of fiscal spending on social security under full-caliber government expenditure level will decrease further. As China's current macro-government spending has been large，it is not appropriate to expand the level of fiscal spending on social security by expanding the general financial expenditure，but apply the structural reform on fiscal expenditure on social security supply side，change the current facts that fiscal expenditure on social security is only from the status of public expenditure，conclude the general government revenue and expenditure into the full caliber budget，and improve the caliber of government expenditure proportion of social security to truly improve the level of fiscal spending on social security.

Public finance expenditure decentralization in social security builds the central government and local government social security boundary. China's financial and social security expenditure decentralization shows that the local decentralized situation is very high regardless of what kind of statistical caliber，which is much higher than the level of fiscal decentralization over the same period. This kind of decentralization situation caused the local government's social security expenditure to take too much responsibility，resulting in the local government to pay a high degree of dependence on social security transfer payment and affect the local government's enthusiasm to carry out social security issues to a certain extent，also increase the social security rights separatism locally. China's unclear division of financial and social security powers is the reason for the high financial decentralization. Reforming and standardizing the division of social security rights between the governments is the key point to current social security related system construction. The re-division of intergovernmental social security rights should be based on the principle of scientific evaluation on externalization，incentive compatibility and information processing complexity，and should also take the Chinese characteristics of decentralization into account. To help accomplish full coverage and sustainable implementation of the social security system，it's crucial to move up part of the social security rights especially those with strong externalizations，low degree of complexity of information and those beneficial to incentive compatibility，raise the central government's direct responsibility in the relevant social security projects，and rationalise the proportion of the local government's expenditure in the financially social security. Additionally，by rebuilding the local government's new main tax，the local government's financial resources will be stabilized. Then improve the local government's ability to supply public goods，and appropriately reduce the generally high degree of dependence from local government in transfer payment about social security.

The fiscal payment risk on social security is also an important factor affecting the sustainability of the social security system. In the current state，The fiscal payment risk on social security is affected by multiple factors. In the macroeconomic factors，the new normal of China's economy will affect the growth of fiscal revenue，while the the structural reform in the supply side will highlight the contradictions between the supply and the demand in fiscal expenditure on social security. Within the social security system，the risk degree of fiscal expenditure on social security is different. As a strategic reserve，National Social Security Fund has inadequate prevention on fiscal expenditure on social security，because of lacking the institutional framework. As a result，it's significant for China to improve the prevention ability of the fiscal payment risk on social security from multiple angles. First of all，we have to adhere to the concept of economic development and social security construction. Next，reform the structure about the supply side in fiscal spending on social security，and maintain its reasonable growth followed when the total scale of fiscal expenditure is steady comparatively. Then，complete the strategic planning of National Social Security Fund，and allocate the state-owned capital to enrich the social security fund in a reasonable way. Finally，China also should improve the social security actuarial system and social security budget system，making the protection of the payment risk in social security more rational and accurate.