Universal Basic Income in China

Universal Basic Income in China

March 22, 2020

Universal Basic Income (UBI) is a fixed cash grant programme that adheres to principles of universality, individuality and unconditionality. It could provide a guaranteed safety net aimed at promoting social equity and integration by narrowing income and other differences between groups of people.

A widely shared consensus is that people respond in varying ways to social policies given the diverse social, economic, cultural and institutional context of a country (or territory). Take, for instance, China. As the largest developing country in the world, China has established a fundamental social security system in the past four decades, which has been successful in reducing poverty and narrowing the income gap. In this context, it may be worth discussing the possible outlook of having an inclusive social policy like UBI in China.

This report on UBI explores possible policy responses in China from two dimensions: behavioral insights and economic insights. The behavioral component looks at the social perspective and interprets the findings through a cultural dimension. Notably, the behavioral data arrives from traditional survey methodologies and an online gaming application, which were developed as an innovative approach to ascertain public attitudes. The economic component outlines China’s current social ‘safety net’ policy landscape to examine the compatibility of UBI and the existing Chinese social security system. Such analyses using economic rationale provides the needed complement to culturally-interpret behavioral insights when assessing the overall possible public policy response.

Main conclusions and recommendations from the report include:

  • If UBI were to be issued to the entire population with a basic standard of 267 RMB (US$ 37.8) per person per month, the financial expenditure would be 4.5 trillion RMB, 25 times that of the current subsistence allowance, and roughly a quarter of national fiscal revenue;
  • China’s current socio-economic conditions would make a nationwide implementation of UBI not financially feasible;
  • Pilots could be undertaken in areas with less income disparity or a modified version of UBI for lesser developed areas;
  • If implemented, people would tend to continue working and save UBI benefits, reflective of traditional Chinese culture;
  • Strengthening existing social welfare programmes should remain the policy and budgetary priorities;
  • Gamification can be a useful supplement to traditional surveys for garnering behavioral insights.