The welfare of millions of mortal beings now enjoys top priority on the government agenda.

The matter involves employment, social security, healthcare, housing, communication, food safety, education and the environment. All these are directly connected to the country's undertaking of building a harmonious society.

These issues cannot be entirely left to the mercy of market forces. Instead, the tangible hand of the government is needed.

In the planned-economy era, we had a big government that concentrated everything in its hands, ranging from State affairs to minor things concerning ordinary people's everyday life.

The all-encompassing government began to transit to a limited one after the reform and opening-up were launched in the late 1970s, disengaging from sectors and affairs that should be governed by market mechanisms.

In the course of transition, however, the government became absent where its presence is needed, such as matters involving social justice. At the same time, it remains involved in affairs and sectors where its presence should be replaced by market mechanisms.

Establishment of a complete social security system guarantees social justice and stability. The social security system is supposed to cover all members of society, offering them healthcare, pensions and, in turn, real security.

Compulsory, equal, and universal coverage are the most salient features of the social security system.

However, differentiations exist between the urban and rural populations, between regular urban workers and migrant workers and between different localities in terms of social security coverage, a situation we have inherited from past practices.

Serious dislocations, therefore, exist in the social security system, taking into account that the majority of China's 1.3 billion population live in the countryside, including the millions who are working as migrant workers in urban areas.

By the end of last year, 186.49 million urban and township people were covered by pension insurance, 157.37 million urban and township people were under the umbrella of healthcare insurance, and 111.87 million urban and township people were covered by unemployment insurance.

The majority of the population still remain outside the social security system, which means we still have a long way to go to build up a universally inclusive social security system.

Apart from this, education, public hygiene, environmental protection and employment are all vitally important issues involving ordinary people's livelihood.

To run an effective social security system needs huge sums of money, people often claim. But it is more important that we use the money efficiently.

Among all the expenditures of the government, spending on public services and social welfare is only 25 percent, in contrast with 75 percent in the US.

In view of this, spending on running the government and on economic activities need to be reduced and expenditures on public services ought to be largely increased.

In particular, the money used on travel at public cost, on public vehicles and feasting at public expense must be brought down by large margins.

The money sheared off from this kind of spending needs to be channeled into public-service undertakings to address the vitally important issues involving the lives of more than 1 billion mortal beings.

At present, many local governments, especially those in poverty-stricken areas, feel keenly that their financial strength in no way matches their attempt to set up a social security infrastructure.

This is because the existing tax and finance systems were originally designed to encourage the localities to promote their economies, instead of being geared to addressing matters involving people's livelihood.

As a result, the financial strength of poor areas is sapped or remains weak. To redress the situation, the central and provincial governments should take up tasks such as building up social security systems through transfer payments to counties and towns.
At the same time, we should realize that boosting employment is one of the best ways to improve people's welfare. Realignment of employment policies is called for.

First, control on setting up small businesses should be liberalized. No registration procedure should be required to start a tiny business. Filing a record for reference is quite enough.

At the same time, all kinds of irrational fees levied on tiny business proprietors ought to be scrapped.

Finally, it should be made easier for small- and medium-sized enterprises to get bank loans.

Zhou Tianyong is a professor with the Party School of the Central Committee of the Communist Party of China; Hu Feng is a PhD candidate at the school

(China Daily March 13, 2007)