Big business as vanguard: social welfare expansion in China

Abstract

Why would an emerging market economy without Western democratic institutions provide and promote social welfare to its citizens? This paper explores the driving forces behind the rapid yet unequal expansion of social welfare in China, a phenomenon notable since the late 1990s. Rather than adhering to the conventional state-centered approach that views welfare expansion as a strategy for one-party regimes to seek legitimacy, this study offers an alternate perspective that emphasizes the ‘demand’ side, particularly the role of business. Through a systematic analysis of all 336 Chinese municipalities from 2001 to 2012, the study demonstrates how big businesses act as ‘vanguard,’ pushing local governments to enhance social welfare provision. It suggests that big businesses, in the absence of institutionalized democratic institutions, serve as ‘functional equivalents,’ channeling societal demands to the government. This paper also finds that firms’ influence on social policy in non-democracies is more capability based instead of institutional based; large domestic and multinational corporations are more capable in lobbying the government.