At what looks like the dawn of a new era in Chinese politics, social inequality and the reform of the emerging welfare state are crucial determinants of socio-economic developments in the coming decades. The perceived inequality in healthcare under health reforms and general inequality based on hukou (household registration) status are broadened over time. Accordingly the Xi administration announced a comprehensive set of reforms, which will directly and indirectly affect China's social policy. The goal of this panel is to provide a preliminary assessment of the potential of these reforms against long-standing governance issues in various areas.

The hukou system serves as an institutional basis of public welfare programs and remains a major force of social stratification. In public social programs such as pension insurance, social assistance, health insurance or housing, there are distinct inequalities in terms of entitlement. Dissolving the complex hierarchies of citizenship and welfare in favor of greater social equality is another declared goal of the Xi government, which is to be reached by reforms of the social protection programs. Public service units such as hospitals have become a focus point of governance problems in the reform period. The plans of a comprehensive overhaul of local government finances and a partial privatization of the hospital sector are directly affecting these governance problems and may substantially enhance China's steering capacity in the health sector.

The logic behind the reforms of governance in social policy is both productivist and authoritarian: on the one hand, the central government is trying to formulate a reformed state by providing more “equality”; on the other hand, it cannot afford the cost of dramatic changes. Therefore, it uses different approaches to motivate the local government to work on the complex social development projects in an effort to partially shift the burden of reform to the local government.