The relevance of the concept of path dependence in path-breaking retirement protection reforms in Hong Kong and urban China

Abstract

Path-breaking reform measures have been launched recently to reform the retirement protection systems in both Hong Kong and urban China. In 2000, the Hong Kong government introduced the first compulsory retirement saving scheme intended to protect the entire workforce–the Mandatory Provident Fund. Since the early 1980s, the Chinese government has been attempting to develop a multi-pillar pension system to replace its previous pension system dominated by the State-owned Enterprises in urban China. This paper is intended to show that, despite these measures, the concept of path dependence has relevance to these reforms in Hong Kong and urban China. To meet this objective, the article discusses some significant similarities and differences of the causes, key features of the reforms in these two locations, and how these differences are related to the two governments’ attempts to address their earlier ways of providing welfare for retirees.