China has entered a transitional period of socio-economic development with the adoption of a market-based economy in the early 1990s. During this period, a brand-new social assistance program—Minimum Living Standard Guarantee System (MLSGS)—was established and developed in China. This article analyzes the poverty in urban and rural China during the transitional period, and scrutinizes the evolutional process of MLSGS. It argues that during the period of transition, China's social assistance program was not only a corollary of dealing with the challenge of poverty, but also had a close relationship with politics.

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