China has been undergoing large-scale socio-economic transformation in the past three decades. With the shift from a planned to a market economy, China's social security system has been fundamentally transformed. In order to help inefficient state-owned enterprises to survive in a competitive market economy, since the mid-1980s the Chinese government has made great efforts to transform the traditional danwei- (work unit-) based social security system into a multi-tier social security system based on social insurance programmes. However, the embryonic social insurance system has proven inadequate and inefficient to cope with the mounting unemployment and urban poverty caused by the reform of the state-owned enterprises (SOEs), and has left more urban people outside the social protection system, thus imposing a negative impact on social stability. In the late 1990s, to pacify the vulnerable social groups consisting of laid-off workers, the unemployed, retirees and poor farmers, the Chinese government started to reform its public assistance policy and established a social assistance system with the minimum living standard scheme (MLSS) as its core. Focusing on the policy pertinent to the MLSS in China in general and in Guangdong in particular, this article examines social assistance policy and its impact on social development. It argues that although the MLSS indicates a statist approach to social development, the residual nature of the MLSS and the localization of financial responsibility have hampered the role of social assistance policy in promoting people's wellbeing and social development in China.

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