LAUSR

Abstract What has driven China, a developing country that has only recently saved itself from nationwide poverty, to increase its investment in social welfare so rapidly and extensively in the past decade? Drawing on extensive field research in a prefecture-level district in southwest China between 2014 and 2017, the authors argue in this article that local governments in China provide welfare housing programmes as a veil for developmentalist industrial policies aimed at industrial upgrading and the improvement of dynamic efficiency. The article demonstrates the unique incentive structure behind the local Chinese governments’ role as the front-line investor in social welfare benefits, and how the local state has cunningly used the façade of welfare provision to (1) divert the earmarked budget to implement development-oriented industrial policy; and (2) fake a discursive congruence between the heavily interventionist local practice and the overall neoliberal central-level policy discourse that features deregulation, small government and a laissez-faire developmental pathway. Exploring this set of strategic dynamics underlining the manoeuvres of the Chinese welfare operation helps us understand the variability of welfare state forms and trajectories of developmental strategy in the Global South.