This thesis is attempting to analyze the main causes that shaped the Chinse welfare system in the way we see it today. In order to achieve this the author surveyed secondary literature on the topic and summarized the findings. The Chinese welfare system is relatively young, and most attention and political capital was generally directed towards the urban regions of the country. The fragmentation of the system is one of the main problems that impede comprehensive reform and are indeed a legacy of the previous choices of the central government.