In 2001, the urban social security reform pilot work saw a formal startup. In an attempt to strengthen leadership to pilot work, the State Council established a leading group of social security reform pilot work, and approved the implementation plan of Liaoning Province on perfecting urban social security system pilot, which started and gained initial achievements. The project of "Two Guarantees" was further consolidated and intensified. Positive efforts were made to expand the covering of endowment insurance; the amount of workers that attended the social planning of endowment insurance continued to increase at a large rate. The basic retirement pension was essentially fulfilled with socialization duly and fully. While granting duly, positive efforts were added to solution of past arrears. About RMB980 million yuan of past arrears in 20 provinces and autonomous regions were reissued. In response to the requirements of the State Council, the basic retirement pension level was appropriately adjusted and improved for the enterprise retirees. The basic living maintenance of the laid-off workers was guaranteed. In 2001, there were 6 million laid-off workers in State-owned enterprises; 90 percent of them entered reemployment centers where 99 percent above of them enjoyed basic living maintenance with advancement of laid-off workers basic maintenance to unemployment insurance, the amount of workers adopting unemployment insurance continued to rise; 10.350 million people attended unemployment insurance at the end of the year and 3.50 million people accepted unemployment insurance.

The urban minimum life guarantee system was steadily promoted. According to
Regulations on Minimum Life Guarantee of Urban Citizens of the State Council, requirements were made to fully advance town minimum life guarantee system. The minimum life guarantee system was established in 668 cities and 1693 counties (Inc. towns where county-level governments are located) across the country; 4.026 million poverty-stricken people in towns entered into the scope of minimum life guarantee. Financial departments at all levels added great efforts to expenditures of minimum life guarantee. The amount of people who adopted minimum life guarantee pension continued to rise.

The "Three Reforms" work made break-through headway. The medical insurance worked out a batch of supported policies. Each province, autonomous region and municipality established overall planning. The planning areas set up specific reform schemes and supported measures. In the whole country, 91 percent of cities started to implement their plans, covering above 61 million people. Especially, Shanghai Municipality realized an overall coverage. The town medicine sanitation system reform gained much headway. The competition mechanism was introduced in medical institutions and medical workers; the reform that patients selected hospitals, doctors and drug stores helped upgrade efficiency and quality of medical service. The management of separation of medicine income from expenditure and medicine bid purchase were adopted; the unreasonable increase momentum of medical service cost was initially restricted. The General Office of the State Council transmitted Proposals on Guiding Rural Sanitation Reform and Development of the State Council Office for Restructuring Economic System and other departments, further promoting rural sanitation system reform.

Explorations were made on specific methods of raising national social security fund, to further intensify the management of national social security fund investment. According to the Provisional Regulations on Management of Selling off State Shares to Raise Social Security Fund, requirements were made to explore specific measures to sell off state shares for funding social security by means of increment issue of listed companies. In an attempt to intensify management of social security fund investment, the Ministry of Finance and the Ministry of Labor and Social Security jointly released Provisional Regulations on Management of National Social Security Fund Investment, set up some major investment policies and related measures for supervision and administration.