China is confronted with a crucial test of welfare reform following a court ruling that impacts employment and small businesses

The ruling by China's highest court, which prohibits businesses and employees from evading social insurance contributions, is raising concerns regarding employment and the viability of small enterprises, compelling Beijing to address the dangers associated with the long-anticipated welfare reform.

According to analysts and a government advisor, this ruling seeks to restore the dwindling pension funds in aging areas and establish a foundation for more substantial welfare, facilitating China's shift towards a growth model that depends more on consumer demand and less on debt-fueled infrastructure and industrial investments.