Economic and social security systems are intimately connected in all societies, and China is no exception. Social security programs necessarily become part of an economy’s institutional framework, for they affect economic activities in many ways. The central policy aim is to coordinate economic and social security policies so as to achieve the desired results. In China the social security system has acted as a safety net to catch the human debris disgorged by an economic system under more or less constant pressure to increase production. It has endeavoured to compensate for the ’diswelfare’ of economic development and change, especially occupational accidents and diseases, youth unemployment, poor family, family disintegration and separation and so on. The purpose of this study is to explore the change of welfare needs and social security system through economic reform in China. To achieve this goal, firstly, this paper examined the relationship between economic and social security system in China. And secondly, this paper analyzed the characteristics of change of welfare needs and social security system through economic reform in China. Finally, this paper examined carefully the directions for future development of social security system in China. The major findings of this study are as follows: (1) Regarding social security system in China, a special feature is that the labor insurance program has been set up for the privileged minority of state-run enterprise workers, while the rest of the population are either left to fend for themselves or to depend on an irregular and poorly constituted state assistance program. (2) The social(labour) insurance program were not flexible enough to cater for the different needs arising from the reform of the economic system. So the future social insurance program must be managed collectively and regulated by the state. (3) The development of social welfre and social relief lagged behind other aspects of the social security system. The future program should thus be planned alongside with the reform of the wage system and other allowances made by the state. And it is very important to distribute resouce or non-contributory income supplements to low-income households, while at the same time encouraging collective and local development of contributory pension and insurance schemes. (4) The administration of the entire system lacked systematic control and the different parts did not correlate with each another. So a new social security organization would probably need to be created to take charge of the planning and co-ordination of all social insurance, social welfare and social relief programs. (5) The source of funding came almost entirely from the state and lacked variety. Funds should thus be built up for different purposes and be raised from various sources including the state, enterprises or sociery, and individuals. And a decision will have to be made regarding the financial responsibility of those being covered, but this is obviously linked up closely with the wage reform and the extent to which contributions of the workers can influence the kind of benefits enjoyed by them. In relation to the idea of contribution, another suggestion is that fees should be charged for certain services used by the recipients. It is most important for China to acknowledge that a social security system is not there to justify the superiority of socialism, but to assist those who for one reason or another are deprived of the means to support themselves. The Chinese social secuirty system should thus be so formulated and developed that it will truly serve her people.