The government is to increase the level of pensions and housing subsidies for poor families in a bid to bridge the widening income gap.
A State Council meeting chaired by Premier Wen Jiabao on Wednesday pledged to increase pensions for more than 40 million retirees from State-owned enterprises over the next three years.
The government has already raised their pensions in the past three years by an average of 8 percent a year.
But the cabinet considers the present pension level "still quite low".
It said the increases over the next three years would exceed the rises made between 2005 and 2007 to "further ease social tensions caused by the income gap".
The move is aimed at helping retired senior technology professionals and those who now get a relatively low pension.
The cabinet ordered local governments to make sure this year's pensions are paid by the end of the month.
While pledging to regularize pension increases, the cabinet also called for the development of other forms of pension rather than solely relying on the budget.
It mentioned commercial and enterprise-funded insurance schemes.
The average pension of enterprise employees is about 750 yuan ($100) per month - the minimum salary set for developed cities, including Beijing.
"With my pension, I can just about make ends meet. Consumer prices have kept on rising in the first half of this year," a 72-year-old retiree said.
The cabinet also endorsed a plan to provide affordable housing to urban low-income groups.
The policy aims to provide rent subsidies or low-rent housing for those who cannot afford commercial housing in the cities.
By pledging to set aside more funding and land for the construction and acquisition of such housing, the government hopes to provide low-rent housing for all low-income urban residents - not just the poorest - by the end of 2010.
The government aims to achieve this goal through multi-channels - construction, purchases, renovation and donations.
"With the country's economic boom, it's time to share the pie with all levels of society," Chen Liangwen, an economic researcher with Peking University, said.