Abstract: It is a common problem in many countries that social endowment insurance fund is not sufficient, however, the real problem facing China’s social endowment insurance is that of great pressure brought by a great population base, accelerating process of aging and many retired before required age due to industry structure change as well. The solution is controlling the population, the core of which is to control the peasant population. In the market economy in order to attain this goal the government cannot but pay the transaction cost, that is, establishing the peasant endowment insurance system supported by its finance.

Key words: control population, the social endowment insurance, fiancé, marker economy