Beijing: China’s pension crisis stems from demographic, economic, and institutional changes, rather than a single policy failure. The decision made in the coming years will shape the country’s “fiscal sustainability, social stability, and public trust”, a report said on Friday.
“By 2040, roughly 402 million people in China are expected to be over the age of 60, more than a quarter of the population. By comparison, the total population of the United States is expected to reach around 379 million by that time. This shift marks a turning point for China, signalling the erosion of its longstanding advantage in abundant and affordable labour while presenting a formidable financial challenge in caring for an ageing society,” a report in The Diplomat detailed.
“These demographic pressures prompted China to begin a gradual adjustment of its statutory retirement age in 2025, the first such change in more than seven decades. The retirement age for men will gradually increase from 60 to 63 over a 15-year period, while the retirement age for women will rise from 55 to 58, with adjustments varying by occupation. While delaying retirement may ease fiscal strain, it does little to alter the underlying demographic arithmetic driving the crisis,” it added.
According to the report, China has recently introduced reforms to improve pension sustainability, but these measures may risk deepening inequality.
“Beginning in 2030, the minimum contribution period required to qualify for monthly pension benefits will rise from 15 to 20 years. While fiscally rational, the change disproportionately affects rural workers, migrants, and informal employees with fragmented careers. For many, meeting the new threshold may be unrealistic, effectively excluding them from meaningful retirement support,” it mentioned.
“China now faces three major fiscal demands competing for limited resources. Aging drives rising costs for pensions, health care, and social services. Security and resilience require sustained spending on defence, energy, and supply chains. Industrial upgrading demands long-term investment in advanced manufacturing and strategic technologies. None of these priorities can be deferred, leaving policymakers with limited room to manoeuvre,” it further said.
The report stressed that while ageing is inevitable, how China handles its impact “will determine whether its next phase of development rests on solid ground or fragile foundations”.
(IANS)
