Roving Periscope: The Dragon is fast-aging; China to hike retirement ages

Virendra Pandit

New Delhi: For decades, China had the dubious distinction of being the world’s most populous nation. In 2022-23, India replaced China on this count.

But now China faces the twin threats of a growing aging population and a shrinking workforce because of a low birth rate, forcing it to consider raising its statutory retirement age to address mounting pressure on its pension system.

China’s retirement age, which has remained unchanged since the 1950s, is currently one of the lowest in the world — 60 for men, 55 for white-collar women, and 50 for blue-collar working women.

According to the media reports, the proposed reforms are expected to gradually increase the retirement age to 65 for all citizens, with implementation anticipated over several years.

The Central Committee of the ruling Communist Party of China, in its July meeting, approved a plan to gradually raise the retirement age by 2029. The Chinese Academy of Sciences indicated that the final retirement age could be set at 65.

The CPC’s decision came when China’s pension system, the largest in the world with 1.05 billion contributors and beneficiaries, was under significant stress because of demographic changes. The country’s population of 1.4 billion is aging rapidly, mainly because of the one-child policy implemented from 1980 to 2015, causing a sharp decline in the number of working-age citizens.

China’s fast-aging population is a central issue driving these reforms. As of 2023, the country had 297 million citizens aged 60 and older, whose number, by 2035, would swell to over 400 million. Life expectancy increased from 44 years in 1960 to 78 years in 2021, and it is projected to exceed 80 by 2050—thus further adding to the number of aging people and pensioners.

The current pension system, funded by a shrinking workforce, is unsustainable. Eleven out of 31 provincial jurisdictions in China are already operating pension budget deficits and projections from the Chinese Academy of Sciences predict the system could run out of funds by 2035 if no changes are made.

The proposal to increase the retirement age has triggered debate across Chinese social media platforms. Some citizens support the change, saying that many Western nations, like Canada, have retirement ages of 65 or older. Others, however, are concerned about job security and age discrimination, particularly in a culture that increasingly favors younger workers.

China’s controversial ‘996’ work culture, working from 9 am to 9 pm six days a week, has fuelled anxiety about the ability to work into one’s 60s. Besides, Chinese women traditionally retired earlier because of family pressures and their caregiving roles, and many are worried about how they will remain employable in their 40s and 50s, especially amid widespread age discrimination.

The Chinese job market’s bias towards younger workers compounds the anxiety. Many highlighted employers’ preference for those under 35, with older workers often being overlooked for new positions.

Pension reform is rarely popular, and China is not alone in facing resistance to such changes. Pension reform tends to provoke a negative reaction worldwide, whether in France, Russia, or now in China. Raising the retirement age, increasing taxes, or reducing pension payouts are all unpopular measures.

The rural-urban divide in China further complicates pension reform. Villagers, who generally have lower life expectancies and less access to healthcare, may be disproportionately affected. Life expectancy and access to pension benefits vary significantly between urban and rural areas. While urban pensions in major cities like Beijing and Shanghai can range from 3,000 to 6,000 yuan per month, rural pensions are much lower, with the minimum set at just 123 yuan per month.

Some experts proposed immigration as a potential solution to China’s demographic challenges. An influx of young immigrants could help offset the aging population. However, “hundreds of millions” of people would need to migrate to China to have a meaningful impact.

Additionally, immigrants would also eventually age, contributing to the very problem they were meant to alleviate in the first place.

Raising the retirement age is only one of the multiple strategies the Chinese government could employ to address its aging population. Experts suggest that a combination of policy changes will be necessary, including investments in gerontechnology to support older workers and improve healthcare access.

Gerontechnology, which focuses on the development of technology to assist elderly populations, could reinvent the nature of work in later life, making it less physically demanding and more accessible to older workers.

China might also encourage a culture of volunteerism, similar to the ‘barefoot doctors’ program of the 1960s, where minimally trained medics provided healthcare in rural areas. A similar approach could see older citizens participating in community-driven support systems.