The Director's Blog
Population and Pensions in China
According to China’s National Bureau of Statistics, China’s population shrank by 850,000 people in 2022. This was the first population decline in 60 years. China has entered an "era of negative population growth". “The national birth rate hit a record low - 6.77 births per 1,000 people. In comparison, in 2021, the United States recorded 11.06 births per 1,000 people, the United Kingdom 10.08 births and India (which is poised to overtake China as the world's most populous country) 16.42 births per 1000 people” (BBC).
More people died than were born in China in 2022. A total of 10.41 million people died (the highest death rate since 1976), but only 6 million babies were born. And this was before the Covid explosion in China began seriously to increase mortality rates.
This decrease in China’s population will place strong pressures on China’s healthcare system and on its pension funds. The average Chinese citizen now lives for 78 years, the oldest in the country’s recorded history, according to the World Bank. But the pension system was created in 1951, when people in China on average died before they were 45 years old, thus it was instituted at a time when most people did not live past middle age.
“Its population is rapidly aging and Beijing’s failure to timely adjust the country’s pension and retirement systems accordingly presents an acute challenge.” “As China’s population ages – and the birth rate drops ever further below replacement level – the combined cost of healthcare and public pensions will place a massive (and potentially insurmountable) burden on public expenditures.”
The problem seems likely to grow worse. China is not just aging but it is doing so at an unprecedented speed. The United Nations considers a country’s population to be ‘aged’ when at least 7% of people are 65 or older. In most developed nations, the transition to an aged population has occurred over the course of three or four generations. But China has ‘aged’ in one generation.
The number of working-age people in China is expected to shrink by 35 million people between 2021 and 2025, while the number of retired people is expected to increase by 40 million. The result is that the number of retirees compared with the number of workers in China was 17% in 2000, but it is projected to explode to 33% in 2035.
China had a ratio of 9.9 wage earners supporting one pensioner in 2000. But by 2020 that had fallen to only 5.8 wage earners per one pensioner. By 2050 it will be 2.3 workers to one pensioner, far too low a percentage to support the high number of retired people and yet at the same time to drive sustainable economic growth.
According to the Chinese non-profit Insurance Association of China, the public pension fund is facing up to a 10 trillion yuan or US$1.5 trillion shortfall in the next five to ten years. A 2019 report by the Chinese Academy of Social Sciences predicted that the fund possibly will be empty by 2035.
Pray for wisdom for the Chinese government in this challenge to reform China’s pension plans.
Pray for stability from those impacted by the pensions crisis, that they would not resist increases to the age when pensions can be taken, as has happened in France.
Pray that this impending crisis would cause many to turn from trust in man to trust in our faithful heavenly Father.
