China Gears Up to Increase Retirement Age in Face of Aging Population and Unemployment Challenges

August 14, 2024 TruthUSA

In recent days, major Chinese media outlets have reported that the retirement age may soon be raised, and 65 could become the new retirement age for both men and women.

The ruling Chinese Communist Party (CCP) first included the policy of raising the retirement age in its five-year reform plan released last month after its top meeting, the Third Plenum. The CCP said the raise would be “gradual” and based on “voluntary participation with appropriate flexibility.” The change will directly affect more than 500 million Chinese citizens who make up the country’s workforce.

Currently, the retirement age in China is 60 for men and 50 or 55 for women, depending on their occupation.

The population aged 60 and above in China increased from 126 million in 2000 to 297 million in 2023, doubling their proportion of the total population, public data show.

According to a 2021 projection by the International Monetary Fund, China’s population aged 65 and above will surge to nearly 400 million by 2049, making China a “rapidly aging” society, while the Chinese working-age population (15 to 64 years old) has already started to decline.

Meanwhile, China’s birthrate continued to fall, hitting a record low this year. Beijing fears it will soon run out of pension funds as more retirees need support, and there are fewer young workers to pay into pension funds.

With a sluggish Chinese economy and increased unemployment rate, social security funds contributed by young people have also decreased. China’s state pension fund will run dry by 2035, according to a Chinese Academy of Social Sciences report titled “China Pension Actuarial Report 2019-2050.”

Regarding the likely imminent raise of retirement age, Li Hengqing, a senior accountant and economist at the Institute for Information and Strategic Studies, told The Epoch Times on Aug. 13 that the push for postponing retirement shows that the recent socio-economic situation has left the CCP’s central government with no other choice.

An elderly woman pushes a cart after searching through rubbish bins to collect recyclable items to sell, along a street near the Great Hall of the People in Beijing on March 5, 2021. (Nicolas Asfouri/AFP via Getty Images)

“The three-year pandemic has basically drained the two funds—pension and health funds. These two are basically gone, so if they [the CCP] don’t postpone it now, many people who should soon receive their pensions will basically find out that they get nothing. I think this is why it was brought up again and needs to be implemented quickly,” Li said.

Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan, also believes that the change is imminent, based on what’s laid out in the CCP’s new five-year plan.

“The plan said to raise the retirement age gradually in the next five years, which means China will introduce a more specific policy plan before 2025, and raise it year by year in the five years from 2025 to 2030.”

Unemployment Issue

The CCP officially reported that China’s urban unemployment rate was five percent in June and 13.4 percent among Chinese youth aged 16 to 24.

China’s 447 million rural population is not included in the official unemployment statistics. The outside world estimates that the actual overall unemployment rate in China is 50 percent if both urban and rural populations and part-time work are considered. Only 48 percent of college graduates received job offers this year, according to major Chinese job website Zhaopin.

Migrant workers standing near signs advertising their skills as they wait by a street to be hired in Shenyang, in northeastern China's Liaoning province on Feb. 6, 2023. (STR/AFP via Getty Images) — Migrant workers standing near signs advertising their skills as they wait by a street to be hired in Shenyang, in northeastern China’s Liaoning province on Feb. 6, 2023. (STR/AFP via Getty Images)

Sun said delaying retirement means that older workers will stay in their jobs longer, and younger people’s employment opportunities will actually decrease.

“This is why China seems not to dare to raise it [to 65] in one step, which may cause a big impact in the short term. That is, the current unemployment rate will increase significantly. That is why they will raise it from 60 to 65 years old gradually year by year,” Sun said.

Li said that China’s job market is already exhausted, and raising the retirement age would put more pressure on unemployment.

“People already see a large number of unemployed people around them. And those who could be receiving their pension next month are suddenly told that it’s postponed for a certain number of years. Not only do they have to go back to work or figure out how to earn some money by doing part-time jobs, but they will definitely not dare to consume but save for their own retirement. This means that China has entered an extremely vicious cycle, so China’s economy will likely keep worsening,” Li said.

Sun said that China is facing an increasingly serious problem of population aging, coupled with the declining birth rate and shrinking labor force, “which puts great pressure on the social security system and leads to the increasing burden of pensions and medical expenses. It may be impossible to bear for China in the future.”

Luo Ya and Reuters contributed to this report.

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