China’s coming pension crisis

An elderly Chinese man walks through a dilapidated part of a city
China’s elderly are, on average, poorer than their working-age counterparts. The country’s inefficiently managed pension system means many will not have state support (source: dpa)
  • China’s population is aging rapidly
  • Its pension system is inefficient and poorly funded
  • Demographic trends will not change soon
  • It is likely that China will undergo a prolonged pension crisis

An inefficiently managed pension system, fraying intergenerational bonds and a lack of easily implemented policy options are creating a huge challenge for China’s rapidly aging population. Many major global economies have looming pension crises, but China’s socioeconomic position is particularly unfavorable. While most rapidly aging societies have already reached a state of widespread prosperity, China remains relatively poor. The country is growing old before it grows rich. The economic and political impacts of China’s pension crisis will last for a long time, both within China and globally. The only way to meet challenge is to create an entirely new, rationalized pension system at the national level. However, no system can reverse the demographic trends driving the emerging crisis.

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