China's retirement crisis is here, and Beijing will be forced to keep raising the retirement age, demographer says
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- China has no choice but to keep raising the retirement age for workers, according to Yi Fuxian.
- The nation has a demographic crisis, which is straining the pension system, the researcher said.
- China could have 475 million people over the age of 60 by 2050, per UN estimates.
China has a retirement crisis on its hands, and the nation will probably be forced to keep raising the retirement age for workers to stave off demographic imbalances, according to a demographer.
Yi Fuxian, a researcher whose book on China's demographic problems was previously banned in the country, cast a dark outlook for the nation's demographic future, with its population aging and its workforce rapidly shrinking. Those trends led China to recently raise the mandatory retirement age for workers, the first time the nation has raised its retirement age in decades.
But those measures are "long-overdue" and merely "kicking a political time bomb down the road." They also probably aren't enough to alleviate pressure on the retirement system in the world's second-largest economy, Fuxian wrote in an op-ed for Project Syndicate on Wednesday.
"Given the severity of its demographic crisis, China will need to keep raising its retirement age, potentially fueling civil unrest and political instability," Yi said. "As the workforce ages and shrinks, economic growth will slow and reduce government revenues, while the growing elderly population will drive up pension costs," he later added.
Economists have flagged worrying demographic trends in China for years. China's fertility rate dropped to 1.17 births per woman in 2022, according to World Bank data. Meanwhile, life expectancy has climbed, with the average person in China living to 79.
The number of people over the age of 60 in China has soared the last 40 years, increasing from 72 million in 1980 to 297 million in 2023, according to the latest report from the nation's Ministry of Civil Affairs and the China National Committee on Ageing.
By 2050, the population of people 60 and older is expected to increase to 475 million, or nearly half of China's total population, Yi said, citing estimates from the United Nations.
There are already signs China's aging population and simultaneously shrinking workforce is starting to strain its benefits system for retirees. China's main pension fund could be depleted by 2035, according to a 2019 estimate from the Chinese Academy of Social Sciences. Meanwhile, around a third of Chinese provinces are struggling with pension deficits, Reuters reported.
"With too few workers to support the system, no amount of political maneuvering or creative accounting can avert the impending pension crisis," Yi said.
The situation mirrors some aspects of the retirement crisis in the US, with a growing number of older Americans continuing to work amid concerns about financial security. Over 30 million US baby boomers are nearing retirement without enough saved, and over half of Americans over the age of 65 make less than $30,000 a year, according to 2022 Census data.