Chinese modernization is the modernization of over 1.4 billion people — a number higher than the combined population of all developed countries in the world. To achieve modernization of such a large population is unprecedented.
And the seventh national census in 2020 showed Chinese population above 60 had surpassed 260 million. The year 2022 witnessed negative population growth for the first time in nearly 61 years, decreasing by 850,000.
The rapidly rising aging population and the relatively slow but steady decline of the working-age population and workforce have increased the elderly people’s dependency ratio. These trends will continue in the next two decades.
With the country yet to realize complete Chinese-style modernization and progress from a middle-income to a high-income country, the low fertility rate and increasing aging population pose a significant challenge to socioeconomic development and people’s well-being.
However, it should be noted that despite challenges, aging doesn’t necessarily become an obstacle to achieving modernization. With the help of some measures, senior citizens should and can enjoy fruits of modernization too.
In order to address this problem, reform in various social and economic sectors, particularly in the retirement system, should be deepened.
The advantage of the phased-in reform plan is that it can advance reforms without causing social upheaval. And the disadvantage is that it has to face the pressure on the pension payment system brought about by the declining workforce and rapidly growing elderly population in the short to medium term.
Talks about retirement system reform have been going on for a long time. But reforms were not implemented because of concerns over youth employment. Although the pandemic has had a huge impact on the economy and employment, it has not changed the labor supply and demand patterns. Multiple proactive policies are needed.
First, a flexible retirement age plan can now be implemented on a larger scale. In fact, flexible retirement age policies have already been introduced in some universities for teachers and technicians. Such policies can be expanded to allow any individual or group of professionals or skilled workers who are in demand and willing to postpone their retirement.
Second, favorable policies can be introduced for people who continue to work even after the legal retirement age by, for example, increasing their pension benefits according to the number of years they work beyond the retirement age.
And third, the income distribution system should be reformed in such a way that it helps increase the income of workers, especially of those in the middle- and lower-income brackets. Increased incomes will not only help them to lead a better life and take better care of their aged parents, but also better prepare for their post-retirement life.
In order to address the challenges of rapidly rising aging population, the authorities need a comprehensive and far-sighted policy, of which retirement system reform is just one part. More important strategic measures include:
・promoting innovations and expediting high-tech development, which are key to high-quality development and major drivers of economic growth.
・ fully utilizing the market mechanism to promote the entrepreneurial spirit, and stimulate innovations and economic development.
・taking measures to encourage couples to have two, if not three, children in order to raise the birth rate, increase the workforce, reduce the old-age dependency ratio, and get some demographic dividends in the future.
・promoting higher education to tap the potential of new demographic dividend with well-educated population.
・improving the labor market system, making the labor market and working time more flexible, and eradicating gender and other forms of discrimination from the workplace and in the recruitment process.
And given that Chinese-style modernization is people-centered, China will continue to address its unbalanced and inadequate development, including improving welfare services and medical care for the elderly, and strive for common prosperity for all.
[Abridged]
Li Jianmin*, China Daily
* The author is a professor of demography at the Institute of Population and Development, Nankai University.
