CHINA: Chinese Retirees Face Tough Times: Little Income, No Social Security

BEIJING (Inter Press News Service), March 17, 2006: China is aging. At a rate which is far superior to its growth and development rates. The consequences in the long term are worrying both population experts and rural families who have no social security. By 2013, China is expected to experience its first staff shortages placing it well behind younger countries such as India. Chinese elderly are expected to retire without social security and with annual income per capita which reaches a third of present day incomes in Japan, another rapidly aging Asian country. China faces an impending dilemma, how to avoid developing a greying society while preventing a population explosion. As China's pre-1979 baby-boomers reach retirement, there are fewer and fewer younger workers to take their place. For 20 years, China's one child policy gave them an advantage over other economies but by 2015, this advantage will turn into a deficit, According to Cai Fang of the Chinese Academy of Social Sciences, the demographic dividend, or surge of working-age people, have contributed to 24% of China's wealth between 1978 and 1998. By 2013, labour shortages are expected to appear. Already in 2000, people aged over 60 composed 10% of China's population, a figure close to that of the USA. By 2035, it is expected that people aged 65+ would compose 20% of the population. These figures are especially worrying given that China has not yet reached a level of development sufficient to cater for an aging population. Indeed, in 2030, Goldman Sachs Group estimates that China's annual per capita income will reach $ 11,000 (9 000€) in current prices, less than a third of Japan's income per capita last year, another rapidly aging society. More worryingly, most Chinese do not have a secure pension scheme. Only 160 million urban people, less than 15% of China's total population, are covered by the Social Security. Consequently Chinese workers are relying on their savings to fund their retirement. Between 1990 and 2002, the World Bank estimated that Chinese families were saving up more than any other nationality.