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China faces elderly dilemma
By Zheng Li (China Daily)
Updated: 2004-08-21 00:47

China, the world's most populous country, is now crowned with another title: one of the world's most rapidly aging nations.

Senior residents are entertained by a group of community workers in Dinghai District, Zhoushan City of Zhejiang Province. [newsphoto]

According to statistics from the National Population and Family Planning Commission (NPFPC), the country's top population policy-maker, residents who are 65 or older already accounted for 7.1 per cent of the overall population at the end of 2001.

This figure is projected to shoot up dramatically in the decades immediately ahead.

The commission's own predictions indicate the proportion of the population 65 or older will surge to 24 per cent by 2050.

If translated into absolute numbers, that means China will boast a staggering 400 million elders over 65 by around 2050.

Meanwhile, China's median age is set to advance substantially from about 30 in 2000 to around 39 by 2025, which will be higher than that in the United States, according to United Nations Population Division projections.

The on-going tempo of aging in China is far faster than what was witnessed in more developed regions during the past three decades.

Declining fertility rates, partly the result of national family planning policies, and prolonged life expectancies are the two main factors behind the aging crisis.

"China is now a country with a very low fertility rate with its total rate consistently below the sub-replacement level since 1990," said Yu Xuejun, director of the Policy and Regulation Department at the NPFPC.

Meanwhile, the national average life expectancy grew from a mere 41 years in 1950 to 70 years in 2000.

China's rapid aging is only rivalled by its Asian neighbour, Japan.

However, there is a marked difference between China and already developed Japan or other such developed countries in their respective aging populations.

Simply put, Japan became rich well before it was troubled with an aging society.

But never in history has such a big developing country like China experienced a population in an aging phase while it is still not economically better-off.

For example, when Japan had the same proportion of an elderly population as China did in 2000, its per capita economic output was three times higher than China's is now.

"China's situation is accompanied by persistent employment pressures and a patchy social security system, and this is all unfolding while it is still an economically underdeveloped country," said Zhang Xiulan, a professor of social development and public policy at Beijing Normal University.

The prospective situation is unsettling: a mammoth developing country coping with a rapidly aging population without the proper planning yet in place to handle all the issues it presents.

The quickly graying population is poised to generate many social problems if it is not handled properly and timely.

"The biggest challenge China faces this century is how to handle the problem between its still low productivity level and the population aging," said Hu Angang, a leading economist in China.

"The shrinking ranks of labour forces, capital competition and the rising taxation burden may force China to rethink its current development model," said Hu, who is a professor at Tsinghua University.

China must urgently bolster its inadequate social security and healthcare systems, which are poorly funded at present, Hu said.

Although China began to establish the social security system in 1997, the system is still not yet up to the speed.

By the end of 2002, the social security umbrella covered only 14 per cent of all the workforce, of which almost all were urban workers.

Without a sufficient pension system, families still represent the last resort for most aging Chinese today.

But with elders swelling the ranks, , mounting pressure is already weighing heavily on Chinese families.

For example, as the result of the family-planning policy, the phenomenon in which one couple has to support four elderly parents has become more and more common.

And with life expectancy expected to rise as medical advances continue and living standards improve, the elderly who believe they are obliged to receive support may increase to include grandparents.

Without a viable pension system, problems are certain to arise. Just who will take care of seniors who have no children or those whose children cannot afford to pay their parents' way or refuse to tend to them?

Although the aging population means less employment pressures for the government, it also means the ratio of workforce supporting the elderly will soar, which may have to be addressed by increasing the taxation burden on the workforce.

Besides racing against time to improve the current frail social security system, other options are also available to tackle looming problems brought on by this dilemma, experts say.

Raising the retirement age may be one of them.

"While other countries are pushing the retirement age to 65 or above, China's average age is relatively low, 60 for men and 55 for women," Zhang Xiulan, the public policy expert said.

And as a developing country with low productivity, investment in human resources should be enhanced.

"Public financial backing for education and healthcare efforts for rural residents and migrating populations are not only crucial to maintaining robust economic development but also hold the key to defusing the mounting pressure from the aging population," Zhang wrote in an article.

Rising productivity could, to some extent, offset the negative impact of the declining labour forces.

At the same time, it may well be time to modify the current family planning policy in line with the changing social and economic conditions facing the nation.

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