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Chinese Face the Burden of Aging

With nearly 11 percent of its total population over sixty years of age, China faces enormous social and financial burdens as it struggles to meet the needs of its senior citizens.

According to official Chinese figures, more than 144-million of China's one-point-three-billion citizens are 60 or older. The figures also show that most of them are poor and many are unemployable in China's ever-modernizing economy.

How to deal with this aging population is becoming a growing problem for China, as each year, the number of its senior citizens increases by about six million. At the present rate of growth, their ranks will exceed 400 million by 2050, accounting for 30 percent of China's population.

Many analysts say part of the problem stems from the family planning policy Beijing introduced in the 1980s, which restricts the number of children most Chinese couples can have. Gerhard Heilig [hi-lig] of the United Nations' Population Fund says in the years ahead there will be fewer young people to take care of the nation's increasing number of old people.

"The number of young people is relatively stable or is even declining, so for instance, the number of children, which is now in China around 284-million, will decline to 250-million. And the number of people 15-60 [years old] will decline from around 885-million to 755-million. So in other words you have a shrinking active population while, at the same time, the number of people that are over sixty will increase."

The growing elderly population poses special problems for China, which has a family-based system of caring for the elderly and an economic system that, until the late 1970s, had no pension funds or social safety nets in place. California-based economist Charles Wolf of the Rand Corporation says this will burden the next generation of China's young adults, especially in families with only one child to support both parents and four grandparents.

"It poses an additional burden for the next generation which will be reflected in higher taxes, higher voluntary and or required contributions to pension and retirement funds. And that is the problem that is being worked on through the national social security fund, which China is trying increasingly to make into a contributions plan rather than a benefits plan."

But in a country with an aging workforce and an annual per capita income of roughly 13-hundred dollars there is a concern that not many people will have enough to contribute to a benefits plan.

Moreover, economist Charles Wolf says that China's labor force will have fewer workers by 2050. This means that there will be one retiree for every three-to-four workers, compared to one retiree, or dependent, for every five workers today.

"There will be fewer prime age members of the labor force per capita than there are currently. That imposes a heavier burden on the workers and on taxes and hence provides a concern -- which I think is serious but not grave -- for what the prospects are for the labor force, for labor costs and for sustaining China's remarkable record of nine-10 percent real annual growth over the last two decades."

Some analysts speculate that China's labor problem will become so serious that Beijing will eventually have to seek migrant workers or review its one-child per couple policy.

But the United Nations' Gerhard Heilig believes China will not have to import workers or change its one-child policy. He says the country has a huge reserve of workers.

"It is estimated that around 200-million, maybe 250-million people in rural areas are actually not having adequate work. So they will migrate to urban areas and will find jobs in the urban sector. So the modern economic sector will grow and will absorb people from the rural areas. In fact, it probably will be difficult to absorb excess labor from the rural areas. So China is facing a problem of oversupply of labor at the moment."

But most experts agree that Beijing, which has been focused in recent years on economic growth and productivity, needs to shift resources and restructure its markets to meet the demands of elderly consumers. And some suggest that, as it advances technologically, the country might be able to do more with fewer workers.

Others, like Richard Suzman of the National Institute on Aging in Maryland, suggest that China should raise its retirement age. Under its present system, the retirement age is 55 for men and 50 for women in blue-collar jobs and 60 for men and 55 for women in the professional sector.

"Many countries have structured their retirement policies so that old workers get forced out of the labor force -- prematurely, in many instances. It's very likely that, as life expectancy goes up and health improves, that people can work longer. Companies or organizations may have to make some concessions, allow greater flexibility. But there's a huge untapped pool that could be retained in the labor force."

Suzman says Beijing is aware of the magnitude of the problem, including what steps it will have to take to provide health benefits to the elderly.

"My impression from a recent visit to Beijing is that many government officials and academics have grasped the extent of the problem and are trying to grapple with it. Only a small fraction of the populations are covered by pension plans or full health insurance, and they [i.e., the Chinese officials] understand that. And that will take significant savings. I mean there will be some families who are prepared for old age by saving. And if they [I.e., the Chinese government] institute a pension system and health care insurance, some of those savings may actually get spent."

According to some estimates, about half-a-billion Chinese, mostly in rural areas, are not covered by the country's social security system.

Beijing is already experimenting with a number of public and private pension systems, and various savings programs to help the Chinese prepare for their old age. But the question that many analysts ask is whether China will be able to get rich before it gets too old.