China

Chinese workers may soon have to work just a little bit longer.

In late July 2024, China’s ruling Communist Party adopted a resolution that would see the country’s statutory retirement age gradually rise over the next five years.

This would put the country more in line with other large economies, including the U.S. At present, China has one of the lowest retirement ages in the world, at 60 for men, and 55 for women in white-collar jobs or 50 if they are in blue-collar jobs.

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The apparent urgency now reflects growing concern over the impact that a shrinking – and aging – population will have on the country’s dwindling pension pot.

Funds set aside to cover retirement costs in China look set to be completely used up by 2035, the Chinese Academy of Social Sciences projected just a few years ago.

[But raising the retirement age] will not be a permanent fix – and it does nothing to address the serious underlying demographic problems that China faces.

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With a fertility rate of 1.1 children per woman – way below the 2.1 births per woman needed to maintain a native population – and more deaths each year than births, China’s future is one of declining population, with an enormous increase in the numbers of elderly. Compounding the problem, China has long been hostile to the idea of supplementing its native population through immigration; just 0.1% of its population is foreign-born – that’s the smallest percentage of any major country in the world.

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According to U.N. figures, in 2023 just under 20% of China’s population was in the current retirement bracket of 60 and over. But by 2100, this is projected to increase to an astounding high of over 52%.

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The need for immigration

Many of the major countries of the world with very low fertility rates rely on international migration to provide young workers – and these young immigrants also have more babies than the local people. Compare, for instance, China’s low rate of 0.1% foreign-born with the almost 14% foreign-born in the U.S. and 18% in Germany. Even the East Asian nations of Japan and South Korea have higher foreign-born percentages than China, at 2% and 3.7%, respectively.

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But it will not be easy to introduce and implement an active immigration policy in China, a country with little experience with immigration and a seemingly deep-rooted belief in racial purity shared by many leaders in the Communist Party.

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If an active immigration policy is not implemented, by the beginning of the next century, China will be half as large as it is today and will be one of the oldest countries – if not the oldest country – in the world.

Beijing is already facing the strain of these trends, hence the need for pension reforms. But without the influx of a young immigrant workforce, the problems China faces will be far worse.