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China's Looming Pension Crisis

America’s pension crisis is ugly, but it could be worse: consider China. The Chinese public is in an uproar over new academic research on pensions arguing among other things that the retirement age should be raised from 50 and 60 (for males and females, respectively) to 65.

The problems this would address are all too real. Market Watch runs down the litany of issues facing China’s pension programs, including a multi-trillion yuan debt, low returns on pension investments, and, most worrying, a demographic catastrophe caused by the country’s one-child policy:

Finally, the government must soon make adjustments to the present population-control policy. China became an aging society, one with more than 10% of the population above 60 years old, 13 years ago. Amid dramatic economic transformation and 30 years of strict population-control policy, the birth rate has fallen to an alarming level. […]

In fact, the country has fallen short of the replacement rate for the last 20 years. Its labor force is rapidly shrinking as a result. The pension funds will eventually run dry, given the aging demographic. The current population-control policies are pushing the country closer to a pension crisis.

Add to this the fact that the Chinese economy is unlikely to keep growing at its current clip, and you have a recipe for disaster.

This story should remind us that pension struggles are by no means unique to the US. European countries have been battling unsustainable pension programs for years now, and even the fast-growing countries of the developing world are not immune.

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  • lukelea

    To say nothing of the fact that those moneys have been squandered.

    When the sh*t hits the fan China will explode.

    • Kevin

      Fortunately for the CCP, without democracy revolts by 75 year olds are a lot less troublesome to deal with than revolts by 25 year olds. Chinese politicians do not live in fear of retires in Florida but of unemployed and unmarried peasants and their urban counterparts with nothing to lose.

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