Imperative to address age-old issue

Favorable policies are needed to increase birthrate to offset the impact of aging population

Demographic changes have played a key role in China's rapid economic growth since the launch of reform and opening-up. In the 1970s to 1980s, the growing working-age population and the declining dependency rate helped build a "productive" demographic structure in China, characterized by a large productive population.

But due to the declining birthrate and increasing life expectancy, China today faces a rapidly aging population, with its demographic structure shifting from "productive" to "consumptive". The vanishing demographic dividends and growing elderly population pose a serious challenge to China's economic development in the new era and to the governance capacity of authorities.

Understanding the trend of China's aging population problem is necessary to take proper measures to address it. According to the findings of China Population and Development Research Center, several features mark the country's aging society.

In the next three decades, China will see the aging population increasing at a faster rate, especially after 2030, when the number of senior citizens is expected to increase by 11 million a year. Also, the old-age dependency ratio will be higher than children's dependency ratio by around 2030, with elderly care becoming the primary burden of working-age people. And with nuclear families replacing extended families, the "empty nest" phenomenon will become even more prominent and the number of senior citizens living alone would increase to more than 50 million by 2050 from about 18 million in 2010.

China faces similar challenges in coping with an aging society as many developed countries. But despite China undergoing rapid social transformation, it still lags behind developed countries in terms of its economic development and social security network. The graying population puts a considerable, rather huge, burden on China, which is still a developing country. This "aging before getting rich" situation poses a daunting challenge to China to mitigate, if not totally offset, the negative effects of its graying population.

The widening pension gap, too, is a big problem. In the 1980s, the Chinese authorities began promoting the transition from a "pay-as-you-go" pension system to one integrating social pooling and individual accounts. However, this transition is not yet complete. In the next three decades, when many of today's younger generation become, or are close to becoming, senior citizens, the number of pensioners will increase manifold while the number of pension contributors will decline, thus creating a wide gap in the pension fund.

Family support has long been a pillar of eldercare in China. But the rapidly aging population is undermining the foundation of this model, and the number of "empty nest" families will increase significantly in the next three decades, posing a severe challenge to the family support model. In the long term, as institutional and community care services are still in their infancy, the growing burden of eldercare on families will have a negative influence on the supply of labor and the accumulation of human resources.

To address these severe challenges, the following countermeasures can be considered. First, the family planning policy should be adjusted and public services further improved to encourage couples to have more children. Although the current "two-child" policy has not achieved the desired results, in the long run it will be important for boosting population growth and increasing the supply of labor coupled with a more proactive population policy.

A more proactive population policy means not only adjusting the family planning policy, but also building a support system that encourages childbirth through policies favorable to families, better maternal and child care services, and women's employment.

Second, there is a need to tap the potential of population dividends and facilitate the transition from "advantage of quantity "to "advantage of quality". The government should therefore promote "life-long learning" by ramping up its input into education and training that cover people of all ages, in order to improve the quality of the workforce. In addition, investment in healthcare services should be increased by providing better health services for senior workers, and improving the measures for prevention and control of occupational diseases, and workplace environment and safety.

The government should also ameliorate the eldercare system by integrating elderly care and health services, making it easier for senior citizens to access medical services, and supporting the society-based eldercare system, while institutions and communities should play a bigger role in eldercare to alleviate the burden of individual families.

Third, it is important to upgrade the pension system by introducing a flexible retirement plan. For that, the government has to build a multi-layered pension system keeping in mind the reality of a graying population and promote a pension system that encourages savings, so as to ease the pressure of the pension fund raising and encourage people to save more as life expectancy increases.

The government should also accelerate the transfer of a part of the profits of State-owned enterprises to social security funds, and professionally manage the funds to realize higher returns, thus making the pension system more sustainable.

Lei Xiaoyan is a professor at the National School of Development and director of the Center for Healthy Aging and Development Studies at Peking University; and Bai Chen is a lecturer at the School of Labor and Human Resources at Renmin University of China. The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.