China to raise retirement age as it faces demographic crisis and low birth rate

China would gradually raise its statutory retirement age, as the country grapples with a looming demographic crisis and an ageing population. Hundreds of millions of people in China are set to enter old age in the coming decades while the birth rate dwindles dramatically.

The national population fell in 2023 for the second year in a row, with policymakers and experts warning of severe impacts on the economy, healthcare and social welfare systems if action is not taken.

China’s retirement age had not been raised for decades and had been among the lowest in the world.

State news agency Xinhua said top officials in Beijing had decided that “the statutory retirement age for male workers will be gradually extended from the original 60 years to 63 years”.

For women workers the retirement age will be extended “from the original 50 or 55 years to 55 and 58 years, respectively”, depending on the type of job, Xinhua reported.

It said the retirement age would be gradually raised over 15 years from 2025, adding that from 2030, workers would need to make a minimum of 20 years of basic pension contributions instead of the current 15.

The new rules will allow Chinese people “to postpone retirement to an even later date if they reach an agreement with employers”, Xinhua said.

They will take effect from January 1, 2025.

State media said the move was based on a “comprehensive assessment of the average life expectancy, health conditions, the population structure, the level of education and workforce supply.”

China’s current retirement age was set at a time of widespread scarcity and impoverishment, well before market reforms brought comparative wealth and rapid improvements in nutrition, health and living conditions.

But in recent years the world’s second-largest economy has had to contend with slowing growth, while a fast-greying population and a baby bust pile pressure onto its pension and public health systems.

An expert said that “demographic change” was likely the key factor behind the decision.

“The central government first proposed changing the retirement age in 2013, and there has been a lot of social discussion in the decade since,” said Li Changan, a labour economist at the University of International Business and Economics in Beijing.

“I think many people are mentally prepared for the announcement.”

Prior to the news, state media had published articles touting the proposed retirement age. The People’s Daily said that the hike would “adapt to the objective situation of our country’s widespread increase in life expectancy and years of education”.

It quoted Mo Rong, director of the Chinese Academy of Labour and Social Security, as saying the move was “an inevitable choice for our country to adapt to the new normal of population development”.

But He Yafu, an independent population expert, said the plan “cannot fundamentally deal with the negative impacts of population ageing and shrinkage on the economy, society, and technology”.

“The fundamental measure to deal with the ageing problem is to increase the fertility rate,” he said.

Recent statistics make grim reading for policymakers hoping for a reversal in the country’s demographic destiny.

People over 60 are expected to make up nearly a third of China’s population by 2035, according to the Economist Intelligence Unit, a research group.

Meanwhile, the country’s fertility rate has fallen far below the level required to keep the population stable, despite recent relaxations of the “one-child” policy and official efforts to stimulate births.

Many young people already feel disillusioned by an economic system that they say fetes intense study and long working hours for increasingly scant reward. – AFP