Opinion: Proactive Measures to Address the Impact of Aging

China recognizes aging as a significant issue that demands immediate and proactive measures. On August 26, the State Council held a study session focused on the implications of an aging population and the development of elderly care services. Premier Li Qiang emphasized integrating responses to aging with economic and social development, highlighting the necessity of financial, service, and institutional support to foster new growth drivers [para. 1].

The issue of aging is not new, and concerns about the sustainability of pension funds have long existed. A notable report is the China Pension Actuarial Report 2019-2050 by the Chinese Academy of Social Sciences’ World Social Security Research Center, predicting the depletion of the urban enterprise employees' pension fund by 2035 if current subsidy and retirement policies are maintained [para. 2]. This has spurred the government, businesses, and academia to devise strategic measures. In 2023, policy documents like the “Opinions on Advancing the Construction of the Basic Elderly Care Service System” were issued to address the issue preemptively, ensuring long-term control and mitigation of aging effects [para. 3].

China’s aging population is vast and growing rapidly, putting immense pressure on economic growth, financial investments, social support systems, and institutions, all of which need urgent solutions. Past stringent population control policies further complicate the situation [para. 4]. The issue personally impacts all demographics, as aging is universal. Many elderly, including about 50 million disabled individuals, face difficulties due to an inadequate care system. The main constraints are the limited payment capacity of the demand side and a shortage of high-quality services. Premier Li Qiang highlighted the need to develop home and community care services and integrate medical care to support disabled elderly individuals better [para. 5].

Pension reform is crucial, and China’s retirement funds follow a three-pillar system: state urban and rural pensions, voluntary employer-provided plans, and individual pension funds. The sustainability of the first pillar is in question, and the third pillar needs stronger incentives. The 20th National Congress of the Communist Party of China emphasized improving a multi-tiered social security system to ensure fairness and sustainability across all demographics [para. 6].

The government should prioritize developing a basic elderly care service system, supporting the elderly care industry by removing bureaucratic obstacles, and leveraging market-driven operations to expand services. The State Council’s 2024 directive focuses on expanding services like meals, home assistance, and healthcare, which requires nurturing related industries and providing robust financing [para. 7]. Lessons from developed economies suggest that market solutions effectively address elderly care challenges [para. 7].

Adjusting to an aging society necessitates continual reforms, such as delaying retirement, which, despite potential resistance, should be implemented soon. The Third Plenary Sessions of the 18th and 20th CPC Central Committees proposed developing the silver economy and creating diverse employment opportunities for the elderly, requiring policy guidance and a societal shift in perceptions of the elderly [para. 8]. Improving elderly care services impacts not only the current elderly population but also shapes young people's expectations for their later years, motivating them to look forward to a secure and comfortable future. Addressing elderly care challenges is essential for societal progress [para. 9].