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In Fast-Aging China, Elder Care Costs Loom Large

A woman pushes an elderly man in a wheelchair as residents play with their children near a commercial office building in Beijing on May 10, 2021.
A woman pushes an elderly man in a wheelchair as residents play with their children near a commercial office building in Beijing on May 10, 2021.

China's latest census shows that the country's population is quickly growing older, creating a policy challenge familiar to many governments: how to cover elder care costs while ensuring continued prosperity for everyone else.

Over the past decade, China's overall population grew at the slowest pace since the first modern census in 1953, according to the National Bureau of Statistics (NBS). This came even though the one-child policy was abolished in 2016.

In about 25 years, one-third of China's population will be retirees, and their living and health care expenses will eat up a quarter of the country's GDP, according to the NBS census report, which was released last week. But by 2035, the government-run basic pension system for corporate employees will likely be depleted, according to a 2019 Chinese Academy of Social Sciences report.

China's "increasing elderly population will reduce the supply of labor force and increase the burden on families' elder care and the pressure on the supply of basic public services," said Ning Jizhe, head of the NBS, at a May 11 press conference in Beijing marking the release of the census.

"The aging of the population has further deepened, and in the coming period, (we will) continue to face pressure for the long-term balanced development of the population," Ning said.

"I think it's a serious problem," Mrs. Su, a retired teacher living in Beijing, told VOA Mandarin. "But to be honest, I couldn't care less about our country's family planning policies and what the government is going to do from now on. I only care about my retirement benefits and how I can enjoy my remaining years." She asked to be identified by only one name to avoid attracting the attention of authorities.

Africa bucks trend

China is not alone in facing this demographic tension.

In many developing and developed nations, younger working people pay part of their income into pension plans, offsetting the costs of an aging population. As birthrates fall in the Americas, Europe and elsewhere in Asia, this construct is challenging governments. Only in Africa do demographers see population growth, at least over the next two decades.

China's current economy was built on lives spent in poorly paid manufacturing jobs which offered little to workers for their retirement. Male workers become eligible to retire at 60; female office workers, 55; and female blue-collar workers, 50. Officials set the ages in the 1950s, when China's life expectancy was less than 45. As of 2019, life expectancy was 77.3 years nationwide, with city dwellers expected to keep going past 80 years.

In China, families have traditionally been the caregivers and major source of financial support for older adults. According to a study published in the China Economic Journal in 2015, roughly 41% of Chinese 60 and over live with an adult child. Another 34% have an adult child living nearby.

Yet that pattern is gradually changing. China enforced the one-child policy between 1979 and 2015, aiming to control population growth. This means that people born in the 1940s could have three or four children to care for them when they are old, while people born in the 1950s and 1960s usually have only one adult child. Mrs. Su, the retired teacher in Beijing, is from the latter group.

Mr. Chen, a retired professor living in Beijing, said that the one-child policy is not the only thing that's contributing to today's demographic trend. He asked to be identified by only one name to avoid attracting the attention of authorities.

"Modern medicine has prolonged our life expectancy, so it's inevitable for China to have an aging population," he said. "In addition, just as many young people in the developed countries, young people in China today don't really want to have kids because of the high cost. So even with the policy change, not a lot of young people choose to have a second kid since the cost of living is so high."

Official census data for 2020 alone showed a fertility rate of 1.3 children per couple.

Chinese policymakers "have been studying — and adjusting for — the effects of demographic change on China's economy for more than three decades," wrote Lauren Johnston, a research associate at SOAS China Institute, in a 2019 post for the World Economic Forum.

Effect on economic growth

Officials understood that an aging population coupled with a low birthrate could slow economic growth — and undercut the ruling Communist Party's promises of continued prosperity. In 2018, an editorial in the official People's Daily newspaper said, "To put it bluntly, the birth of a baby is not only a matter of the family itself, but also a state affair."

In 2020, the Chinese government created a strategy for responding to its aging population and added it to its next five-year plan. China would increase the retirement age, develop the elder care sector and improve the quality of service for senior citizens, according to the official China Daily newspaper, which did not report any details of how the plan would be carried out.

According to the latest official census data, those 60 and over now make up 18.7% of the population, or 264 million people. In 2010, the over-60 cohort was 13.3% of a total population of 1.34 billion, or 178 million people. Those 65 and above accounted for 13.5% of the population in 2020. In 2010, 8.9% were 65 or older, compared with just under 7% in 2000 and 5.6% in 1990. China uses age 60 as the marker for being elderly, while the United Nations uses 65 years.

The U.N. and the World Health Organization define an "aging society" as having at least 7% of the total population over 65 years old. When the percentage reaches 14%, it is called an "aged society." A "super-aged society" is one in which more than 20% of the population is over 65. China became an "aging society" in 2002, according to a study published in BioScience Trends in 2019.

According to a 2014 study by consulting firm Deloitte, developed countries generally do not become "aging societies" until their average gross domestic product reaches $10,000 per person.

"By contrast, China became an aging society in 2011 when its average GDP was only $5,416 per person. Today, the elderly in China depend on pensions, family care, and income from work," the report said, adding that the shortage in China's pension fund will reach $1.4 trillion in 2050.

China's state media Xinhua News Agency reported in 2019 that from 2005 to 2016, the average monthly pension payment for enterprise retirees increased to about $350 (2,400 RMB) from just under $100 (640 RMB).

Nursing home shortage

As the demand for elder care increases in China, so does the shortage of affordable assisted living facilities and nursing homes. According to The Rooth Law Firm of Chicago, in 2014, less than 3% of China's aged population could find accommodation in nursing homes.

In cities such as Shanghai or Beijing, the cost of a nursing home ranges from $310 (2,000 RMB) per month to $3,100 (20,000 RMB per month), with the requirement of purchasing at least a one-year lease.

In Shanghai, according to China Daily, only 3% of the city's elderly population is cared for in nursing homes. The majority — 90% — remain at home, and they or their families hire a caregiver to provide some form of assistance at a monthly cost of $450-$700 (3,000-4,500 RMB).

"Obtaining a spot in a nursing home has become incredibly competitive," the law firm said, "The top social welfare home in Beijing has a waiting list of more than 10,000 applicants, and only approximately 1,100 beds in the facility, with only about 12 spots opening up annually."

Mrs. Wang, a retired doctor, said she has seen numerous cases of elderly adults failing to get a bed in nursing homes. She asked to be identified by only one name to avoid attracting the attention of authorities.

"If you want to get into a private nursing home, you've got to have money first," she told VOA Mandarin. "On top of that, you have to prepare gifts for the staff so you can receive good care."