April 22, 2009 / 5:34 AM / 8 years ago

China faces stability threat from aging: report

3 Min Read

BEIJING (Reuters) - China faces a threat to its social stability and economic growth from a population which is aging before the country becomes wealthy and must tackle the problem properly, a report released on Wednesday said.

The U.S.-based Center for Strategic and International studies warned that by 2050 China will have more than 438 million people older than 60, with over 100 million of them 80 and above.

The country will have just 1.6 working-age adults to support every person aged 60 and above, compared with 7.7 in 1975.

"The 'premature aging' of China's population ... poses broader challenges that reach far beyond retirement policy," the authors of the report wrote.

"It threatens to impose a rising burden on the young, slow economic and living standard growth and become a socially destabilizing force in a country where the stresses of rapid modernization are already straining the civic fabric."

China's population growth has slowed over the last three decades since the introduction of a one-child policy for most couples, but people are now living longer due to rising living standards which have followed breakneck economic growth.

China is ill-prepared to cope with its graying population, with an underfunded state pensions system and shrinking family sizes removing a traditional layer of support for elders, as well as reducing the number of workers who can support them.

"China's age wave is arriving in a society which is still in the midst of development," said one of the report's authors, Richard Jackson.

The country is building a social safety net, to replace the cradle-to-grave security once offered by state-owned enterprises.

The central government spent 276.16 billion yuan ($40.43 billion) on social welfare and employment in 2008, 19.9 percent more than it did in 2007, according to state media. Beijing has also announced a 10 percent rise in pensions for retired workers.

Still, less than one-third of China's total workforce gets any kind of pension cover at present, the report said, and if the government does not take strong steps retirees will face a difficult old age.

"Concerted action on the long-term challenge is needed now to ensure China's economic fundamentals remain strong when it emerges from the current crisis," it added. "It may even help mitigate the crisis by bolstering investor confidence in the government's economic stewardship."

What Beijing should do is guarantee a minimum pension for all old people, which may be expensive in the short-term but would have long-term benefits, the report argued.

"Without an effective retirement policy, it is difficult to envision a prosperous, long-term future for China."

Reporting by Ben Blanchard; Editing by Nick Macfie

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