3-Child Policy, Raising Retirement Age Won’t Solve China’s Pension Deficit

By Nicole Hao
Nicole Hao
Nicole Hao
Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.
June 7, 2021 Updated: June 8, 2021

The Chinese Communist Party (CCP) has changed its notorious one-child policy to allow for three children and said it would raise the retirement age to resolve the huge pension deficit and dramatic decline in births. However, economists and experts say these methods can’t resolve the deficit nor the issue of the country’s aging population.

China has been an aging society since 2000, with the rise in average age accelerating significantly over the past 10 years. China’s working population is projected to decrease to 795 million in 2050—20 percent less than in 2010—as long as China’s fertility rate doesn’t decline, according to Dong Keyong, human resource professor at Renmin University of China.

In the 2010s, the CCP launched various versions of a two-child policy to rejuvenate the aging population, but the effect was limited. Now, authorities are hoping a three-child policy can resolve the issues.

Economists doubt whether the policy will work, saying that Chinese parents feel unable to have more children because of economic pressures and the high cost of raising a child in China. A survey conducted by CCP mouthpiece Xinhua on May 31 showed that over 90 percent of respondents were unwilling to have a third child.

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The online survey that Xinhua launched for third-child policy on May 31, 2021. (Weibo/Screenshot via The Epoch Times)

In addition, raising the retirement age makes it harder for younger people to find a job. Meanwhile, the older generation won’t have time to take care of grandchildren if they’re not able to retire on time.

Many Chinese people are worried that the CCP will launch policies to force couples to have more children.

Thorny Issues

The CCP’s politburo on May 31 discussed related policies to support families in having up to three children. Members said that doing so could “modify [China’s] population structure,” provide a “response to the aging population issue,” and “maintain the advantage, endowment of [China’s] human resources,” according to Xinhua.

To solve these three issues, Beijing officials announced a plan to raise the retirement age. Xinhua reported on April 13 that the regime would raise the age gradually over the next five years because “China’s working-age population has been declining for eight consecutive years, with an average over three million per year. The decreasing rate is increasing.”

Among China’s many thorny issues caused by the population imbalance is the pension deficit, the key cause being the rapidly shrinking working population and the increasing older population.

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An elderly woman carries a boy on a street in Beijing on May 11, 2020. (NOEL CELIS/AFP via Getty Images)

In July 2018, northeastern Heilongjiang Province couldn’t pay all its pensions due to the deficit. In January 2019, state-run National Business Daily reported that Liaoning, Jilin, Hebei, Shaanxi, and Qinghai provinces also suffered from pension deficits.

The Chinese regime hasn’t released the size of the pension deficit, but the Chinese Academy of Social Sciences published its China Pension Actuarial Report 2019–2050 in April 2019, in which it said the whole of China faced a pension deficit, that the pension required state financial aid in 2019, and that the deficit would expand exponentially each year.

In recent years, the Chinese regime has withheld pensions from specific groups, including political dissidents, religious believers, and rights advocates.

Beijing officials, citing the country’s seventh census, announced on May 11 that 264 million people, nearly 19 percent of the population, were over the age of 60 by the end of 2020, an increase of 86.4 million, or nearly 49 percent, from the sixth census released in 2011.

Meanwhile, the working population shrank 45.2 million, or around 5 percent, in 2021, according to the census.

“Our country has come out of the demographic dividend period,” Miao Wei, member of the CCP Central Committee and vice chairman of the Economic Committee of the National Committee of the CPPCC, said at a financial summit in Beijing on Nov. 14, 2020.

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‘Left behind’ children Luo Hongni, 11 (L), and brother Luo Gan, 10, carry grass to be used as feed while doing chores in the fields in Anshun, China, on Dec. 18, 2016. (Kevin Frayer/Getty Images)

Will the 3-Child Policy Succeed?

Economists and experts questioned the claim that the three-child policy and raising the retirement age would help China regain the demographic dividend.

“Education, health insurance, housing, utilities … all living necessities are expensive in China,” Chinese independent economist Gong Shengli told the Chinese-language Epoch Times on June 2. “Chinese people are struggling with even basic living needs, even without having a child—how can they dare to have more children?”

The Shanghai Academy of Social Sciences released a report in December 2019 that said the average cost of raising a child from birth to middle school graduation—typically 15 years old—in the Jing’an district of Shanghai is 840,000 yuan ($131,400). A family normally spends over half of its total income on its children, with lower-income families spending more.

At the same time, the majority of Chinese people aren’t wealthy.

On May 12, Chinese Premier Li Keqiang said at a state council meeting in May that 200 million Chinese, or 22.4 percent of the working population, are “in flexible employment,” which means they’re “street vendors” or have temporary jobs. In May 2020, Li said that 600 million Chinese earned $140 per month, which isn’t enough to pay for monthly rent for a one-bedroom apartment in a mid-sized Chinese city.

Despite the disparity between the high cost of living and low income, Chinese people still prefer to have children, because in traditional Chinese culture, having children is considered essential.

On average, each Chinese family had 2.62 members by the end of 2020, and the majority of Chinese families have three members—two parents and a child—Xinhua reported on May 20.

“It shows that Chinese people haven’t followed the two-child policy. … So how will the three-child policy work?” Frank Tian Xie, professor of business at the University of South Carolina–Aiken, told The Epoch Times in a phone interview on June 1.

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Chinese students wait in line for lunch in a classroom at an unofficial school in Beijing on Dec. 18, 2015. (Kevin Frayer/Getty Images)

The willingness to have children is also reflected in the birth rate. China’s fertility rate was 1.3 children per woman in 2020, far short of the 2.1 replacement rate, and lower than Americans’ 1.637, according to Ning Jizhe, director of the Chinese National Bureau of Statistics.

“Raising the retirement age can only make things worse,” Lai Jianping, a North America-based former Chinese lawyer and democracy activist, told The Epoch Times on June 1.

In China, it’s usually the grandparents who take care of the children. A large number of young couples have their first child when at least one of the grandparents retires.

“If the grandparents don’t retire, young couples don’t dare to have children,” Lai said. “On the other hand, young people will have trouble finding a job if the old ones don’t retire.”

As Li pointed out, jobs are hard to come by, which is reflected in the high number of people with “flexible employment.” The real Chinese unemployment rate is a state secret, and the regime only releases data on those who have an urban hukou—a city household registration—and have registered their employment with the local government.

In July, over 9 million Chinese students will graduate from universities and start looking for a job. “Graduation means unemployment” has become a common saying in China in recent years, with Chinese state-run media, including Xinhua, resorting to publishing articles that teach students how to find a job.

“If young people can’t find a job, they won’t have the income to raise children,” Lai said.

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A Chinese girl looks out the back window of a three-wheeled taxi in the street in Beijing on April 22, 2020. (Kevin Frayer/Getty Images)

The CCP launched its infamous one-child policy in 1979. The majority of Chinese women of childbearing age are now themselves an only child. In China, older people rely on their children in their later years because social security isn’t enough to take care of them.

“As an only-child couple, the two of us need to take care of our four parents and work 996,” a Chinese netizen wrote on social media platform Weibo on May 31. “996” is Chinese IT-business standard working hours, 9 a.m. to 9 p.m., six days per week. “If we have three children, how can we survive?”

Nicole Hao
Nicole Hao
Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.