Number 4, Volume 4, 2016 of Economic and Political Studies (EPS) has become available online at www.tandfonline.com/reps. This issue is dedicated to the thematic discussion on Ageing and its implications in China. In the following articles, scholars draw on their expertise to examine this fundamental issue.
Economic and Political Studies
Vol. 4, No. 4, 2016
China pension system and reform: An OECD perspective
Monika Queisser, Andrew Reilly and Yuwei Hu
Population ageing is a worldwide phenomenon, but the speed and scale of ageing are much greater in China than in most other countries. This paper discusses the key demographic indicators of the population in China and provides a comparison with OECD countries. The evolution of the Chinese pension system is summarised before concentrating on the current structure for both public- and private-sector workers as well as rural and urban residents. The level of future pension promises for full career workers are calculated and compared with those of selected OECD countries. Possible future challenges are highlighted as China seeks to achieve an adequate and sustainable pension system. The paper highlights the issue of high level of pensioner poverty in comparison to many OECD countries as well as the low retirement age, particularly for women, despite China’s relatively high employment rates for older workers.
Coping with the effects of population ageing on public finances in the European Union and China
The population age structure is changing fast both in the European welfare states and in China, as fertility remains low and longevity continues to increase. The pressure on public pensions, health care and long-term care expenditures is receiving increased attention. Sound public finances in the euro area call for pension reforms, especially for raising the retirement age. Although the challenges are qualitatively similar in the EU and China, the quantitative picture is different: GDP per capita in China is about 30% of that in the more advanced states of the EU, and the ageing-related public expenditures as a percentage of GDP is currently one quarter of this ratio in the EU. A particular factor in China is migration of workers to the cities and factories in rural areas. For a harmonious society, their rights to social security, including pensions, and their children’s access to education require modernisation of government institutions. The retirement age in practically all EU countries and in China is currently low, lagging behind the increase in longevity. Increasing the ratio of participating in working life to the average years of retirement is a key to moderating the pressures on public finances.
Raising the retirement age: the impact on the individual and actuarial balance for Chinese urban workers’ basic pensions
Xiaojun Wang & Ge Shan
Rapid population ageing and increasing longevity are raising concerns about the sustainability of the basic pension systems in China. Raising the retirement age, as an important way to maintain long-term financial sustainability, has become the main policy choice for China. Some studies show that postponing retirement can solve the financial pressures of pension systems effectively. However, if the pension benefits increase with the pensionable age, this may offset some effects and even have a negative impact on the financial balance. This paper builds cohort models and period actuarial balance models for Chinese urban workers’ basic pension system to measure the cohort and period effects of postponing retirement, with the aim of analysing the change in the individual pension net wealth and the long-term actuarial balance of the system with population ageing and increasing life expectancy. The result shows that raising the retirement age, which is linked to life expectancy, will lead to an increase in the pension benefits, individual net pension wealth and then pension fund expenditure. It may benefit the individual and short-term actuarial balance but have a small effect on the long-term actuarial balance of the system.
China’s pension system: achievements, challenges and future developments
Keyong Dong & Gengyu Wang
This study focuses on the framework and achievements of China’s pension system and analyses the long-term risk and institutional dilemmas. Because the existing pension system does not clearly define the responsibilities among the Government, the market and the individuals, the main challenge facing China’s current pension system is the huge future fund gap and the difficulty in coping with the risk of an ageing population. The proposal for China’s pension scheme reformation is to establish a three-pillar pension system: transfer the social pooling account into a public pension as the first pillar; merge the refilled personal account by transferring the state-owned assets and the enterprise annuity into the occupational pension as the second pillar; and promote the tax deferral individual pension plan as the third pillar. The roles and functions of the Government in the three-pillar pension system are different: for the first pillar, it is fully responsible for the system construction, management and funding security; for the second and the third pillar, it is responsible for system construction and operation supervision.
Population ageing and the impacts of the universal Two-child policy on China’s socio-economy
The Two-child policy was officially proclaimed in the Guideline of the 13th Five-Year Plan and approved in March 2016. This article provides a detailed analysis of the Chinese demographic structure characterised by ageing with sub-replacement fertility. It argues that the universal Two-child policy is timely and necessary for the New Normal economy. The policy has significance in relieving socio-economic pressure and promoting economic growth, for which it is not only a necessary premise but also a sufficient condition. Having reviewed the evolution of the demographic transition theory, this research undertakes a comparative analysis of different stages of demographic transition in different regions across the world. It further investigates the three stages of successful demographic transition in China. The universally adopted Two-child policy, as it meets the requirements and law of demographic transition, is also unavoidable with socio-economic development.
Implications of population ageing for the Chinese productivity
Since 2000 when China entered the “ageing society”, the pace of ageing has speeded up. At the same time, traditional growth engines of the Chinese economy (i.e. export and investment) are losing momentum. Against this background, to what extent the expected demographic transformation would affect growth trajectory of the Chinese economy is of great interest. Among new growth engines, productivity has been receiving increasing attention among China’s top policy makers. In this paper, we try to identify the both micro and macro effects of ageing on China’s productivity. In general, our research supports the hypothesis that more working experience and/or elder age contributes to higher wage growth and total factor productivity, although with a reversed U-shaped pattern.
Chinese research on disaster economics: situation and characteristics
Yan Zhang & Aipling He
This study employs the bibliometric method to analyse a sample of 936 core journal articles obtained from Chinese Social Sciences Citation Index (CSSCI) during the period 1998–2014, with a view to outlining the situation, characteristics and trends of Chinese research on disaster economics. Our analysis shows that Chinese research on disaster economics is characterised by marked short-term fluctuations, non-mainstream tendency, localisation and non-collaboration. In terms of content, the major concerns of Chinese scholars are post-disaster construction, agricultural natural disasters, as well as disaster insurance and securitisation. In terms of methodology, these researches have entered into a quantitative phase of establishing the evaluation index system, and mathematical model analysis. With regard to the path, researches in the Chinese language have expanded from analyses of causes and natures of disasters to those of institutional response to disasters (e.g. disaster insurance and finance).
Renmin University of China
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