Welcome to Foreign Policy’s China Brief.
The highlights this week: China announces plans to raise its retirement age for the first time, Beijing abruptly ends international adoptions, and Goldman Sachs and Citigroup cut their economic growth estimates for China this year.
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China Raises Retirement Age
Last week, China announced that it will “gradually raise” its retirement ages over a 15-year period. The move is both unprecedented—the country hasn’t increased its retirement ages since the 1950s—and inadequate. But even the half-hearted steps are likely to spark widespread unhappiness. China’s retirement ages are currently among the world’s lowest.
China set its retirement ages in the 1950s, when its population lived much shorter lives on average and most people did grueling agricultural work. Under the current system—initially copied from the Soviet Union—men can retire at 60, women in white-collar jobs at 55, and women in blue-collar jobs at 50. The gradual increase will bring those ages to 63, 58, and 55, respectively. (Furthermore, early retirement is common in China.)
Because those numbers haven’t changed since they were established, last week’s announcement may seem radical. But China has one of the most rapidly aging populations in the world. Before the COVID-19 pandemic, the World Health Organization estimated that 28 percent of the population would be over 60 years old by 2040—and a United Nations estimate of population lost by 2050 has tripled in the last five years.
Observers expected that China would follow Russia’s example and raise retirement ages by five years, bringing them closer to developed norms. The Kremlin’s original plans were more sweeping, but Russian President Vladimir Putin softened the changes after public protest and enacted them in 2018.
For China, raising the retirement ages by just three years in the case of men and white-collar women—and not doing so fully until 2040—will do little to address the issue. Even raising all retirement ages by five years might not have been enough in China, given that the country’s average life expectancy (78) outstrips that of Russia (69).
China is also headed into a demographic crisis: It’s not just that there are too many old people, it’s also that there are too few young people and even fewer babies. State efforts to encourage couples to have children have proved futile. China’s population is already decreasing each year—and quicker than expected.
So why is the government taking such lukewarm steps on the retirement age? Delaying pensions is an unpopular move almost everywhere in the world, but it is especially tricky in states with a communist legacy. Early and generous retirement after a lifetime of hard work was part of the social bargain established by the Soviet Union in the 1920s. When the Russian system collapsed in the 1990s, mortality rates soared. China’s political leadership has studied this period closely.
But unlike in the Soviet Union, where pensioners enjoyed a pretty good life, China has always struggled to establish a clear retirement system. Elder poverty is common, especially in rural areas, although Chinese President Xi Jinping’s poverty-reduction efforts have been somewhat effective. Pensions are built on what is now a three-tiered system that advantages urban workers over rural ones, as with nearly every aspect of the Chinese welfare state.
China has tried to push some of the burden of care onto the younger generation, passing Confucian-inspired laws that mandate that children have a duty to support their parents. But even developed Confucian countries have higher rates of elder poverty, suggesting that family obligations can’t substitute for a state system.
In China, the one-child generation is being squeezed by the so-called inverted pyramid that leaves four grandparents and two parents dependent on one child.
Furthermore, China’s pension system is on shaky ground. The Chinese Academy of Social Sciences estimated in 2019 that the urban worker pension fund will be out of money by 2035. Media discussion of the issue has made Chinese workers even more determined to protect the rights that they have. Reforms intended to push middle-aged people to open individual retirement accounts have flopped. The public is convinced that this is the government’s job, not theirs.
Underlying all this are China’s economic woes. There was long a fear that the country would, in a much-repeated phrase, “get old before getting rich.” The first part of that statement has arrived faster than expected, and the second part now looks further away. The local government debt crisis has already caused cities to cut benefits for seniors, sparking fierce protests. The grim economic mood also makes young people less likely to save for retirement or to have kids.
It’s a wicked problem for Xi, who has made “common prosperity” his economic mantra. An increase in immigration to China—the logical solution for an aging country—would lead to a racist response among a public primed by the government’s own ethnonationalism, as well as fears of competition for jobs. More serious reforms to the retirement system would fuel wide protests—and probably an embarrassing government retreat.
What We’re Following
International adoption stops. China abruptly ended international adoptions this month, likely due to ethnonationalist pressures—such as the perception that foreigners were supposedly stealing Chinese children—and the association of overseas adoption with past poverty. The move has left many families in limbo, even as foreign adoptions from China—which began in 1992—had declined in recent years. Adoptions saw an almost total halt during the COVID-19 pandemic.
International adoption is a controversial issue worldwide, but it has been transformative for many Chinese orphans. The number of children living in institutional care in China has dropped steadily, but disability remains a major underlying issue. In 2014, 98 percent of orphans in China had disabilities; domestic adoption for disabled children in China is difficult.
China’s child protection system has improved since the 1990s, but cases of physical and sexual abuse of children within institutions remain extremely difficult for Chinese academics or reporters to cover.
Sabina Shoal standdown? The confrontation between China and the Philippines in the South China Sea at the disputed Sabina Shoal took a pause after Manila withdrew a coast guard ship that was stationed there for about five months, citing the heavy logistical costs imposed by a Chinese blockade. But what looked like a Chinese victory lap may be forestalled, with the Philippines redeploying another vessel there.
The Sabina Shoal is within the Philippines’s exclusive economic zone. Manila won a U.N. Convention on the Law of the Sea arbitration ruling against China in 2016, which Beijing refuses to accept. Confrontations between the two navies have heated up this year, while China is also making use of its so-called maritime militia, a fleet of supposedly civilian vessels that the Chinese navy controls.
Tech and Business
Economic growth estimates cut. After another month of weak economic data and falling property prices and sales, Goldman Sachs and Citigroup have cut their growth estimates for China for the year to 4.7 percent. That follows a general pattern of falling expectations over the year from analysts. It looks increasingly unlikely that China will hit its 5 percent growth target for the year, even in the government’s official data.
The typical solution would be a flurry of last-minute statistical manipulations, but it’s possible that the government may bite the bullet and accept failure, given the already-low economic mood. That will mean a doubling down on the language about determination and austerity—as well as a need for scapegoats, likely prompting another round of official purges.
Wealth management investigation. A $1.2 billion wealth management firm linked to the bankrupt property giant China Evergrande Group is under official investigation for fraud. Hywin Wealth Management, which has more than 2,500 employees, announced in June that it would leave the conventional wealth management sector to focus on technology after it defaulted on some products due to exposure to China’s crumbling property sector.
China’s boom years, especially the property bubble, allowed for a lot of fraud, but now the bills are coming due. Expect even more large-scale Ponzis and other schemes to be exposed.
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A Bit of Culture
Tuesday is Mid-Autumn Festival in China, a popular traditional celebration that is also a short public holiday. In the past, every mid-autumn, on the 15th night of the eighth lunar month, Tiger Hill in the canal city of Suzhou was the site of a famous singing competition. Below, the 17th-century memoirist Zhang Dai (1597-1684) recalls one such competition.—Brendan O’Kane, translator
“Mid-Autumn Night on Tiger Hill”By Zhang Dai
On the fifteenth day of the eighth month they came to Tiger Hill: locals and visitors; scholar-officials with families in tow; chanteuses and accompanists; courtesans, actresses, and other belles of the demimonde; commoner wives and respectable daughters; hustlers and prettyboys; rakehells and wastrels; idlers and spongers; serving boys and confidence men, all packed together like scales on a fish.
They spread out mats anywhere they could find a place to sit: on the stone ledge where Daosheng preached the Dharma so movingly that even the pebbles nodded, or on Thousand-Man Rock beneath it; between Crane Brook and Sword Pond; in front of the shrine to Grand Secretary Shen and even all the way to the Swordcleft Stone and past the first and second temple gates.
Viewed from above, the crowds looked like geese flocking on a sandbar, or sunset clouds gathering over a river. The sky darkened, the moon rose, and from a hundred different spots rose a clamor of pipes and drums, a clash of cymbals, a rumble of Yuyang drums that shook earth and sky and drowned out even the loudest shouts.
With the first night watch this gave way to strings, flutes, and singers performing ensemble pieces like “Unfurl the Brocade Sails” and “Across the Limpid Lake” in a commotion of cymbals and citterns and pipes and voices that made it impossible to pick out a rhythm or tell one piece from another. As the night grew deeper, the crowds began gradually to disperse.
The scholar-officials took to their pleasure-boats with their families, and the people who remained set about trying to out-sing one another, showing off in a farrago of Southern and Northern styles to the accompaniment by turns of woodwinds and strings. By now, it had become possible to make out the words, and the connoisseurs in attendance offered their appraisals of each line as it was sung.
By the second watch the crowds had quieted and all the instruments fallen silent save for one wisp of flute, clear and plaintive, that wound around the voices of the three or four remaining singers. By the third watch, the moon hung alone in the sky and a chill had come into the air, and everyone was perfectly silent, even the mosquitoes.
One lone figure strode out onto a rock high above, sat down, and sang, unaccompanied by flute or clapper, in a voice as fine as silk thread that rose and fell but never wavered, powerful enough to split stones and pierce clouds, every word as clear as a carving. The listeners sat transfixed, listening intently to every subtle modulation of his voice.
Nobody dared clap along. The hundred-odd people who sat there like stranded geese could only nod their heads in mute approval. Only in Suzhou will you find such connoisseurs!
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