Faced with the dual challenges of an aging population and a sluggish economy, China has decided to undertake a significant reform, announcing the first increase in the retirement age since the 1950s. The new policy raises the retirement age for men to 63, while for women, it will be adjusted to between 55 and 58, depending on the nature of their work. Experts suggest that the rapid pace of China’s aging population makes delaying retirement an unavoidable choice.

Currently, the retirement age for blue-collar male workers in China is set at 60, while for female workers it is 50. Female white-collar workers retire at 55. These retirement ages were established in the 1950s when the average life expectancy was around 40 years. In addition to raising the retirement age, the period for contributing to the pension fund will also be extended—from 15 years to 20 years starting in 2030.

China’s population is aging rapidly. The Chinese Academy of Social Sciences warned this year that the public pension system, which is the main source of income for most elderly people in China, will run out of funds by 2035.

Continuous Population Decline

The reason for the dwindling population is that China’s low birth rate is advancing faster than that of other countries. In 2022, China’s National Bureau of Statistics reported that, for the first time, the year-end population decreased by 850,000 compared to the previous year, marking a turning point from population growth to decline. In 2023, the population further decreased by 2 million, marking the second consecutive year of decline.

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In 2022, China’s total fertility rate dropped to 1.05 children per woman, down from 1.5 in 2019. The working-age population in China is expected to decline from 976 million this year to 938 million by 2030. With various government policies aimed at boosting the birth rate proving ineffective, there is an urgent need to adapt to an aging society with a lower fertility rate.

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Rapid Formation of an Aging Society

Reports indicate that last year, China surpassed the United Nations’ threshold for an “aging society,” with at least 14% of its population aged 65 and above. By around 2035, the proportion of people aged 65 and over is expected to increase to 30%.

At this rate, China could move from an aging stage to a super-aged stage in just nine years—a pace faster than any major country except South Korea. Japan took 11 years to make the same transition, Germany took 34 years, and the United States is expected to make this transition in 14 years.

Meanwhile, China’s fiscal situation has been deteriorating. Due to weak domestic demand and low business confidence, China’s fiscal revenue fell by 2.8% year-on-year in the first half of this year. Local governments have struggled to cope with a fiscal crisis as their revenue from land sales has dried up. Internal analysis in China suggests that delaying the retirement age to 65 by 2035 could reduce the pension budget deficit by 20%.

The Chinese government began discussing delaying retirement as early as 2008 but has been hesitant to take action due to concerns about political backlash. Now, with youth unemployment already high and the economy sluggish, the announcement of a retirement delay is bound to bring additional social pressure. Political commentators see this as a necessary course adjustment, arguing that faced with the worsening demographic challenge, the Chinese government has no other choice.

(Photo credit: Flickr/Thomas Berg CC By2.0)