By Feng JianHua, The Beijing Review

China

December 20, 2007

The Ministry of Labor and Social Security has announced an "ambitious" goal to provide all of the country's senior citizens with a pension by 2020.

"This goal is achievable," stressed Yuan Xinli, Deputy Director of the China National Committee on Aging (CNCA), an agency dedicated to promoting the well-being of the elderly, "but it must be pointed out that such a widespread safety net can only guarantee the minimum living standard of senior citizens."
China's population is aging rapidly. Right now, China is the only country in the world that has more than 100 million people above the age of 60. The age structure differs between rural and urban areas and among regions. About 60 percent of China's elderly reside in the countryside, which is the weakest link in China's social security system. As elderly care in China is still in its infancy, the system has many "loopholes," the biggest of which is the pension shortfall.

The next focus

By the turn of last century, most of China's rural areas had become part of the aging society. According to Yuan Xin, a sociologist professor at Nankai University, every year, 850,000 people in the countryside turn 60. In the coming two decades, the number of people above the age of 60 will reach 120 million.

Yet, China's basic elderly care system has not extended to rural areas. According to statistics released by CNCA in early 2006, about 55 million Chinese farmers, less than 10 percent of the total, have purchased endowment insurance. The number was even lower in some regions. According to statistics, of around 600,000 farmers above the age of 60 living in the 14 counties in the vicinity of Beijing, only 23,000 claim a pension.

At present, about 94 percent of the rural elderly are taken care of by their children or other family members. However, the traditional family care system is being jeopardized by rapid social and economic development.

The one-child policy implemented from the 1970s has gradually reduced the average household size. Most households have one to two kids now. In addition, as a large number of rural workers migrate into cities, empty nesters, namely, those whose children have moved away, are now increasingly common in the countryside. As their children are not home most of the time, it is not realistic for them to take care of their aging parents.

To meet the challenge of elderly care, an official at the Ministry of Labor and Social Security recently indicated that China would speed up the construction of a social security system covering both urban and rural areas. The existing social security system gives priority to urban dwellers. To guarantee the basic living standard of the rural elderly, the ministry has two focuses: One is to specify how rural workers can participate in the endowment insurance system, and the other is to establish a rural endowment insurance system in areas where it is feasible.

Searching for the right system

"I have been planting vegetables for several decades. I never dared to dream about claiming a pension month by month when I get old," said an elated Ma Julan, a villager in Dayingmencun Village, Hami City of Xinjiang Uygur Autonomous Region.

Ma is one of the seven original members of a seniors' fund in the village. The fund was established in May 2006 at the initiation of Cui Yong, Chairman of Yingfeng Real Estate Development Co.Ltd. in Hami.

Dayingmencun Village lies in the suburbs of Hami City. In the 1990s the city began to expand and now more than two thirds of the arable land has been occupied. Although the government has increased compensation for land expropriation, most farmers barely have enough savings for their retirement.
Cui's real estate company develops land in the village. All the 108 shareholders of the company, including Cui, are residents of the village. To reward the villagers, Cui established the Yingfeng Seniors' Fund. The company contributes 5 percent of its annual profit and the usage rights of 30 shops to the fund.

However, few villages in China have seniors' funds like Dayingmencun Village. Privately provided social security systems have only been experimented with in some areas, so levels of security for social security are patchy across China.
In 2004, the Chinese Government introduced a social security system to rural areas. Under the system, the annual contribution for each individual was 200 yuan, which was to be matched by the government, but the system was aborted.

"Back then, farmers did not understand the importance of social security and were unwilling to participate in the program. This led to the failure of the program," Yuan from the CNCA explained. He confirmed that building a social security system in rural areas is now back on the government's agenda.

"Different from the previous program, this social security system is coordinated by the government but operated under a market model. The public will feel real benefits," said Yuan.

Outsourced elderly care

Right now, China is developing new models for elderly care that combine home care with community care. Such programs have been piloted in some places.
In Gulou District, Nanjing City of Jiangsu Province, the local government has outsourced elderly care to local communities, according to Yuan. Companies in the community winning a bid will provide home care to the seniors. The service will be evaluated primarily by senior citizens, and also by the government and the company. The government will pay the company delivering the services directly based on the combined evaluation result.

According to Yuan, China has a total of 1.59 million beds in nursing homes, which can only meet four percent of the demand. The occupancy rate in many elderly care centers is very low, while other centers are overcrowded. For instance, the Beijing First Social Welfare Institution has only 540 beds, while more than 1,000 seniors are on its waiting list.

"The government should strike a balance between social service and the market, and should give incentives to the private sector," Yuan said.

Statistics

At the end of the 20th century, the proportion of people over 60 in China accounted for more than 10 percent of the total population. By international standards, China had become an aging society.

At the end of 2005, more than 144 million people in China were over 60 years old, accounting for 11 percent of the total population.

The proportion of people above the age of 60 is growing at an annual rate of 3 percent. A forecast from the China Population Information and Research Center says that by 2020, 16.6 percent of the population will be older than 60, while in 2050, the proportion will reach 28.76 percent.

In 2005, the ratio of worker to retiree was 6.2 to 1; while in 2020 the ratio will fall to 3.7 to 1.

In 2005, there were about 39,546 elderly care providers in China. On average, every grassroots urban community has 1.31 such providers. In the countryside, the New Rural Cooperative Medical System covered 495 million rural population and 73 percent of the rural elderly were in the system.

To meet the challenge of elderly care in China, where well over 100 million people are above 60 years old, the government will speed up the construction of a social security system covering both urban and rural areas.

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