China's retirement age reforms not enough to fix pension headache

Shrinking workforce, slow economy make further reforms urgent, say economists

China's move to raise retirement ages is a starting point to plug pension deficits and bolster a shrinking workforce, but more pain lies ahead as the economy slows, making further reforms urgent, said economists and demographers.

Ageing populations are a global phenomenon but the issue is particularly stark in China due to its one-child policy, which was in place for three decades.

China's number of dropped to nine million in 2023 and the UN forecasts that the country's working-age population will decline by nearly 40 per cent by 2050 from 2010 if fertility rates remain at current levels.

Both older and younger workers have expressed worries about the changes as policymakers grapple with discrepancies between rural and urban pensions, maintaining public stability and high youth unemployment.

"They need to solve the pension problem now because this is when they still have some growth to finance the deficit," said Natixis' chief economist for Asia-Pacific, Ms Alicia Garcia Herrero.

China's economic growth rate has slowed from about 8 per cent in the early 2000s to about 5 per cent now and could be as low as 1 per cent after 2035, she added.