Lol China Learns Too Much From The West



Watching China emerge and economically compete with the rest of the world has been nothing short of fascinating.  While all appearances seem to indicate that the world is happily willing to let China become the world’s next economic leader, the Chinese have been in a hurry to do other things emulating the west.   

Policy makers and economists have long been worried about the financial burden of China’s expanding patchwork of pension schemes, but those concerns have recently escalated as its rural pension scheme took off in the past three years.

The funding shortage is daunting: economists say it could blow out to a whopping $10.8 trillion in the next 20 years from $2.6 trillion in 2010, towering over China’s $3 trillion onshore savings, the biggest hoard of domestic savings in the world.

Time is not on China’s side. Its fast-maturing society and economy — thanks to a one-child policy and a rapid rise in living standards — demand better pension coverage in future.  Yet China is already straining to hold things up.  Funding capacity is not keeping pace with swift growth in pension coverage as China sticks to safe but low-yielding investments for its pension funds.

To make bad matters worse, retirements are getting pricier on an ageing population, a shrinking work force, longer life expectancies, early retirements and generous pension payouts.

Sound familiar?  So what will be China’s response to this?

So pressing are China’s pension problems that analysts say they can no longer be ignored. Xi Jinping, China’s president-in-waiting, must raise retirement ages and supply pension funds with state assets for financing after he takes power next year.

“This is a very important issue for the next leadership, which does not have a lot of time to get to it,” said Zhao Xijun, an economics professor at Renmin University in Beijing.

To give or not to give, China’s pension dilemma is not a sideshow. Good pension coverage will help Beijing remake the world’s No. 2 economy to boost domestic consumption, cut export reliance, and dodge a middle-income trap that could ensnare the country anytime in the next two decades.

They will do exactly that.  It’s so cute watching a statist economy grow up.  Of course, much of this is uniquely China’s actions and thoughts.

The number of Chinese over 65 years of age, at 123 million, virtually matches Japan’s total population, and is rising fast due to the one-child policy Beijing adopted in the 1970s.

According to the World Bank, China is ageing so rapidly it grayed in the last 40 years, whereas ageing societies in the United States and the United Kingdom took a century to form.

Many analysts believe China’s labor force will shrink from 2015, hurt by stubbornly low birth rates and an ageing populace, a trend expected to drive up wages in the world’s factory floor in years ahead, and henceforth global inflation.

To beat the demographic challenge, Beijing hastened the roll-out in 2009 of a voluntary pension scheme for 657 million rural residents, the equivalent of two United States.

Read more here.

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2 Responses to Lol China Learns Too Much From The West

  1. Bruce says:

    In China everything is big, including unexpected bubble baths.

  2. gator69 says:

    Soon China will enforce a “One Grandparent” rule. 😉

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