BEIJING – Beijing is set to make its $406 billion National Social Security Fund “bigger and stronger” to tackle the challenge of Chinese ageing population.

The National Social Security Fund will “effectively” respond to population ageing and “improve the policy mechanism for the development of the elderly care industry,” said Ding Xuedong.

Ding is the party secretary and vice chair of National Security Fund. He made these comments in the Study Times, a Communist Party newspaper, on Monday.

“It is unprecedentedly urgent and arduous to make the strategic reserve fund bigger and stronger,” he added.

Chinese ageing population is a massive challenge for the country amid shrinking birth rate and younger workforce to support its seniors shrinks.

The issue is complicated by the fact that the young Chinese are avoiding marriage because of economic reasons. It is said that the cost of raising a child in China is much higher than the rest of the world.

SEVERE AGEING STAGE

As of 2023, China had nearly 297 million people aged 60 or above, accounting for 21.1% of the total population.

Ding admitted that China had entered a moderate ageing stage. It would reach a severe ageing stage around 2035 which was going to last for a long time, he added.

Over the next decade, roughly 300 million Chinese will retire – almost the equivalent of the entire US population. One in every two people aged over 65 in the Asia-Pacific region will live in China by 2040, Euromonitor estimates.

That’s why Ding said severe aging in the coming decade means the “urgency and difficulty of expanding and strengthening the strategic reserve fund are unprecedented”.

INCREASE IN INVESTMENT

It is said that the pension fund would also increase investment in the domestic capital market, especially strategic sectors.

“[It is] a strategic reserve fund for social security needs during the peak period of population ageing, Ding noted.

Introduced in 2000 in response to an ageing population, the National Security Fund has supported China’s welfare system, including pensions and work injuries, as well as medical, unemployment and maternity insurance.

NO MONEY BY 2035

The general public in China – especially the younger generation – have long-standing concerns over the sustainability of the state pension system.

In 2019, a report from the Chinese Academy of Social Sciences warned that the main state pension fund – the urban worker pension fund which is the backbone of the country’s state pension system – would run out of money by 2035 amid a shrinking Chinese workforce.