As China increases its retirement age for the first time in decades, Focus looks at the reasons driving the change – and what it means for businesses in China
The Standing Committee of the National People’s Congress, China’s top legislative body, announced on 13 September 2024 that the country would gradually increase the retirement age for men from 60 to 63, for women in white-collar jobs from 55 to 58, and for women in blue-collar jobs from 50 to 55. The adjustments will be gradually implemented over a 15-year period starting from January 2025.
The primary driver behind this policy shift is China’s rapidly ageing population. The country faces a shrinking workforce and a growing number of retirees, putting pressure on its pension system, as well as the elderly care system.
The results of China’s latest census in 2020 showed significant population ageing, with people over the age of 65 accounting for 13.5% of the Chinese population, an increase of 4.6% from the 2010 census. Birth rates are also falling, putting further strain on the population.
By raising the retirement age, China hopes to alleviate some of the financial strain on its pension system by bolstering the working-age population. In 2020, China’s Social Security Administration predicted that its pension fund could be depleted by as early as 2035 unless remedial measures were taken. Indeed, in addition to raising the retirement age, China also announced that the minimum number of years needed to pay into a pension will increase from 15 to 20 years (which will come into effect in 2030).
This move will also align China with international norms. Neighbouring countries with similar demographic challenges, such as Japan and South Korea, have already adjusted their retirement ages.
Although the reform aims to secure long-term economic stability, it has sparked some criticism, with both young and old complaining of the longer working years. Others are worried about the implications for youth unemployment, which had already reached record highs in summer 2023. However, Chinese officials argue that the gradual implementation of the changes will prevent sudden impacts on job opportunities for younger workers.
China’s ageing population prompts a number of considerations for British companies looking at the China market.
British consumer brands, for example, may want to consider how their products may benefit or appeal to an ageing population that, on the one hand, will remain wage-earning consumers for longer and, on the other hand, may find itself without the kind of family and community-based support system that previous generations had access to.
Indeed, in January 2024, the Chinese government unveiled a series of 26 guidelines to encourage the development of a “silver economy” catering to older people. Health-related consumption is likely to account for the biggest share of spending in this “silver economy”, presenting opportunities for British companies in the pharmaceutical and biotech industries, as well as robotics and AI. Sales of home healthcare devices for older adults have already shown an increase in recent years, as have sales of dietary supplements and cosmetics with ‘anti-ageing’ properties.
