Why China raised retirement age?

 According to the The South China Morning Post, China's decision to raise its retirement age is primarily driven by its rapidly aging population and shrinking workforce.

Experts and academics have pointedout that the country's population of 1.4 billion is aging quickly, partly due to the one-child policy implemented from 1980 to 2015, causing a sharp decline in the number of working-age citizens.

Further, according to the Economist Intelligence Unit, with 297 million citizens aged 60 and older as of 2023, and this number expected to surpass 400 million by 2035, the country's pension system is under significant stress.

According to the Bloomberg Intelligence, the current retirement age in China is one of the lowest in the world, set at 60 for men, 55 for white-coller women and 50 for blue-collar women. 

However, with life expectancy raising from 44 years  in 1960 to 78 years in 2021, and projected to exceed 80 by 2050, the government recognizes the need to adjust the retirement age to ensure the sustainability of the pension system.

China's social security system constitues five different types of insurance contributions to the mandatory housing fund. Frequently, business commentary in the region debates whether China's social security contributions are burdensome for companies.

With labour costs continually rising and economic growth slowing, it is not uncommon that companies may endeavor to look for ways to circumvent social security obligations according to China Briefing.

The Economist, in a series of articles, recently, highlighted the problem confronted by the Chinese economy.

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