China Prepares for Ageing Future with Expanded Social Security Fund

New Delhi: China is taking significant steps to reinforce its National Social Security Fund, currently valued at 2.88 trillion yuan, in response to the challenges posed by its rapidly ageing population. With the number of new births declining and the younger workforce shrinking, the Chinese government is focusing on expanding this fund to ensure robust support for its elderly citizens in the coming years.

Ding Xuedong, the party secretary of the National Social Security Fund, underscored the critical need for this expansion as China faces an impending demographic shift. Over the next decade, approximately 300 million Chinese citizens are expected to retire, a number nearly equivalent to the entire population of the United States. By 2040, it is estimated that one in every two people aged over 65 in the Asia-Pacific region will be living in China, according to research by Euromonitor.

The National Social Security Fund, established in 2000, has served as a strategic reserve to address the nation’s social security needs during peak ageing periods. However, concerns have been raised by the Chinese Academy of Sciences, which warned that China’s pension system could potentially run out of funds by 2035 if no proactive measures are taken.

To counter this risk, Ding announced a strategic plan to broaden pension fund investments, particularly within the domestic capital market. The focus will be on long-term equity investments in sectors vital to the national economy and the welfare of the Chinese populace. In addition, the fund will increase its investments in scientific and technological innovation, aligning with the government’s priority areas for future growth.

Ding also emphasized the need for greater transparency in financial disclosures, which he believes will play a crucial role in stabilizing public expectations about old-age care. By ensuring clear communication and openness, the government aims to build trust and confidence in the sustainability of the social security system as it navigates the challenges of an ageing society.