China has taken a major step to reform its labor policies by raising the retirement age for the first time in 74 years, a move that reflects growing concerns over its shrinking workforce and aging population. The country has historically had one of the youngest retirement ages among major economies, with Chinese workers typically leaving the workforce 15 years earlier than their American counterparts. However, with a rapidly aging society and declining birth rates, China faces an unprecedented demographic challenge that threatens its long-term economic stability.
The new policy was approved by the Standing Committee of the National People’s Congress and will be phased in over the next 15 years starting in January. Under the previous system, the retirement age for men was set at 60, and for women, it was 50 for manual workers and 55 for office workers. The new legislation will progressively raise the retirement age to 63 for men and between 55 and 58 for women, depending on their birthdates. The aim is to stagger the retirement transition in a way that minimizes social and economic disruption while addressing the needs of an aging population.
China’s aging crisis has reached a critical point. By 2035, over 400 million Chinese citizens are expected to retire, a staggering figure equivalent to the combined population of the United States and an additional 100 million people. This demographic shift has placed immense pressure on China’s social safety net, particularly its public pension system, which experts warn could run out of funds by 2035. The Chinese Academy of Social Sciences, a prominent government think tank, has been warning for years that without policy changes, the pension fund would face unsustainable pressure. Xijuan Peng, a senior researcher at Victoria University in Australia who specializes in China’s population and its global economic ties, emphasized the urgency of the situation: “With more people reaching retirement age, the pension fund is under enormous strain. It’s critical that China acts now to alleviate the long-term financial burden.”
The situation in China mirrors challenges faced by other aging economies. For example, the United States is grappling with its own concerns over Social Security, with the system expected to be unable to pay out full benefits by 2033 unless reforms are implemented. However, China’s demographic challenge is compounded by its sheer scale and the speed of population aging. China’s one-child policy, implemented in 1980 and relaxed only in recent years, contributed to a dramatic reduction in birth rates, which in turn has left the country with a disproportionately older population. As a result, the working-age population has been shrinking, while the number of retirees continues to grow.
In 2022, the National Bureau of Statistics reported that China’s population shrank by nearly one million people—the first time the country experienced a population decline in decades. The situation worsened in 2023, with a reported loss of two million people. These declines signal a troubling trend: China is no longer producing enough younger citizens to replace those retiring. The economic consequences of this demographic shift are profound, as fewer workers will be available to support the growing elderly population through taxes and social contributions.
Moreover, China’s younger generations are increasingly opting out of having children due to a variety of socioeconomic factors. The rising cost of living, coupled with intense pressure to succeed in a hyper-competitive job market, has led many couples to delay or forgo starting families altogether. This trend has been exacerbated by urbanization, where young professionals flock to expensive metropolitan areas in search of better job opportunities, often finding that raising a family is unaffordable.
Economically, China is already feeling the strain. High youth unemployment rates—reported to be over 20% in urban areas—are a growing concern. Slower economic growth has made it more difficult for younger workers to find stable, well-paying jobs, and many fear that raising the retirement age will further delay their career advancement. The prospect of older workers staying in the workforce longer is seen by some as a barrier to promotions and leadership opportunities for younger employees.
The decision to raise the retirement age has not been without controversy. On Chinese social media platforms such as Weibo, there has been notable backlash from citizens who express frustration with the idea of working longer. Many older workers have voiced concerns about their physical ability to continue in labor-intensive jobs beyond the age of 60, while younger workers are worried that the policy will limit their upward mobility in the workplace. Although many critical comments were reportedly censored, the government has allowed limited discussion to remain visible, with only a fraction of the more than 13,000 comments on the policy accessible to the public.
Despite this public discontent, economists and policy experts generally agree that China had little choice but to take action. The country’s demographic time bomb is ticking, and without significant reforms, the consequences could be dire. In the short term, raising the retirement age may lead to economic disruptions and discontent among workers, but in the long run, it is seen as a necessary step to ensure the sustainability of China’s pension system and prevent a financial collapse that could ripple through the global economy.
China’s leaders are also acutely aware of the broader challenges facing the country’s economy. With slowing growth, high debt levels, and a property market in crisis, the government is attempting to balance immediate economic concerns with long-term structural reforms. Raising the retirement age is just one piece of a larger puzzle aimed at stabilizing China’s economy while addressing its demographic realities.
In conclusion, China’s decision to raise the retirement age is a reflection of the urgent need to address its aging population and shrinking workforce. While this policy may provoke short-term outrage and discomfort, it is a critical adjustment for ensuring the sustainability of the country’s economy and social welfare system. As China navigates these demographic shifts, the rest of the world will be watching closely to see how it manages the delicate balance between economic growth and social stability in the face of unprecedented population challenges.
Written by Aniruddh Sajan
