On 13 September 2024, the Chinese government announced that it will gradually increase the retirement age. This is the first retirement age adjustment since 1950. Currently, China has one of the lowest retirement ages in the world. The retirement age will be raised from 60 to 63 for men, from 55 to 58 for women in white-collar jobs, and from 50 to 55 for women in blue-collar jobs. The adjustments will be gradually implemented over a 15-year period, starting in January 2025. In this article we will look at the implications for the Chinese economy and for Belgian companies.
China’s ageing population
The main driver behind this policy shift is China’s rapidly ageing population. According to data from Reuters, China’s population of individuals aged 60 and older climbed to 296.97 million in 2023, representing approximately 21.1% of the total population and an increase from 280.04 million in 2022. Within the next two decades, China’s elderly population is expected to exceed the entire population of the United States. By 2040, an estimated 402 million people, or about 28% of China’s population, will be over the age of 60. With the country’s ageing population growing at a fast pace, there were growing concerns that the current pension system and elderly care system will struggle to remain sustainable without major reforms. On top of that, birth rates are also falling in China, and the country faces a shrinking workforce.
China’s Pension System
To combat the shrinking working population issue, China places a strong emphasis on achieving technological development, hoping that innovations will boost labor productivity and help compensate for potential labor shortages. However, according to the Chinese Academy of Social Sciences (CASS), even if these strategies are successful, they will likely not alleviate the mounting financial strain caused by the country’s underfunded social security and pension system.
China’s pension system is structured around three primary pillars. The first and most significant is the state-run basic pension system, which forms the backbone of retirement support. The second pillar consists of voluntary employer-sponsored pension plans, while the third is made up of private voluntary retirement schemes. Despite the presence of these additional pillars, experts note that both corporate and private pension plans are still underdeveloped, leaving the public system under considerable financial strain.
By encouraging people to stay in the workforce longer, China aims to ease some of the strain on its pension system. However, these changes must be balanced with the need to ensure sufficient employment opportunities for younger generations entering the labor market.
Opportunities in the ‘silver economy’
China’s rapidly ageing population presents significant opportunities for Belgian companies in the elderly care sector. With an expected one-third of China’s population over 60 by 2050, the demand for quality elderly care services will increase significantly. The Chinese government’s push for private sector involvement and foreign investment further enhances this potential, with favorable policies like relaxed regulations and joint venture opportunities.
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 Belgian 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. Belgium can also offer its extensive experience in senior care, retirement homes, innovative technologies, healthcare management and rehabilitation services.
Belgian consumer brands may want to consider how their products may benefit or appeal to an ageing population. Examples are age-friendly fashion, nutrition and dietary supplements, personal care products, cosmetics with ‘anti-ageing’ properties, luxury and leisure goods. With extended working years and rising disposable incomes, China’s ageing population is becoming a more affluent and active consumer group.
The Chinese government’s push for better elderly care and active ageing policies aligns well with the expertise of European and Belgian technologies, services and products, allowing them to position themselves as trusted suppliers in this expanding market. With thoughtful marketing and localized products, Belgian companies should discover the opportunities in China’s growing silver economy.
Please contact the Belgian-Chinese Chamber of Commerce (BCECC) in case you need more information.