The Chinese Economy

pp 83-100


Demographic Trends and Sustainability of the Old-Age Security System in China

  • Enrica Di StefanoAffiliated withInternational Economic Analysis and Relations Department, Bank of Italy Email author 

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In the last 60 years, population growth in China has been paired with lowering fertility and mortality rates. As a result the population is ageing rapidly while per capita income remains relatively low. This article provides evidence on these trends, comparing China with other countries, and argues that, if the level of income per capita remains low, China might face increasing problems for the sustainability of the current old-age security system. In particular, the government will have to face a growing pension burden for urban residents while also be faced with having to provide support to an increasing share of the rural population. The traditional system based on family support may be hampered by the decreasing size of households large rural-to-urban migration.