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Population Aging in China

Chapter · January 2009

DOI: 10.1007/978-1-4020-8356-3_8

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Chapter 8
Population Aging in China

Feinian Chen and Guangya Liu

Introduction 1970s was also the consistent and sustained decline of

mortality, which was a direct consequence of strong
government health intervention programs. The state
The proximate determinants of population aging in influence was also reflected by the divergent aging tra-
China are fundamentally the same as those in any other jectories of the urban and rural areas, arbitrarily aug-
country. It is an inevitable consequence of the pro- mented by the Hukou system (a household registration
cess known as the “demographic transition” in which system that divides the population into “agricultural”
declining fertility together with a rise in life expec- and “non-agricultural” sectors) and strict state control
tancy leads to a shift towards an older age structure on migration to a certain extent.
of the population. Yet, the story of population aging in It is the purpose of this chapter to examine the multi-
China is unmistakably unique, shaped by its distinct faceted process of population aging in China, with par-
historical, cultural, economic and political contexts. ticular attention to its socialist/communist background.
The pace of its aging trend is by itself unparalleled, We begin by exploring the demographic determinants
with the proportion of older adults projected to grow and trends of population aging, highlighting the role
from 6.8 per cent to 23.6 per cent over the first half of of state policies in facilitating the fertility and mortal-
the twenty-first century (United Nations 2005). As the ity declines. To address the issue of elderly caregiving,
most populous country in the world, this increase in we examine the traditional family support system and
the population of elderly translates to an astounding the challenges it faces since the launch of the economic
growth of 242 million people, which would qualify it reform policies in 1978. We then review the on-going
for the fourth largest population in the world today. pension and health care reforms initiated by the gov-
On the one hand, the rapid aging process in China ernment as strategies to meet the demands of an aging
conforms to a global trend, with the forces of indus- population. In the conclusion, we discuss the dilemma
trialization, urbanization and associated changes in that the government faces in balancing economic
value systems affecting the demographic dynamics. development and providing adequate old-age support.
On the other hand, no other country around the world Lastly, we review some alternative policy options and
has had their government play such a pivotal role in potential opportunities China may have in addressing
accelerating the aging transition. Among these influen- this global population problem of the 21st century.
tial governmental courses of action, perhaps the most
well-known is the “one-child” policy, without which
the decline in fertility would not have been so dras-
tic and abrupt. Preceding the drop of fertility in the An Accelerated Model of
Mortality and Fertility Decline
F. Chen ( )
Department of Sociology and Anthropology As one of the oldest human societies in existence,
North Carolina State University
Raleigh, NC, USA China’s population history up to the twentieth cen-
E-mail: [email protected] tury fits the description of the pre-transitional stage

P. Uhlenberg (ed.), International Handbook of Population Aging, 157

DOI 10.1007/978-1-4020-8356-3_8, © Springer Science+Business Media B.V. 2009
158 F. Chen and G. Liu

of the classic model of demographic transition. 2002). The results from these government sponsored
Under a high fertility and high mortality regime, the programs were impressive. Mortality first dropped
population fluctuated between 37 and 60 million in suddenly and continuously, except in the three fam-
size for over a thousand years prior to the 17th cen- ine years (1959–1961), achieving a low mortality
tury; then for the first time experienced rapid growth level (with crude death rates around 6.5 per 1000 in
and reached a size of over 400 million during the the1970s) (see Fig. 8.1). The life expectancy at birth
reign of the Qing Dynasty (1749–1851); but then had rose from a low 41 in 1950 (5 years below the world
its growth slowed again between 1851 and 1949 as average) to 66 in 1980 (5 years above the world
a consequence of the social turmoil caused by civil average) (see Table 8.1). During the same time, the
wars and imperialist invasions (Banister 1992). The infant mortality rate, a frequently used indicator for
establishment of the People’s Republic of China in national development, also dropped from as high as
1949 marked the beginning of its demographic transi- 195 per 1000 in 1950 to 52 per 1000 within a thirty
tion, a process that distinguished China from the rest year period (see Fig. 8.1).
of world due to its extraordinarily rapid declines of After the Chinese government launched its eco-
mortality and fertility (see Fig. 8.1), neither of which nomic reform policies in 1978, the public health
would have been possible without strong government programs received less government investment (see
intervention. details in later discussion). However, mortality con-
The route to low mortality in China was deemed tinued to decline at a moderate pace in the 1980s and
“exceptional” by Caldwell (1986), because it achieved onward, with an overall decline in deaths caused by
world spotlight success in improving life expec- infectious diseases but an increase in deaths from
tancy with a poor and non-industrialized economy chronic diseases (Cook and Dummer 2004). The life
within a short period of time. Beginning from the expectancy in 2006 is estimated to be 70 for males
1950s, the state engaged in mass public health cam- and 74 for females, well above the average level for
paigns against parasitic and infectious diseases, with other less developed countries (64 for males and 67 for
efforts including environmental clean-ups, expanded females) and close to that of developed countries (73
immunization/vaccination programs, establishments for males and 80 for females) (Population Reference
of Hygiene and Anti-Epidemic Stations around the Bureau 2006).
country and the introduction of “barefoot doctors” The onset of the fertility decline in China did not
(medical personnel with basic training to deal with start until the late 1960s, almost two decades after
hygiene matters and medical practice in rural China) the initial decline in mortality. The total fertility
(Cook and Dummer 2004; Lee 2004; Woo et al. rate was still as high as 5.6 in 1950, then fluctuated

200 10

crude death rate

160 8
crude birth rate
( total fertility rate
per woman)

infant mortality rate

(per 1,000)

120 6
total fertility rate

80 4

40 2

0 0
0

55

60

65

70

75

85

90

95

00
80
5
19

19

19

19

19

19

19

19

19

20
19

Fig. 8.1 Trends of fertility Source: United Nations (Population Division of the Department of Economic and Social
and mortality in China, Affairs of the United Nations Secretariat). 2005. World Population Prospects: The 2004
1950–2000 Revision Population Database. http://esa.un.org/unpp/.
8 Population Aging in China 159

between the mid-1950s to early 1960s due to natural ential narrowed somewhat since the 1980s but urban
and human disasters such as the famine and the Great TFR was only half of that of the rural areas (e.g., in
Leap Forward and peaked around 6.0 in the mid 1960s 1981, the TFR was 2.9 for rural areas and 1.4 for urban
during a brief economic recovery (see Fig. 8.1). After- areas, see Poston 1992).
ward, fertility began its sustained decline in China. In
1971, China started the wan xi shao program (later
marriages, longer intervals between children and fewer
The Trend of Population Aging
children), resulting in a steep decline in the total fertil-
ity rate (see Fig. 8.1). In the late 1970s, China under-
in Urban and Rural China
went a major leadership shift in the government. With
economic development as the primary agenda of the The very success of China’s mortality and fertility
country, the leaders were concerned with the detri- decline has accelerated the process of population
mental effect of rapid population increase on improv- aging in China. Political leaders gave little thought
ing the standard of living. As a result, a more intensive to this issue three decades ago, when all the attention
family planning program, known as the “one-child” was focused on controlling the population size. The
policy was launched in 1979. This program was and median age of the population increased from 23.9 in
remains a carefully drawn system of economic incen- 1950 to 32.6 in 2005, a 36 per cent increase in half
tives for one-child families and disincentives for larger a century (see Table 8.1). Under the United Nations’
families, with tremendous regional and local variations medium fertility and mortality assumption, it is
(Li 1995; Short and Zhai 1998; Winckler 2002). The projected to further increase to 49.8 by 2050, well
one-child policy was deemed a success, resulting in a above that for the U.S. (41.1) and the world (37.8).
70 per cent drop in fertility in less than twenty years, The proportion of the population aged 65+ in China
the fastest decline ever recorded in history. Research- was below 7 per cent prior to the 21st century but
ers have been careful to note that the reduction was not will quickly climb to 13.7 per cent in 2025 and will
only a consequence of government policy but also a constitute almost a quarter of its population by 2050.
response to social and economic development (Feeney Given the sheer population size of China, this figure
and Wang 1993; Merli and Smith 2002; Poston 2000; will translate into 329 million people over age 65 in
Tien 1984). 2050, a number that is ten per cent larger than the size
It is important to note that there are tremendous of the current U.S. population.
sub-national differences in mortality and fertility lev- As mentioned earlier, the rural-urban differentials in
els, particularly between urban and rural areas, with the timing and levels of mortality and fertility decline
the division arbitrarily enforced by the Hukou (House- have naturally led to divergent aging trends between
hold Registration) system. Due to differences in the these areas (Qiao 2001). Using the urban/rural defi-
standard of living and access to health care, urban resi- nition from the 1982 population census, Wang and
dents enjoy a life expectancy that is on average five Mason (2007) projected that 15 per cent of the urban
years longer than that of rural residents at the turn of population would be 65 years and older in 2017, while
the 21st century (Wang and Mason 2004). The fertil- the same figure would not be achieved in rural China
ity difference is even more pronounced. The fertility until twenty years later. However, massive rural to
gap between urban and rural population existed even urban migration that started in the 1980s may very well
prior to the implementation of the one-child policy, change the scenario. It was conservatively estimated
with a three-child difference between urban and rural that the size of the “floating population” (“temporary”
TFRs in the early 1970s (Poston 1992). The one-child migrants) reached nearly 79 million, according to the
policy was strictly implemented in urban China since 2000 census tabulation (Liang and Ma 2004). Tak-
the 1980s, whereas rural communities instituted a two- ing net out-migration into account, Wang and Mason
child policy (allowing for a second child when the first (Forthcoming) found that aging in rural China would
birth is a girl) in response to the desire for sons and in occur much faster and sooner, with the proportion of
the absence of a formal old age support system in rural the population aged 65+ reaching the level of the cur-
areas (Short and Zhai 1998). The rural-urban differ- rent urban population as early as 2009.
 160

Table 8.1 Selected indicators of trends of aging in China, the U.S. and the world, 1950 –2050

Proportion of 65+ Proportion of 80+ Median age Old-age Life expectancy

dependency ratio
China U.S. World China U.S. World China U.S. World China U.S. World China U.S. World
1950 4.5 8.3 5.2 0.3 1.1 0.5 23.9 30.0 23.9 7 13 9 40.8 68.9 46.6
(24,851) (13,043) (130,875) (1,559) (1,801) (13,780)
1955 4.6 8.8 5.3 0.3 1.3 0.6 22.5 30.2 23.5 8 14 9 44.6 69.7 49.7
(28,109) (15,073) (145,591) (1,893) (2,223) (16,080)
1960 4.8 9.2 5.3 0.4 1.4 0.6 21.8 29.6 23.2 9 15 9 49.5 70 52.5
(31769) (17,101) (161,594) (2,344) (2,643) (18,826)
1965 4.4 9.5 5.3 0.4 1.6 0.7 20.4 28.3 22.5 8 16 9 59.6 70.4 56.2
(32,057) (18,944) (178,349) (3,114) (3,154) (22,247)
1970 4.3 9.8 5.5 0.5 1.8 0.7 19.7 28.2 22.2 8 16 10 63.2 71.5 58.1
(35,806) (20,667) (203,114) (4,002) (3,837) (26,746)
1975 4.4 10.5 5.7 0.6 2.1 0.8 20.6 28.8 22.4 8 16 10 65.3 73.3 59.9
(40,830) (23,035) (231,660) (5,105) (4,690) (31,451)
1980 4.7 11.2 5.9 0.4 2.4 0.8 22.1 30.1 23.1 8 17 10 66.6 74.1 61.4
(47426) (25,871) (263,947) (4,329) (5,460) (35,948)
1985 5.2 11.7 5.9 0.6 2.4 0.9 23.8 31.4 23.8 8 18 10 67.1 74.6 62.9
(55,478) (28,423) (287,564) (6,111) (5,916) (43,691)
1990 5.6 12.2 6.2 0.7 2.6 1.0 25.3 32.8 24.6 8 19 10 68.1 75.2 63.7
(64,357) (31 283) (325,407) (7,839) (6,658) (53,044)
1995 6.1 12.4 6.5 0.7 2.8 1.1 27.6 34.1 25.7 9 19 11 69.7 76.5 64.6
(74,178) (33,403) (371,764) (8,821) (7,565) (61,571)
2000 6.8 12.3 6.9 0.9 3.2 1.2 30.1 35.3 26.8 10 19 11 71.5 77.3 65.4
(87,228) (35,078) (421,351) (11,373) (9,138) (70,254)
2005 7.6 12.3 7.4 1.1 3.6 1.3 32.6 36.1 28.1 11 18 11 72.6 77.9 66.5
(100,020) (36,710) (475,719) (14,766) (10,605) (86,648)
2025 13.7 17.7 10.5 2.2 4.1 2.0 39.5 38.3 32.8 20 28 16 75.3 80.2 71.1
(197,268) (62,069) (832,151) (31,560) (14,213) (160,219)
2050 23.6 20.6 16.1 7.2 7.3 4.3 49.8 41.1 37.8 39 33 25 78.7 82.4 75.1
(329,103) (81,547) (1,464,938) (100,551) (28,725) (394,224)
Note: Proportions and ratios in per cent, total numbers (in thousands) in parentheses.
Source: United Nations (Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat). 2005. World Population Prospects: The 2004
Revision Population Database. http://esa.un.org/unpp/.
F. Chen and G. Liu
8 Population Aging in China 161

Growth of the Oldest Old Population Filial Piety and Family Support

It is noteworthy that the growth of the oldest old Traditionally, respect for elderly was an integral part
(defined as 80+ years old) population will be most of the Chinese value system. Filial piety (xiao), a pri-
dramatic among the elderly population in the coming mary virtue cultivated by Confucianist teaching, was
decades. While the proportion of 65+ years old will the cornerstone in Chinese culture for thousands of
increase from 6.8 per cent in 2000 to 23.6 per cent in years (Fei 1992). Being filial means that children must
2050, the proportion of 80+ years old will grow even be deferential and completely obedient to their parents
more dramatically, from 0.9 per cent to 7.2 per cent during their lifetime. Moreover, sons bear the ultimate
(see Fig. 8.2). The share of the oldest old popula- responsibility of taking care of their aging parents.
tion will increase from 13 per cent to 30 per cent of The Chinese proverb “Yang Er Fang Lao (Having sons
the elderly population (defined as 65+) from 2000 to makes one’s old age secure)” is an accurate depiction
2050. This is indeed no trivial issue, as the oldest old of this cultural ideal.
are more vulnerable than the younger old in many After the communist revolution in 1949, most Con-
aspects – they are more likely to experience chronic fucian doctrines were regarded as feudal practices and
diseases, mental health disorders and functional limi- came under heavy attack. However, the notion that it
tations. As a result, the oldest old require more assis- was the children’s responsibility to take care of their
tance from family members, consume more medical parents was upheld by the government. The constitu-
services and need higher levels of physical, emotional tion of 1982 reiterated that it was the obligation of adult
and financial support than their younger older-adult children to support and assist elderly parents (Palmer
counterparts (Gu and Zeng 2004; Zeng et al. 2002; 1995). An adult child may face criminal charges for
Zimmer 2005). refusing to support an aged parent.
The first longitudinal survey on the oldest old Despite the strong position of the government, the
population in China, the China Longitudinal Healthy way in which the elderly are regarded is quickly chang-
Longevity Survey (CLHLS), was conducted in 1998 ing in China, as witnessed elsewhere around the world,
and was subsequently followed up in 2000, 2002 and with words such as “burden” and “dependence” replac-
2005 (see detailed description of the survey project in ing “reverence” and “wisdom.” A plethora of research
Zeng et al. 2002). Numerous published papers using has been done on the impact of industrialization and
the CLHLS data have called attention to issues such as urbanization as well as policy influences on the tradi-
the extent of functional limitations, the level of subjec- tion of filial piety. In the following section, we review
tive well-being, urban versus rural as well as gender the current status of the family support system in China
disparity in socioeconomic and health profiles and the as well as the enormous challenges it faces in the near
association between living arrangements and health future. We examine trends of living arrangements and
(Gu and Zeng 2004; Wu and Schimmele 2005; Zimmer patterns of intergenerational relations and exchanges
2005). Given the fast growth of the oldest old popula- in the context of remarkable demographic and socio-
tion, it is imperative to find out whether and how their economic transformations in China, with special atten-
needs are being met. tion paid to the rural-urban divide.

25 35
30 Percentage of
20 65+
25
15 20 Percentage of
80+
10 15
Percentage of
10 80+ among 65+
5
5
0 0
2000 2010 2020 2030 2040 2050
Fig. 8.2 Projection of the
proportion of the population Source: United Nations (Population Division of the Department of Economic and Social
aged 65+ and 80+ in China Affairs of the United Nations Secretariat). 2005. World Population Prospects: The 2004
2000–2050 Revision Population Database. http://esa.un.org/unpp/.
162 F. Chen and G. Liu

Trend of Living Arrangements ferentials in mortality rather than marital status. This
point is illustrated in Fig. 8.4, which presents statistics
on marital status of older adults (65+) from the 2000
Studies on living arrangements of the elderly popu- census. Marriage was nearly universal for both men
lation are essential to understand the structure of kin and women; divorce was rare; and longer life expec-
availability for support. Because coresidence with fam- tancy resulted in a much higher rate of widowhood for
ily members often means they are more likely to receive women than men.
support, living arrangements were often viewed as an A comparison of living arrangements of the elderly
indicator for well-being, despite mixed empirical find- population using the 1982, 1990 and 2000 census sug-
ings on the relationship between living arrangements gested that the level of coresidence seemed to decline
and health (Lawton et al. 1984; Sarwari et al. 1998; slightly in the 1990s (from 68.1 per cent in 1982 to
Zunzunegui et al. 2001). 59.0 per cent in 2000 for men and from 73.2 to 66.7
The 2000 census showed that the majority of per cent for women, see Zeng and Wang 2003). At the
the elderly population (both those with a spouse same time, the proportion of elderly men and women
or without a spouse) coresided with their children living only with a spouse increased considerably over
(either), with minimal urban and rural differences time (from 17.1 per cent in 1982 to 30.2 per cent in
(see Fig. 8.3). The percentage of the elderly popula- 2000 for males and from 11.7 to 21.7 per cent for
tion living with children but not with a spouse was females). Both trends suggest possibly increasing
higher for women than for men and the percentage of preferences of elderly parents to live independently
those living with a spouse (with or without children) (Logan et al. 1998; Logan and Bian 1999; Zeng and
was higher for men than women, reflecting gender dif- Wang 2003).

A
50
39
40 36.5
33.7
rural
30 26.3 25.6
urban
%

20 16.8
8.7 7.7
10
0.3 0.7 2.6 2.1
0
Living alone With spouse With spouse With children, Institution Other living
only & children not with arrangements
spouse

B
50 48.1
42.6 rural
40 urban
30
21.3 22.8 21.7
%

20 17.9
12.4
9.8
10
0.2 0.4 1.2 1.6
0
Fig. 8.3 A) Living arrange- Living alone With spouse With spouse With children, Institution Other living
ment among male older adults only & children not with arrangements
spouse
aged 65+ in China, 2000.
B) Living arrangement among Source: Zeng, Yi and Zhenglian Wang. 2003. “Dynamics of Family and Elderly Living
female older adults aged 65+ Arrangements in China: New Lessons Learned from the 2000 Census.” The China
in China 2000 Review 3: 95-119.
8 Population Aging in China 163

Fig. 8.4 Marital status of 80.0

72.6 Males
older adults aged 65+ in
China, 2000 Females
60.0
48.8 50.6

%
40.0

23.8
20.0

2.7 0.3 0.9 0.3

0.0
never married currently married divorced widowed
Source: China National Statistical Bureau. 2003. Tabulation on the 2000 Population
Census of the People’s Republic of China. Beijing: All China Marketing Research Inc.

Using census and survey data collected around are in need of help are cared for by family members
2000, Zeng et al. (Forthcoming) macro-simulated the (Davis-Friedmann 1991; Ikels 1997).
trend in elderly living arrangements under the medium In a recently edited volume on intergenerational rela-
assumptions on fertility, mortality, rural-urban migra- tions in contemporary urban China, Whyte (2003:306)
tion, marriage and divorce. Despite being a conser- concluded that “filial piety is alive and well in urban
vative estimate (given that it does not take changing China.” The claim was grounded by survey evidence,
preference into account), their projection showed that such as parents receiving consistent emotional and
the average household size would decrease from 3.46 financial support from adult sons and daughters,
persons per household in 2000 to 2.86 in 2020 and 2.69 strong filial attitudes and filial behavior expressed by
in 2050 and that the proportion of the elderly aged 65+ the younger generation, a relatively high coresidence
living in “empty-nest” households would triple that of rate and a high level of exchange between non-coresi-
the 2000 level. dent parents and children. However, he cautiously
noted that the traditional familial support system may
be endangered in the future, within the context of dra-
Intergenerational Exchanges matic decline in fertility, market reforms and global
economic and cultural influence.
and Relations In rural areas, the picture is perhaps not as rosy.
Scholars have long suspected that traditional family
To interpret the declining prevalence of coresidence values were seriously undermined in rural China dur-
as a collapse of the traditional family support system ing the collectivization of agriculture in the 1950s.
is obviously an over-simplification of a complex situ- During this process, land, a major type of private
ation. While coresidence is often considered the core property, was eliminated, which negatively affected
of support relationships between elderly parents and parental authority (Davis and Harrell 1993; Parish
adult children, intergenerational exchanges can eas- and Whyte 1978). Although the economic reforms
ily transcend the boundary of the household. Studies in the late 1970s restored the household as a basic
have documented that non-coresident children often production unit, the foundation for the authority of
lived close by, maintained a high level of contact the elderly had already eroded, with power shifting
and provided regular help to their parents, suggest- to the better educated and more resourceful young
ing the emergence of a “modified extended family” generation. Several studies on elderly support in
or “network” family (Bian et al. 1998; Chen 2005; rural China describe the weakening of filial prac-
Logan 1998; Logan and Bian 1999). The majority of tice and the increasingly vulnerable situation of the
the elderly population receives financial support from rural elderly. These studies report increasing early
their adult children (China Research Center on Aging (extended) household division, increasing numbers
1992). Similarly, most of the elderly parents who of elderly living alone, growing grievances from the
164 F. Chen and G. Liu

elderly and increasing incidences of failure to sup- in urban areas, due to the increasing burden of caring
port parents (Yang and Chandler 1992; Leung 1997; for older adults with longer life expectancy.
Wang 2004 a; Zhang 2004). The rates of institutionalized care in many East
There are ample reasons to believe that family sup- Asian societies are significantly lower than in West-
port for the elderly in rural China will weaken in the ern nations (Ikegami et al. 2003; Kim and Kim 2004).
years to come. The pressure of the demographic forces The major reason for the disparity is largely due to
alone is extraordinary. Rural China is yet to face the the cultural emphasis on the practice of filial piety
impact of the one-child policy, which will substantially in most East Asian societies, where frail parents are
reduce the number of children available to share sup- cared for by their children (especially daughters or
port duty in the next few decades. The unprecedented daughters-in-law). Currently, the proportion institu-
flow of rural-to-urban migration of the young genera- tionalized among the population aged 65 and over
tion has already created a geographic separation of is less than 2 per cent and is only about 1 per cent
adult children from their parents and thus may limit the among the oldest-old (aged 80 and over) in China
children’s capacity to fulfill their filial duties (Joseph (China National Research Center on Aging 2003;
and Philips 1999). China National Statistical Bureau 2003). According
to a recent report from the Ministry of Civil Affairs
(2005), about 15 per cent of institutionalized resi-
dents are non-Three-No elders (roughly 20 per cent
Government and Institutional
in urban areas and 10 per cent in rural areas), who are
Support for Elderly required to pay for admission and services.
Despite the increase in the number of elder care
As described above, the traditional family structure institutions and the changing social norms regarding
and family support system has undergone some major institutionalized care, a strong cultural stigma remains
shifts in China. Facing the possibility of an undermined attached to this living arrangement. While institutional-
informal old age support system, it is imperative for ized older adults often feel embarrassed that they are
the government to strengthen its role in public support. “abandoned” by their children, the latter face the charge
In the following section we outline three systems at of being “unfilial” by sending their parents to nursing
different stages of policy development, including insti- homes. However, the combination of an aging Chinese
tutionalized care, health care and health insurance and population, increasing number of young adults migrat-
old age social security. ing away from home for work and the weakening of
inter-generational relationships suggests that the rate
of institutionalization will continue to grow over time.
Increasing Role of Institutionalized Care Therefore, it is worth investigating the physical, men-
tal, political and social characteristics of institutional-
for the Elderly ized older adults in a traditionally family-care oriented
society. For example, a recent study by Gu et al. (2007)
Institutionalized care for the elderly has a very short shows that institutionalized oldest old are more likely
history in China. In the 1950s, the Chinese government to be younger, male, reside in urban areas, have lower
began to establish elderly homes in both rural and family-care resources and have poorer health than com-
urban areas (mostly in cities), primarily accommodat- munity-residing oldest old. While institutional care is a
ing the “Three-No” elders, who had no living children/ rational, effective and seemingly unavoidable supple-
relatives, little or no income and no physical ability ment and/or alternative for family care, it is also impor-
to work (Chen 1996). After the economic reforms in tant to consider whether current policies are achieving
1978, elder care homes began to accommodate non- their goals or whether individuals experience greater
Three-No elders. As a result, the number of elder care feelings of abandonment, loneliness, or other depressive
homes gradually increased all over China, particularly symptoms due to institutionalization.
8 Population Aging in China 165

Reform for the Health Care On another front, the government faces enormous
and Health Insurance System challenges in providing its population adequate access
to health care. While China has experienced phenom-
enal economic growth and a much improved general
As a society at the late stage of epidemiological transi- living standard in recent decades, access to health
tion, China is experiencing a rise in chronic and degen- care has become widely unequal. This increasing gap
erative diseases, which accounts for an estimated 80 is a result of the collapse or dysfunction of govern-
per cent of total deaths in 2005 (Wang et al. 2005). ment health insurance schemes in both urban and
Indeed, the aging of the population alone is predicted rural areas, accompanied by an astounding growth of
to lead to an increase of 200 per cent in cardiovascular income inequality (Grogan 1995; Hsiao 1995; Zhao
diseases between 2000 and 2040 (Leeder et al. 2005). 2006). For example, results from the 2003 National
The changes in disease patterns and improved life Health Services Survey showed that a large proportion
expectancy are also accompanied by increasing inci- of the population (nearly half of the rural population)
dence rates of disability with age. A sample survey in failed to receive needed in-hospital medical treatment,
2004 shows that more than a quarter of the adults 80 the average cost of which approaches one’s average
years and older were physically dependent, compared annual income (Zhao 2006). It is significant that Chi-
with around 5 per cent for those who were between 65 na’s total health expenditures rose from 3.2 per cent
and 69 years old (see Fig. 8.5). to 5.4 per cent of the gross domestic product (GDP),
These aging and health related issues are likely to while government health spending as a per cent of
become a long-term economic burden for the Chinese GDP declined from 1.1 to 0.8 per cent of the GDP from
society. The government has made serious efforts to 1980 to 2002. This suggests that the growing financial
tackle these problems from several different angles. burden of health care has largely fallen on the indi-
In terms of health education and preventive activities, vidual (Zhao 2006). The situation stands in sharp con-
the government started a series of policy initiatives of trast to that in the pre-reform era, when there existed a
chronic disease control in the 1990s and early 2000s, comprehensive level of basic health care provision in
including a national cancer control plan, intervention both urban and rural areas.
trials of diabetes and hypertension and the establish-
ment of the National Center for Chronic and Non-com-
municable Disease Control and Prevention (NCNCD) Reform in Urban China
and a number of demonstration sites for chronic dis-
ease prevention and control (Wang et al. 2005). The In pre-reform urban China, there were two main health
Ministry of Health also established a National Geriat- insurance programs financed by the government: the
ric Institute to conduct scientific research (Woo et al. Government Insurance Scheme (GIS), provided to
2002). government employees and retirees, staff in cultural,
educational, health and research institutes and uni-
versity teachers, staff and students; and the Labor
40.0 Insurance Schemes (LIS), provided to state enterprise
33.5
Males employees and retirees. Both systems extended full or
30.0 Females 25.0
partial coverage to immediate family members. The
20.0
%

13.5 14.9 GIS and LIS provided effective health care benefits,
10.0 8.0 9.7
4.4 5.2 including inpatient and outpatient services regardless
0.0 of expense. As for delivery of health care, there are
65-69 70-74 75-79 80+ street (sub-district), district and municipal level hos-
Source: China National Statistical Bureau. 2005. China pitals – a three-tiered system provided efficient patient
Statistical Yearbook 2005. http://www.stats.gov.cn/english/. referral for care in the most appropriate setting.
Fig. 8.5 Physical dependence among older adults aged 65+ in However, the market transition beginning in the
China, 2004 early 1980s brought major challenges to the health
166 F. Chen and G. Liu

care system in urban China (see review by Grogan (village stations, township health centers and county
1995). The breaking of the “iron rice bowl” (a Chi- hospitals). The CMS collected funds from households
nese term referring to occupations with guaranteed and communes and received small subsidies from the
job security, income and benefits) meant that state government. It helped to financially maintain and
owned enterprises were responsible for their own consolidate a network of health facilities and effec-
benefits and losses. Thus, bankrupted or poorly man- tively provided basic health care services to the rural
aged enterprises were often unable to provide health population. It was estimated that over ninety per cent
benefits to their workers. At the same time, the gov- of the rural communes were covered by CMS in the
ernment introduced a new set of health care system mid 1970s (Feng et al. 1995; Wang et al. 2005). How-
reform policies, which limited public funds avail- ever, the introduction of the household responsibility
able for health care, allowed for private ownership of system in the late 1970s led to the near collapse of
health facilities and clinical practices and encouraged rural CMS. With agricultural production being decol-
hospitals and other health facilities that were previ- lectivized, most townships and villages no longer had
ously fully supported by the government to cover the funds to finance CMS. Coverage by CMS was
their own operating costs (Rosner 2004). The gov- reduced to less than 10 per cent of the rural residents
ernment also attempted a series of pilot programs in in the 1990s, with the majority of the rural population
the 1990s to revamp the old health insurance system. having to pay out of pocket for health care (see review
Although there were wide regional variations, the by Liu et al. 1995). Rising medical costs negatively
central goal of the reform was that the government impacted the living conditions of the rural people and
and firms should no longer be responsible for most greatly increased the risk of illness-induced poverty.
of the health care costs, as they were before (Rosner Village health stations, once staffed by “barefoot”
2004). Under the new basic health insurance scheme, doctors and provided easy access to services for the
employees and their work units would jointly pay majority of the rural population, were sold to indi-
contributions to a social pooling fund and a personal viduals or were contracted to private practitioners,
savings account, with the amount of contribution with virtually no quality control of the services from
largely dependent on age, region and wage level. the local government (Cook and Dummer 2004). The
The recent health insurance policy changes helped number of village health workers and village and
to separate medical insurance from one’s place of town health care centers decreased considerably. Fur-
employment, gave patients more freedom in choices ther, inequality in access to health care facilities and
of medical facilities and promoted competition the health status of populations among rural commu-
amongst medical care providers (Dong 2001). None- nities widened.
theless, the new health insurance system had major Meanwhile, the central government adopted a lais-
limitations, including its failure to reduce inequal- sez-faire policy on rural health care and left the oper-
ity in health care access, increasing medical costs, ation and financing of the health facilities largely to
poor ability of the central government to implement the rural population. Starting in the 1980s, a number
the scheme and underfinancing of the social pooling of Cooperative Health Care Schemes (CHCSs) were
fund. Policy makers began to realize that a market set up by some local governments to deal with the
oriented approach to the health care sector may not issue of access to basic health care in rural areas but
be the best solution, particularly for the disadvan- they were concentrated in richer areas and were not
taged sector of the urban population. common at all. It was not until 2003 that a nation-
wide New Cooperative Medical Scheme pilot project
was implemented for the rural population of China
Reform of Cooperative Medical Schemes (CMS) (Rosner 2004). By mid 2006, 1399 pilot counties in
in Rural China 31 provinces (half of all counties) were set up (see
review by Wang et al. 2006). The goal of the govern-
Prior to the economic reforms, China achieved ment was to extend the coverage nationwide in 2008
remarkable health improvement for its rural popula- and to guarantee all rural residents with some sort of
tion through the rural cooperative medical schemes basic health care by 2010. The funding comes from
(CMS) and a three-tiered health care delivery system contributions from voluntary participants (roughly
8 Population Aging in China 167

0.5–1 per cent of their annual income), with addi- Pension Reforms in Urban China
tional support from the local villages and the central
government. The first nationwide pension system in China was set
While it is too early to evaluate the success of up in the 1950s by the central government. It only
these pilot programs, numerous studies noted various covered urban workers in state-owned enterprises and
sources of difficulty, including uncertainty in funding government staff. The system had defined benefits at
from the central and provincial governments, inability 50–70 per cent of workers’ wages and was termed
by poor residents to afford contribution despite its low as a “Pay-As-You-Go” (PAYGO) pension scheme,
premium, poor quality of services and overemphasis reflecting that state-owned enterprises contributed
on risk protection from catastrophic care while over- a portion of their payrolls to a labor insurance pool
looking basic health services (Wang et al. 2006). To to pay existing retirees. This scheme disintegrated
successfully cope with the rise in health care demands during the domestic turmoil known as the Cultural
associated with the rapid aging of the rural population, Revolution (1966–76). Pension payments were then
it is vital that the NCMS system should be improved managed by individual enterprises, with no system-
and promoted in the near future. atic intervention from the central government and
thus pension benefits and contributions varied greatly
from one enterprise to another (see review by Gao
2006). A restructuring of the state sector economy in
Pension Reforms the 1980s nearly dismantled the pension system. As an
effort to increase productivity, individual state owned
Besides the reform of its health care system, popula- enterprises became directly responsible for profits
tion aging makes the establishment of a well function- and losses. Their financial autonomy meant that they
ing old age security system another equally pressing often were either unable or unwilling to assume for-
task for the Chinese government. According to a recent mer pension liabilities. At the same time, economic
sample survey, only 34.1 per cent of the male popula- restructuring resulted in a rise in unemployment and
tion and 17.7 per cent of the female population was underemployment, leading governments at all levels
covered by any sort of pension scheme (see Fig. 8.6). to push for early retirement. For example, over half
In contrast, support from family members was a major of the employees who retired in 1999 in a number
source of financial support for older men and women. of big cities in China were under official retirement
With a falling ratio of workers to pensioners and pre- age, which added more burden to the pension system
carious funding situations, China is undertaking a (Huang 2003). In addition, the private sector of the
major overhaul of its old age security system in urban economy expanded rapidly after economic reforms,
areas and is introducing a new system for the rural with most enterprises not offering any old age pen-
population (where they were previously non-existent). sion to their employees.

68.4
70.0

Males
52.5
41.5 Females
34.1
%

35.0
20.3 17.7
17.5 9.2
2.4 2.3 1.7 2.5
0.0
Employment Pensions Support from Social Relief Others
Income Family Members
Fig. 8.6 Sources of support
among older adults aged 65+ Source: China National Statistical Bureau. 2005. China Statistical Yearbook 2005.
in China, 2004 http://www.stats.gov.cn/english/.
168 F. Chen and G. Liu

It is against this backdrop that the Chinese gov- challenges lying ahead call for the government to
ernment started a major revamping of the old age speed up the reform of its old age security system.
pension system in the 1990s (see review by Huang
2003; Gao 2006; Wang 2006; Zhu 2002). The gov-
ernment’s major goals were: first, to redefine the Introduction of a Pension System
enterprise financed pension system to a scheme that in Rural China
is financed by the government, enterprises and indi-
viduals; and second, to extend the coverage from In rural China, there was virtually no pension system
state owned and collective enterprises to essentially prior to the 1990s. A 1992 national survey done by
all urban residents. The Chinese government largely the China Research Center on Aging showed that 94
followed the World Bank’s three pillar financing sys- per cent of the elderly in rural areas had no pension
tem by including: 1) a basic pension plan to provide available for retirement (Qiao 2001). The elderly pri-
employees with a minimum level of benefit that is marily relied on their children for care and support.
financed entirely by the enterprise contribution; 2) a However, the informal old age support system that
mandatory defined-contribution pillar for accumulat- has worked well for thousands of years is endangered.
ing additional benefits by contributions via individ- With nearly two thirds of the population living in rural
ual contributions and enterprises; and 3) a voluntary China, the need to provide adequate support for the
pension pillar offered by private firms (World Bank elderly is acute, particularly under the pressure of
1997). The on-going pension reform, while ambitious declining numbers of children, massive rural-to-urban
in its goals, also faces enormous challenges on many migration by the young generation and the erosion of
fronts. These challenges include its narrow coverage, traditional family values.
a funding gap in the overall pension system, a large In the late 1980s, the government introduced a
amount of unfunded liabilities from the old pension number of pilot projects of old age social insurance
system, a huge disparity of pension coverage as a programs in some developed rural areas. Subsequently
result of the decentralized system and immature capi- the government proposed some basic principles for
tal market development. Finally, the rapid aging of rural social security insurance in the 1990s. The basic
the population in the next thirty years will also put a pension system for rural farmers was intended for
heavy toll on the work force in supporting the pen- those between 20 and 60 years of age. It was financed
sioners, particularly when the retirement age in China by voluntary personal contributions and supple-
is set to a low level (55 for most women and 60 for mented by a collective subsidy and was managed by
men). the county government (see review by Wang 2006).
None of the challenges will be easy to address. For Over 75 million farmers participated in the insurance
example, it seems obvious that the retirement age in schemes in 1997. However, a restructuring of the gov-
China was set too low considering that the life expec- ernment stalled the development of the rural old age
tancy is 70 and 74 years respectively for men and security system, with a decision by the State Council
women. However, raising the retirement age clashes to transform the existing system to a fully commer-
with the downsizing of the state sector and could cialized insurance program. In 2006, about 54 million
worsen the unemployment situation (Trinh 2006). rural laborers participated in the insurance scheme,
Recent statistics from the National Bureau of Statis- representing about 12 per cent of the total rural labor
tics suggest that only 46 per cent of urban employees force (Xinhua News Agency 2006).
were covered by a pension plan in 2004, with most The rural old age pension system, while still largely
of these employees concentrated in the state sector underdeveloped, has laid a foundation for its further
(Trinh 2006). However, extending the plan to all urban development. It is not only critical to the well-being
residents could adversely affect labor costs and con- of an aging rural population but will play a key role in
sequently wage and employment growth. The lack of integrating the rural and urban economies through the
incentives to participate by some private enterprises establishment of an individual contributory account
was explained by the fear that their contributions were system (Wang 2006). In the context of a widening
used to pay the pension liabilities of state owned enter- rural-urban income gap and massive rural to urban
prises. In sum, the road to a successful pension reform migration, it signifies one initial step toward easing the
in China is likely to be thorny but the demographic rural-urban divide.
8 Population Aging in China 169

Conclusion of benefits rather than the single defined benefit plan.

With the shrinking worker-to-retiree ratio as the popu-
lation ages dramatically in the next several decades, it
As recently as three decades ago, China’s primary pop- is crucial to make the urban pension reform financially
ulation problem was overpopulation. Paradoxically, sound. While promising in its direction, the urban
successful implementation of the family planning reform is saddled with problems, including burden
policy has effectively controlled the population size from the old pension system, reluctance to participate
but drastically speeded up the aging process, thereby by some individuals and firms due to concerns over
shifting the concern from “too many children to sup- the adequacy of funding and underdevelopment of
port” to “too few children to support a rapidly aging the investment market. Experts have suggested pos-
population” (Kaneda 2006). With a falling dependency sible routes of improvement, including liberalizing the
ratio and an increasing burden on the health care and financial market, centralizing the management of the
social security programs, China is under enormous pension pool and increasing contribution rates. In rural
pressure to meet the demands of an aging society. areas, the government has recently began to promote
This is a particularly challenging issue because its per an old age security system, which is primarily funded
capita income level is less than that of a quarter of the by a voluntary savings plan, with possible matching
other aging but more developed nations (Population from local government and rural enterprises. Still
Reference Bureau 2006). China is thus confronting the largely underdeveloped, an old age pension program
concurrent tasks of economic development and deal- is urgently needed in rural China to meet the demands
ing with population aging. How will China respond to of the elderly population, who were supported by an
the issue of “growing gray before growing rich”? Who informal old age support system (family) in the past.
will take care of the elderly? In addition to the pension reforms, the government
This chapter highlights some of the major chal- is also engaged in major reforms of its health care and
lenges that China is facing. We have shown that the health insurance systems. During its planned economy
demographic reality in the next two decades will make period, the Chinese government made great achieve-
it impossible to rely solely on the traditional family ment in providing basic health services to its population
support system for elder care. Rapid decline of fertil- despite its low economic development level. However,
ity leads to a reduction of family size over time. Even as an effort to stimulate economic growth and decentral-
without taking into account possible changes in norms, ize the economy, initial reforms of the health care sys-
the traditional living arrangement (parents living with tems proved disastrous. Examples include a collapse of
adult children, mostly with a son) cannot be sustained the Cooperative Medical System in rural areas, escalat-
in most families due to fewer available children. The ing costs of health care and growing inequality to access
4-2-1 family pattern, meaning four grandparents, of health care. In fact, a 2005 executive summary of the
two married persons (one couple) and one child will Ministry of Health openly referred to the reform so far
become increasingly common, making it difficult for as “unsuccessful.” The government is currently exploring
children to provide adequate support to family mem- different ways to strengthen government responsibility in
bers in need. The substantial rural-to-urban migration the reforms of its health care and insurance system.
will also make the situation worse in rural areas, where In addition to the on-going public health and social
the elderly are often left behind, sometimes even with benefits reforms, other policies that are demographic
the added responsibility of raising grandchildren in nature are also recommended by scholars as options
whose parents have moved to urban areas. to alleviate the increasing pressure from the aging
Facing the prospect of declining family-based old population, including relaxing the one-child policy,
age support, the government has taken the initiative to encouraging “rural-to-urban” family migration and
reform a failing old age social security system in urban reforming the hukou (household registration system)
China and to introduce a new system for the rural pop- (Wang 2004B; Qiao 2001; Zeng et al. Forthcoming).
ulation. The urban reform includes processes such as To meet the mounting challenges of population aging
a new financing scheme shared by the employer (work in the next few decades, comprehensive strategies are
unit), the employee and the government, expansion of needed to address the demand for old age support.
worker coverage from state enterprise employees to Despite the above mentioned difficulties, there are
the entire urban work force, as well as multiple plans numerous positive signs. Since the launch of the eco-
170 F. Chen and G. Liu

nomic reforms in 1978, China has experienced the China National Statistical Bureau (2003) Tabulation on the 2000
most persistent economic growth ever recorded around population census of the People’s Republic of China. All
the world. Despite some recent slowdown, the annual China Marketing Research Inc., Beijing
economic growth rate has been around 9 per cent and China National Statistical Bureau (2005) China statistical year-
book 2005. http://www.stats.gov.cn/english/
reached an unprecedented 13 per cent in several peak China Research Center on Aging (1992) Survey data on china’s
years (Lai 2003). Increasing state resources and indi- support system for elderly. China Research Center on Aging,
vidual savings provided a solid basis for the reform Beijing
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