China plans 'bigger, stronger' social security fund to aid ageing society

People walk at a subway station during morning rush hour in Beijing, China April 11, 2024. /Tingshu Wang/File Photo

HONG KONG - China will beef up its 2.88 trillion yuan ($406 billion) social security fund, making it "bigger and stronger" to help support its rapidly ageing population as the number of new births and younger workforce to support its seniors shrinks.

The National Social Security Fund will "effectively" respond to population ageing and "improve the policy mechanism for the development of the elderly care industry," the fund's party secretary Ding Xuedong said in comments made in Communist Party newspaper, the Study Times on Monday.

Over the next decade, roughly 300 million Chinese will retire - almost the equivalent of the entire U.S. population. One in every two people aged over 65 in the Asia-Pacific region will live in China by 2040, Euromonitor estimates.

The fund, which was established in 2000, is a "strategic reserve fund for social security needs during the peak period of population aging and the ballast of my country's social security system," Ding said.

China has already entered a moderate aging stage, Ding said, adding that severe aging in the coming decade means the "urgency and difficulty of expanding and strengthening the strategic reserve fund are unprecedented."

The state-run Chinese Academy of Sciences sees China's pension system running out of money by 2035.

Ding said the fund will improve and expand the scale of pension fund investments, "actively disclose important financial information to the public" and carry out investments in an "open and transparent manner."

The disclosures aim to stabilise people's expectations of old age care, he said.

The fund will increase investment in the domestic capital market, "increasing long term equity investments in strategic and basic areas related to the national economy and people's livelihoods."

Investments will be increased in scientific and technological innovation and new quality productivity, key priorities for the government, Ding said.

($1 = 7.1363 Chinese yuan renminbi)