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Aging Opportunity

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Aging Opportunity

Can Western financial giants fix China's pension system?

The Wire China,

5 min read
3 take-aways
Audio & text

What's inside?

China’s pension system is in peril; foreign investment funds and capital markets could help.

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Editorial Rating

9

Qualities

  • Eye Opening
  • Overview
  • Hot Topic

Recommendation

When Chinese officials implemented the nation’s one-child policy in 1979, they failed to plan for the fiscal tornado it would unleash on the long-term health of the nation’s pension system. A destructive aspect is the “1-2-4 conundrum”: One worker having to financially support two parents and four grandparents. Journalist Sean Williams explores the Chinese pension architecture, its social ramifications, and the history, current state and future trajectory of Western financial involvement. Investors, business executives and financial professionals will find this an insightful analysis.

Summary

The Chinese pension system’s finances are precarious, as the number of retirees vastly outpaces the number of workers. 

Chinese officials face a fiscal dilemma in the country’s pension system: The nation’s aging population requires current workers to shoulder an increasing financial burden in support of retirees. The “1-2-4 conundrum” is a common scenario in which a Chinese worker must support “two parents and, on average, four grandparents.” This situation places considerable stress on workers as well as on retirees, and observers note that the root of the crisis rests in China’s one-child policy, implemented in 1979 and rescinded in 2016.

Stresses first appeared in 2002, when workers...

About the Author

Reporter and photographer Sean Williams’s work has appeared in The New Yorker, Harper’s Magazine, GQ, The Daily Beast, The New Republic, Wired and The Economist.

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