Monday, March 6, 2023

China's Pension System Screams Corruption And Failure

It is important to understand how China's pension system works because it reflects just how flawed the Chinese system is. The fact is China's population is rapidly getting older partly as a result of the one-child policy the country had for many years. This is a time bomb that will leave many older Chinese living with nothing. Having faith in a corrupt system generally yields little.

Most of the older people in China had better prepare themselves to work until they die. In this video, China Insights, puts a spotlight on how China's pension system is in big trouble. The numbers, even those from China's government, do not bode well or bolster the argument that life in China will be kind or soon get better for the average Chinese citizen. 

As an example, in one Provence the pension of some government and institutional sectors, which of course includes members of the CCP is around 25 times that paid to the average urban resident. Adding to the problem is that little money has been set aside to fund these pensions in the future, which means they are being paid "out of pocket" by a government that already has a slew of budget problems. 

The Graph Above Shows China Has An Aging Population

Chinese pension funds had a deficit of over 600 billion yuan ($93 billion) last year, due to tax cuts to help struggling firms amid COVID-19, according to the financial magazine Caixin. Recently the former President of China's central bank acknowledged the existing pension base is not good because of the large and aging population. The shortage of available pension funds means older people will need to rely more on "personal pensions" to supplement their income in the future. By bringing this up and letting the public know, he may have been testing the waters for a change in policy. 

The unfairness of China's pension system combined with funding issues is a bit ironic. Pension payments as low as one hundred yuan or about $14.60 do not go far. It is a slap in the face to all those loyal citizens raised believing in communism with the belief all the people of China would share equally in the wealth they helped to create. With this in mind, we have to think, the poor people living in rural areas should be prepacked to fend for themselves.

This dovetails with the failure of the Chinese Communist Party ( CCP ) to protect its citizens from bank fraud. In China, even when deposited in a bank, a saver's money can vanish in the blink of an eye with nobody taking responsibility. Considering how many Chinese investors have lost money during the housing collapse, the overall message is that the CCP does a poor job of protecting the money of its citizens. In short, when all is said and done, like most governments, China gets a big fail when it comes to taking care of its elderly.


(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)

1 comment:

  1. I agree that China has problems with pensions but if we pull back the curtain we look just as bad. I think one day, who knows when all of the ponzi schemes will be exposed.