Chinascope – Page 110

Ex PBOC Chief Admits Deficiency of China’s Pension System

The former Governor of the People’s Bank of China, Zhou Xiaochuan, has acknowledged that China’s current pension system is facing challenges due to the country’s large and aging population. Zhou made these comments at the “5th Global Wealth Management Forum” hosted by Caijing Magazine on the 25th. According to Zhou, the expansion of the pension coverage in China has created a shortage of funds, making it difficult for the national pension arrangement to provide adequate coverage. He suggested that, in the future, personal pensions will play a crucial role in supplementing the national pension arrangement.

Zhou stated that China’s personal pension system is good in terms of social discussion, but the incentives are weak. The existing personal income tax has some flaws, as a large proportion of individuals in China do not fall within the scope of paying a personal income tax. Furthermore, Chinese enterprises are not anxious to cooperate with the personal pension system due to the high cost burden. This affects their competitiveness. Although the social security funds paid by Chinese enterprises have been adjusted down by 4 percentage points, at 16 percent, the rate of payment is still high, compared to the world.

Regarding the extension of the retirement age, Zhou believes that while there is room to extend the retirement age, it cannot be extended as many years as desired. This involves the average health level and productivity of the elderly, and companies must also take into account the costs involved.

Source: Central News Agency (Taiwan), February 26, 2023
https://www.cna.com.tw/news/acn/202302260106.aspx

Briefings | | March 2, 2023 | Economy/Resources

Workers’ Daily: Promoting Young Elderly to Continue to Work to Benefit from the “Silver-Hair Dividends”

Worker’s Daily published an article to suggest getting the young elderly to continue working. “Young elderly” (低龄老年) refers to people who retired at a relatively younger age than others.

It recommends extending the retirement age. Currently China’s retirement age is 60 for male cadres and employees, 55 for female cadres, and 50 for female employees. The article didn’t give a specific age to which to extend the retirement age. Some other articles mentioned to extend it to 65 years old for males and 60 years old for females.

The article describes this retirement age delay act as a benefit for the “silver-hair dividends” (银发红利).

Source: Sina, February 20, 2023
https://news.sina.com.cn/c/2023-02-20/doc-imyhiqcv5194805.shtml

Briefings | | March 2, 2023 | Economy/Resources Government/Politics

China Announced that it Has Built 600 Million Buildings

China’s Ministry of Housing and Urban-Rural Development announced on February 15 that China has nearly 600 million buildings in cities and villages combined. The ministry spent 3 years and mobilized 5 million people (among whom 2.6 million are from the ministry itself), to cover all cities and all natural villages in China to get this result. The ministry has issued a digital ID to each building.

There are multiple interpretations of the 600 million number. One is that China’s housing is over-supplied. The authorities said 90 percent of the housing is from villages and only 10 percent are in cities. Assuming that is right and only 60 million buildings are in cities, and further assuming each urban housing has 16 units (4 floors and each floor has 4 units), that means China has 540 + 60 * 16 = 1500 million units or 1.5 billion units. China’s entire population is only 1.4 billion (without deducting the COVID deaths).

Another interpretation is that this housing census is to prepare the authorities to impose a real estate tax, as the government is running out of money.

Source: Epoch Times, February 24, 2023
https://www.epochtimes.com/gb/23/2/24/n13936935.htm

Briefings | | March 2, 2023 | Economy/Resources

ZhouXiaochuan: China’s Pension System Lacks Funding

Zhou Xiaochuan, a former President of the People’s Bank, (China’s Central Banker), recently said that China’s pension system does not have enough funding. Zhou made that statement on February 25, at the Fifth Global Wealth Management Forum. Zhou said that expansion of the coverage of China’s pension system and the aging trend make the current funding insufficient. The state managed funds can only provide rudimentary coverage. The gap needs to be covered by each person’s own individual retirement account (funded by that person himself).

Zhou said China’s pension fund reserve has a few trillion yuan. One can use the pension reserve as a percentage of the GDP to compare it with other countries. Many countries have a ratio between 50 and 100 percent. But China’s ratio is only 10 percent; some even say 6 percent, and some even say only 2 to 3 percent.

Source: Sina, February 25, 2023
https://finance.sina.cn/2023-02-25/detail-imyhxkkn8300424.d.html?oid=3933064046417508&vt=4&cid=76729&node_id=76729

Briefings | | February 28, 2023 | Economy/Resources Government/Politics

People’s Lives: Self-Employed Chinese Are Quitting the Social Security Program

Facing a big shortage in the government’s medical insurance system (partly due to COVID spending and partly due to corruption), many local governments have adjusted the medical insurance funds: The first adjustment was to cut the monthly payments to individual healthcare accounts for those who are company employees. The second was to cancel the monthly payment to self-employed people.

This triggered the public’s concern about the government’s changing its policy at will.

As a result, many self-employed people recently decided to quit their participation in the government’s social security program. The reasons: One, they cannot afford the monthly contribution of 1,492 yuan, while many of them have a monthly income of only three or four thousand yuan. Two, the government keeps adjusting the benefit payout plan. Some local governments extended the minimum contribution period from 15 years to 25 or 30 years, and there is a rumor that the government may defer the retirement age to 65. This means the participants will have many more years to contribute but fewer years to receive benefits. On a simple calculation without adjusting for inflation, paying 1,492 yuan per month for 20 years will end up contributing 358,000 yuan in total. If the retiree starts to receive a social security payment of 2,000 yuan per month at age 65, he needs to live to age 80 to break even, but the average age for Chinese is only 77. Thus many people may end up receiving less than what they contributed. Therefore, they would rather keep the money in their own account instead of putting it in the government’s account.

According to the National Labor Union’s statistics, in the year 2021, China had over 200 million self-employed people. Only 48.6 million, or 24 percent, participated in the social security program.

Sources:
1. 51.ca website, February 21, 2023
https://info.51.ca/articles/1186931
2. Radio Free Asia, February 21, 2023
https://www.rfa.org/mandarin/yataibaodao/shehui/gt2-02212023020155.html

Hot Topics | | February 28, 2023 | @CS Economy/Resources Government/Politics

Public Opinion: Why Can’t People Who Work Hard Have a Better Life?

Recently, an Internet posting triggered Chinese people to discuss whether work can lead to prosperity. Quite a number of people doubted it. This could be a sign that more people may choose Tang Ping (Lying Flat or Relaxing) in their lives.

An Internet video by two college graduates, one from a worker’s family and one from a farmer’s family, talked about the fact that, after working for five years, they were not able to save any money at all. Both of them had graduated from decent universities in China, Central China Normal University, Wuhan, and the Hubei Province and Communication University of China. One changed 12 jobs in five years and saved less than 5,000 yuan (US$720). One works as a cleaner in a restaurant. Both of them showed a positive attitude while facing a harsh life.

Many comments said that it was true that these days many college graduates can not find decent jobs and thus have struggled to make ends meet.

In another incident, the People’s Daily website published an article, “Do It Diligently and Life Will Become Sweeter and Sweeter.” However, many people questioned whether working hard will really get people a good life. One author used her own family’s example to explain. She said that everyone in her entire family, from her grandparents to her parents-in-law and then to her husband, all were extremely hardworking but they didn’t save much money, not to mention having a better life.

Sources:
1. China Digital Times, February 14, 2023
https://chinadigitaltimes.net/chinese/692967.html
2. Zhihu, February 16, 2023
https://zhuanlan.zhihu.com/p/607066570

Hot Topics | | February 24, 2023 | Economy/Resources

Local Governments Consolidate Offices to Save Money

As local governments are running out of money, they have started to try creative ways to cut spending. One option is to shrink the government. In Loufan County, Shanxi Province, a pilot reform county in the province, announced that it will cut down the county-level Party offices from nine to six, county-level government offices from 26 to 16, and county-owned business units from 133 to 104.

In Heilongjiang province, Yichun city and Qiqihar city have started converting a Street Office (街道办事处) into a Township Office (镇). China differentiates people into urban dwellers and farmland dwellers, where the former enjoy many more benefits than the latter. Townships are usually set up for farmland residents, while the street offices are inside a city and thus their residents are urban dwellers. Therefore, local governments have decided to convert Township offices into Street offices, which will then enjoy better treatment (government spending) in the areas of education, healthcare, and culture events, etc. However, the recent actions of reverting Street Offices back to Townships indicates that local governments are low on population and therefore are consequently losing revenue (budget). For example, Yichun City lost 270,000 people between the 2010 census and the 2020 census.

Sources:
1. Sohu, February 3, 2023
https://www.sohu.com/a/636769105_12017948423
2. Sina, February 10, 2023
https://k.sina.com.cn/article_6863045962_19911c54a019010kxn.html?from=movie

Briefings | | February 24, 2023 | Economy/Resources Government/Politics

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”

The CCP’s Performing Arts Troupes in the U.S.