CAI MENG/CHINA DAILY
For China to achieve Chinese modernization, the huge population base is a significant factor to focus on. Its aging population, which is relatively large on a global basis and still increasing, also requires efforts to properly address the situation. With an aging society that does not possess sufficient wealth to navigate the golden years, China may need a sounder pension system catering to the nation's specific characteristics to achieve Chinese-style modernization.
Aging issues normally occur alongside higher life expectancy and improved levels of overall health. The view of China's imbalanced life expectancy and wealth levels actually points to a miracle in healthcare advances. Life expectancy in China stood at 65.9 years in 1978, yet its per capita GDP that year was less than one-third of that of the average sub-Saharan African country in 1978. New China, which began in 1949, has indeed created a health miracle of increasing life expectancy by 30 years within 30 years.
The reason why such low income levels could coexist with such high life expectancies during those three decades was mainly due to efforts in three aspects, namely, the three-level medical preventive healthcare system in counties, townships and villages; barefoot doctor services; and a medical system cooperative. A three-level medical preventive healthcare system refers to one supported by hospitals in counties, clinics in townships and exam rooms in villages. Barefoot doctors, though mostly not highly educated, have the basic medical knowledge and to see simple diseases and provide simple treatments. With a cooperative medical system, rural residents can be reimbursed for medical treatment.
Such efforts helped the nation lift its life expectancy at the early stage of its development to a relatively high position globally. However, in terms of its GDP level, compared to developed economies, China has to make more efforts of late. In 2019, there were 70 high-income countries, and 28 of them had a per capita GDP of half or more than that of the United States. With a target of achieving Chinese modernization, the nation's per capita GDP should also reach this level.
If calculated in terms of purchasing power parity, China's per capita GDP in 2019 was 22.6 percent of the US. To make the figure half of that of the US by 2049, China's annual per capita GDP growth must be 2.7 percentage points higher than that of the US. The average annual per capita GDP growth in the US over the past six-plus decades has been 1.8 percent, which means that China's per capita GDP growth must reach 4.5 percent per year for the 30 years from 2019 to 2049.
China's economy has been on a rapid growth track since 1978, with an average annual growth rate of 8.9 percent. Such an unseen growth miracle in human economic history is considered by many to be a result of the demographic dividend that China previously enjoyed. Nowadays, due to an aging trend and a decrease in population, the demographic dividend is gone. Debate thus often centers around the topic of whether China will be like Japan, which, with its graying population, will see an economic growth rate hovering between 0-1 percent.
According to our research, there are 53 countries with a moderately aging population, and 27 of them have seen their per capita GDP reach half or more of the US level at the time when their population started aging. While the other 26 countries failed to record a per capita GDP at such a level when their population started to age.
In countries of the former group, economic growth declined only slightly in the first decade of population aging. In those of the second group, the economic growth rate was still increasing after the population grays, as the education level of their labor force was still improving, and the effective labor force was increasing, which is conducive to technological innovation and industrial upgrading. Therefore, although China is facing the same situation as the latter group, judging from the experience of other countries, it is possible to maintain medium-to-high economic growth as long as the right efforts are deployed to this end.
Such a situation will not necessarily put a strain on the economy amid the process of promoting Chinese modernization. It is necessary to think about how to build a suitable pension system with Chinese characteristics for the huge elderly population. In this case, China can learn from the experience of the three-level medical system and build a new one that is more suitable for China's current pension system and demographic makeup.
First, the government can further promote the three-level system, especially in urban areas based on districts, blocks and communities. Efforts should be made in accordance with the actual healthcare needs and accessible conditions of seniors to enhance the current eldercare system in order to provide basic senior services to as many elderly as possible.
Second, teams of eldercare workers, similar to that of barefoot doctors in the past, could also be launched. Such workers can pay routine visits to families with eldercare needs and provide necessary assistance.
Third, the nation should promote a home-based eldercare system supported by community mutual aid and a senior care system cooperative. The reason why home-based care can work in China is because filial piety is a long-valued traditional cultural practice. In rural or urban areas alike, where the elderly live in relatively concentrated areas, mutual assistance and cooperation are entirely possible. With this approach, coupled with commercial pension institutions, a pension system with Chinese characteristics can be established to function as a pillar supporting China's modernization drive.
The views do not necessarily reflect those of China Daily.
The writer is dean of the Institute of New Structural Economics at Peking University. The story is a translation version of his article published on China Civil Affairs.
