(U) CHINA: DEMOGRAPHIC TRENDS AND THE PUBLIC

C O N F I D E N T I A L STATE 071045 NOFORN SIPDIS E.O. 12958: DECL: 07/09/2034 TAGS: PINR CH SUBJECT: (U) CHINA: DEMOGRAPHIC TRENDS AND THE PUBLIC POLICIES FOR THE AGEING POPULATION (C-AL9-01354) REF: A. SHANGHAI 000273 ¶B. BEIJING 001097 Classified By: SUZANNE MCCORMICK, DIR., INR/OPS. REASON: 1.4(C). ¶1. (C/NF) WASHINGTON ANALYSTS ARE CLOSELY MONITORING CHINA'S DEMOGRAPHIC TRENDS AND THE PUBLIC POLICIES THAT ARE BEING IMPLEMENTED TO CARE FOR CHINA'S AGEING POPULATION - INCLUDING PENSIONS, RETIREMENT AGES, NURSING HOME FACILITIES, AND HEALTH CARE INFRASTRUCTURE. BECAUSE THESE DEMOGRAPHIC TRENDS AND THE POLICIES IMPLEMENTED TO AMELIORATE THEM HAVE ECONOMIC CONSEQUENCES, ANY INFORMATION POSTS CAN PROVIDE ON THE REALITIES OF CHINA'S DEMOGRAPHIC, PENSION, AND ELDER CARE SITUATION AND ON HOW BEIJING INTERPRETS ITS DEMOGRAPHIC ISSUES AND POLICIES WILL PROVE USEFUL TO SERVE US POLICYMAKERS INTERESTED IN CHINA'S ECONOMIC OUTLOOK. ¶2. (C/NF) CHINA'S PENSION SYSTEMS ARE UNDERFUNDED AND CHINA WILL "GRAY" AT A MUCH LOWER STAGE OF DEVELOPMENT COMPARED TO OTHER DEVELOPED NATIONS. ADDITIONALLY, IN COMPARISON TO DEVELOPING NATIONS THAT SOMETIMES COMPETE WITH CHINA FOR LOW VALUE ADDED EXPORT MARKETS, THE RATIO OF WORKERS TO RETIREES WILL BE MUCH HIGHER, LIKELY INCREASING THE STRAIN ON BEIJING'S FISCAL RESOURCES AND HURTING CHINA'S COMPETITIVENESS. ANALYSTS SEEK ADDITIONAL REPORTING ON THE TOPICS AND QUESTIONS BELOW, AS TIME AND RESOURCES PERMIT. ¶A. (U) PRESENT RETIREMENT POLICY 1) (U) WHAT IS CHINA'S POLICY ON RETIREMENT AGE AND HOW DO RETIREMENT AGES DIFFER IN STATE-OWNED ENTERPRISES, PRIVATE COMPANIES, AND AMONG BUREAUCRATS? 2) (U) HOW ARE CHINA'S PENSION FUNDS AT THE CENTRAL AND PROVINCIAL LEVELS ADMINISTERED? 3) (U) WHO IS OBLIGATED TO PAY INTO THE PENSION FUND? WHO ACTUALLY PAYS INTO THE FUNDS AND WHO IS ELIGIBLE FOR BENEFITS, BOTH IN PRIVATE INDUSTRY AND IN THE STATE-OWNED SECTOR? 4) (U) WHO (IF APPLICABLE) INSURES CHINA'S PENSION OR RETIREMENT FUNDS? WHERE ARE PENSION FUNDS INVESTED AND WHO IS RESPONSIBLE FOR INVESTMENT DECISIONS? WHAT GOALS DOES THE NATIONAL SOCIAL SECURITY FUND HAVE FOR ITS INVESTMENTS, WHAT MEANS IS IT PURSUING TO ACHIEVE THESE GOALS, AND WHO IS DRIVING THESE DECISIONS? ¶B. (U) DEMOGRAPHICS 1) (U) HOW IS BEIJING CONSIDERING ADJUSTING THE "ONE CHILD POLICY" IN RESPONSE TO THESE DEMOGRAPHIC TRENDS AND THE ECONOMIC STRAINS THAT WILL RESULT FROM THE "GRAYING SOCIETY?" WHO IS MAKING THESE POLICY DECISIONS AND WHAT DISAGREEMENTS ARE THERE AMONG POLICYMAKERS ON THIS ISSUE? WHAT IS THE ROLE AND VIEWPOINT OF THE NATIONAL POPULATION AND FAMILY PLANNING COMMISSION, THE MINISTRY OF HEALTH, THE CHINA NATIONAL COMMISSION ON AGEING, THE CHINA FAMILY PLANNING ASSOCIATION, PROVINCIAL GOVERNMENTS, AND OTHER ENTITIES? ¶C. (U) CHANGES TO PENSION AND RETIREMENT POLICY 1) (U) TO WHAT EXTENT ARE POLICYMAKERS THINKING ABOUT CHANGING THE RETIREMENT AGE TO REFLECT THE AGEING OF SOCIETY? WHO IS ARGUING FOR OR AGAINST THESE CHANGES AND WHAT IS DRIVING THEIR DECISIONS? 2) (U) CHINA'S PENSION LIABILITIES ARE SUSPECTED TO BE LARGE, WHAT POLICY OPTIONS ARE POLICYMAKERS CONSIDERING TO ADDRESS THESE LIABILITIES? 3) (U) WHAT IMPLICATIONS DO CHINESE POLICYMAKERS AND THEIR ADVISORS ASSESS THE AGEING POPULATION WILL HAVE ON GOVERNMENT BUDGETS? WHAT CHANGES, IF ANY, TO GOVERNMENT BUDGET PRIORITIES, ARE THEY CONSIDERING TO DEAL WITH THE ISSUE OF AN AGEING POPULATION? ¶3. (U) PLEASE CITE C-AL9-01354 IN THE SUBJECT LINE OF REPORTING IN RESPONSE TO THE ABOVE QUESTIONS. CLINTON