China is undeniably ageing, and to meet the needs of the growing number of the elderly, special policies will need to be put in place.

In fact, the country's economic hub Shanghai is leading the march towards old age, with the largest population of pensioners in the country.

As early as 1979, when the country's economic take-off had just begun, Shanghai had become an "aged society" according to the United Nations (UN) criterion, with 7.2 percent of its population at 65 years old or above. The UN benchmark is 7 percent.

Since 1993, Shanghai has seen its population growth stagnate and decline.

The national scenario is no less serious.

About 7 percent of China's population is currently 65 or over. But a recent Chinese Academy of Social Sciences report predicts this will rise to 14 percent within two to three decades. Large cities, such as Shanghai in east China and Dalian in northeast China's Liaoning Province, will face an even more severe situation, the report said.

It took 20 years for China to develop from an "adult" society into the current "aged" one. Researchers say the United States can expect this to happen within 60 years and in France, the time span is more than 100 years. These countries have a long time to lay down a solid social and economic foundation to cushion the social shocks that will doubtless emerge. China does not have this luxury.

The grey wave will pose severe challenges to social development. The smaller work force will have to shoulder more of a burden to provide pensions for the elderly.

The number of pensioners in China is rising by 3 million a year, and as a result, the ratio of social security payers to pensioners has risen from 10:1 in the 1990s to the current 3:1, according to Liu Yongfu, vice-minister of labor and social security.

In the countryside, where the ratio of elderly people to the entire rural population is higher than that of urban areas, the situation is more challenging since farmers, who earn much less than their urban cousins, are basically not insured by the social security net.

Pensions are not the only issue with an ageing population. An ageing society is also likely to drag down the economy. Japan, for example, has seen its economic growth decline since it became a so-called "aged" society in the 1970s.

The predicted population impasse in China in the forthcoming decades has led researchers and policy-makers to reflect on the country's past population policies. To many, the family planning policy may need finetuning.

Poverty combined with dramatic population growth risked eating up the country's limited resources, so China implemented the family planning policy in the late 1970s. Thanks to the policy, China has maintained a rational population growth rate in line with its economic and social development. But few policies are perfect, and China's family planning has brought some problems. The ageing population supported by a predictably decreasing number of adult pension contributors is among them.

Some experts have suggested the government increase the number of children couples may have from one to two, to ease the ageing population bottleneck in the future.

Currently farmers whose first child is female may have another child; in some urban areas, if the couple are both only children of their parents, they are permitted to have two.

A "two-child" policy will help increase the future young population to bridge the proportion gap between the young and the elderly. But such a drastic policy change will put pressure on China's already large population base of nearly 1.3 billion. As one Ministry of Labor and Social Security official put it, while an ageing society is looming in China, the large population remains the thorniest issue of this country. A balance should be struck between controlling the population growth and breaking down the ageing population bottleneck.

An overall strategic plan now should be drafted to adjust China's population policy. China has launched a high-profile population development strategy research program, which was approved by the State Council. The program will be conducted by 256 experts from major domestic research institutes.

While the research results are yet to come out, we can draw from the experiences of developed Western countries.

Western societies generally use three kinds of measures to offset the impact of an ageing population, according to Wang Dingding, economist from Peking University's China Centre for Economic Research. One is to improve the so-called participation rate of the population in employment, especially women. In China's case, however, the rate for women has always been high, Wang said.

The second choice is to raise the retirement age. There are rumours that China does indeed intend to do this in the near future, although official sources have denied such a scheme. In this way, however, the government risks giving the impression that it wants to transfer its own burden of paying pensions onto the shoulders of the people.

The policy, if it is adopted, will also go against the natural propensity of the people. An International Monetary Fund report, released in late September, said that in the second half of the 20th century, the life expectancy of Japanese men rose from 64 to 78, while the age at which they are willing to stop working fell from 73 to 67.

The last resort may be a transfer of laborers from rural to urban areas. Policies that encourage the free flow of labor between the poor rural and affluent urban regions should be fully implemented.

In Wang's view, the best policy to counter the adverse impacts of an ageing of population is to improve the skills of workers to make the most of them. In other words, investment in education may be one way to help solve the problem of a greying population in China.

(China Daily October 28, 2004)