At present, people 65 years or older make up about seven percent of China's population. That number is rising every year. It's predicted by 2050, China will see the peak of an aging population with those 65 and older will make up a quarter of the population.

The recently released "Report on Population and Labor" from the Chinese Academy of Social Sciences notes the aging population will bring about severe challenges towards social development.

It points out the aging population will put increasing pressure on the national finance and social insurance system.

One of the researchers and editors of the report, Cai Fang, addresses the importance of preparing ahead of time and improving the social insurance system for aged people.

"During our transition from a planned economy to a market economy, the responsibility of providing for the aged in China is being shifted from enterprises to the society. We have to work out a plan of building an old-age insurance system proper for China."

Currently, no more than half of urban employees pay into their pension fund, and about 80 percent of those who are retired draw money from their pensions.

As the aging population grows, so will pension shortages. This means the administration of charging and allocating old-age pensions also needs to be strengthened.

Cai Fang says in order to have enough social resources to meet the demands of an aging society, China will need to increase capital investment in educating the population, and try to keep a relatively steady economic growth rate for the next 20 years or more.

The problems will also be felt in China's rural areas.

Family size is shrinking, profits from working the land are becoming less and less, and the urban insurance system has not covered the rural areas.

Cai Fang names some of the urgent tasks to deal with the problem in rural areas.

"I believe two things should be done. In the long run, we should gradually establish a rural insurance system covering all the aged people there. And what we should do right now to solve the present problem is to set a minimum living standard for rural residents."

Cai Fang believes China has to finish these tasks in the coming two decades to successfully offset many of the problems we face with an increasingly older population.

(CRI July 6, 2004)