Can pensioners rescue China’s economy?

养老金能否拯救中国经济?

Economist

2025-07-31

9 分钟
PDF

单集文稿 ...

  • Inside Beijing's third ring road, Mr Li rides a scooter for FlashEx, a courier.

  • Now in his 40s, with two school-age children, he migrated from Henan province, roughly 600km to the south.

  • The capital's ring roads, he has discovered, are not paved with gold.

  • Competition has increased; fees have declined.

  • Of the roughly 8,000 yuan ($1,100) he makes each month, he saves more than half.

  • People like Mr Li pose a conundrum for China's economic policymakers.

  • If China's households feel insecure, they will not spend.

  • And if they do not spend, the country's ever more impressive industrial system will keep struggling to find customers.

  • The lack of demand has already saddled the economy with persistent deflation:

  • China's factory-gate prices have fallen year on year for 33 months in a row.

  • Falling prices can become a vicious circle, if they oblige companies to cut wages, further dampening demand.

  • On a recent visit to Henan,

  • China's leader, Xi Jinping,

  • urged officials to strengthen social security and improve public services.

  • Many macroeconomists agree: stronger social safety-nets would be good economically, as well as being good in themselves.

  • On July 28th, the government took a welcome step in the right direction with a new subsidy to boost births:

  • 3,600 yuan a year for families for each child under the age of three.

  • The government might look next to the other end of the life cycle.

  • If China spent another 1trn yuan on rural pensions, it would increase GDP by roughly 1.2trn,

  • according to Liu Shijin, who used to work for a think-tank attached to China's cabinet.