Aging Chinese Face a Bleak Picture; High Rates of Poverty, Disability and Mental Illness Haunt Elderly, Pose Growing Economic Challenge

Updated May 30, 2013, 11:43 p.m. ET

Aging Chinese Face a Bleak Picture

High Rates of Poverty, Disability and Mental Illness Haunt Elderly, Pose Growing Economic Challenge



BEIJING—China’s elderly are poor, sick and depressed in alarming numbers, according to the first large-scale survey of those over 60, an immense challenge for Beijing and one of the greatest long-term vulnerabilities of the Chinese economy.

The survey of living conditions for China’s 185 million elderly paints a bleak picture that defies the efforts of the government to build what it calls a “harmonious society,” one dedicated to human welfare rather than simply economic growth. Of the generation that built China’s economic boom, 22.9%—or 42.4 million—live in poverty with consumption of less than 3,200 yuan a year ($522).

The fear of being old and poor, which prompts many Chinese to stash away their earnings, also cuts against another of Beijing’s priorities: to rebalance the economy toward stronger consumption.The survey, led by Chinese and international academics, covered 17,708 individuals across 28 of China’s 31 provinces and was partly funded by the Chinese government through a science foundation. While careful to credit the government with progress on expanding pension and health-care coverage, it also showed that physical disability and mental-health problems are widespread: Of those surveyed, 38.1% reported difficulty with daily activities and 40% showed high symptoms of depression.

International comparisons are made difficult by definitional issues. But rates of poverty, disability and depression in China all appear relatively high. The poverty rate for Americans aged over 65 is 8.7% according to the Census Bureau. The U.S. Health and Retirement Study found that 26% to 27% of elderly Americans had a disability, and depression rates are also markedly lower than in China.

John Strauss, a professor at the University of Southern California and one of the leaders of the project, pointed to China’s relatively low level of development as part of the explanation for higher poverty levels there. “We need to remember that China is still a developing economy, it is not yet a high-income country,” he said.

An aging population means the problems are compounded. The number of old people for every hundred working-age members of the population—known as the dependency ratio—will rise from 11 in 2010 to 42 in 2050, according to projections from the United Nations.

Other countries will also see a rise in the dependency ratio. But the pace of aging in China is particularly marked—a consequence of the one-child policy.

The survey finds that 88.7% of the elderly who require assistance with daily activities receive it from family members. But the one-child policy and the migration of many young people to China’s cities for work threaten to erode the traditional approach of children caring for elderly parents.

China is also unique in encountering a serious problem with aging while still a poor country. “Other countries are old and rich,” said Albert Park, a professor at Hong Kong University of Science and Technology and another survey leader. “China will be old at a relatively early stage in its development.”

Yu Baihui is one of many who have fallen through the cracks. Aged 73, Ms. Yu lives with her husband in a dilapidated house in Rensha, a town of 31,000 on the edges of Chongqing in western China. Like many of China’s impoverished elderly, she is a former farmer, too old to benefit from the booming economythat has swept the younger generation into China’s factories,and passed over by a benefit system that is skewed in favor of urbanites.

“My parents don’t have any pension or other allowance,” said Luo Zhengfeng—Ms. Yu’s son, who works selling umbrellas and tour maps in Chongqing to support his wife, child and aging parents.

China’s turbulent history also appears to have had an impact on the generation that lived through it. “China’s elderly experienced famine in the 1950s, and the disturbance of the Cultural Revolution,” said Mr. Park. “Those early experiences leave a marked impact on physical and mental health.”

In theory, respect for elders is deeply ingrained in China’s culture. Confucius, China’s cultural lodestone who has enjoyed a revival in popularity as leaders search for new sources of legitimacy, advocated the honoring of all old people.

On a visit to an old people’s home in Tianjin in 2009, former President Hu Jintao echoed those sentiments and set the tone for government pronouncements on China’s aged. “Respecting and caring for the elderly is not only a Chinese tradition, but also a symbol of national civilization and progress,” he said.

Mr. Hu advocated a more inclusive form of development, with expansion of public pension and health-care coverage. The results of the China Health and Retirement Longitudinal Study suggest those efforts haven’t so far been sufficient.

Widespread poverty in old age also undermines China’s attempt to put the economy on an even keel, with lower saving and investment and higher consumption. Despite rapid increases in wages—which rose 14% last year for workers in the private sector according to official data— households remain unwilling to spend. One reason: the need to guard against poverty in old age. “I hope the government is stung by conscience and puts more money into pensions,” said Cecilia Wang, a 30-year-old translator at a business magazine in Beijing, “but as they don’t we have to save ourselves.”

China has enjoyed some success in expanding the welfare system. Pension coverage for urban residents has expanded from 155 million in 2003, when Mr. Hu took over, to 304 million in 2012, according to data from the Ministry of Human Resources and Social Security. Pension coverage for rural residents has grown even more rapidly. But the benefits provided by the expanded schemes remain inadequate in many cases. The survey shows that on average, recipients of the government’s basic rural pension receive just 720 yuan a year.

More than 90% of the elderly population is now covered by health insurance, but out-of-pocket costs remain high. “Mom had a stroke last year, and the hospital charged 18,000 yuan, but we could claim back only 1,000 yuan from insurance,” said Mr. Luo, the Chongqing umbrella seller. The 17,000 yuan in out-of-pocket costs equaled almost half of his annual income.

“China’s government is aware of the problem and addressing it aggressively,” said Mr. Park. But there are few easy answers. With a growing number of elderly relying on a shrinking workforce, the existing system of care inside the family appears untenable. But more generous pension and health-care benefits risks putting a sharply increased strain on the public finances.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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