It was after 9pm and the square between the Drum Tower and the Bell Tower was dark but halfway along the eastern wall hung a string of fairy lights. They were dangling from a motorbike festooned with coloured feathers that had a boom box strapped to the saddle.
It was playing Kemusan (Subject 3), a dance song with an updated Chinese folk melody and a western beat that has become a TikTok sensation over the past year. Two young women were performing the dance moves in front of the bike, swinging their knees, rolling their wrists, stretching their arms outwards and snapping them back in.
Nearby, a little boy was bouncing uncertainly on a pogo stick as his father watched from just over an arm’s length away. Other children were scattered in groups around the square, some of them swinging giant balloons shaped like a hammer.
In the northwest corner, a cluster of men were chatting and smoking with their T-shirts rolled up under their armpits and showing off their plump bellies. This style, known as bang ye (exposing grandfathers) or the Beijing bikini, is a favourite among older men as a means of staying cool in hot weather.
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A number of these men looked to be in their early 60s, an age at which in most countries they might face the prospect of having to get up for work in the morning. But men in China retire at 60 and women at 55, apart from those in manual labour who can finish up at 50.
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The retirement rules were set in 1951 and Chinese policymakers have been talking about changing them for more than a decade. There was supposed to be a blueprint in 2015 and again five years later and it was included in the reform agenda of China’s 14th Five-Year Plan for 2021-2025 but no concrete proposals emerged.
That may be about to change after the Communist Party’s Third Plenum, a five-yearly policymaking meeting, last month made a commitment to raise the retirement age. For the first time, the plenum adopted a resolution that set out the principles for reforming the system, fuelling expectations that this time the Party is serious about changing it.
In the four decades since Deng Xiaping’s reform and opening-up China’s average life expectancy has increased by 10 years, from 67.9 years in 1981 to 78.2 years in 2021. The number of people over 60 has more than doubled since the start of this century, from 126 million in 2000 to 297 million in 2023.
While the population over 60 is ballooning and is expected to account for 30 per cent of the total by 2035, the number of people of working age is shrinking. At the same time, China’s population is declining as its birth rate is falling, with 2023 seeing a record low of 9.02 million births.
China has a three-pillar pension system with 1.07 billion of its 1.4 billion people covered by a state-run, basic pension system. The other two pillars, private sector occupational pensions and private plans, are still marginal compared with the state-run system.
There have been mounting concerns about the financial sustainability of the state-run pension system, into which both employers and employees are required to make contributions. Contributions have risen in recent years but these increases have become a greater burden as wages have stagnated and businesses have been struggling.
There are stark inequalities within the state-run system too, so that rural residents and non-employed urban residents received an average monthly pension of just RMB204.7 (€26.15) in 2022. Those retiring from private companies took home an average monthly pension of RMB3148.60 (€402.17) while former government and public institution employees received an average of RMB6099.80 (€779.13).
The Third Plenum agreed to raise the retirement age gradually based on the principle of “voluntary participation with appropriate flexibility”. This means that people will be able to decide how long they want to work beyond their current statutory retirement age, with bigger pensions for those who delay retirement.
At the same time, the Party promised to expand care services for older people and to create a “childbirth-friendly society” by bringing down the cost of having children and raising them. China, which had a one-child policy for decades, instituted a three-child policy in 2021 and dozens of cities and provinces have introduced measures to support parents financially.
All of these measures will take a long time to make a difference to China’s demographic profile and raising the retirement age will also take years to implement. One reason for the Party’s hesitation is the high level of youth unemployment, which stood at 13.2 per cent in June, and fears that delaying retirement for older workers might make the problem worse.
The decision to make the system for delaying retirement voluntary as well as flexible also reflects a central fact about how the Party governs China. Even with a monopoly on political power and the ruthless suppression of rival sources of public authority, it cannot achieve much without at least the acquiescence of the people.