China Raises Retirement Age For First Time Since 1978, Sparking Social Fury

A few weeks ago, we warned that the entire Chinese experiment was on the verge of collapse because while on one hand the welfare state was crumbling due to Beijing’s stubborn insistence not to stimulate the economy at any cost (normally, it would be admirable to be so stubbornly insistent  on austerity but when austerity threatens social collapse, it may be time to reassess), this was accentuated by an explosion in social unrest as youth unemployment soared, and worker strikes surged across the nation.

While we detailed the various reasons that had pushed China to the edge of the abyss, one section was especially notable: our preview of what was the logical next step in China’s belt-tightening ways – raising the retirement age – and the obvious blowback storm it would generate.

In a key socioeconomic planning meeting concluded last month, the government vowed to improve the social security system by addressing the restrictions faced by migration workers. In response to the country’s aging population, it added that the statutory retirement age — currently 60 years for men and between 50 and 55 for women — would be raised gradually and voluntarily.

To this we added that there is, of course, zero historical record of a “centrally-planned civilization that has managed to raise the retirement age either “voluntarily” and without clashes, violence, and collapse in social cohesion, precisely the three things that Beijing fears the most.”

We concluded by quoting Yun Zhou, a social demographer and family sociologist at the University of Michigan, who warned that “for China’s urban workers, the talk of raising retirement ages is felt as a delayed, if not broken, promise of social welfare coverage” to which we counteded:

Which is precisely why Beijing will have no choice but to blink in the end, and that will mean unleashing a much delayed stimulus bazooka that likes of which have not been seen yet.

Fast-forward to today, when Beijing did just as we expected it would and, in a last ditch attempt to delay the “stimulus bazooka”,  announced it would raise the retirement age for the first time since 1978, a move that will help stem a rapid decline in the labor force but risk angering workers already wrestling with a slowing economy.

Top lawmakers endorsed a plan to delay retirement for employees by as long as five years, Xinhua News Agency reported Friday. Men will retire at 63 instead of 60. Women will retire at 55 instead of 50 for ordinary workers, and 58 instead of 55 for those in management positions. Come to think of it, it is absolutely insane that in China 50 is the retirement age for women. But now that China has finally figured out the brutal reality of its demographic implosion, the money printer comes next.