An Analysis of the Chinese Pension System Pointing to the Urgent Need for Reform

Xiao Zhang and Satish Chand

Chinese Economy, 2025, vol. 58, issue 2, 174-188

Abstract: The pension system in China exhibits variations in the level of benefits provided to the elderly, influenced by their residential and employment status. This article applies the welfare-state typology commonly used in developed countries to analyze the Chinese pension system. The analysis reveals that the amount of pension received by individuals is determined by their place of residence and the employer type, resembling the characteristics of the conservative type in international welfare-state typology. For instance, in 2015, former public servants received approximately four times the pension income compared to those from the nonstate sector. These disparities result in rural elderly individuals who retired from the private sector facing meager income during their retirement phase. Consequently, immediate measures are needed to establish a basic safety net for retired individuals lacking a basic pension, while medium- to long-term reforms are required to instill fiscal sustainability akin to the liberal Western model. This research highlights the necessity of addressing the inequities within the Chinese pension system, calling for both short-term and long-term reforms to ensure adequate support for the retired population. By drawing upon insights from international welfare-state typologies, this study provides valuable recommendations for policymakers to establish a more inclusive and sustainable pension system in China.

Date: 2025
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DOI: 10.1080/10971475.2024.2384168

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