Pension Reform in China: Racing Against the Demographic Clock

In the context of rapid demographic, political and economic change, the Chinese pension system has evolved from a scheme almost exclusively for urban and public sector workers to one with broad national coverage. However, this apparent success masks structural and governance deficiencies, which if left unresolved, could threaten the equity, adequacy and security of future retirement incomes. This article examines the key demographic challenges for China and their implications for the pension system. We then review and critically assess the current pension arrangements, including recent initiatives, and highlight likely future reforms. Overall, we advocate that the key to sustainable reform will be the establishment of a regulatory framework with well-defined governance structures for both publicly and privately managed pension assets.