Share on facebook
Share on twitter
Share on telegram
Share on whatsapp
Share on linkedin
Share on print
Share on email

Risk Watch: China’s Social Security Ministry in Deficit, Has Less than a Year of Pension Funds in 13 Regions

◎ The HRSS pension fund deficit is a ticking time bomb for the Chinese authorities.


The Ministry of Human Resources and Social Security’s (HRSS) 2016 annual report notes that it is running a considerable pension funds deficit: Thirteen regions have insufficient pension funds to pay workers for a year, while Heilongjiang Province is 23.2 billion yuan ($3.5 billion) in the red.

The backdrop: According to the HRSS report, China’s total pension fund expenditure for workers in the 32 provinces and regions grew 23.4 percent on year to 3.19 trillion yuan, while total incomes increased 19.5 percent from the previous year to 3.5 trillion. In other words, the rate of expenditure is growing faster than the salary of workers.

The regions that have insufficient pension funds for a year include Guangxi, Hainan, Hebei, Heilongjiang, Hubei, Liaoning, Inner Mongolia, Jilin, Jiangxi, Qinghai, Shaanxi, Tianjin, and the Xinjiang Production and Construction Corps. That means that over 40 percent of China is at risk of going into debt.

Between 2012 to 2016, the expenditure of China’s five social security funds has consistently been higher than the rate of increase in revenue.

Why it matters: The HRSS pension fund deficit is a ticking time bomb for the Chinese authorities. If the economy continues to worsen and retirees cannot withdraw their pension, this issue will ignite China’s long build-up of social problems.

Our take: The pension issue is one of the negative consequences of Chinese Communist Party rule. The one-child policy exacerbates the problems of China’s aging demographic, and creates a situation where fewer taxpayers have to fund an ever-increasing amount of retirees.

China’s pension deficit is also another legacy of the Jiang Zemin era. The problem is particularly severe in China’s three northeastern provinces, strongholds of the Jiang faction, owing to the policies and corruption of the regions’ officials. Younger workers are leaving the provinces in droves due to the difficulty of making a living there, while retired officials continue to draw large pensions while embezzling from the social security fund or making bad investments with it.

“Your publication insights tremendously help us complete our regular analysis on in-depth issues of major importance. ”
Ms. Nicoleta Buracinschi, Embassy of Romania to the People’s Republic of China
"I’m a very happy, satisfied subscriber to your service and all the deep information it provides to increase our understanding. SinoInsider is profoundly helping to alter the public landscape when it comes to the PRC."
James Newman, Former U.S. Navy cryptologist
“Prof. Ming’s information about the Sino-U.S. trade war is invaluable for us in Taiwan’s technology industry. Our company basically acted on Prof. Ming’s predictions and enlarged our scale and enriched our product lines. That allowed us to deal capably with larger orders from China in 2019. ”
Mr. Chiu, Realtek R&D Center
“I am following China’s growing involvement in the Middle East, seeking to gain a better understanding of China itself and the impact of domestic constraints on its foreign policy. I have found SinoInsider quite helpful in expanding my knowledge and enriching my understanding of the issues at stake.”
Ehud Yaari, Lafer International Fellow, The Washington Institute
“SinoInsider’s research on the CCP examines every detail in great depth and is a very valuable reference. Foreign researchers will find SinoInsider’s research helpful in understanding what is really going on with the CCP and China. ”
Baterdene, Researcher, The National Institute for Security Studies (Mongolian)
“The forecasts of Prof. Chu-cheng Ming and the SinoInsider team are an invaluable resource in guiding our news reporting direction and anticipating the next moves of the Chinese and Hong Kong governments.”
Chan Miu-ling, Radio Television Hong Kong China Team Deputy Leader
“SinoInsider always publishes interesting and provocative work on Chinese elite politics. It is very worthwhile to follow the work of SinoInsider to get their take on factional struggles in particular.”
Lee Jones, Reader in International Politics, Queen Mary University of London
“[SinoInsider has] been very useful in my class on American foreign policy because it contradicts the widely accepted argument that the U.S. should work cooperatively with China. And the whole point of the course is to expose students to conflicting approaches to contemporary major problems.”
Roy Licklider, Adjunct Professor of Political Science, Columbia University
“As a China-based journalist, SinoInsider is to me a very reliable source of information to understand deeply how the CCP works and learn more about the factional struggle and challenges that Xi Jinping may face. ”
Sebastien Ricci, AFP correspondent for China & Mongolia
“SinoInsider offers an interesting perspective on the Sino-U.S. trade war and North Korea. Their predictions are often accurate, which is definitely very helpful.”
Sebastien Ricci, AFP correspondent for China & Mongolia
“I have found SinoInsider to provide much greater depth and breadth of coverage with regard to developments in China. The subtlety of the descriptions of China's policy/political processes is absent from traditional media channels.”
John Lipsky, Peter G. Peterson Distinguished Scholar, Kissinger Center for Global Affairs
“My teaching at Cambridge and policy analysis for the UK audience have been informed by insights from your analyzes. ”
Dr Kun-Chin Lin, University Lecturer in Politics,
Deputy Director of the Centre for Geopolitics, Cambridge University
" SinoInsider's in-depth and nuanced analysis of Party dynamics is an excellent template to train future Sinologists with a clear understanding that what happens in the Party matters."
Stephen Nagy, Senior Associate Professor, International Christian University
“ I find Sinoinsider particularly helpful in instructing students about the complexities of Chinese politics and what elite competition means for the future of the US-China relationship.”
Howard Sanborn, Professor, Virginia Military Institute
“SinoInsider has been one of my most useful (and enjoyable) resources”
James Newman, Former U.S. Navy cryptologist
“Professor Ming and his team’s analyses of current affairs are very far-sighted and directionally accurate. In the present media environment where it is harder to distinguish between real and fake information, SinoInsider’s professional perspectives are much needed to make sense of a perilous and unpredictable world. ”
Liu Cheng-chuan, Professor Emeritus, National Chiayi University
Previous
Next