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Chinese retiree protests reveal deeper problems

As China's population ages rapidly, the government increasingly has to make difficult political and fiscal choices.

The recent protests by Chinese retirees over cuts to health insurance benefits is a microcosm of a series of interconnected problems plaguing China, including an aging population, strained local government finances, inadequate social safety nets and high debt.

The direct cause of this protest is that some local governments, including Wuhan City, have promoted medical insurance reforms and reduced personal account rebates for medical insurance. Part of the funds paid into individual accounts under a mandatory health insurance contribution plan will be pooled into a public insurance fund. The move aims to use some of the surplus in these so-called personal accounts to meet growing public health needs, but elderly protesters argue the government is taking their savings.

With China’s rapidly aging population, which last year saw its first decline in decades, the government increasingly has to make tough political and fiscal choices. This is especially the case because China does not have a strong social safety net, and individuals already pay a relatively high proportion of health care costs out of pocket, and many have meager pensions.

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