According to the latest United Nations’ World Population Prospects and data from China’s National Bureau of Statistics, China recorded 9.54 million births in 2024, a sharp fall from the 17.86 million births recorded in 2016. Total fertility rate has also fallen to 1.01 in 2024, well below the replacement level of 2.1. Over the medium and long term, both the number of births and the fertility rate are expected to continue declining. The demographic dividend that once powered China’s economic rise has long faded, driving a deeper transformation across productivity, societal structures, and industries.
Do opportunities lie amid these demographic headwinds, and how can limited public resources support a sharply rising demand for eldercare? In an interview with FTChinese.com, Stuart Gietel-Basten, Professor of Social Science and Public Policy at Hong Kong University of Science and Technology, emphasised that while governments must continue to provide core social protection, financial and insurance entities are also increasingly positioned to help supplement and build a comprehensive social security system.
China has one of the fastest growing ageing populations. In just 21 years, China went from being an “ageing society”, where 7% of the population is aged 65 and above, to an “aged society”, where that proportion doubles. In comparison, it took Japan about 24 years to make the transition. This demographic pressure places significant strain on public finances, the labour market, and the social security system.
“If China continues to rely on a 20th century economic model centred around low-quality labour, unreformed retirement systems, and limited productivity growth, it will be disastrous,” Prof. Gietel-Basten warned. The demographer also noted that the conventional threshold age of 65 as the start of “old age” stems from century-old European pension systems and no longer reflects contemporary realities. “Sixty today is completely different from sixty in 1950,” Prof. Gietel-Basten said, “Old age should be defined by remaining life expectancy, not arbitrary age cutoffs.”
He also highlighted that with the increase in literacy rates, younger cohorts in China have more years of schooling, stronger professional skills, and greater digital literacy than their parents. Investments in education, workforce upskilling, and technological innovation have significantly increased the marginal productivity of labour.
This means that even if the workforce shrinks, total economic output may not decline proportionally, as workers are far more productive.
An approach to incorporate labour force participation, education-driven productivity, and health status into demographic assessments may provide a far more feasible and realistic understanding of the economic implications of ageing.
A simplified version of this framework includes:
This approach is not just theoretical. China has spent decades building strong foundations in education, healthcare, infrastructure, and technological capacity. With appropriate institutional design, these quality improvements can mitigate some of the pressures of aging.
Thus, scholars like Gietel-Basten maintain a cautiously optimistic view: despite falling fertility and rapid aging, China still has room to sustain economic and social development through productivity gains, institutional reform, and technological innovation. These structural shifts also create substantial opportunities for forward-looking life insurance companies.
For Prof. Gietel-Basten, government remains the “last line of defence” in an ageing society—not just fiscally, but in safeguarding social equality and intergenerational trust. When a society becomes unable to prevent older adults from falling into poverty cycles, social cohesion erodes, intergenerational tensions deepen, and public confidence declines. Ensuring that older people can live with dignity is therefore essential.
China’s basic pension system now covers more than a billion people, reflecting wide coverage and inclusiveness. Yet, Prof. Gietel-Basten notes that benefit levels remain low and cannot fully meet the increasingly diverse needs of older adults. The World Bank similarly argues that China must develop a robust multi-pillar pension system comprising of occupational pensions and individual retirement plans, to ensure long-term sustainability and intergenerational equity.
Examples from across Asia provide valuable insights. Singapore has built a comprehensive, mandatory-savings system centred on the Central Provident Fund (CPF), complemented by occupational schemes and the Supplementary Retirement Scheme (SRS). Contributions are allocated across accounts for housing and insurance, long-term investment, and healthcare, providing a diversified foundation for retirement security.
Hong Kong’s Mandatory Provident Fund and Malaysia’s Employees Provident Fund operate on similar principles, with joint employer–employee contributions and long-term capital accumulation.
However, Gietel-Basten cautions that the key issue in pension design is balancing sustained contributions with stable long-term returns. Treating pension investment or elderly-care industries as short-term profit opportunities risks distortions and undermines long-term service quality. Industry leaders such as Taikang, with more than two decades of experience, demonstrate the importance of stability and long-horizon planning.
Government responsibility for older adults goes beyond cash benefits. Investments in healthcare, mobility, and community infrastructure shape seniors’ daily quality of life. “Ageing in Place”, supported by community-based care, smart-home technologies, and accessible transport, aligns with Chinese cultural preferences and reduces reliance on institutional care.
Education and human capital development are equally critical. Without a productive and employable younger generation, the pension system cannot remain sustainable. Reforms in exams, education systems, and vocational training therefore directly affect long-term demographic resilience.
Finally, Gietel-Basten highlights China’s institutional advantage: policy piloting. China routinely tests pension finance models, long-term care schemes, and community-care innovations at the local level before scaling them up. This flexibility allows risk-controlled experimentation in managing population ageing.
The government alone cannot meet the enormous and growing demand for elderly care. By 2027, China’s elderly-care sector is projected to exceed 20 trillion yuan, with finance and insurance playing central roles. This underscores not only a vast market, but also that the solution to aging will hinge on institutional and financial innovation.
Gietel-Basten notes a clear trend. “Insurance companies are no longer just selling products, but providing services across the entire life cycle,” he observes.
Companies such as Taikang are building long-term partnerships with clients by integrating savings, healthcare, elderly care, and risk protection across life stages—from youth wealth accumulation to midlife health management, to retirement income and long-term care. This “lifecycle services” model is becoming a strategic direction for China’s financial and insurance industries.
To earn public trust, companies must ensure transparent fees without hidden or complex charges, securely manage funds and long-term savings, and offer flexible, portable products that adapt to changing life circumstances. Taikang’s philosophy of “long-termism,” championed by founder，chairman and CEO Chen Dongsheng, reflects this broader shift from a product-centred model to a service-oriented, long-horizon approach to customer engagement.
China’s financial market also offers distinctive advantages for innovation. As Prof. Gietel-Basten contends, “Even tiny premiums become enormous funds when two hundred million people participate. That is China’s unique potential.”
Combined with advances in artificial intelligence and digital transformation, innovations such as micro-insurance, low-cost annuities, inclusive health insurance, and personalized pension planning are reshaping the financial architecture of elderly care.
AI and digital technologies are driving improvements in:
Yet Prof. Gietel-Basten cautions about the risks of digital inequality: “If only smartphone users benefit while those without digital skills are left behind, we solve one problem but create another.” Digitalisation, he argues, must therefore be accompanied by broader accessibility.
Ultimately, no single actor—government, markets, families, or communities—can shoulder the challenges of aging alone.“We cannot rely solely on the state or the market. Individuals, families, communities, enterprises, and government must act together.”
The challenge for China is not simply to grow old, but to grow old with dignity. Through institutional innovation, financial reform, and sustained social investment, China has an opportunity to turn demographic pressures into a new driver of social progress and public well-being.