Why China is raising retirement age

BEIJING - China's pension fund will come under tremendous pressure to break even in coming years and as such, the government needs to gradually raise the official retirement age to salvage the finances, a top official said on Tuesday.

Yin Weimin, minister of human resources and social security, said the government will gradually raise the official retirement age, which is as low as 50 for some female workers, but stressed that any policy changes will be phased in over five years.

He did not say when retirement ages will be raised.

Analysts have long warned about China's state pension crisis and the severe funding shortage, with some estimating that the cash shortfall could rise to as high as nearly $11 trillion in the next 20 years.

Yin said the finances were not as dire for the moment, but warned about challenges ahead.

"The pension fund faces tremendous pressure in terms of breaking even in future," he told reporters at a news briefing on the sidelines of the annual meeting of China's parliament.

The fund's income stood at 2.3 trillion yuan ($367.3 billion) in 2014, exceeding its expenditure of 2 trillion yuan for the year, he said.

But in coming years, the proportion of Chinese over the age of 60 will rise to 39 percent of the population, from 15 percent now, Yin said.

That would depress the dependency ratio - the ratio of the number of people younger than 15 or older than 64 to the working age population - to 1.3 from the current 3.04, he said.

And as China's economy slows to an expected 25-year low of around 7 percent this year, Yin cautioned that the country's labour market will also face greater pressure.

Employment fell more year-on-year in January and February compared with the same two-month period a year earlier, he said, but added that he was confident China can still create more than 10 million jobs this year.

Chinese leaders have repeatedly said they will tolerate slower economic growth as part of the reform process so long as employment levels remain healthy.

And some officials have said the Chinese labour market held up last year despite the economic slowdown due to a fast-growing services sector, and brisk job creation in new emerging industries such as the e-commerce sector.

source: www.abs-cbnnews.com

China says Europe debt crisis is now 'critical'

BEIJING -- Europe's debt crisis has reached a "critical juncture", Beijing said on Monday, a day ahead of talks between Chinese leaders and European Union officials.

The crisis, which has triggered violent unrest in Greece, will top the agenda at the EU-China summit this week as Europe's leaders try to persuade Beijing to help resolve the continent's financial woes.

"China is concerned over it. The debt issue is at a critical juncture," foreign ministry spokesman Liu Weimin told a press briefing in response to a question about the crisis.

"We believe that as China's largest trading partner and the largest economy in the world (collectively), it is important for the European Union to resolve this issue.

"Apart from contingency measures, they should also push forward... structural and long-term reforms."

European leaders have previously called on China, which has the world's largest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken countries.

Beijing has so far made no firm commitment to provide financial assistance, but Chinese Premier Wen Jiabao said last month it was considering offering assistance through the International Monetary Fund or bailout funds.

Wen will hold talks in Beijing on Tuesday with EU president Herman van Rompuy and European Commission president Jose Manuel Barroso which are expected to focus on the crisis, following a wave of credit-rating downgrades and as Greece teeters on the brink of bankruptcy.

Barroso and Van Rumpuy will also meet with China's President Hu Jintao during the two-day summit, which takes place after lawmakers in Greece agreed late Sunday on a set of drastic austerity measures.

The agreement on the measures, which triggered street battles between police and protesters that left dozens injured, cheered markets and led the euro to rise in Asian trade.

Beijing has watched with increasing concern as the crisis has deepened, repeatedly urging EU leaders to get a grip on the situation and put their house in order.

The IMF warned earlier this month that an escalation of Europe's debt crisis could slash China's economic growth in half this year, and urged Beijing to prepare stimulus measures in response.

On Monday, the head of China's sovereign wealth fund said German Chancellor Angela Merkel had asked the country's investors to buy Italian and Spanish debt during a recent official visit to China.

Lou Jiwei, chairman of the China Investment Corporation, said more reform of those two countries was needed before China would invest in them, in comments reported by the Dow Jones news agency.

But he said the fund saw opportunities to invest in infrastructure and industrial projects in Europe.

Chinese companies and funds have ramped up their investment in Europe, buying up utilities, energy firms and even luxury yacht makers, in a move welcomed by some but eyed with concern by others.

The Chinese government has sought to calm concerns in Europe that a wave of investment by Chinese companies and government-backed funds will give Beijing too much influence over struggling European economies.

On Monday, the People's Daily, mouthpiece of China's ruling Communist Party, said in a front-page commentary that the country was not seeking to "buy out Europe".

source: interaksyon.com