The International Conference on Poverty Reduction
Beijing, 16-18 May, 2000
Organized by the Government of China, the World Bank,
United Nations Development Program (UNDP) and
the Asian Development Bank

 

The Care of Elderly People

in China

 

Presentation by

  Mr Arne Svensson, President, Professional Management, Sweden

 

Background

China is not only the largest country in the world, it is also the country in which the Aged population is increasing most rapidly. At present, the population of the Aged is 132 million (10% of the population in China). The number of old people is increasing more than 3% every year. It is predicted that the population of the Aged in China will reach a peak of 374 million the year of 2040. In cities as Beijing and Shanghai and the provinces of Zhejiang, Jiangsu, Sichuan and Shandong the changes are even faster.  

According to Chinese tradition, most of the Aged are supported by and taken care of by the family. Along with the economic restructuring of the country and the birth control policy of China, most families have only one child.  It is predicted that within the next ten years, the typical Chinese family will have a structure of 4:4:2:1, i.e., the husband and wife foster one child but they will also have 4 parents and 4 grandparents to take care of. No matter how committed the younger couples are to support their parents and grandparents, in practice it will impossible for them to take care of them in a traditional way when they are becoming older. Hence, the responsibility for the care of the Aged by the society will increase.  Developing the social insurance systems and the social service provision for the Aged is of great urgency. 

The Chinese government has paid special attention to the development of social systems for elderly people. For strengthening the leadership for the work, approved by the State Council, the State Aged Working Commission was established in 1999. The Committee is composed of ministers of more than 20 departments coming from the Ministry of Civil Affairs, the Ministry of Labor and Social Guarantee, the State Commission of Development and Planning, the Ministry of Finance, the Ministry of Public Health, the Ministry of Construction, the Ministry of Education, the Association for the Aged, etc. The function of the Commission is to coordinate the work for the Aged nationwide and at the same time, it has placed the social service provision for Aged on the agenda of the 15th five years plan of national economy and social development.   

Social Insurance

In 1951, The Labor Insurance Regulation of the People's Republic of China was issued. At the beginning of the 1980s' a series of reform policies were carried out for the insurance system. The Labor Law issued in 1995 has promoted the insurance system. It has strengthened the coordination function among different regions and the state owned enterprises. It has proportioned the economic burden of the enterprises.  In 1997, the State Council issued a white paper Regarding the decision of set up the unified basic insurance system for the employee.  It stipulated that generally the proportion of the fee paid by the enterprise can not exceed 20% of the total amount of the salary of the enterprise (including personal pay). In 1997, the proportion of personal pay can not be lower than 4% of the salary. From 1998 it can raise 1% every two years. It is stipulated that 11% of the salary can be set up on a personal account. All personal pay is noted in the personal account. Along with the raise of the personal pay, the part paid by the enterprise will be reduced to 3%. The saving amount of personal account can not be expended in advance. It can be transferred to wherever the employee move. The system covers 84% of the employees.

It is important to support the efforts to gradually transfer the responsibilities from the enterprises to the community.  

The system of " three lines of social guarantee ", i.e., the basic living guarantee, the insurance of unemployment for the employees who are redundant and the basic living guarantee for the urban residents should be further developed. And the policy of " two guarantees "are carried out, i.e., the redundant and retired personal must get their total basic living expenses and pension on time. The measures adopted by the Chinese government is an important part of the social guarantee system. This has created a sound social environment for deepening the enterprise's reform and promoting the adjustment of economic structure and economic development.  This has played an important part in terms of "security net" and for maintaining the stability of the society.  

Care of the Elderly

The insurance fund for the Aged is in grave shortage. 25 of the 31 provinces, municipalities and autonomous regions have unfavorable balance of payments. The retired personals in areas with of financial problems and bankrupt enterprises can not get their pension timely and in full volume. Their life has been seriously influenced. As more and more people retire, the shortage of insurance fund has become even worse. 

According to incomplete statistics, the Governments on all level have established more than 120,000 welfare service facilities in communities nationwide. Among them more than 20,000 facilities are for the Aged. In recent years "Nursery for the Aged and Children" has been created -half for the children and half for the Aged - in Beijing, Tianjin and Changzhou.

Yet there is only 1.3 million beds in the Aged service institutions nationwide. It is far beyond the requirement. 

Along with the development of reform and opening to the outside world, the wishes and requests of the Chinese people has been changing. Most families are still accepting the way of taking care of the elderly at home. Social welfare institution, supported by the civil affairs department, has helped poor Aged without family to meet the basic requirement of living. Superior apartments are offered to those who are obtaining high income to meet their requirements. To move into apartments of good condition does not mean a so called " lose face", on the contrary, it becomes a new fashion for respecting the Aged in some places. 

An investigation by China Aged Scientific and Research Center and China Aged Foster Office shows that at present only 1% of the 132 million Aged population in China live in institutions for elderly people. The others live in different types of families
-         families of husband and wife 30%
-         “single family” 12%

Among them the number of families without children is 23 %. In some universities and research institutions, the number of families without children has reached 30% to 40%. For example, in Peking University, 1,500 families are without children. The Aged in these families need to be taken care of in daily life, get medical treatment, etc. 

The number of Aged over 80 in China has reached 10 million. The number is increasing 5% every year. The self-care capability of these Aged is declining - 70% are sick or handicapped. Nine out of ten is receiving medical treatment. Only 4% consider they have received the treatment they need.

Besides the small number of houses for respect of the Aged that has been built in recent years by the society, 90% of the beds are in welfare institutions built in 50s and 60s. Most of the institutions have no places for medical treatment, amusement and learning. 95% of the staff are not professionally trained. Owing to the simple facilities, insufficient service function, low level of services and the dull life, the Aged are not satisfied according to different rankings. 

Many Aged are willing to live in the service institutions for the Aged. Based upon investigations 5% of the Aged in Chinese cities are willing to immediately move into a service institution for the Aged. Above that 14% want to move to an apartment for the Aged later. 

The problem is that the existing Houses for the Aged are at China' s Luguan level. They can not meet the demand of the six qualities, i.e., quality of life, care, medical treatment, learning, contribution and enjoyment. The Aged are not any more satisfied with only having enough food to eat and warm clothes to wear. They want a rich and colorful cultural life and fairly good condition for their medical treatment.

Beijing has 1.75 million elderly inhabitants, but only 12,000 beds in houses for elderly. The number of Aged people who live in these institutions is only 0.6% of the total population. Yet the number of people who want to move to immediately the Aged institutions is 110,000. And the number of those who want to move to the Aged institutions later is 290,000.

Calculated by the current number of 132 million elderly persons it has been estimated that there is a need for 4 million to 6.6 million beds and related service facilities of medical health etc.  This means investments of nearly 200 billion to 400 billion yuan. Yet, the investment made by different levels of the government (Central, provincial, county, commune, etc) is only 1.5 billion yuan a year. The social welfare fund used for building the welfare facilities is only 5.1 billion yuan. Apparently, the investment made by the government can not meet the need of so many Aged people. The 132 million Aged people need clothes, food, house, transport, medical health articles etc. There is also a need for professional training of the employees. Along with China's entering WTO, it is important to open up the market of social services for the Aged to the investors coming from different parts of the world. 

Summary

China has more than 130 million aged people and 60 million disabled people. The number of aged people will increase rapidly. The new situation means that there will have to be a new balance between the families and the Governments responsibility for the elderly. This is extremely important especially for women who in most cases in practice have the responsibility for the care of the elderly people in the family.

As a part of developing a modern social welfare system there is work going on to formulate policies, laws, regulations and development plans on social welfare and organize and supervise their implementation.

Based upon the requirement of the Government Work Report  by Mr. Zhu Rongji, the premier of the State Council on the just closing Third Session of the Ninth National People's Congress,  close attention must be put to the following:

By every possible means, the Government must provide the basic pension timely and in full volume for the retired personals of the state owned enterprises. The Government will extend the coverage of the Age insurance to different kinds of enterprises in cities and raise the rate of payment of the insurance. The Government will have to pay close attention to solve the problem of default of the pension.  New default is forbidden. The Government will actively search the way of collecting taxes instead of collecting fees in terms of the Aged insurance. 

The Chinese government has clearly pointed out the importance of setting up the social guaranteed system with Chinese characteristics, which is independent from the state owned enterprises and the government departments. The coverage of the guarantee will gradually be extended to the whole society. The following is regarded as the key part of the work, i.e., establish and further develop the system of the Aged insurance, unemployment insurance and medical insurance. At the same time, the government is going to reorganize and standardize the Aged insurance system in the countryside and is actively searching the way of social guaranteed system which will fit the national conditions in Chinese countryside.  

The Government must readjust the financial expenditure structure and increase budget expenditure of the social guarantee. In 1998, the expenditure for the social guarantee is 96.5 billion yuan (9% of the financial capability). In 1999, the expenditure for the social guarantee is 122.9 billion yuan (10% of the financial capability). In 2000, the social guarantee is 147 billion yuan. The proportion of the expenditure in social guarantee will be increased 1% every year, and it will gradually increase to 15% to 20%, i.e., the financial expenditure of the social guarantee will be 220 billion to 300 billion yuan every year. 

Further development of the social guarantee system is an important precondition for deepening the reform and for developing a market economy.  And further more, it is the essential measure for maintaining the social security.  

For the process of socialization of social welfare, the Government will mobilize different forces and collect capital to set up service facilities for the Aged. The government will give support to the projects in terms of land use, tax collection, etc. Chinese Social Development and Social Security Association of the State Development and Planning Commission has made the decision to cooperate with organizations from foreign countries. 

It is recommended to establish a project aiming at setting up houses for elderly people as demonstration models for the care of elderly people in China.

Based on the information about social welfare systems for elderly people in other countries, China decided to invite a Swedish delegation a couple of years ago to discuss the possibility of establishing care of elderly people based on the Swedish experience.  Based on the discussions during the last three years both parties have decided to speed up the process with the aim to set up the houses for elderly as demonstration models as soon as possible.

In accordance with the current system of government financial administration, the central and local governments share the financial allocation for the care of elderly outside the family. Since the reform and opening, however, the new situation and the increasing demand for modern houses for elderly have initiated also a reform of the fund-raising mechanism in order to better solve social problems and improve the people's well being. Therefor China is looking for international co-operation with companies willing to make investments in the care of elderly people and - at the same time - improve the quality of living for elderly people. The companies involved should be specialized in the care of elderly people with a focus on quality and development.

This is a new market with new policies, new regulations and without any experience when it comes to foreign investments and development of modern houses for elderly people. Therefor the risk is extremely high for the companies involved. The Swedish companies involved in this project are willing to take that risk. But above that these first modern houses for elderly are aimed to be demonstration models. This means a lot of additional work to organize the care to make it possible to use the services as a demonstration model. This has to be taken into account in all the main documents needed to set up an Enterprise - Application report, Project proposal, Feasibility study report and Joint-venture (co-operative) contract.

The aim of this project is to make sure that the lessons of Experience from the demonstration models will have effects on the development of the care of elderly people in also the other provinces in China and the existing houses for weak and poor people in rural areas.

The general purpose of this project is to explore the possibilities to establish joint-ventures between China and Sweden within the field of care of elderly people and to learn the mechanism of social development in this field and the relationship between central government and local authorities and the co-operation between government and non-governmental organizations.

References

The Care for the Aged Undertaking is the Industry of the Rising Sun of the 21st Century -The Current Situation, Policy and Future Development of the Guarantee for the Aged Living in Retirement of China (Presentation at United Nations Global Forum on Local Governance and Social Services for All, Stockholm, 2-5 May, 2000 by Zhang Yuji General Director, Chinese Social Development and Social Security Association of the State Development Planning Commission).