Hong Kong (CNN) The Chinese government, which has been underfunded after years of costly measures to combat the coronavirus, plans to cut medical benefits and raise the retirement age.
Since January, thousands of seniors have taken to the streets to protest drastic cuts in their monthly medical benefits. They gathered in four major cities across the country and demanded that local authorities reverse the decision.
Analysts said the changes were part of national reforms aimed primarily at covering deficits in the public health insurance fund, which has since dried up. pay Mass testing, mandatory quarantines, and other pandemic controls over the past three years.
Chinese media hold demonstrations ‘Grey-haired movement’ is another rare denunciation of subsequent authorities widespread protest It grabbed the country in November against the Covid lockdown.
Anger is further undermine confidence in the Communist Party already undermined by Covid lockdown, bank scandal and a real estate crisis.
Craig Singleton, a senior fellow at the Washington-based Foundation for the Defense of Democracies, said: “Chinese pensioners see these latest reforms as another broken party promise and looming. He believes that facing China’s population crisis could have a major impact on quality of life.
Chinese officials appear concerned that these protests could spread further.
Censors removed the “Wuhan Health Insurance” hashtag from Weibo’s talked-about section after the demonstrations began in January. They also censored protest photos and videos from social media.
Fueling the anger is Beijing’s new move to delay the retirement of all workers.
miserable finances
For about three years, the local government bear the brunt This has resulted in a sharp increase in spending despite declining income from sources such as land sales.
Concerns ignited after Guangdong and Dalian announced that it will use the public health insurance fund to pay for mass Covid tests in 2022.
The problem was exacerbated shortly afterward when the National Health Security Administration (NHSA) mentioned the money. Please do not use In this way, local governments have to fund the tests with their own budgets.
At the time, state media reported that several other regions were already spending public money on mass testing. The report raised concerns about the future sustainability of an already underfunded health care system.
It’s unclear exactly how much money China has spent to maintain its ultra-strict zero-coronavirus policy, or exactly where the money came from. However, at least 17 of the country’s 31 states have revealed huge sums of money spent fighting the pandemic.
GuangdongChina’s richest province was the largest consumer. In 2022, he will spend 711 billion yuan ($10.3 billion) on measures such as vaccinations, testing and emergency benefits for medical workers, an increase of more than 50% year-on-year.
Zhejiang and Beijing spent 43.5 billion yuan and 30 billion yuan respectively.
“Local governments are underfunded, or in some cases underfunded,” said George Magnus, an associate at the University of Oxford’s China Centre.
“Zero-corona funding was the closest cause of the crisis, but local finances are also worsening for other reasons, especially the increased cost burden related to age-related spending.”
Interest burdens on trillions of dollars of debt and declining revenues from land sales are also hurting the government’s finances, he said.
China’s outstanding government debt may have exceeded 123 trillion yuan ($18 trillion) last year, of which Nearly $10 trillion is what we call “hidden debt.” According to Chinese analysts. Debt problems have deepened, making some cities unable to provide basic services such as heating.
A man undergoes a Covid test in Shanghai on January 7, 2023. After years of implementing a costly zero Covid policy, the Chinese government is running out of money.
make up for the shortfall
China’s health insurance system is an important part of its limited social safety net. Covers a portion of medical expenses for active and retirees in urban areas.
It consists of a personal account funded by mandatory payments from workers and their employers, and a pool of funds made up of employer contributions. Individual accounts are used to pay for medication and outpatient costs, while collective accounts are used to pay for hospital visits.
Retirees are not required to receive monthly payments by donating from the communal pool to their personal accounts.
After the reforms introduced from January, payments to all personal accounts have been cut.
Elderly people with high medical needs are more sensitive to change. In central Wuhan, the number of retirees has been cut by as much as 70% each month.
Shortly after protests in Wuhan and the northeastern port city of Dalian, the NHSA made a statement Defending the policy by saying that even if people put less money in their individual accounts, more money will flow into collective accounts as a result.
But it appeared to protesters that local authorities were reaching out to individual accounts to make up for the shortage of collective pools.
“The idea of extorting pensioners to repay the party for the costs associated with mandatory Covid testing and other expensive pandemic measures has never been accepted by the general public,” Singleton said. rice field.
Aging society
In the long run, the “grey hair movement” demonstrates the fundamental problems facing the Chinese government. That is how he will care for a rapidly aging society where by 2035 400 million people, or 30% of the population will be over the age of 60.
China’s public health system and other public services are under increasing financial pressure as retirees outnumber young people entering the workforce.
In 2019, a leading government think tank predicted that a shrinking workforce could deplete public pension funds by 2035.
“[The] A crisis affecting health insurance is only a stone’s throw from a larger crisis affecting pensions, and workers can be nervously shaken by poor pensions and health coverage. There is a possibility that protests by
To meet this challenge, the government is making a new push to raise the retirement age.
The country’s new prime minister, Li Qiang, said: In March, the government announced that it would conduct rigorous research and analysis to develop prudent policies “at the right time.”
The news has already sparked an outcry on social media, with tens of thousands of angry reactions.
At the forefront of complaints were those nearing retirement, who expressed anger at the prospect of delays in accessing pensions. Did.
“Something needs to be done about the financial capacity of local governments to meet current and future age-related costs,” Magnus said. “Otherwise, there could be crises, layoffs, and reduced provision of public goods and services that could lead to political upheaval.”
From healthcare to public infrastructure, local governments have many obligations to pay. But they are facing a severe cash shortage, with three years of draconian pandemic measures and a real estate crash running out of money.
Some municipalities may roll back health insurance changes after witnessing the uproar, but “some municipalities are really out of money and unable to find other sources of income. So you may have to do it no matter what,” says Frank See. Professor of Business Administration at the University of South Carolina Aiken.
— CNN’s Juliana Liu and Martha Zhou contributed to this article.
