According to the statistical data, by the end of 2023, the number of retirees in China has exceeded 310 million, with urban retirees accounting for 45% and rural retirees accounting for 55%.
The financial expenditure on retirement benefits has reached 730 billion yuan, with urban retirees accounting for 93% and rural retirees accounting for a mere 7%.
If the retirement benefits for rural retirees were to be brought in line with those of urban retirees, an additional financial subsidy of 785 billion yuan would be required, which represents a staggering 3-fold increase in the fiscal deficit of 885 billion yuan. The tax revenue for the previous year stood at 159 billion yuan, which highlights the daunting task of balancing the fiscal books.
In discussions about fiscal tightening or loosening, one must consider the structural issue of fiscal tightening, particularly for vulnerable populations, which has led to a persistent downward shift in the consumption equilibrium.
If future macroeconomic trends prioritize shifting fiscal resources towards social welfare (vulnerable groups), an investment of 80-100 billion yuan per annum would be required, taking into account safeguards for maternity, unemployment, and other social benefits.
The benefits of such a policy would include reduced resident savings rates and enhanced circulation of aggregate demand. However, the costs would be substantial, including displacing resources from non-social sectors and significantly reducing the liquidity component within the system.
Over the years, China has seen a steady increase in debt-to-GDP ratio, mirroring that of the US. In hindsight, social welfare benefits should have been proactively improved years ago, rather than relying on the current reactive approach.
https://mp.weixin.qq.com/s/dLZpdH46hz1lIjQgx8pTvw