Yichang illustrates a new way to tackle aging

Improving the well-being of elderly people has long been the Chinese government's focus. To do so, the government has, in part, drawn on cooperation and experience-sharing with other countries and international organizations.

One such partner is the Asia Development Bank (ADB). With the backing of the Ministry of Finance and other government departments, ADB has been providing technical assistance and loan projects for Yichang city, Hubei Province since 2014 to help establish a sustainable eldercare system.

Operational knowledge and lessons regarding public-private partnerships, human resource development, and integrated care have been harvested from this long-term collaboration, promoting a elderly-friendly society in less-developed urban areas amid rapid demographic change.

Population aging challenges in China

Population aging challenges are accelerating across Asia, including in China which is home to the world's largest elderly population. More than 18.9 percent of China's population, or 267 million people, are 60 years old or above (according to the National Health Commission in 2022) and the figure is likely to reach 35.0 percent by 2050 (United Nations, 2022).

These demographic realities are already straining China's healthcare system. What is more, the average monthly pension for the country's elderly is 170 RMB yuan (about $25) in rural and urban communities, or a mere 6.12 percent of per capita disposable income in 2021. This amount barely covers basic living expenses for seniors in rural areas, where costs of living are lower.

The broader macro outlook is not encouraging either. With a diminishing working-age population, the elderly-support ratio (people aged 15-64 relative to people aged 65 or above) is projected to decline from 5.5 persons to 1.9 persons by 2050, meaning fewer than two people in 2050 will provide economic support for one person aged 65 or above, according to United Nations estimates.

Strengthening eldercare is critical to mitigating the vulnerability of China's seniors.

Insufficient capital hindering eldercare development

Inadequate financing is the first major hinderance to the development of the eldercare system, taking into account structural problems within the pension system. As the principal source of pension funds, basic pensions comprise about 75 percent of pension assets. The financial sustainability of the pension system could face severe pressure if incoming funding from salaried contributions falls short of covering outgoing healthcare expenditure.

The second problem for China's eldercare development is the shortage of providers. According to the Ministry of Civil Affairs, the current number of eldercare providers can only meet about 10 percent or less of market demand. Yet, high labor intensity, poor wages, and lack of social recognition are deterring people from pursuing a career in eldercare.

The increasing number of elderly people with disabilities and/or dementia, too, poses a big challenge to the eldercare system. In 2019, about 75 percent of China's elderly population suffered from non-communicable diseases, according to the World Health Organization. This shows that a high percentage of elderly people need integrated health and elderly care.

Facing unprecedented aging challenges, the Chinese government has implemented various policies, from labor market reform to a new private pension scheme. For example, in 2013, the State Council, China's Cabinet, launched labor market reform to incentivize employers who hired older workers and promoted the use of technology to address population aging.

New pension policy to help the elderly

In September 2022, the government announced a new private pension plan that will allow individuals to make voluntary deposits into a pension account and invest their pension money in stable financial products. And in March 2023, the government unveiled sweeping reforms in central government institutions, including shifting responsibility for aging population measures from the National Health Commission to the Ministry of Civil Affairs, according to China Global Television Network.

While these actions reflect a commitment to improve eldercare services and financial security, issues such as an unsustainable pension system and imbalanced and inadequate eldercare services persist. It is on this basis that the government is working with ADB as a source of technical assistance and loan projects for Yichang City, which is in turn emerging as an important guide for achieving a sustainable eldercare system.

From an aged society to an aging-friendly city

Yichang is a mid-level city in Hubei province with an elderly population that was 6 percent higher than the national average in 2020, according to Yichang local government data. The Yichang local government's ADB elderly care project, approved by the Ministry of Finance, combines three innovative approaches to address the city's population aging.

First, it promotes engagement with the private sector to support the development of the eldercare sector with capital and management through public-private partnerships, delivering quality services, and narrowing the gap between local fiscal capacity and increasing elderly care demand.

Second, the project's comprehensive human resource development programs have helped improve elderly care workforce education and training facilities, boosting the available workforce for industries and enterprises. particularly in geriatric medicine.

Third, the project focuses on integrated eldercare services and medical care support to meet elderly people's daily and special health needs. This includes treatment of acute and chronic diseases at local or nearby medical centers or hospitals, strengthening geriatric care, and improving the overall healthcare services for the elderly.

Correspondingly, the volume, quality, and depth of structures and programs in place for elderly in Yichang care have significantly increased. The number of elderly care beds in the city has also increased from 18,000 in 2014 to 35,520 in 2022, while the proportion of nursing beds increased from 22% to 63% during the same period (ADB, 2022).

In addition, more than 100 public eldercare centers and 176 home-based eldercare facilities have launched services, and almost all of them provide eldercare and healthcare services, as well as quality care services for the elderly with disabilities and dementia.

Why is the Yichang story important for the world?

Efforts to improve the well-being of the elderly in Yichang have been successful thanks to many factors, including the support of the central government. Yichang was recognized by the central government as one of the first group of “national key contact cities on tackling aging” in June 2022. The city today serves as a model for developing an effective eldercare system and senior citizen-friendly environment.

Yichang's success story could also help cities in China and other Asian countries with rapidly aging populations to build a workable eldercare system.

Yixin Yao is a senior research fellow at the Asian Development Bank Institute; and Benbo Yue is an intern at the same institute.

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