China reduces senior citizen medical benefits because of a cash shortage.

The rallies, termed a “grey hair movement” by Chinese media, are yet another uncommon criticism of the government after the huge demonstrations over Covid lockdowns that erupted in November.

Hong Kong: In extremely unpopular steps that are stoking broad public resentment, China’s government, starved for cash after implementing an expensive zero-Covid policy, is going to increase the retirement age and decrease medical benefits.

Since January, thousands of senior citizens have demonstrated in the streets against significant reductions in monthly medical benefit payments. They have congregated in four significant cities throughout the nation, urging local authorities to overturn the judgments.

According to experts, the modifications are a part of a nationwide revamp that is primarily meant to offset shortfalls in public medical insurance funds that have grown as a result of spending for obligatory quarantines, mass testing, and other pandemic measures during the previous three years.

The rallies, termed a “grey hair movement” by Chinese media, are yet another uncommon criticism of the government after the huge demonstrations over Covid lockdowns that erupted in November.

The resentment would further erode public confidence in the Communist Party, which has already been tarnished by Covid lockdowns, financial scandals, and a housing crisis.

Chinese authorities seem to be concerned that these demonstrations may become worse.

After the rallies started in January, censors deleted hashtags for “Wuhan health insurance” from Weibo’s hot topics area. According to CNN, they also removed protest-related images and videos from social media.

Beijing’s latest initiative to raise the retirement age for all employees is stoking the fury.

Local governments spent almost three years implementing the now-defunct pandemic controls, which caused increasing costs even as their income from sources like land sales fell.

In 2022, Guangdong province and the city of Dalian said they will use public medical insurance money to pay for widespread Covid testing, which raised worries.

Shortly after, the National Healthcare Security Administration (NHSA) said that the funds shouldn’t be utilized in this manner and that local governments should pay for the tests out of their own budgets, which further complicated the situation.

At the time, state media indicated that several other localities had already used taxpayer funds for widespread testing. According to CNN, the studies raised concerns about the long-term viability of the already underfunded health insurance system.

Uncertainty exists over the precise amount that China has spent overall to uphold its stringent zero-Covid policy as well as the source of that funding. However, the vast amounts that at least 17 of the country’s 31 provinces have spent combating the epidemic have been made public.

The largest spender was Guangdong, the wealthiest province in China. It spent 711 billion yuan (USD 10.3 billion) in 2022, an increase of more than 50% from the previous year, on things like immunization, testing, and emergency compensation for medical personnel.

Beijing spent 30 billion yuan, while Zhejiang spent 43.5 billion yuan.

According to George Magnus, an associate at Oxford University’s China Centre, “local governments are running out of money, or in some cases, short of money,” CNN said.

“Funding zero-Covid was the most direct cause of the squeeze, but local finances are also failing for other reasons, particularly the rising cost of spending related to aging,”

Government finances have become worse, according to him, due to rising interest rates on billions of dollars’ worth of debt and declining property sale earnings.

Chinese researchers estimate that China’s total outstanding government debt may have exceeded 123 trillion yuan (USD 18 trillion) last year, of which almost 10 trillion USD is allegedly “hidden debt.” Some communities are unable to offer essential services like residential heating because of the severe debt crisis.

A significant component of China’s meager social safety net is its health insurance system. For active and retired employees in cities, it pays a percentage of medical expenses.

It includes of individual accounts that are financed by required contributions from employees and their employers, as well as a fund pool made up of employer contributions. The communal account is used to pay for hospital visits, while the personal account is used to pay for prescription drugs and other outpatient expenses.

Retirees get a monthly payout into their personal accounts from the common pool without having to make any contributions.

Payments to all personal accounts were lowered after the changes, which were put into effect beginning in January.

The elderly are particularly sensitive to the changes since they often have higher medical requirements. Retirees in Wuhan, a city in central China, saw monthly reductions of up to 70%.

According to CNN, the NHSA quickly responded to the demonstrations in Wuhan and the northeastern port city of Dalian by defending the policy and claiming that even though fewer individuals would have money in their individual accounts as a consequence, more money would flow into the group account.

However, to demonstrators, it seemed that local governments were using their own funds to make up for the communal pool’s shortcomings.

Longer term, the “grey hair movement” is a sign of a major problem the Chinese government is facing: how to care for a rapidly aging society where 400 million people, or 30% of the population, will be 60 or older by 2035.

As more people are retiring than are joining the workforce, the financial burden on China’s public health care system and other public services is growing.

A top government think tank predicted in 2019 that a declining workforce will cause the state pension fund to run out of money by 2035.

Workers may grow angry about inadequate pension and health care security since “[the] crunch affecting health insurance is only a stone’s throw away from the larger one affecting pensions,” Magnus said. “It’s possible that senior citizen protests will spread.”

The government is redoubling its efforts to increase the retirement age in order to solve the issue.

Li Qiang, the nation’s new premier, said in March that the government will carry out meticulous research and study before implementing a policy “at the right time.”

Tens of thousands of furious comments have been made in reaction to the revelation on social media.

People who were about to retire led the complaints, venting their rage at the possibility of delayed access to their pensions. Younger individuals contended that because of increased competition, they would have fewer employment.

Magnus said that a solution must be found about the financial capability of local governments to cover present and future age-related expenditures. Otherwise, “rolling crises, layoffs, and decreased delivery of public goods and services could result, which could cause political trouble.”

Local governments have a lot of expenses to cover, from public infrastructure to health care. However, three years of rigorous economic restrictions and a real estate crisis have depleted their funds, leaving them with a severe financial need.


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