Chapter 25: The pension system in China: an overview
The obligations of filial piety (xiao) have traditionally had a special weight in Chinese societies, and they persist in modern China, where adult children show filial piety, not only by being respectful or obedient, but also by providing monetary support and care for their parents (Ng, 2002; Ng et al., 2000). Transfers from adult children are in fact the primary source of old age financial support in China, especially in rural areas. Recent social and demographic change has, however, called into question the ability of traditional family support mechanisms to meet the financial needs of tomorrow’s older Chinese. Dramatic economic development, together with increasing integration in international networks of trade and finance, has placed traditional Chinese society on a transitional and modernizing trajectory. The economic reform programme launched in 1978 has helped drive a shift in production from agriculture to industry; it has moved enormous numbers of people from rural areas to cities; and it has contributed to the decline in traditional extended family households. Modernization theory predicts that older parents will experience a decline in financial and other family support and an increasing need for public support (Burgess, 1960), and there is now emerging evidence for this erosion of traditional forms of support (Cheung and Kwan, 2009). China, moreover, is entering a demographic era that will be dominated by population ageing. The population is no longer young and its growth rate is approaching zero.
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