China’s pension failings expose its harshest inequality

THE MORNING commute on line four of the Chongqing subway is, as anywhere, full of workers rushing onto the train and going downtown. But there is a crucial difference. The people are not destined for offices. They are farmers carrying large baskets laden with beans, tomatoes and more, as they head to markets. It is a scene that illustrates one of China’s marvels: a sparkling subway that links the countryside to the city. Alas, it also illustrates one of China’s glaring gaps: pitiful pensions that leave many rural elderly with no choice but to toil.

On a recent weekday morning Chaguan rode the metro and talked to Chongqing’s farmers about their lives. Many expressed gratitude for the relative convenience. The subway connection, just a few years old, allows them to go directly to customers, bypassing wholesalers and earning more. For people over 65 it is free. The markets charge a nominal fee, usually about five yuan (34 American cents), for the patch of ground from which they sell their produce. City inspectors, known for being strict, sometimes let farmers set up roadside stalls for a few hours without charging them. A merchant manning a cart of oranges says the city had become more permissive as the economy slows. “Farmers need to eat, too. You cannot crack down too much,” he suggests.

These humane touches cannot mask how difficult life still is. “Compared with the past, it’s the same hardship,” reckons one seller from behind a stack of lettuce. A wizened man, Mr Wei, says he forages in the wild to supplement his harvest of green scallions. “Carrying these all the way here to sell them for just a bit of money is not easy.” The metro is often just part of their journey. Chaguan accompanied one man back to his station in Shichuan village. From there he caught a bus deeper into the countryside, a two-hour journey in all. “If they couldn’t sell their vegetables, what else could they depend on to live?” said the bus driver.

That these senior citizens are still working the soil and making long commutes to eke out a living cuts to the heart of one of China’s most pressing economic questions. There is an obvious solution: the government should boost pensions for its farmers. The baseline payout for retirees who lacked formal employment—a category that includes almost all farmers—is 163 yuan per month. Compare that with the average monthly pension of 3,500 yuan for pensioners from urban enterprises or nearly 7,000 yuan for former state workers. These are, in truth, not the same concept. The pension for farmers is a fiscal programme, which serves as a safety-net. Urban pensions derive from individual contributions, including payroll taxes, as, in part, do public-service pensions.

The inevitable result, however, is an extreme difference in living standards. This sits uneasily in a country that celebrated a victory over absolute poverty in 2020. Although old folk in cities can look forward to a retirement of dancing in parks or travel, their rural peers are still hunched over fields. At China’s annual parliament last month, it was a hot issue. At least 34 representatives made separate proposals calling for an increase in rural pensions, a notable instance of how the gathering, often branded as a rubber-stamp legislature, can occasionally shine a light on real problems. The government has in fact raised the pension, but only marginally—by just 20 yuan per month for three years running.

Some proponents of higher pensions for farmers describe it as a matter of historical justice. Millions of rural residents spent their most productive years as migrant workers, building the apartment blocks, office towers, railways and roads that are the face of modern China. Moreover, many paid an agricultural tax that was later abolished. Should those payments not count as contributions to a national pension system? Others think that boosting rural pensions would be good for China’s economy by helping to boost consumption in the countryside.

Yet the most compelling argument is simple: a country that pledges “common prosperity” and holds its elderly in high esteem should not leave so many old people struggling to make ends meet. According to Wang Mingyuan, a researcher, more than 80% of China’s able-bodied rural residents between the ages of 60 and 80 are still working, primarily as farmers on tiny plots. That is not a dignified old age. China can and should do better.

Why does the government delay? Part of the answer is a resistance to creating a welfare state. Extra support for rural oldies could lead to demands for more hand-outs for the unemployed and the poor, which China’s leaders want to avoid. They also have fiscal concerns. Doubling rural pensions to a slightly more comfortable level would swallow about 3% of the national budget, a level that would require trade-offs, including less spending on the infrastructure that officials consider to be more important for the country’s future.

Recently, Lu Dewen, a scholar of rural affairs, wrote an essay against increasing pensions, arguing that the real crisis was ethical: children, not the state, should look after the elderly. In a sign of the emotions around this issue, Mr Lu’s essay encountered fierce pushback, with critics accusing him of being an out-of-touch expert. But his opposition to making rural pensions much more generous appears, for now, to be firmly in line with government thinking at the highest levels.

In Chongqing’s countryside, the politics of all this feel remote to a hunched woman in her 80s, preparing her hillside field for corn. Her son, who is there to help with planting, has a modest request: raise her pension to 500 yuan a month, roughly a sixth of what an urban pensioner receives, and she could finally put down her hoe. China, which built a subway all the way to her village, has yet to find the will to do that much. ■