‘Silver economy’ poised to extend senior care services

BY ZHANG DONG | 07-11-2024
Chinese Social Sciences Today

A senior couple meets with their family doctor. Photo: TUCHONG


As population aging accelerates, senior care has increasingly become a common social concern. Compared with other countries, China’s population aging is characterized by greater severity, quicker development, longer duration, and tougher tasks. The country faces the challenge of “getting old before getting rich and prepared.” 


Based on global experience, population aging not only poses challenges, but also presents opportunities. By seizing development opportunities from the “silver economy,” many countries have effectively satisfied diverse demands for elderly care, while advancing higher-quality economic development through industrial structural reforms brought about by the silver economy. 


In January 2024, the General Office of the State Council unveiled guidelines on enhancing the elderly’s wellbeing by developing the silver economy, the first document dedicated to supporting the silver economy in China. This policy responds to heightened demands for elderly care services in recent years, heralding a new stage of the silver economy in the nation. It is of great significance for China to actively cope with population aging, expedite the construction of a multi-level, multi-pillar old-age insurance system, and promote the high-quality development of the senior care industry. 


Huge potential of silver economy

Vigorously developing the silver economy is not only the key to improving the life quality of senior citizens, but also conforms to the trend of economic and social transformation. 


China was officially designated as an “aging society” in 2021. By the end of 2023, the number of people aged 60 and above had reached 297 million, accounting for approximately 21.1% of the total population. With the steady improvement of living standards, elderly people’s consumption attitudes and demands have upgraded continuously. They pay more attention to the quality and personalized nature of products and services, as their demands encompass medical care, life necessities, leisure and entertainment, and other fields. 


At the same time, the vast senior consumer group has provided a broad market space for the development of industries relating to the silver economy, which is pivotal to boosting China’s industrial innovation and economic growth, particularly driving the expansion of industries like life and health services, innovative medicine, and medical devices, while spurring the development of relevant services. 


On the policy level, China has provided significant support and guidance for the silver economy. Since the 18th CPC National Congress, high importance has been attached to population aging. While strengthening top-level design, a series of policy documents have been released to fuel the high-quality development of the silver economy.


First, proactively responding to population aging has been elevated to a national strategy, as the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 introduced “a national strategy in response to population aging.” General Secretary of the CPC Central Committee Xi Jinping has, on many occasions, urged efforts to energetically develop the silver economy and advance high-quality demographic development. Key departments have also promulgated several documents regarding fostering the silver economy, making arrangements and plans for specific “silver” industries and the senior care service system. 


Moreover, efforts have been made to adhere to the coordinated development of a proactive government and an effective market. Since the 18th CPC National Congress, the CPC Central Committee and the State Council have improved the performance of the elderly care service system to new levels. These policymakers not only proposed building a Chinese elderly care service system which coordinates home care and community services, but also made a list of national basic elderly care services, stressing the importance of fully leveraging the market mechanism and encouraging social capital to participate in silver industries to meet senior citizens’ diverse, high-level care demands. 


Supply-demand contradiction 

As living standards improve and the aging population expands, elderly people’s living needs have also been diversifying. Unfortunately, due to rapid population aging, those responsible for providing elderly care, such as families, society, and the government, are all underprepared. This had led to a mismatch between supply and demand in China’s senior care service industry, manifesting in challenges to financial security and service guarantees. 


First, the foundation for financial security is still not solid. China’s old-age security system can be divided into institutional and non-institutional security. Institutional security mainly refers to the pension system, while non-institutional security includes commercial pension reserves, labor income from continued employment, and transfer payments within families. However, under the impact of factors like population aging, China still faces complex problems in the construction of a sound old-age security system. The pension system in China is led by a public pension program, and the population covered by occupational and individual pensions is rather limited. As population aging progresses, the institutional dependency rate in China’s current pension system will keep rising, while people paying for old-age insurance within the system will further decrease. If the current system remains unchanged, China’s pension system will face great pressure. In addition, despite a wide variety of commercial old-age insurance products, there is a shortage of personalized products that meet varying needs of different groups. Meanwhile, the elderly care industry needs improvement overall. 


Second, service guarantees are imbalanced and inadequate, marked primarily by a misalignment between the content and demand for elderly care services. Current services are restricted to material factors such as basic living care and medical care, tilting towards basic survival demands. Senior citizens demand greater provision of such services as health care and the combination of medical and elderly care, but current market offerings are inadequate. Development- and psychologically oriented services like mental comfort, pension finance, legal counseling, and social participation opportunities are in even shorter supply. 


Furthermore, the structural tension between the insufficient effective supply of geriatric care beds and strong demand looms large, particularly the contradiction between the short supply of beds in public senior care institutions and poor sales of beds in private institutions.


Third, a shortage of professionals trained for geriatric care services coexists alongside severe brain drain. In 2022, there were roughly 44 million disabled and semi-disabled elderly people in China. This group’s demand for caregivers is far higher than current market supply, representing a massive shortage in geriatric care service personnel. Additionally, unsatisfactory pay, high labor intensity, heavy responsibilities, and low social status are also reasons for the severe undersupply of these workers. 


Chinese path to elderly care 

In the future, it is necessary to indigenize the development of elderly care services through the silver economy and give full considerations to two core aspects of the policy guarantee mechanism. First, elderly care service guarantee capabilities must be strengthened to lay a material foundation for meeting diverse service needs, and second, the form and content of services should be enriched to promote the high-quality development of the elderly care industry. 


Regarding financial security, multiple stakeholders should share the burden to consolidate resources reserved for elderly care. It is essential to further improve the pension system. A more efficient, balanced institutional framework for basic old-age insurance should be constructed by raising the retirement age, specifying the pension contribution base, and reforming the old-age treatment adjustment mechanism. Meanwhile, measures like establishing an automatic accession mechanism and enhancing tax incentives can be taken to expand the coverage and benefits of occupational and individual pension systems. 


Society should be encouraged to divert savings towards elderly care. It is crucial to focus on senior citizens’ need for financial services and accelerate the development of financial products for senior care to explore models like intergenerational elderly care, house-for-pension plans, and preventive pensions. Emerging technologies can be utilized to innovate universal financial products and retail finance services to better satisfy elderly people’s comprehensive demands for care services, a convenient life, transportation and travel, and culture, sports, and entertainment. 


With respect to service guarantees, multipronged measures are needed to amplify elderly care service content. It is first recommended to optimize the service model by improving the layout of service institutions, thereby making services more targeted. We should further refine supporting policies for home care services and intensify labor, material, financial, and policy investments to bolster the development of community- and home-based elderly care service institutions. 


It is vital to strictly implement documents relating to land use and infrastructure construction for elderly care services in communities to ensure that outlets of community- and home-based service institutions are reasonably configured. The supply of care services for people of advanced ages, senior citizens with disabilities, dementia, and who have lost their only children, “empty nesters,” and impoverished elderly people should be strengthened to enhance service accuracy and pertinence. Cooperative care by communities, homes, and institutions should be reinforced to extend professional services from elderly care institutions to communities and families, thereby practically improving the quality of care services. 


Moreover, we should intensify the research, development, and application of elderly care products. It is time to advance the construction of smart communities and inspire elderly care service institutions, social organizations, and enterprises to capitalize on emerging technologies such as the internet of things, cloud computing, mobile internet, and intelligent terminals to develop platforms like a call-from-home service system and emergency rescue networks for the elderly, better mobilizing various resources to provide online and offline elderly care services. 


It is likewise important to expedite the research and development of smart care products and encourage enterprises to actively harness new technologies, crafts, materials, and devices to develop products and services suited to the physiological and mental characteristics, as well as special needs of aged people. In the meantime, we should promote the application of intelligent nursing robots and housekeeping robots, vigorously develop the industry of rehabilitation assistive devices, and cultivate a batch of leading elderly care service enterprises which have their own characteristics, are managed scientifically, and provide standardized services, thus continuously enriching new models and new business formats for elderly care services and accelerating the high-quality development of the senior care industry. 


Zhang Dong is an associate professor from the College of Humanities and Development Studies at China Agricultural University. 


Edited by CHEN MIRONG