Thursday, April 25, 2019

China's pension crisis

April 25, 2019 By Chriss Street

China faces the biggest pension crisis on the planet with its social security systems running out of money by 2035 and many provincial and business retirement funds already broke. Chinese Academy of Social Sciences released a study estimating that China’s main state-sponsored social security fund could be exhausted by 2035, or about the same year as actuaries for the U.S. Social Security Trust Fund estimate its fund will run dry.

But the more immediate problem for China is that nearly half of China’s 31 provincial regions expect to report operating shortfalls in their basic pension funds by 2022, compared to six in 2015. Despite federal subsidies, the northeastern China rust belt province of Heilongjiang was forced in to begin delaying pension payments in July 2018........... Read more

My Take - I subscribe to Geopolitical Futures, so I get regular updates on everything.....and I mean everything....going on in the world.  They also let everyone know what they're reading.  Phillip Orchard is one of the analysts there and posted this review of the book, China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle, By Dinny McMahon showing how China is in deep economic trouble with what he's calling shadow lending,  recognizing just how unstable is their banking system.  Orchard says:
In “China’s Great Wall of Debt,” Dinny McMahon..........ties together nearly all of China’s lurking demons — from shadow banking to ghost cities to zombie firms — explaining the underlying forces and pathologies fueling their spread, as well as Beijing’s limited options for dealing with them without risking an overcorrection that only accelerates the arrival of a crisis.
One thing is clear.  If there's any downturn in the world's economy China's paper tiger economy will collapse. 

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