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The government of China is making extremely unpopular decisions that are causing a great deal of public resentment, CNN reported. China’s government is cutting medical benefits and planning to increase the retirement age because it is short on money after enforcing the expensive zero-Covid policy.
Since January, thousands of seniors have demonstrated in the streets against significant reductions in monthly medical benefit payouts. They’ve collected in four significant cities across the nation, urging local officials to overturn the judgements.
According to analysts, the adjustments are a part of a national overhaul primarily designed to cover deficits in public medical insurance funds that have been depleted after spending for mass testing, mandatory quarantines, and other pandemic controls over the previous three years, CNN reported.
Following widespread protests against Covid lockdowns that erupted across the nation in November, the demonstrations, dubbed a “grey hair movement” by Chinese media, are yet another uncommon rebuke for the authorities.
The resentment might further erode public confidence in the Communist Party, which has already been tarnished by Covid lockdowns, financial scams, and a housing crisis.
Officials in China seem concerned that these demonstrations might get worse.
Following the start of the protests in January, censors removed references to “Wuhan health insurance” from the Weibo hot topics area. They also removed protest-related images and recordings from social media, according to CNN.
some other areas, according to state media. Concerns about the long-term viability of the already inadequate health insurance system were raised by the stories, according to CNN.
It is unclear how much money China has spent overall to uphold its stringent zero-Covid policy or where that money originated from. However, at least 17 of the nation’s 31 provinces have made public the astronomical amounts they’ve spent combating the pandemic.
China’s wealthiest province, Guangdong, was the biggest spender. It spent 711 billion yuan (USD 10.3 billion) in 2022, a more than 50% rise from the previous year, on things like vaccinations, tests, and benefits for medical professionals in need of an emergency.
Beijing and Zhejiang each paid 30 billion and 43.5 billion yuan, respectively.
According to CNN, George Magnus, an associate at Oxford University’s China Centre, “local governments are short on cash or, in some cases, out of cash.”
The funding for zero-Covid was the immediate cause of the crisis, but there are other factors at play as well, most notably the growing cost of spending linked to ageing.
Government finances have gotten worse because of rising interest costs on trillions of dollars’ worth of debt as well as declining property sale revenues, he claimed.
Chinese experts estimate that the total amount of outstanding government debt in China may have exceeded 123 trillion yuan (USD 18 trillion) last year, with nearly 10 trillion dollars of that amount being so-called “hidden debt.” According to CNN, the debt crisis has become so severe that some towns are unable to provide even the most basic services, like heating homes.
The restricted social safety net in China is significantly bolstered by its health insurance programme. For active and retired workers in urban regions, a portion of medical expenses are covered.
It comprises 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 collective account is used to pay for hospital appointments, while the personal account is used to pay for prescription drugs and other outpatient expenses.
Retirees receive a monthly payment into their personal accounts from the communal pool without having to make any contributions.
Payments to all personal accounts were reduced following the reforms, which were put into effect beginning in January.
Elderly people, who typically have more medical requirements, are more sensitive to the changes. Retirees in the capital city of Wuhan experienced monthly reductions of up to 70%.
Soon after the demonstrations in Wuhan and the northeastern port city of Dalian, the NHSA defended the measure in a statement, according to CNN, noting that even though fewer people would have money in their individual accounts as a result, more money would come into the group account.
To protesters, however, it appeared as though municipal governments were using their personal funds to make up for the gaps in the overall fund.
Longer term, the “grey hair movement” is a sign of a basic problem the Chinese government is facing: how to care for an ageing society where 400 million people, or 30% of the population, will be 60 or older by 2035.
As the number of retirees outpaces the number of young people joining the workforce, China’s public health care system and other public services are experiencing increasing financial strain.
A top government think tank predicted in 2019 that the state pension fund might become insolvent by 2035 as a result of a declining labour population.
Workers may become agitated over poor pension and health care security because [the] crunch affecting health insurance is only a short distance away from the bigger one affecting pensions, according to Magnus. The spread of senior citizen demonstrations is a possibility.
The government is once again pushing to increase the retirement age in order to handle the issue.
The government will carry out rigorous studies and analyses to roll out a policy carefully “at the appropriate time,” according to Li Qiang, the nation’s new premier, who stated this in March.
According to CNN, the news has already caused a fierce online backlash that has generated tens of thousands of angry comments.
People who were about to retire complained the loudest and were most incensed about the possibility of having their pension benefits postponed. Younger people contended that due to increased competition, they would have fewer employment opportunities.
The issue of local governments’ ability to pay for present and future age-related costs needs to be resolved, according to Magnus. Otherwise, there might be continual crises, layoffs, and a reduction in the delivery of public products and services, which could cause political issues.
Local governments have a lot of expenses to cover, from health care to public facilities. However, they are currently in dire need of money due to the three years of stringent pandemic controls and the real estate collapse, which have depleted their finances.