China has to figure out how to care for 400 million people over the age of 60 by 2040 — and it's off to a rocky start

January 17 was a historic day for China. After decades of styling itself as a powerhouse of unfettered growth, the country revealed that its population had declined for the first time since the 1960s.

And with life expectancy rising and birthrates sinking to record lows even after ending the one-child policy in 2016, China's 1.4 billion population isn't just shrinking — it's also aging, fast.

This landmark moment signifies a monumental shift in how China must chart its future. Left unchecked, an aging population presents crises on multiple fronts: The country will have more elderly people in need of healthcare, and at the same time fewer and fewer working age adults to drive the very economy that funds this care.

China is also dealing with aging on an unprecedented scale. By 2040, it's expected to have 400 million people above the age of 60 — more people than in the entire US.

The country's leadership knows it has to quickly sow the seeds for an effective system down the road. In March, Beijing announced a five-year plan — its broad vision — to tackle aged care. Individual counties, fretting about their falling marriage rates, are trialing a bevy of creative strategies to coax couples into marrying and having children.

On the wider scale, China's response as a nation has been lagging. Recent policies to bolster birth rates were enacted too late, and government-sponsored aged care can't even cope with today's demand, experts on China told Insider.

Five professors who specialize in studying China's population and economy helped Insider break down the nation's race against time.

A national insurance scheme is currently in trial stage

As the only developing nation in the world growing old before it gets rich, China needs to figure out how to pay for elderly care.

But there are no easy, one-step solutions for China's aging problem, said Sabrina Luk, an assistant professor in public policy and global affairs at the Nanyang Technological University of Singapore.

China is currently trialing a national insurance scheme that specifically covers care for older people with long-term needs, like patients who suffer from dementia or have diabetes. In the pilot program are 15 cities, such as Chengdu, Shanghai, and Guangzhou, said Luk, who's written two studies on aging in China.

It's up to each city to decide how it funds the scheme, who gets benefits, and what kind of care they receive.

Most of these cities pay for treatment by taking funds from mandatory insurance programs that people have been putting money into for years. In China, if you're a working adult in a city, you're required by law to pay for health insurance.

These insurance programs usually lump contributions into one big pool, and cover workers even after they've stopped working, meaning a retiree can get medical care even if they've stopped paying a premium.

But if China is progressively getting older while having fewer working age adults, demand for age care insurance will skyrocket even as the number of people contributing to the programs shrinks, Luk said.

And elder care is expensive — usually three times higher than healthcare for younger generations, she added.

"It's obvious that relying on contributions from medical insurance schemes to fund age care services is not likely to be viable in the longer term," she said.

Cracks in the insurance scheme are already showing

Even this early, the cracks are starting to show, said Luk.

Some cities already have deficits in their shared insurance pools, estimated to total $100 billion nationwide in 2024, said Luk. There also aren't enough facilities that accept the new scheme, nor is there enough staff under the program to take care of older folks, she added.

Professor David Goodman, the director of the China Studies Centre at the University of Sydney, said local governments in poorer regions will especially struggle to keep up with expenses, in a country where wealth and urbanization rates can vary drastically. In Beijing, China's richest province, GDP per capita was $28,517 in 2021, compared to $6,362 in Gansu, China's poorest province.

"I can imagine that some richer cities will be able to do this, and actually will be able to do quite a lot of philanthropy too," Goodman said. "But I think one thing is certain — it won't be common prosperity. It can't be."

Aging at home — the ultimate aim

Like in the US, China's main aim is to let people grow old in their own homes, and keep them out of nursing homes and assisted living facilities where possible, said Gu Qingyang, an associate professor of economics at the National University of Singapore.

"China is trying to establish day care centers, where people can return to their homes and be cared for by their children at night," said Gu.

That's the goal for aging people anywhere in the world, said Stuart Gietel-Basten, a professor of social science and public policy at Abu Dhabi's Khalifa University, whose research covers demographics in China.

"You want to age in place. You want to get older in your own home and to stay in your own home for as long as possible," said Gietel-Basten.

It's a particularly effective solution for poorer seniors in rural China, where a typical resident makes $2,700 a year and pensions are too small to buy longterm medical care.

For example, an elderly farmer who's worked physical labor for most of their life and is in good health can sustain themselves for many years with a supportive community, Gietel-Basten said.

"The problem comes if you've got some kind of chronic, long-term illness. By that stage, it's very difficult to access complex health and social care services in the middle of nowhere and sparse populations," he added.

Alzheimer's is quickly rising as a concern in China, Luk said. The country recorded around 15 million people with dementia in 2022, the most in the world.

"Dementia in China in 2030 is estimated to represent about 10% of the forecasted $1.1 trillion global cost in 2030," Luk said.

China's National Health Commission launched a national dementia strategy in 2020 to bolster services for Alzheimer's patients under its "Healthy China Action Plan."

But it's yet to produce any significant results, Luk said. "In the context of China, many people with dementia and their caregivers still cannot obtain the support they need," she said.

With years still left on the clock, China can also cut down on the burden by teaching its people to adopt habits that will help them age healthily, like cutting down on drinking, quitting smoking, and exercising regularly, Luk said.

"Whelping older adults to thrive is actually helping them to achieve healthy aging," Luk said. "Without a healthy body, people can't do the things they want and enjoy life."

"It's not just about adding years to life," she said, "It's also about adding life to years."

One proposed solution: outsource to the private sector

Still, even if China isn't achieving widespread success with age care yet, it's got a fighting chance at finding stability over the next few decades, several experts told Insider.

"Is China aging rapidly? No doubt. On the flip side, it's got a lot of positives," said Gietel-Basten.

The government's one-party system allows it to pivot quickly and implement sweeping changes, compared to democracies where the keys to power can change hands every few years, he said.

But it's not yet clear if the central government will decide to harness that power and go all-out with a push to bolster age care services — like Beijing did with its sweeping zero-COVID campaign that locked down hundreds of millions and stifled businesses for years.

"It will likely happen if the middle class creates a tipping point, where there is so much unanswered demand for age care that local governments say: 'Okay, it's time we did something,'" said Goodman, the China Studies Centre director.

On the other hand, it may not need a drastic, nationwide campaign.

Beijing has been pressuring the private sector into building daycare centers, wards, and other age care infrastructure to shore up gaps in local government finances, Gu said.

Chinese corporate giants like Alibaba, Tencent, and Geely Automobile, compelled by Xi Jinping's administration to share their wealth, have pledged billions to "common prosperity funds."

Another proposed solution: rely on migrant labor

An option for China could be to rely on migrant labor, pulling in foreign workers on short-term contracts to work in factories, care for the elderly, and even raise crops — like Taiwan and South Korea did in the 1990s, said Carl Minzner, a senior fellow for China studies at the Council on Foreign Relations.

Yet China has few foreigners compared to the rest of east Asia, and Xi has been closing the door to China, rather than opening it, to the rest of the world, Minzner said.

"Naturally, this is where some will vaguely gesture in the direction of technology or robotics as a magic wand that will allow Beijing to surmount these challenges," Minzner said.

But aging countries like Japan and South Korea are far wealthier than China, and still are relying on migrant labor instead of fancy tech solutions, Minzner said.

"Why should China be any different?" he said.