Cai Fang: The main challenge of pension security is not the funding gap, but how to share the dividends of productivity improvements.

Special Topic: China Development Forum 2026 Annual Conference

The China Development Forum 2026 Annual Conference was held from March 22 to March 23. Cai Fang, member of the Chinese Academy of Social Sciences and former Vice President, attended and delivered a speech.

Cai Fang mentioned that currently discussing the combination of “investment in physical assets” and “investment in people” actually refers to a new height of their close integration. This new height involves reallocating some resources, shifting from a focus on “investment in physical assets” to a greater emphasis on “investment in people.”

He provided four reasons for this shift: First, at a higher stage of development, public goods play a greater role in improving people’s quality of life, which is a general rule. Second, in terms of people’s livelihood and well-being, especially in developing countries, there are still many shortcomings, bottlenecks, and pain points that need to be addressed. Third, although China’s capital returns are decreasing, the returns on investing in people are increasing. Fourth, the main constraint on economic growth has shifted to residents’ consumption, which requires increasing income and improving distribution.

Additionally, he discussed several key areas of investment in people, including “three育” (fertility, nurturing, education), employment, and elderly care.

First, “Investing in reducing the ‘three育’ costs” does not mean controlling their prices but rather integrating them into the basic public service list, with the government bearing the main expenditure responsibilities. This would significantly reduce household and resident spending in these areas; otherwise, it would be difficult to increase the birth rate, Cai Fang explained.

Second, given the current demographic trend of “peak shaving and valley filling” in China’s population age structure, Cai Fang emphasized the importance of seizing this resource reallocation “window period” to promote unified allocation of resources across different educational stages. “Currently, the number of children enrolled in kindergartens is decreasing, but the number of students in elementary, middle, and high schools is still growing. Vocational education students in secondary schools are decreasing, while higher education students are expected to increase significantly in the future. This means that educational resources at different stages must be managed uniformly. Currently, different departments manage different stages, and administrative integration is insufficient. Therefore, we must coordinate solutions and reallocate resources to substantially increase our educational investment.”

He also addressed the issue of elderly care: “Many are worried about the continuous aging population and whether the pay-as-you-go pension system can sustain itself, with concerns about potential payment crises. From a conceptual and resource distribution perspective, we can see that in the future, especially further down the line, the speed of productivity improvement can outpace the aging process.”

Cai Fang emphasized that for elderly care, the issue is not a lack of funds but how to share the dividends of increased labor productivity, especially ensuring that the elderly benefit equally from these dividends.

Disclaimer: All conference transcripts are compiled from现场速记 (on-site shorthand notes) and have not been reviewed by the speakers. Sina.com publishes this article to disseminate more information and does not necessarily endorse or verify the views expressed.

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Editor: Li Ang