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

Topic: China Development Forum 2026 Annual Conference

The China Development Forum’s 2026 Annual Conference was held from March 22 to March 23. Cai Fang, a member of the academic department of the Chinese Academy of Social Sciences and the former vice president, attended and delivered a speech.

Cai Fang mentioned that the current discussion of “investing in things” combined with “investing in people” actually represents a new high level achieved through the close integration of the two. This new level essentially involves reallocating some resources, shifting from a focus on “investing in things” to a greater emphasis on “investing in people.”

In response, Cai Fang provided four reasons: First, at a higher stage of development, public goods play a larger role in improving people’s quality of life—this is a general rule. Second, in safeguarding and improving people’s livelihoods, especially during development, many shortcomings, bottlenecks, and pain points still need urgent attention. Third, although China has experienced diminishing returns on capital, the returns from investing in people are increasing. Fourth, the main factor limiting economic growth has shifted to residents’ consumption, which requires increasing incomes and improving distribution.

Additionally, he discussed several key areas for investing in people, including “the three educations” (birth, upbringing, and education), employment, and elder care.

First, “investing to reduce the costs of the ‘three educations’” does not mean controlling their prices but rather turning them into an increasing part of the basic public service list. This means the government should take primary responsibility for spending, significantly reducing household and individual expenditures in this area; otherwise, it will be difficult to increase the birth rate,” Cai Fang explained.

Second, given the current “peak-to-trough” trend in China’s population age structure, Cai Fang emphasized the importance of seizing this “window period” for resource reallocation and promoting unified resource distribution across different educational stages. “Currently, kindergarten enrollment is decreasing, but the number of students in primary, junior high, and senior high schools continues to grow. Vocational education in middle schools is declining, while the number of higher education students is expected to increase significantly in the future. This means education resources at different stages must be allocated in a coordinated manner. Currently, different departments manage these stages separately, and administrative integration is insufficient. Therefore, we must coordinate and address these issues, reallocate resources, and substantially increase our educational investment.”

He also discussed elder care: “Many people are worried that aging will continue to rise, and whether the pay-as-you-go pension system can be sustained. There are also concerns about potential payment crises. From our perspective—considering the concept and broad resource distribution—we see that in the future, especially as time goes on, the rate of improvement in labor productivity can outpace the pace of aging.”

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

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Responsible editor: Li Ang