China’s Retirement Reform Buys Time, but Can Jobs and AI Turn It Into Lasting Growth?

China’s retirement reform could keep nearly 50 million additional people below retirement age by 2035, temporarily easing the pressure from a shrinking and ageing workforce. Its long-term success will depend on creating jobs for older workers, improving productivity, strengthening social protection, and ensuring AI supports rather than replaces workers.

China's retirement reform could keep nearly 50 million additional people below the statutory retirement age by 2035, giving the country more time to manage a shrinking workforce and a rapidly ageing population. But a RAND Corporation study warns that the reform is only a temporary buffer. Its real value will depend on whether older people can stay employed, businesses are willing to hire and retrain them, and productivity improves fast enough to support China's economic goals.

A temporary shield against demographic decline

China started raising retirement ages in January 2025. Men will gradually retire at 63 instead of 60, women in managerial and professional jobs at 58 instead of 55, and women in blue-collar and frontline jobs at 55 instead of 50.

The reform comes at a difficult time. In 2025, China recorded about 7.92 million births and 11.31 million deaths, marking a fourth straight year of population decline. Fewer young people are entering the labour market, while more older people are moving towards retirement.

RAND estimates that China's statutory working-age population stood at about 781 million in 2024. Under the old retirement system, that number would have fallen by around 42.8 million by 2035. With the reform, however, it could rise slightly by about 5.5 million.

Compared with the previous rules, around 28 million more people could remain below retirement age by 2030 and about 48.3 million by 2035. The impact could peak at roughly 67 million in 2043 under RAND's preferred scenario. Across different assumptions, the peak ranges from about 66 million to 79 million.

The key message is that the reform delays the demographic decline but does not stop it. China's statutory working-age population is still expected to begin falling steadily again in the late 2030s.

Women carry a large share of the adjustment

The reform will not affect all workers equally. Women account for around 54% of the estimated increase in the statutory working-age population by 2035.

Women who would previously have retired at 50 contribute about 38% of the total effect. Many of them work in factories, frontline services or other physically demanding jobs.

This creates an important policy challenge. Raising the retirement age does not automatically mean that people will stay in secure employment. Older workers may face health problems, skills gaps, caregiving responsibilities or age discrimination.

For governments, the success of the reform should therefore be measured not only by how many people remain legally of working age, but by how many are actually employed and earning stable incomes.

Growth will depend more on productivity than labour

The reform will help slow the decline in China's labour supply, but its direct economic impact is limited.

RAND's analysis shows that labour contributed almost nothing to China's GDP growth between 2016 and 2023. Capital investment and productivity were the main drivers.

Even if every additional person kept below retirement age were employed, the reform would add only about 0.3 percentage points to annual GDP growth through 2035.

This is small compared with the roughly 4.17% average annual GDP growth that Chinese planning calculations suggest may be needed to achieve the country's 2035 income goal.

Productivity will therefore be crucial. RAND estimates that China's total factor productivity growth averaged about 2.19% between 2016 and 2023. If capital growth slows, productivity will need to rise further to keep the economy on track.

AI, services and business investment could decide the outcome

Artificial intelligence could either strengthen the reform or weaken it. AI could help older workers by reducing physical demands, improving job matching and supporting productivity in sectors such as healthcare, eldercare, education and logistics.

But automation could also replace many routine jobs held by older workers. If that happens, millions of people may remain legally available for work while finding fewer employment opportunities.

For businesses, this creates both risks and opportunities. Companies may need to redesign jobs, remove unnecessary age limits, invest in retraining and offer more flexible work arrangements. At the same time, an ageing population could increase demand for eldercare, healthcare, insurance, pension services, rehabilitation and digital health technologies.

For governments and international development partners, the lesson is clear: raising retirement ages should be supported by stronger healthcare, lifelong learning, social protection and policies that encourage employers to retain older workers.

China's reform has bought valuable time, but time alone will not produce growth. Its success will depend on whether policymakers, businesses and development partners can turn longer working lives into real jobs, higher productivity and more secure incomes.