Shrinking funds, growing pains

China has reformed its pension system. Now who has a solution to the aftermath?

A new tax is on the drawing board to solve China's complex problem of enterprises failing to contribute to the country's central pension fund pool.

A mainland newspaper, Business Weekly, has quoted an unnamed source from the Ministry of Labour and Social Security that a decision had been made to introduce a social security tax. The tax will be used to fill the ever-deepening hole in the state's pensions coffers to help pay retirees and retrenched workers.

Some experts working closely with the Chinese government on pension reform believe the news is nothing more than a test on the level of objection to a new tax from investors.

Nevertheless it accentuates...

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