Introduction

Since reorientation to a market economy in 1978, China has experienced remarkably high economic growth. Growth has most certainly been both an effect of and a motor for the transition process and has raised the living standard, especially of the segments of the country participating directly in growth-related activities. At the same time growth has created greater inequality in incomes between regions and between the rural and urban populations (see Chapters 2 and 3 of this volume). The question addressed in this chapter is how has the economic well-being of the elderly, a large group that does not benefit directly from the growth process, been affected by the past two decades of rapid growth and development? To answer this question, this chapter examines the determinants of the income status of both the rural and urban elderly in China.

From the outset it is important to note that there is a big difference in how old age security is provided in rural and urban China. In 2003 around 60 percent – 800 million – of China's population of almost 1.3 billion persons lived in rural China, where the older generation relies almost exclusively on the family network for income support in old age. In contrast, workers in urban China who have been employed in state-owned enterprises (SOEs) or as civil servants are covered by a pension plan.