Investing in people, in Rmb20 instalments

This year’s Two Sessions produced an unexpectedly lively discussion over one small number. China says it is now “investing in people”. Rural pensioners may be forgiven for wondering when it begins.

At China’s annual Two Sessions, discontent is usually filed down into ceremony. Delegates praise, endorse, and occasionally offer carefully padded suggestions. They are not meant to look as though they are rebelling against the headline promises of the government work report. Yet this year one tiny line has produced something close to exactly that. The report said the minimum basic pension for urban and rural residents would rise by Rmb20 a month to Rmb163 ($23.59). That was meant to sound benevolent. Instead it landed with a thud.

The backlash has been striking not because the demand is radical, but because it is so modest, so human, and so plainly overdue. One delegate after another argued that Rmb163 a month is not a pension in any meaningful sense. It is a token. Some called for Rmb500 a month for older rural residents. Others argued for Rmb500-600 by 2035. A few went further and urged the state to raise farmers’ pensions to Rmb1,000 by 2030. In the usually airless atmosphere of the Two Sessions, that amounts to a rare public revolt against the logic of the official text.

The numbers explain why. Around 180m people receive the basic pension for urban and rural residents, and farmers account for more than 70% of them. The minimum has indeed risen over time, from Rmb55 when the rural pension system was launched in 2009 to Rmb163 now. But that is progress from a base so low as to border on insult. In 2025 the average monthly pension for urban and rural residents was only Rmb287, including both the basic pension and the individual contibution. The equivalent figure for urban employees was Rmb3,498. China has spent years narrowing all sorts of gaps. This one still looks feudal.

And the arithmetic is brutal. At the current pace of Rmb20 extra a year, getting from Rmb163 to Rmb1,000 would take about 42 years. That points not to 2030, but to around 2068. Many of the elderly villagers now at the centre of this debate will not live to see it. That is what gives the issue its emotional force. This is not an argument about an abstract entitlement in some distant welfare state. It is about whether people who are already old should be asked to wait half a lifetime for the state to recognise that they are poor.

This year’s government work report says fiscal spending should place greater emphasis on boosting consumption, “investing in people”, and safeguarding livelihoods. The draft 15th Five-Year Plan outline likewise speaks of combining investment in things with investment in people, and tying improvements in living standards more closely to the drive to expand domestic demand. On paper, the rhetoric has shifted. China no longer speaks only of bridges, batteries, chips, and industrial capacity. It speaks, when it comes to investment, of people.

Yet when the rhetoric reaches the budget line, the old instinct returns. The same fiscal package that offers a Rmb20 monthly pension rise also raises the annual fiscal subsidy for residents’ medical insurance by just Rmb24 per person. It is smaller than last year’s increment, when the subsidy was increased by Rmb30. So even as officials proclaim a warmer, more people-centred model of development, one of the country’s most basic protections is receiving a smaller top-up than before. “Investing in people” begins to sound suspiciously like a slogan in search of a budget.

This has been the deeper pattern of Chinese governance for years. The state is perfectly capable of spending vast sums when the spending is concrete, visible, and easier to discipline from above. It can build hospitals, fund anti-poverty campaigns, and mobilise whole bureaucracies to eradicate extreme deprivation. In 2021 the government declared complete victory in the campaign against extreme poverty, saying nearly 100 million rural poor had been lifted above the official threshold. It can also subsidise consumption when that consumption is tethered to production goals: this year’s work report boasted that the expanded trade-in programme for appliances and other goods had helped generate more than Rmb2.6trn in sales. Beijing is not allergic to spending. It is just not confident about spending that gives households too much autonomy over how to use the money.

That is why the debate over rural pensions matters so much. It exposes the narrowness of the Chinese state’s redistributive imagination. For years, “common prosperity” was hyped abroad as if China were preparing some sweeping socialist levelling project. In practice, the state has remained extraordinarily cautious about direct transfers to ordinary people. It will subsidise a refrigerator, an electric car, or a washing machine. It is much less comfortable simply giving a poor old villager enough cash to buy meat, medicine, or a thicker coat, and trusting them to decide the rest. The result is that one of the most loudly advertised slogans rings increasingly hollow. A society cannot convincingly claim “common prosperity” while asking elderly farmers to live on Rmb163 a month.

That is not just a moral failure. It is a macroeconomic one. Chinese policymakers have spent years insisting that domestic demand must become a stronger engine of growth. They are right. But demand does not revive because officials exhort it to. People spend when they have money, and when they expect to keep having money. Rural pensioners are almost the textbook case of where transfers would bite fastest. Their incomes are low, their needs are immediate, and their marginal propensity to consume is high. A richer urban household may stash an extra yuan in savings. A poor elderly villager is far more likely to spend it on food, clothes, heating, transport, or a clinic visit. Even better, a more reliable pension for parents would ease the precautionary saving of their children, many of whom are migrant workers supporting two generations at once.

There is also a reason this debate has acquired such moral heat inside China itself. Farmers did not “pay in” to the system in neat, modern, payroll-deducted ways. They paid in older, rougher, harsher forms: in grain handed over cheaply, in taxes, in labour, in years spent underwriting industrialisation while cities surged ahead. Much of today’s Chinese commentary on the issue uses the language of repayment, and with reason. Raising rural pensions is not widely seen as dispensing a new favour. It is seen as settling an old debt. That helps explain why the issue has stirred so much feeling far beyond the usual social-policy crowd. It is not only about poverty in old age. It is about belated recognition.

The official counterargument is usually fiscal prudence. China is ageing. Pension promises are sticky. Once raised, they are politically hard to trim. All true. But fiscal prudence has a habit of appearing only when the beneficiaries are ordinary people. The state that cannot find enough for a meaningful rural pension rise somehow finds room for mega-projects of astonishing scale. Construction has begun on the huge hydropower project on the lower reaches of the Yarlung Zangbo, which cost Rmb1.2trn.

Relatively cautious voices within the establishment are no longer defending the present pension level; they are arguing only over the pace, the target group, and the financing mechanism. That alone says something important. The centre of gravity has shifted. The question is no longer whether rural pensions are too low. It is whether the state is willing to admit how low is too low.

And that, in the end, is why this year’s pension row matters. It is a small revolt, but a revealing one. It shows that public expectations of fairness are now running ahead of the state’s willingness to spend. It shows that Chinese society’s idea of social justice may be simpler, and more demanding, than the government’s. And it shows that the line between “investing in people” and merely talking about them is very easy to spot. A government that can mobilise trillions for industry, infrastructure, and strategic ambition can surely do better than Rmb163 a month for the people who spent their lives feeding the country.

If Beijing wants one clean test of whether its new people-first language means anything, this is it. Not another slogan. Not another carefully targeted voucher. Not another subsidy tied to a preferred purchase. Just cash, dignity, and a little less meanness. Until that happens, the official call to “invest in people” will keep colliding with a stubborn, embarrassing fact: when the time comes to spend directly on those who need it most, the Chinese state still reaches for its calculator before its conscience. (Enditem)

Meng Xiaosu: China’s state capital has a rural debt to pay

David Daokui Li calls for 1.25 trillion yuan pension increase for Chinese farmers

Three types of hidden debt unaccounted for in China's official stats