Challenges of Risk-Based Supervisory System
February 12, 2025
Companies incur a variety of costs in their day to day operation. These costs are very different from one another and need to be treated differently by the accountants to give a fair picture of the organization. Here is a list of the different types of costs that are usually incurred by an organization as […]
The importance of financial planning at an individual and family level cannot be overstated. For years, people and even governments have been trying to inculcate this habit into the masses. However, they have found it difficult to do so. This is because there are several misconceptions related to personal finance, which are common among people. […]
The financial community of the world is at a consensus that the current economic system provides the United States government with exorbitant privileges. This means that the system does not treat all countries equally. Rather it provides an unfair advantage to the United States because the dollar is the reserve currency of the world. The […]
Burn rate is a metric that is specific to the start-up world. On the one hand, most of the financial world is obsessed with frugality but at the same time, investors in start-up companies often pressurize the management to spend as much money as possible within a short span of time. The excess of spending […]
Asset bubbles have always been a testimony to the bizarre things that humans can accomplish when they abandon their own rational thinking and a herd mentality sets in. However, the case in point of the first asset bubble in recorded history i.e. the tulip mania brings this to light. The sheer absurdity of the situation […]
There has no doubt about the fact that the Chinese economy is one of the largest economies in the world today.
Theoretically, China is the second-largest economy in the world. It is widely believed that the Chinese economy will surpass the American economy to become the largest in the world.
However, many economists believe that the Chinese economy is already the largest one in the world if we consider purchasing power parity.
The fact that China has grown at such a remarkable pace has made it a case study for the world. As a result, a lot of scholars are carefully studying the pension system in China as well.
The Chinese system is quite different as compared to the western world. In this article, we will explain how the Chinese pension system works.
The Chinese have created this system because they believe that the financial habits and investment preferences of investors can be very different from each other.
The high number of schemes has caused some confusion amongst the citizens. Many citizens have complained that they are not able to fully comprehend how the system works and how they can gain benefits out of the same.
Many employers have complained that these rates are prohibitively high when compared to other countries of the world. However, China being a communist country tries to focus more on the social welfare of its workers.
In most parts of the world, pension funds are managed at the central level. Hence, the rules governing pensions can vary even within different parts of China.
In most parts of the world, governments encourage their people to invest in pensions by providing them with tax relief. However, this is not the case in China.
In China, there is small tax relief for the employers who make a contribution on behalf of their employees. However, there is no direct tax benefit for employees who make contributions to their pension funds.
It seems like the government is not interested in ensuring higher pension contributions which is strange given the fact that China still has a large population that is close to the poverty line.
The fact of the matter is that the Chinese system is quite complex. There are several schemes and variations which apply differently to different sets of workers. This is in sharp contrast to the largely homogenized pension systems of western democracies.
Your email address will not be published. Required fields are marked *