Commenting on China’s new mandatory social security, SMU Associate Professor of Finance Fu Fangjian noted that the new rules could raise labour costs, prompting job changes and even the hiring of retirees to avoid social security payments. Assoc Prof Fu said that a few small firms may close, but most will adapt to higher costs. He also pointed out that while hiring retirees saves money short-term, it can reduce efficiency. He stressed the transition will take time, but increasing incomes is essential for China to become a true developed nation.
