On March 10, the minister of human resources and social security, Yin Weimin, told the media that he expected a plan to raise the country's retirement age to be drafted this year and submitted to the central government for review in 2016. A new plan could be in practice as early as 2017, Yin said.

Why is the government so eager to raise the official retirement age, which is as low as 50 for some female workers? The reason is the country's worsening age demographics.

An aging population usually implies a low birth rate and people living longer. The average life expectancy in China is around the global average, but the proportion of its elderly compared to its young people makes it perhaps the world's most aged country. Even worse is that this situation has not even peaked. While the proportion of people over age 60 is 15.5 percent today, it will soar to 40 percent in the next two decades.

Ultimately, China's problem has much more to do with low birth rates than having too many elderly people. Coupled with increased life expectancy, China will face a grim situation unless it further loosens its one-child policy and actively encourages families to have more babies.

Official data show that the size of China's working-age population has decreased for the last three years and will continue to shrink dramatically. Meanwhile, the number of pensioners has risen sharply. As people live longer, this also means that the corresponding extension of pension benefits will put mounting pressure on the pension fund.

The Beijing News reports that Lu Hao, the governor of the northeastern province of Heilongjiang, recently told the National People's Congress that the worker-to-retiree ratio in his province is already a troubling 1.42 to 1. When asked by Premier Li Keqiang whether the province has had difficulties paying pensions, Lu said: "Not now, but maybe in one or two years." The northeast, of course, has one of China's lowest birth rates.

Meanwhile, Zheng Bingwen, director of the World Social Security Institute, says: "Delaying retirement for a year will lead to an increase of 4 billion yuan in the pension fund and a spending cut of 16 billion yuan, which together will add up to a 20 billion yuan in relief for the fund."

While delaying retirement for millions of Chinese may help, the fundamental solution for an aging China is to raise birth rates and ultimately maintain a more stable, younger population. China's birth rate has hovered below a so-called replacement level for more than 20 years, resulting in this acute population problem dragging down the pension system.

Even worse, is that in the coming decade, the number of Chinese women in their prime childbearing years of 22 to 30 will shrink by a dramatic 40 percent.

Now is the time for China to act. A significant percentage of young Chinese couples do not yet face the pressure of supporting their parents and are therefore in a position to raise children who will be adults in 20 years. Once the situation worsens and the workforce diminishes sharply in relation to the number of pensioners, the situation will deteriorate quickly.

It's more urgent to encourage parenthood than to postpone retirement ages. Of course, there are those who believe that more babies will increase the burden on the government, but families bear most of the cost of raising children. The government's spending on youngsters is mainly confined to education, which is only a small part of its budget.

Take the United States as an example. Education expenditure there is only 5 percent of GDP, while pension expenditures are 12 percent. Since the United States has maintained a long-term birth rate replacement level, it basically has a stable demographic structure, so spending levels more or less reflect an individual's impact on the government's revenue and expenditure from birth to death.

The data suggests that though the government needs to pay 5 percent of GDP to educate people, it can receive 26 percent in tax and finally use another 12 percent to support retirements. In short, what the government receives from an individual will generally be more than it spends.

China's situation is similar to the United States on one level. Its fiscal revenue accounts for 20 percent of its GDP while education spending accounts for 4 percent and pension expenditures 10 percent. But because the country's birth rate has long been significantly below the replacement level, the number of future workers will dive sharply as a proportion of the total population while that of the elderly will soar.

Restricting childbearing seems to represent a savings for the government, but it also greatly reduces the power that promotes society's progress. If it's not careful, China will kill the goose that lays the golden egg.

Liang Jianzhang is a co-founder and chairman of Ctrip.com International Ltd. Huang Wenzheng is a biostatistics expert at Johns Hopkins University