Confucius would be astounded: special housing complexes for the elderly have sprung up in China. Statistically, they are a blip, but an astonishing blip. For centuries, ancient rules dictated children’s responsibility to their elders, and children obeyed. Several generations often lived under one roof.

Consider some numbers: today, there are roughly 266,000 nursing-home beds—up from almost none 30 years ago. In 1980, Nanjing had three nursing homes; in 2009, it had 140.

Consider, too, the edicts that have sought to codify ancient rules of filial duty. In 1996, China officially required children to care for aged parents. A subsequent proposed amendment mandated that children visit their elderly parents regularly or risk a lawsuit. A regulation in Jingua forbade children from forcing parents to give them money.

In China, the role of the family has shifted. Roughly 40 percent of elderly people now live alone, not in multigenerational households.

An aging population, coupled with urbanization, has spurred this shift. One hundred seventy-eight million Chinese are over age 60; more than 11 percent of them are over age 80. By 2050, demographers forecast that 450 million Chinese will be over age 60. In 1979, China enacted a one-child policy for the ethnic Han majority. Today, the 4:2:1 ratio has realigned responsibility: One child must often care for two parents and four grandparents. Siblings are uncommon, increasing the burden on the working generation.

As for cities, demographers predict that within 30 years, 70 percent of the population will be urban—up from 45 percent today. The McKinsey Global Institute predicts that by 2025 China will have 15 cities with 25 million people each.

The impact of these trends on the elderly is profound. When young people move to the cities for jobs, they often leave elderly parents alone in their villages. Indeed, the urban migration of working-age children has left rural China far “grayer” than its cities. Even when they move to cities with their children, grandparents are often left alone during the day. Consequently, in the “new China,” the need—or demand—for senior housing is real.

The country must now create the supply. As in the United States, financing is key. Who will pay to build these facilities? To operate them? To live in them? Will anybody make a profit? A loss? Who will absorb the loss? Currently, the Chinese government subsidizes the construction of nonprofit facilities. A proposal has been put forth to allow nonprofit facilities, after three years of operation, to be sold to a profit-making entity.

China has sought out foreign investment capital. Some familiar names in western housing—Emeritus (based in Seattle), Fortress Investment Group (based in New York), and Life Care Services LLC (based in Des Moines)—have been invited to the discussion, with different possible roles, as funders, operators, or consultants. So far, some facilities have been hybrids, blending public and private dollars; others have been privately owned.

The financial support of housing for seniors in China, as in the United States, must weigh public versus private risk. To date, a few publicized failures have hovered over investors. For instance, Shanghai Holiday Retirement Housing, a joint for-profit Chinese-American venture, closed after three years. Augustinum, a German company, planned to open in 2010, but withdrew. A Rong-D International Investment plan for housing turned into a vacation community. Yet other buildings still rise. In Shanghai, for example, Emeritus (under its Chinese arm, Cascade Healthcare) plans to open the first American-operated assisted-living complex in China.

Understandably, the luxury market is the most robust. A small percentage (in China, that number still totals millions) of the elderly who want to live in an expensive “retirement community” can afford to pay for it. Developers have tapped into this market.

For the great majority who cannot pay, however, the government is discussing pensions, subsidized health care, and rental subsidies—topics familiar to Americans in the housing industry.

In a world that Confucius wouldn’t recognize, China is working to maintain the dignity of its elders.

ULI–the Urban Land Institute