China's cabinet warned Tuesday that creating welfare programs for its soaring numbers of elderly will be a daunting challenge in a rapidly graying society. The government has launched pension, health care and other programs for the elderly, the Cabinet said in a report on aging, but cautioned that with the population of elderly people rising by 3% a year, paying for such programs will strain government finances. China faces an acute demographic crunch; the number of elderly Chinese people is expected to top 200 million by 2015 and 280 million by 2025, according to the official Xinhua News Agency. Rural families are especially dependent on children to support them in old age. The report said 60% of China's elderly live in the countryside and the government "has begun to study the establishment of an old-age social security system in rural areas in order to guarantee the basic livelihood of the elderly people there".