China is one of the most rapid ageing countries in the 21 century. Apart from pension pressure, long term care has emerged to become another great challenge due to the one child policy and rapid increasing longevity in the past 30 years. In the coming 20 years, majority of the 70 million frail elders will be left unattended if no positive policy development from now on. 42 Government fiscal transfer is one of the fundamental supports to establish an efficient and sustainable long term care mechanism. This could be a direct transfer to LTC alone, or through medical insurance and pension insurance premiums. China is a country with great disparity in income and demographic structures. In some cities, like Beijing, Shanghai, Suzhou, elders above 60 have already passed 20% of local population with the national ratio at 14.9%. At present, local governments are the main bodies to establish long term care systems. There are no universal policies for long term care planning and budgeting. Most current retirement facilities do not cope with the ever growing demand for frail elders, especially for disabled population. Some pilot projects are available at Qingdao and Suzhou to combine nursing homes (with personal and facility upgrades) into medical insurance system, so that long term patients in hospital beds can be transferred to those facilities with medical insurance compensation. Home care is comparatively new and receives lots of research interests. Many cities have so called 9073 (Beijing) and 9064 (Shanghai, Suzhou etc.) plans, indicating 90% will be depending on family care alone and governments will be caring for 6-7% elder as home care package providers and 3- 4% as nursing home cares. Some have done a lot of initiative works but at very preliminary stages. Budgets are at ad hoc basis. Funds can be either from premium of medical insurance (Qingdao) or fiscal transfers (including allocation of lottery revenue). Our research is to analyse whether it is possible to design a long term budget mechanism to meet the demand for nursing home care and home care in the next 20 year. We based our data on 2010 China Urban and Rural Old Population Living Conditions Survey. We estimate the prevalence of disable/dementia population based on the survey data as well as our own demographic model. We estimate the cost of such long term service using and survey data and projected the financials in the next 20 years. Based on those projections, we design the possible insurance premiums for both nursing home care (from medical insurance) and home care (from government transfers) at both central and local government levels. Central government should also contribute to the establishments of rural long term care facilities and labour force training. The financial estimates help Chinese government to design relevant long term care policies in the next two decades, since sustainability still remains the most important consideration for most social policy designs.