FRENCH PHILOSOPHER Auguste Comte probably tried to cram too much into his pithy but seductive maxim when he said that “demography is destiny.” Even so, demographic forces can be relentless in shaping future prospects of nations and therefore can offer powerful clues about national possibilities for future prosperity and geopolitical power.
It is well-known that China’s population is aging. Less well-known and rarely examined is what this demographic shift might mean for the future of Asia’s largest and most rapidly rising power. A graying China will not necessarily be a China of economic stagnation and social turmoil. But understood in the context of the country’s current path of development, China’s aging demographics could be the single most important factor preventing the “Asian century” from being a Chinese-dominated one.
Despite its economic dynamism, East Asia is aging rapidly. Most attention is focused on Japan, considered the “grandfather” of the region. But in terms of ramifications for the future power balance, much more attention should be paid to China. Currently it has a population of 1.35 billion, but this number is expected to begin shrinking slowly by around 2030.
More important is the ratio of working-age people to those over sixty-five, considered aging or formal retirees. In the 1980s, the proportion of the working-age population (fifteen to sixty-four years old) was more than 73 percent of the overall population. Currently at about 68 percent, the working-age population is expected to decline to about 65 percent in 2020 and 60 percent in 2035.
The significance of these numbers becomes apparent when we compare the proportion of working-age people with formal retirees. When China began its market reforms in 1979, there were about seven working-age persons to every retirement-age one. Today, the ratio is about 5.5 to 1. Current projections suggest that by 2035 there will be fewer than 2.5 working persons for every retiree.
The age profile of the working population also matters. Studies show clearly that workers are at their most productive and innovative from their late twenties to their midforties. This has been the basis for China’s “demographic dividend,” the massive productivity generated by the combination of declining fertility levels and a mass of young workers entering the workforce with relatively few familial responsibilities. Productive labor-force capacity has risen faster than population since the 1979 reforms. This trend will be in reverse from around 2015 onward.
There are currently around 120 million Chinese people sixty-five years or older. By 2035, there will be around 320 million, with the overall population only around one hundred million larger than it is today. Even within the working population, in 2035 there will be 1.5 older workers (fifty to sixty-four years old) for each of their younger counterparts (fifteen to twenty-nine years old), which is the direct opposite of the current situation.
These trends are replicated in the pre-working-age generation. For example, the number of new students enrolling in primary schools declined from more than twenty-five million in 1995 to fewer than 16.7 million in 2008. Taken together, and although not as serious as in Japan, these statistics place China firmly in the “aging” category, alongside countries such as South Korea, Australia and the advanced economies of Western Europe.
Moreover, for a number of reasons it is extremely unlikely that these trends can be altered or reversed.
First, China’s aging population is largely the result of a dramatic increase in average lifespan, which has increased from under sixty-five years in 1980 to the current seventy-five years. Moreover, fertility rates have declined, from 2.63 children per woman in 1980 to about 1.5 in 2011. This trend is unlikely to change. Wealthier cities such as Shanghai (reporting a fertility rate of only 0.6, which is probably the lowest of any major city in the world) provide evidence that emerging Chinese elites, like their Western counterparts, are choosing lifestyle and career expectations over larger families. Although the country’s “one-child policy,” in place since 1979, has been enforced unevenly across different provinces, it still has had the effect of keeping the number of childbearing women artificially low. This reality, combined with the widespread Chinese preference for sons over daughters, leads to estimates that there will be a surplus of some forty million men of marriageable age by 2020.
Actual figures into the future could vary slightly from the trend lines. But little can be done about China’s aging demographics over the next few decades. Even if the one-child policy were to be abolished, the aging trend wouldn’t be reversed to any appreciable degree for several decades.
NOW LET’S consider China’s economic-growth model in the context of this aging trend. Premier Wen Jiabao has more than once described his country’s growth model as “unstable, unbalanced, uncoordinated and unsustainable.”