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China’s Decrepit Population

China’s government finally appears to be acknowledging the urgent challenges presented by the country’s aging population. On December 12, it released a cabinet-level White Paper on the problem – the first of its kind ­– in an effort to grapple with the prospect of rising social-security and healthcare costs, a tightening labor market, and other potential obstacles to continue rapid economic growth.

Looking back, it is ironic that the Chinese government’s draconian “one-child” policy, imposed in 1979, was implemented at the same time as the “open door” policy, aimed at capturing labor-intensive foreign manufacturing investment. While both policies must be regarded as successes, over the years the family planning program has contributed to an aging population that may diminish China’s attractiveness as a low-cost, labor-intensive manufacturing hub.

During the nearly three decades since the “one-child” policy was introduced, live births have dropped from 22.5 million per year in the early 1980’s to around 16-17 million by the middle of this decade. Moreover, with the number of elderly growing as a result of rising life expectancy, this low birth rate has pushed the share of those aged 65 and above from 4.9% of the total population to 7.7%.

According to the United Nations Population Division’s (UNPD) “medium-variant” projections, without reform of the “one-child” policy, the share of China’s population aged 15 and below would decline from 24.8% in 2000 to 15.7% in 2050, while the share of those aged 65 and above would soar from 6.8% to 23.6%. With fewer children to replenish the workforce, the working-age cohort of those 15-64 years old would shrink from 68.4% to 60.7%. The elderly would thus account for a far greater share of China’s population than in other large emerging economies, such as Brazil, India, Indonesia, and Mexico.