Does China have an aging problem?

Does China have an aging problem?
Does China have an aging problem?
Does China have an aging problem? Top

    China’s population is growing old at a faster rate than almost all other countries. The effects of China’s 36-year one-child policy, combined with dramatic improvements in health care, have contributed to increases in life expectancy and decreases in China’s birth rate. During the years that the one-child policy was in effect, life expectancy in China improved from 67 to 75 and fertility rate decreased from 2.8 to 1.7. China’s looming demographic shift presents considerable social and economic challenges.

    This trend is particularly worrisome for China, as its development is tied to its demographic advantages. For decades, China reaped the benefits of a demographic dividend that supplied a young workforce for its manufacturing sector, which enabled China to emerge as a global economic power. Furthermore, China’s demographic shift presents significant social problems. The number of Chinese retirees will soon skyrocket, prompting questions of China’s preparedness to provide senior care. The one-child policy also contributed to a significant gender imbalance among China’s younger population, as some women elected to have sex-selective abortions to ensure that their only child was male. China’s leaders now face a challenge of reaffirming China’s economic power while addressing prevailing social issues.

    Population History and Projections for China

    This question explores the consequences of the one-child policy for China’s demographic profile, examines the social and economic challenges China faces, and considers how Chinese demographic trends compare with other countries.

    What’s behind China’s aging problem?

    During the mid-twentieth century, China’s population was growing at a breakneck pace. From 1950 to 1978, China averaged a 20 percent annual natural population growth rate.1 Driven by fears of the extraordinary challenges of effectively governing such a rapidly expanding population, the Chinese government began to institute population-control measures in the 1970s. The one-child policy, initiated in 1979, limited urban couples to a single child, and as a result China’s fertility rate fell dramatically, from 2.8 children per woman in 1979 to 1.7 in 2014. In 2013, any parents who themselves were only children were permitted to have a second child. In 2015, the government extended this policy to all couples, formally ending the one-child policy.

    This decline in birth rate coincided with governmental policies facilitating greater access to healthcare, leading to advances in several health indicators. Mao Zedong’s famous “barefoot doctors” program trained hundreds of thousands of young Chinese to provide affordable basic care to China’s rural population. Largely stemming from improved rural healthcare access, life expectancy in China increased from 43 in 1960 to 75 in 2013. In the same period, infant mortality decreased from 12.8 percent to 0.7 percent. Greater life expectancy, combined with decades of implementing the one-child policy, has contributed to China’s current demographic problem. The low and high-fertility variants in the below graph bracket the probable range of future population change in China while the constant-fertility line assumes that future fertility remains unchanged.

    Notwithstanding the improvements in national health metrics, the one-child policy engendered international criticism. The policy was routinely condemned by human rights groups, which argued that the frequent practices of forced abortion and sterilization were human rights violations. For example, an Amnesty International China researcher described these practices as “torture,” and contended that “the state has no business regulating how many children people have.” Human Rights Watch asserts that Chinese family planning policies “continue to impose severe restrictions on women’s reproductive freedoms.” Prior to the dissolution of the policy, human rights activists pressed the UN to take decisive against it.

    During the almost four decades that it was in place, the one-child policy worsened gender imbalances that originated in strong cultural and social preference for male children, which tarnished how China was viewed on the global stage. While forced abortions and sterilizations were officially banned, they nonetheless became frequent occurrences as local officials tried to enforce birthrate targets set by the central government. Despite outlawing fetal sex determination in the late 1980s, the present human sex ratio suggests that it was common for parents to either give up their female children to adoption agencies or have gender-selective abortions. Between 1999 and 2013, Americans adopted 71,632 children from China, of which nearly 90 percent were female. One study estimates that as a result of the one-child policy, there are over 62 million “missing” women (females who would be alive without gender discrimination) in China. In 2014, there were approximately 41 million more men than women in China, which may become a factor contributing to social instability. A 2007 study found a large and statistically significant link between the gender-ratio imbalance for 16-to-24-year-olds and male crime rates in China.2

    Abolishing the one child limit is an important step in the right direction, but the policy change alone is not going to take effect and bring relief to the population aging problem until 2035.

    – Huang Yanzhong

    Although the one-child policy was gradually relaxed over the last decade, and ultimately abolished in 2015, policy measures alone may not be able to rebalance China’s age distribution in the coming decades. When the government eased the one-child policy in 2013, allowing couples where either parent is an only child to have a second child, officials predicted an additional 2 million births in 2014. However, there were only 470,000 more people born in 2014 than in 2013. Even now that all couples are allowed to have two children, there still may not be a baby boom in China. The one-child policy accelerated China’s falling birth rate, but this trend would likely have occurred as a natural consequence of increased incomes and education levels associated with higher economic development. This reality is reflected in a survey by the Chinese website Sina.com, in which only one in three people indicated that they would have a second child as a result of the new policy.

    A Conversation with Richard Jackson

    What challenges does China’s aging population pose for Chinese society?

    China relies on its young, mobile work force to form the backbone of its economy, but current demographic trends could hamper China’s economic growth and create challenging social problems. The trends behind China’s population growth have fundamentally shifted. China’s fertility rate has fallen to below population replacement levels (the amount of births needed to sustain population size) at just 1.7 children per woman. In order for a population to maintain its size, the total fertility rate must be around 2.1 children per woman. China’s population is expected to peak around 2025 at about 1.4 billion, and then to begin a steady decline.

    For a country whose economy remains reliant on affordable sources of labor to drive its manufacturing sector, China’s aging working population presents a serious economic problem. As China’s large surplus labor pool begins to dwindle, manufacturing wages are likely to increase and the sector will decrease in profitability. This phenomenon is common in developing countries and is known as the Lewis Turning Point. China is expected to reach its Lewis Turning Point between 2020 and 2030. The number of Chinese aged 15 to 24 (recent or impending additions to the workforce) has already begun to decline, and is projected to decrease even further over the next few decades. One business-recruitment firm has projected that by 2030 China will round out its thinning labor force by hiring workers from abroad.

    Ultimately, aging will change the societal intergenerational relationships pitting the economic productive young people against those who are benefitting from social security and medical care payments. A confrontation between workers and retirees will likely arise.

    – Huang Yanzhong

    Furthermore, the growing number of elderly retirees and shrinking pool of taxpayers will put significant financial strains on the government. The percentage of Chinese above the retirement age is expected to reach 39 percent of the population by 2050. At that time, China’s dependency ratio (the number of people below 15 and above 65 divided by the total working population) is projected to increase to 69.7 percent, up from 36.6 percent in 2015. This means that China will have a proportionally smaller working-age population with the responsibility of providing for both the young and old. The government is likely to need to play a larger role in strengthening the fledgling social welfare system and in improving China’s senior-care capabilities.

    Traditionally, most Chinese children care for their parents through old age, as demonstrated in the Chinese expression yang er fang lao, meaning “raise children to provide for old age.” Consequently, only a small portion of government resources are directed toward elderly care. According to China’s Bureau of Statistics, there are on average 27 beds at nursing homes for every 1,000 elderly people in China in 2015, while in 2013 there were 39 beds per 1,000 elderly in the United States and 53 in Germany. As there are fewer children now to take care of their parents, China will need to reevaluate its policies. It is striking that an estimated 23 percent of the elderly in China cannot take care of themselves, while in 2010, only 43 percent of elderly males and 13 percent of elderly females received any financial support from a pension. As China’s population continues to age, China will need to provide additional resources to meet the needs of the elderly, perhaps transforming societal norms in the process.

    How does China’s population breakdown compare with other countries?

    Analyzing China’s shifting demographics through comparison with other countries highlights the extent of China’s aging problem. Having an aging population is a common demographic problem in developed countries, where birthrates decline as a result of higher levels of income, healthcare, and education. Countries such as Germany and Sweden have had decades to adjust as their populations have aged gradually. China, on the other hand, has begun the aging process at an earlier stage of development, and at a more accelerated pace than most countries have experienced.

    India, which like China is a highly populous developing country, offers an important point of reference. In 2014, 9 percent of China’s population was 65 or older, while 17 percent of the population was between 0 and 15 years of age. By comparison, just 5 percent of India’s population was over 65, with 29 percent of the population 15 or under. The UN projects India will pass China and become the most populous country in the world by 2022. As China will age more rapidly than India in the coming decades, it is possible that India will reap a “demographic dividend,” where the proportion of the working population in India will increase relative to China. In absolute terms, India’s working-aged population is expected to surpass China’s between 2020 and 2030. This could lead to a shift in manufacturing jobs from China to India, a sector in which India has traditionally lagged.

    A Conversation with Yanzhong Huang

     

    0:11 - Will the Chinese government’s recent decision to end the One-Child policy be enough to address the country’s demographic challenges?

    2:39 - What lessons can China learn from Japan and other developed countries when it comes to mitigating the negative social and economic impact of an aging population?

    5:09 - How will China adjust its economic model to account for a changing demographic?

    7:11 - How will future population trends affect the balance of power between China and India?

    10:07 - What impact will an older population have on the Chinese healthcare and welfare systems?

    China is aging at a rate that few countries have matched historically. While it will take China 20 years for the proportion of the elderly population to double from 10 to 20 percent (2017-2037), this process took 23 years in Japan (1984-2007), 61 years in Germany (1951-2012), and 64 years in Sweden (1947-2011). Japan is the oldest country in the world, and has aged more quickly than most other nations. In 2015, 9.5 percent of the population of China was aged 65 or older. The UN projects this percentage to 27.5 by 2050.

    As China searches for policy strategies to manage its aging population, it can look to the experiences of developed countries, including Japan, South Korea, and the United States. While China’s fertility rate is comparable with these countries (1.7 in China, 1.4 in Japan and Germany, 1.2 in South Korea, 1.9 in the United States), China has little experience in providing social services to aging populations. Countries such as Germany, Japan, and South Korea have developed long-term social insurance systems, designed to provide benefits to older populations.3 Japan’s system, which has been particularly successful, provides care to all people over 65 based solely on need and is funded by mandatory premiums paid by those over 40, as well as local and national taxes. In 2001, faced with a massive incoming wave of retirees, Germany passed a major pension reform, reducing pay-as-you-go benefits while encouraging private pension options. China has announced a plan to raise the retirement age, but the issue remains highly contentious. One key difference between China and these other countries is that China is rapidly aging at an earlier stage of its development. As a result, China at present lacks many of the welfare capabilities that have aided developed nations during their demographic transitionChinaPower

    1. Dudley L. Poston and David Yaukey, The Population of Modern China (New York: Plenum Press, 1992), 15.
    2. Edlund, Lena, et. al. “Sex Ratios and Crime: Evidence from China.” Review of Economics and Statistics 95, no. 5 (2013): 1520-534.
    3. Bloom, David E., and Karen N. Eggleston. “The Economic Implications of Population Ageing in China and India: Introduction to the Special Issue.” The Journal of the Economics of Ageing 4 (2014): 1-7.