China’s time bombs: Gray China

I’m still working on my observations on the snowballing problems with China’s banking and financial systems so as the second installment in my series on the serious problems that China faces we’ll concentrate on aging.

Note: much of the information in this post is either supported by or derived from the Center for Strategic and International Studies presentation The Graying of the Middle Kingdom which I strongly recommend you take a look at.

China has transformed itself from a traditional agrarian society to an incipient modern society with remarkable speed essentially in the sixty years following World War II. Each year since 1979 China’s economy has grown by 8-10%. Something else began in 1979: China instituted its “One Child Policy”, an official policy to reduce population growth by limiting the number of children a couple were allowed to one. The policy hasn’t been 100% effective, particularly in the countryside, but it has had some effect: since 1979 China’s fertility rate has fallen to a sub-replacement level. In the cities the fertility rate is substantially below the replacement level of 2.1 children per couple.

The falling fertility rate isn’t the only reason for the graying of China: life expectancy is rising as well. Beijing Times writes:

Statistics show that the number of Chinese people older than 60, which accounts for more than 10 percent of the country’s population, is increasing at a rate of 3.2 percent per year.

The huge aging population brings various social and economical problems to China, which is still a developing country, said Li Baoku, vice-minister of Civil Affairs.

The elderly will be a big burden for China through the year 2050, when that population will reach 400 million, accounting for 25 percent of the total, according to Zhang Wenfan, president of the Chinese Old-age Association.

Unless trends change starting in about 10 years China’s working age population will actually begin to shrink and within 25 years China’s total population will begin to decline.

This isn’t too different from the situation in Europe where the fertility rate in most countries is below the replacement level (in the United States the fertility rate is slightly above the replacement level at least in part due to recent immigrants). The difference is that China may become old before it becomes rich.

China has no national pension system. Only about 25% of the population is covered by any pension system whatsoever. In traditional Chinese society elders were revered and families were large: children were the pension system for the elderly. From China Daily:

Even though government officials are engaged in handling statistics and reports on the overheated economy and high unemployment rates, some experts warn that China will soon face problems brought by its rapidly aging population unless effective measures are taken in time.

China has the world’s largest elderly population, with 134 million people over 60 years old, a figure that is likely to hit 400 million by the middle of this century.

“A flawed population structure has turned out to be a knotty issue for many developed nations, and now it befalls China, which is still a developing country,” said Zhang Yi, a veteran demographic expert with the Chinese Academy of Social Sciences.

A sample investigation in 2001 said 7.83 percent of Chinese people were above 65, and in 2020 the proportion would rise to 12 percent.

The aging process is speeded up especially in the cities as the one-child policy was adopted in the 1970s, and more couples now tend to postpone pregnancy or not to have babies at all, said Zhang.

Implementation of the one-child policy in the past decades prevented fast population growth, but it also expedited the aging process.

As most experts foresee, some 20 years from now, a young couple will have to look after at least four parents from both families. By then caring for the elderly will not be a family issue but a social one.

Without either pensions or large families to fall back on what are China’s elders to do? Few have much in the way of savings. Continuing to work may not be an option for two reasons. The first is health. According to the American Enterprise Institute:

Hard data on the health status of older people in China and other countries tend to be spotty and problematic-and comparability of method can never be taken for granted. However, some of the survey data that are available through REVES (Reseau sur l’esperance de vie en sante), the international network of “health expectancy” researchers, are thought-provoking. According to a 1989-1990 “health expectancy” study for the Sichuan province, a person 60 years of age would spend less than half (48 percent) of his or her remaining years in passable health. (That study, incidentally, seems to have been heavily weighted toward relatively privileged urban groups: in the rural part of the sample, the corresponding figure was barely 40 percent.) By contrast, a study for West Germany for 1986 calculated that a 60-year-old woman could expect to spend 70 percent of her remaining time in “good health”; for men the fraction was 75 percent. Although one probably should not push those findings too hard, they are certainly consistent with the proposition that China’s seniors are more brittle than older populations from more comfortable and prosperous locales.

But the kinds of work available in China’s new economy is an important factor, as well. Business Week writes:

There are also structural changes at work. A key factor is a paucity of the young women who are the mainstay of the manufacturing workforce. According to the Labor & Social Security Ministry survey, 80% of Fujian textile plants report they only hire young women workers. But after 25 years of China’s one-child policy, there are fewer young people able to leave the farm and staff the factories. The one-child policy also had the effect of favoring the birth of boys over girls, resulting in a population skewed more toward males. “The surplus labor in rural China may be as high as 100 million to 200 million people,” says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences. “But women are well under half of that.” Meanwhile, companies shun the vast majority of laid-off workers, who are often older people with poor skills.

There’s a bitter irony in this, of course. The kinds of children who were preferentially selected out of the population by the “One Child Policy” are precisely the workers needed now by China’s factories. In many of China’s high-pressure-to-produce factories their young female workers are considered burnt-out by the time they are thirty.

So a rising elder population, many poorly educated, trained, and in ill health, an adverse dependency ratio, and falling fertility rates. The graying of China is another time bomb that China hasn’t been successful in dealing with and that won’t wait forever for a solution.

Previous posts in the “China’s time bombs” series:

China’s time bombs: the environment

UPDATE: the next installment in the series is here.

9 comments… add one
  • The 4/13 Wall Street Journal has a front page article describing the breakdown of family ties in China.

  • A relevant and productive website.

  • i need to know what the causes and reasons why china instituted the one child policy are?

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