Across The Border | China’s ‘silver’ economy offers promising outlook for services sector
China risks getting old before getting rich, but tomorrow’s “silver generation” may have higher consumer spending on services
China will be one of the fastest-ageing societies in the coming decades, which will lead to rising labour costs and erosion of profit margins in the country’s vast manufacturing sector.
But the ageing phenomenon also has an upside, as tomorrow’s “silver generation” in China will generate stronger consumption and new investment opportunities for the services sector, according to analysts from Standard Chartered.
“China’s population is getting old before it gets rich,” a group of analysts led by Enam Ahmed said in a recent research report from the British bank, adding that China may not become “rich” until 2026 when its income per capita exceeds US$30,000.
The key reasons are demographic headwinds, as the decline in the working-age population will drag on China’s economic growth.
China already has 144 million seniors aged 65 or older as of the end of 2015, making up 10.5 per cent of the total population, according to government statistics released in July.
According to the UN, an ageing society can be defined as one where seniors make up 7 to 14 per cent of the population, while a hyper-aged society has seniors account for more than 21 per cent.