China’s ageing population: how the gravity of greying will affect nation’s plans to boost economy
- Heavily debated among policymakers and academics for years, China’s greying trend looks to complicate the push by leadership for common prosperity
- China’s once-a-decade census will provide a clearer picture of the demographic structure and welfare of senior citizens when results are released next year
China’s elderly population is on pace to surpass the total population of the United States in 15 years as Chinese baby boomers are set to retire, threatening President Xi Jinping’s pursuit of common prosperity and his goal to catch up with other nations in terms of economic well-being.
And the greying trend will continue, with the number expected to jump to 400 million by 2033 and peak at 487 million by 2053. Considering mainstream estimates that the national population will peak around 2030, this is likely to result in one out of every three or four Chinese being senior citizens in the middle of the century.
“The tide of greying brings huge challenges and impacts to our economic and social development,” Li wrote in an article included in a recently published book that comprehensively outlines the nation’s five-year plan for 2021-25 and its 2035 development blueprint. “Forward-looking thinking and strategic planning are needed to push forward policy arrangements for issues such as childbirth, childcare, education, retirement, pension, income distribution and services.”
Li’s warning came as the country is conducting its seventh once-a-decade population census, which will provide a clearer picture of the demographic structure and welfare of senior citizens when the results are released early next year.
Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at investment firm Natixis, warned that population ageing will further weigh on China’s potential labour input, and thus weaken its current competitiveness. However, there is still some leeway to mitigate the impact.
“The economic transformation towards more capital and skilled-labour-intensive activities will help buffer such a shock, but this needs more efficient organisation of the factors that would enhance labour productivity,” she wrote in a note on Tuesday.
Beijing already altered its one-child policy, introduced in the late 1970s, five years ago, allowing couples to have two children. But birth rates remain far below expectations.
Rather than a potential relaxation of the two-child policy, Beijing’s decision makers have expressed a greater willingness to tap into the “longevity dividend”, including a gradual postponement of the retirement age along with more investment in elderly care.
Li noted that there are now only about 7.75 million beds in the country’s 204,000 elderly care facilities – far below demand.
“Our concerns about the inadequacy of public health facilities and the fragility of the social security system have intensified in the wake of the Covid-19 epidemic, which highlighted substantial weaknesses in these systems,” investment bank Credit Suisse said in an 85-page thematic report released on August 24.
The upside is that upcoming retirees – who grew up in a time of great optimism as living standards improved in line with China’s open-door policies that started in the late 1970s – are likely to be more willing to spend, and that would complement the current efforts to boost domestic consumption.
Citing a survey of 1,500 middle-aged and elderly consumers in 59 cities, the investment bank said the 245 million boomers, defined as those born in the 1960s, are wealthier and more willing to spend on leisure and high-quality health care services than current retirees.
“The travel, entertainment and fitness industries look set to benefit the most,” it said.
