China faces an aging problem characterized by a number of interrelated components: A rising median age, a failing social safety net, the one-child policy introduced in 1979 to curb population growth, and a gender imbalance brought on directly by the one-child policy and a cultural preference for boys.
According to Yuan Xin, a professor and director of the Aging Development Strategy Research Center at Nankai University, “There is no country in the world that is facing such a big aging population problem.”
The impacts of an aging population may include reduced economic growth, a smaller working population to support a larger population of seniors, increased medical costs, and a shortage of paid and unpaid caregivers.
Some of the ways in which this issue will develop are unique to China. For one thing, China is becoming an aged society before it has become a developed economy. In the words of Hong Kong University of Science and Technology professor Albert Park, “Other countries are old and rich. China will be old at a relatively early stage in its development.”
Also, China’s transition to an aging society “is happening far more quickly than in most other countries,” according to a 2012 report from the Brookings Institution.
3 FACTS ABOUT CHINA’S AGING PROBLEM
Statistics tell the tale of a rapidly aging Chinese society, driven by an extremely low birthrate and increasing longevity.
- Lower fertility. In the 2005 to 2010 period, China’s fertility rate was about 1.6, far below the 3.0 rate of 1975–1980 and well below the replacement rate of 2.1.6 (According to the 2010 census, China’s fertility rate was 1.4, below the average of 1.7 for the developed world and below a rate of about 2.0 in the US, Britain, and France.)
- Longer life expectancy. Average life expectancy in China has reached about 76.8.
- Shifting age distribution. Median age in China has risen to about 35.9.
3 BUSINESS IMPLICATIONS
Arie Hoekman of the UN Population Fund noted that while aging poses major challenges for China, it also offers opportunities for both business and society. “[Business] opportunities are as endless as the contributions that a socially and economically active, secure, and healthy aging population can bring to society.”
- Though China’s economic growth rate is very likely to slow, the size of the Chinese market and the likely shift to consumer lifestyles—and an economy more dependent on consumption— will undoubtedly make it an attractive business opportunity for companies of all types.
- On the other hand, demographic shifts and the maturing of the economy likely mean that China’s days as a lowest-cost manufacturer are coming to an end, and that the focus of manufacturing will shift toward higher-value-added goods.
- The aging of the Chinese population will open up all manner of business opportunities to serve this growing consumer segment. Liping Hou of Southwestern University of Finance and Economics notes that there will be opportunities to invest in eldercare, including healthcare infrastructure, caregiver training, accessible housing, transport and public spaces, and financial services. The particulars of the Chinese market— incredibly large population, massive cities and megacities, and the government’s penchant for big projects—suggest that there may be opportunities to totally rethink the way seniors interact with key sectors of the economy in partnership with the government, and to develop new products and services keyed to the Chinese senior population—in healthcare, mobility, or other opportunity areas.