Aging

For the first time in 60 years, in 2022, China’s population stopped growing. More Chinese died, 10 million, than the number of Chinese born, 9.02 million. As a result, the number of Chinese dropped, from 1.4126 billion in 2021 to 1.4118 billion, a decline of 850,000, according to China’s National Bureau of Statistics.

Once the world’s fastest growing in population and in economic expansion, China is now the world’s fastest – in aging, and has the world’s oldest population.

With globalization, China became the second richest country on earth. Its wealth has meant longer life spans but fewer babies born each year. This could lead to a demographic disaster – fewer workers that once propelled the country’s economic growth.

Currently, 20 percent of China’s people are 60 and above, or 280.04 million out of 1.4118 billion people, up by 12.68 million from 267.36 million in 2021 and 264 million in 2020. This 60-plus age group will rise further, to 400 million by 2035, according to the World Economic Forum. The 400 million is equal to the combined population of the United States and England.

The Chinese are expected to live longer, to 78 years, up from 44 in 1960.  This is higher than the US life expectancy and will rise further to past 80 by 2050.

In 2022, China’s birth rate fell to a record low of 6.77 births for every 1,000 people, down from 7.52 in 2021, according to the Asian Development Bank.

China’s population will continue declining, to 1.313 billion by 2050 and even fall below 800 million by 2100, in 77 years or less, according to United Nations projections.

In April 2023, India became the world’s largest country, in population, with 1.418 billion, larger by about 7 million than China’s.

China’s working-age population – those between 16 and 59 years old – decreased from 62.5 percent in 2021 by 0.5 percent and stood at 875.56 million at the end of 2022.

Says Asian Development Bank: “Aging results in labor force shortages, which in turn increase average salaries undermining the economy’s competitiveness. Rapid population aging, if unaddressed, might hamper the industrial transformation process needed to attain higher income status. The fact that the PRC is aging at a low level of income magnifies the challenge.”

For those in pharma and medicine, China today is the biggest market for medicines for the elderly, for health care and housing for retirees.

According to the World Economic Forum, at present, each Chinese retiree is supported by the contributions of five workers. The ratio is half what it was a decade ago and is trending towards 4-to-1 in 2030 and 2-to-1 in 2050. The current pension system, which relies on a shrinking active workforce to pay the pensions of a fast growing number of retirees, is unsustainable and needs to be reformed.

Frets the ADB: “One direct consequence of a declining population is the loss of human capital. This means fewer entrepreneurs, innovators and skilled workers to fuel the economy and spur further economic growth. The aging workforce and a shortage of younger workers because of the declining population may make it difficult for businesses to find the labor they require to meet demand.”

For Filipinos, an aging China could be good. It means China will have a shortage of workers. And a shortage of workers means higher labor costs. And higher labor costs mean China won’t be as competitive as before as the world’s manufacturing hub.

Factories would then move out of China and possibly, locate in the Philippines where there is a surplus of workers at a very competitive rate (although Manila wages are among the highest in ASEAN, after Singapore and Malaysia).

But then again, China can always replace its shortage of workers with robots, who definitely are more intelligent than many Filipinos ten years old and above.

In world tests for ten-year-olds, in reading, comprehension, math and science, Filipino kids consistently rank last or second to the last, thanks to our Department of Education (DepEd) which has among the highest Cabinet budgetary allocations.

In its April 2023 report, the World Bank was clearly worried about an aging Asia:

“The regions’ previously youthful population is now aging rapidly, affecting labor endowments, pension burdens and health care needs.” The lender considers aging one of the three major challenges facing Asia, along with No. 1, protectionism, trade divisions and policy uncertainty and 2) the consequences of global warming, and countries must invest in adaption while contributing to mitigate.

The East Asia and Pacific (EAP) region is also facing the economic challenge of aging faster and at lower levels of income than the currently richer and older countries of the West.

The transition from aging to aged societies (from the 60-and-above reaching 7 percent of total population to the 65+ reaching 14 percent) is taking only 20–25 years for most East and Southeast Asian countries, in contrast to 50-100+ years in other countries.

Asian countries are aging at far lower income levels than their OECD counterparts, with PPP per capita GDP at peak working age shares between 10 and 40 percent of the level of the US at the same point in demographic transition.

Per the World Bank report, aging in Asia hurts two ways: 1) It may impact economic growth through the decline in the share of the working age population (those who are 15 to 64) and 2) It could strain fiscal balances on both the revenue and expenditure sides.

“On the expenditure side, the pressures on public finances will come from rising pension costs, health and long-term care spending, with the first the most pronounced.”

“On the revenue side, the declining size of working age population will shrink the contribution base from which pension, unemployment and health insurance systems are financed in several major economies in the region.”

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