China’s demographic timebomb – Shaun Rein

 

Shaun Rein

China’s aging population is leaving the labor force while dropping consumer confidence discourages youngsters from marrying or having children. Business analyst Shaun Rein tells Reuters the country is heading for a demographic disaster, and raising the pension age is one inevitable measure the government should take.

Reuters:

A record low birth rate in 2023 and a wave of health crisis-related deaths resulted in a second consecutive year of population decline, accelerating concerns about China’s demographic downturn.

Large groups of the 1.4 billion people living in the world’s second-largest economy will exit the labor pool and age past a prime period of their lives for consumption, exacerbating structural imbalances that policymakers have vowed to address.

“The world should be worried about China’s economic slowdown. It’s going to impact the profits of the world’s largest companies. When Chinese consumers are cutting back on their spending, that’s going to impact the Starbucks, the Nike’s, the Apples of the world,” Rein told Reuters.

More – including a video – at Reuters.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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China´s Twilight Years - Howard French

Howard French

While many analysts expect China to grab chances when the US is changing its global position, eminent China experts Howard French sees the opposite is happening. With a shrinking and aging population, China´s power is diminishing, he argues in The Atlantic. While the US have chances.

Howard French:

Under President Xi Jinping, China has until very recently appeared to be a global juggernaut—hugely expanding its economic and political relations with Africa; building artificial islands in the South China Sea, an immense body of water that it now proclaims almost entirely its own; launching the Asian Infrastructure Investment Bank, with ambitions to rival the World Bank. The new bank is expected to support a Chinese initiative called One Belt, One Road, a collection of rail, road, and port projects designed to lash China to the rest of Asia and even Europe. 

Projects like these aim not only to boost China’s already formidable commercial power but also to restore the global centrality that Chinese consider their birthright. 

As if this were not enough to worry the U.S., China has also showed interest in moving into America’s backyard. Easily the most dramatic symbol of this appetite is a Chinese billionaire’s plan to build across Nicaragua a canal that would dwarf the American-built Panama Canal. But this project is stalled, an apparent victim of recent stock-market crashes in China... 

Not so long ago, conventional wisdom in China held that the country’s economy would soon overtake America’s in size, achieving a GDP perhaps double or triple that of the U.S. later this century. As demographic reality sets in, however, some Chinese experts now say that the country’s economic output may never match that of the U.S. 

With American Baby Boomers entering retirement, the United States has its own pressing social-safety-net costs. What is often neglected in debates about swelling entitlement spending, however, is how much better America’s position is than other countries’. Once again, numbers tell the story best: By the end of the century, China’s population is projected to dip below 1 billion for the first time since 1980. At the same time, America’s population is expected to hit 450 million. Which is to say, China’s population will go from roughly four and a half times as large as America’s to scarcely more than twice its size. 

Even as China’s workforce shrinks, America’s is expected to increase by 31 percent from 2010 to 2050. This growing labor supply will boost economic growth, strengthen the tax base, and relieve pressure on the Social Security system. At the same time, Americans will continue to enjoy a substantial advantage over the Chinese in terms of per capita income. This advantage in wealth will continue to underwrite U.S. security commitments and capabilities around the world.

More in the Atlantic.

Howard French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more strategy experts at the China Speakers Bureau? Do check out this list.  

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Health care and pensions firmly on China´s agenda - Rupert Hoogewerf

Rupert Hoogewerf

China´s rich are changing the country´s agenda as the aging population focuses on health care and pensions, in the past often taboo subjects, says Hurun chairman Rupert Hoogewerf to FinNews Asia, after his research institute released another report. As the number of rich increase, so does they influence on the economy.

FinNews Asia:

Every wealth segment in China showed double-digit growth, flouting an economic slowdown, thanks to a surge in property prices in major Chinese cities, according to the latest «Hurun» Report. 

China's high-net worth individuals, or those with more than 10 million yuan, grew by 10.7 percent on the year, or roughly 1.34 million people in total... 

A shift in personal interests reflect the fact that China also faces an aging demographic: healthcare displaced finance and investing as the top concern for wealthy Chinese. Sports was second, and the wealthy also expressed an interest in tourism and traveling as well as current events and news. 

As a result, China's rich are taking an increasing interest in their old age and providing financially for themselves: nearly all of them – 95 percent – believe that social security won't meet their needs, and have taken out commercial insurance in order to maintain a lush retirement lifestyle. 

«Social stigmas of retirement are also gradually shifting, such that Chinese high-net worth individuals are willing to discuss the topic, especially with the recent health 'craze'», Hurun chairman Rupert Hoogewerf said. 

Increasing numbers of Chinese, especially women, are spurning traditional skinny images for more toned and beefed-up fitness looks, an indication that views on healthcare are changing.

More in FinNews Asia.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more stories by Rupert Hoogwerf? Do check out this list

China´s aging crisis: guns vs canes - Howard French

Howard French

The world´s most populous country is facing an unprecedented crisis, as its population ages fast, tells former New York Times Shanghai-bureau chief Howard French to PBS. The fast rising demand for social security, health care and a diminishing work force, will narrow down China´s economic expansion in the near future. The aging crisis not only shows the immense failure of the one-child policy, it will also force the country to become more welcoming to much-needed immigrants.

Howard French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more political experts at the China Speakers Bureau? Do check out this list. 

Can China afford sustainable healthcare? - Sara Hsu

Sara Hsu

Already underfunded and facing a fast aging population, healthcare in China is under pressure. Financial analyst Sara Hsu sees some encouraging tests in keeping costs down, but many more reforms are needed to pass the test, she writes in the Diplomat.

Sara Hsu:

The question of increasing competition and jobs in the healthcare sector is hardly a priority under China’s current reforms, and reasonably so, even though this would aid the transition to a highly skilled service-based economy. The main question now is whether health care costs can be kept low for the consumer, but high enough to keep service provision sustainable for health care providers. Current reforms have laid bare this dilemma. 

Urban public hospital reform is at the top of the list. This is currently being piloted in 100 cities and will soon expand to 200 cities. This aims to reform the business model and particularly the cost/revenue system. The main focus is to ban drug price increases, reduce the cost of medical examinations and increase the price of medical services such as surgery. This presents a challenge to hospitals in raising sufficient revenue to cover costs, especially as the government subsidy to hospitals continues to weigh in at only 8 percent of revenue. Some hospital employees appear to be skeptical. 

At the same time, however, patients benefit from the reform. A study by Jinqiu Yang, Yongmiao Hong and Shuangge Ma (2016) finds that revenue and cost reform that began in 2009 in two Xiamen tertiary hospitals lowered patient costs for both insured and uninsured patients. Other researchers have confirmed the cost reductions centered on decreases in the cost of drugs.

More at the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more financial experts at the China Speakers Bureau? Do check out our list here.  

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How a shrinking population will hit China - Howard French

Howard French

China´s demographic problems might stop its economic development in its tracks, writes author Howard French in the Atlantic.  Not only can China not deal with its aging population, "some Chinese experts now say that the country’s economic output may never match that of the U.S."

Howard French:

Recent events may well provide a preview of this reality. When Xi Jinping announced last year that he was slashing China’s armed forces by 300,000 troops, Beijing spun the news as proof of China’s peaceful intentions. Demographics provide a more compelling explanation. With the number of working-age Chinese men already declining—China’s working-age population shrank by 4.87 million people last year—labor is in short supply. As wages go up, maintaining the world’s largest standing army is becoming prohibitively expensive. Nor is the situation likely to improve: After wages, rising pension costs are the second-biggest cause of increased military spending. 

Awakening belatedly to its demographic emergency, China has relaxed its one-child policy, allowing parents to have two children. Demographers expect this reform to make little difference, though. In China, as around the world, various forces, including increasing wages and rising female workforce participation, have, over several decades, left women disinclined to have large families. Indeed, China’s fertility rate began declining well before the coercive one-child restrictions were introduced in 1978. By hastening and amplifying the effects of this decline, the one-child policy is likely to go down as one of history’s great blunders. Single-child households are now the norm in China, and few parents, particularly in urban areas, believe they can afford a second child. Moreover, many men won’t become fathers at all: Under the one-child policy, a preference for sons led to widespread abortion of female fetuses. As a result, by 2020, China is projected to have 30 million more bachelors than single women of similar age.

“It really doesn’t matter what happens now with the fertility rate,” a demographer at the Chinese Academy of Social Sciences told me. “The old people of tomorrow are already here.” She predicted that in another decade or two, the social and fiscal pressures created by aging in China will force what many Chinese find inconceivable for the world’s most populous nation: a mounting need to attract immigrants. “When China is old, though, all the countries we could import workers from will also be old,” she said. “Where are we to get them from? Africa would be the only place, and I can’t imagine that.”

Much more in the Atlantic 

 Howard French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form. 

Are you looking for more stories by Howard French? Do check out this list.  

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Imbalance, not overpopulation is our problem - Zhang Juwei

Aging, one of China's problems

Even China's mostly optimistic People's Daily, the Communist Party newspaper, admits the country has a problem with its demographics, after the results of the latest census appeared. Huge imbalances are China's largest problem, tells Zhang Juwei in MSNBC, no longer overpopulation.

“China doesn’t have overpopulation pressure,” said Zhang Juwei, the deputy chief of the Population and Labor Economics Institute at the Chinese Academy of Social Sciences.  “A structural imbalance is the real problem we’re facing.”
By that, Zhang means a whole host of problems that the one-child policy has engendered.

Image by Fantake via Flickr

Zhang Juwei

Key findings of the new census confirmed Zhang’s points, even prompting the official Communist Party newspaper, the People’s Daily, to say “a crisis looms” and giving rise to a catchphrase found in much of the Western media coverage, that “China will grow older before it gets richer.”

More in MSNBC.

Zhang Juwei is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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An old-people's home in Shanghai - one solution

Singing Party members by Fantake via Flickr

When I first entered the old-people's home, set up by the municipal government, at the Pingyang Street in the Xuhui district Minhang district of Shanghai I was pleasantly surprised. Larger groups of older people brought together, just because they are old and need care, seldom make me happy. But this Shanghai solution for at least a part of their aging citizens made a surprising good impression,
A light entrance, much room for the sun to kick in, clean, spacious and cheerful uniformed staff.
Admitted, yesterday was a bit of a special day, as we bumped by accident into a larger group of members of the Communist Party performing and handing out presents in an end-of-the-year party. At the second floor a group of apprentice hairdressers offered today free haircut, even less than the normal 5 Renminbi (0.5 euro) they charge.
The home for about 250 people is pretty new and most of the families are living in the neighborhood, often at the other side of the road. Most parts of the day family members can be found at the dormitories with seven beds per room. Food look good and healthy, and the people say they enjoy it.
The costs are relatively high: 300 euro per month, so, way to expensive for many families in Shanghai. And f
or the really rich, they might mostly be able to afford in-house service.
The staff seemed to be really caring, and are mostly women from outside Shanghai: without immigrants Shanghai will of course never solve its aging problem. But these paid-for, sustainable solutions, available for the so-called middle class, can take out a major chuck out of the macro-economic problem.

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Next 5-year plan: a leaner and greener economy - Shaun Rein

Shaun Rein by Fantake via Flickr

China's economy is going to be much leaner and greener, says Shaun Rein in CNBC, as the plans for the 12th five-year plan have been made in Beijing over the weekend. Green technology is already getting much financial support.
Economic growth might be more moderate, but no lower than 7 percent, Rein says. And the next two decades will see another 400 million Chinese citizens moving to cities, as the drive for urbanization continues and all hands are needed in the cities to face the upcoming aging problem.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference, do get in touch.

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'Black children' a rural myth - Zhang Juwei

Zhang Juwei  by Fantake via Flickr

For a long time the existence of 'black children' at China's country side- offspring outside the country's one-child policy and not accounted for in its statistics - were seen as an illegal but useful counter measure for the aging problem and the shortage of cheap labor. But the rural fertility rate is not as high as many hope for, tells CASS-director Zhang Juwei in The Economist. 
The Economist:

The recent CASS report said the rate that would be expected if women had exactly as many children as allowed would be 1.47. The government uses the higher figure believing that many “black children” were missed by censuses. But the report disagreed, saying such serious underreporting was unlikely. It said data showed that the 150m-strong migrant population has a fertility rate of only 1.14 (similar to that of registered urban residents). This belies the common image of migrants as big producers of unauthorised offspring. Zhang Juwei of CASS believes the overall fertility rate is no higher than 1.6.

China cannot avoid its looming ageing problem, but these lower fertility estimates suggest its impact could be greater than officials have bargained for. The CASS study calls for a “prompt” change of policy to get the fertility rate up to around the “replacement level” of 2.1. The problem could be in persuading Chinese to have more children. In cities and wealthier rural areas, surveys found that the number of babies women said they actually wanted would produce a fertility rate well below 1.47.

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Zhang Juwei is a speaker at the China Speakers Bureau. Do you want to share his insights at your meeting or conference? Do get in touch.

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