Why China stands to grow old before it gets rich

David Willetts – The Financial Times

November 9 2005 Copyright The Financial Times
The Chinese president’s visit to Britain this week provided a great
opportunity to talk about better bilateral trade links and China’s
human rights record. But I hope Tony Blair also was able, at some point, to
talk about China’s extraordinary demographics – something which could
shape thecountry’s destiny over the coming decades.
One reason for China’s stellar growth is that it is at a demographic
sweet-spot. The massive reduction in infant mortality achieved by
China’s barefoot doctors in the 1960s and 1970s is now yielding a surge of
young workers – an extra 10m working-age adults per year. China’s
challenge now is just to absorb them into the labour force. Add to that the massive
population flow from the countryside and you can see why wages are low
and growth is so fast. There are few pensioners and there are not many
children either. The rabbit is indeed in the middle of the python.
As early as 2015, China’s working age population will actually start
falling. By 2040, today’s young workers will be pensioners – in
fact the world’s second largest population, after India, will be Chinese
pensioners. There could well be 100m Chinese people aged over 80, more than the
current worldwide total, as Richard Jackson and Neil Howe point out in their
excellent paper, The Graying of the Middle Kingdom (CSIS 2004).
Because of China’s one-child policy there will be fewer new workers
under its so-called “4,2,1” population structure – four grandparents,
two parents and one child. This is a demographic transition that many countries go
through. But a process that is taking a century in the west will take
40 years there. The desperate rush for economic growth is fuelled by fears
that China could grow old before it grows rich.
Not so long ago, China was one of the world’s most youthful
countries, with a median age of 20. Its median age is now estimated at 33. By 2050, the
United Nations forecasts, China’s median age could be 45, against 43
for the UK and 41 for the US.
Older countries are good at incremental improvements in productivity
that come from age and experience. But they are not good at the type of
improvement in performance that comes from doing things differently.
Radical innovation seems to come from youth.
Another important dimension to all this is that China does not have a
strong civil society. What it does have instead is strong family ties. Old
people are the responsibility of their families, and about two-thirds of
people aged over 65 in China live with their children. Only 1 per cent of
those over 80 are in old people’s homes, compared with 20 per cent in the
US.
Imposing the one-child policy on these long established customs is
having
an
extraordinary effect. If you can have only one child it becomes highly
desirable to have a boy. The rule is not as strictly enforced as it
was,
but
you can now see its effect on the second child, which in the eyes of
many
Chinese really is the last chance to have a boy. For every 100 female
second
children, there are 152 males. Overall, there are now about 120 boys
for
every 100 girls in China.
The country is waking up to this extraordinary imbalance. Last year it
banned ultrasound testing to try to stop gender-based abortion. But
already
it means China is facing a world not unlike a traditional Oxbridge
college,
with far too many men relative to women. That is why we can already
read in
the media accounts of young women being bribed or even kidnapped from
places
such as North Korea or Vietnam. China is going to have to attract
large-scale female immigration or many of its young men will leave.
Gender balance can shape a society’s values. If men are in the
majority,
their negotiating position is weak and they have to be prudent and
hard-working to win a wife. If women are in the majority, it is their
negotiating position that is weak and men can get away with being
irresponsible and feckless. (One theory about the problems of
America’s
inner cities is that there is a shortage of young men because of
large-scale
incarceration and high levels of military service.)
So China is going to be full of old people and rather earnest,
frustrated
young men. It will be one of the most dramatic and unusual demographic
changes the world will have seen for a very long time, and Chinese
leaders
now would do well to plan for such a future.
The writer, UK opposition spokesman for trade and industry, is a member
of
the Global Aging Initiative, established by the Centre for Strategic
and
International Studies in Washington DC

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