China’s Twilight Years: The country’s population is aging and shrinking. That means big consequences for its economy—and America’s global standing.

“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.”

Copyright The Atlantic – June 2016

On opposite sides of the globe, two debates that will profoundly affect the future of the United States, and indeed the world, are raging. One of them has become shrilly public, while the other remains almost secret. On the surface they might seem to have little to do with each other, but at bottom, they are inextricably linked.

The first debate, which is unfolding in America, concerns immigration. Republicans like Donald Trump and Ted Cruz have staked out some of the more radical positions in this debate, such as urging that the U.S. build a wall to keep out illegal immigrants and that it deport the millions who are already here. The other debate, which is playing out in Beijing, is about how big a navy China should build, and how much it should contest America’s primacy in the world’s oceans.

To a degree scarcely suspected by most people, both debates—and more generally, America’s chances of maintaining its standing in the world—are bound up in the two countries’ sharply contrasting population dynamics.

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.

Many economists believe that these market plunges are early manifestations of a historic slowdown in the Chinese economy, one that is bringing the country’s soaring growth rates down to earth after three decades of expansion. But the current slowdown pales in comparison with a looming societal crisis: In the years ahead, as China’s Baby Boomers reach retirement age, the country will transition from having a relatively youthful population, and an abundant workforce, to a population with far fewer people in their productive prime.

The frightening scope of this decline is best expressed in numbers. China today boasts roughly five workers for every retiree. By 2040, this highly desirable ratio will have collapsed to about 1.6 to 1. From the start of this century to its midway point, the median age in China will go from under 30 to about 46, making China one of the older societies in the world. At the same time, the number of Chinese older than 65 is expected to rise from roughly 100 million in 2005 to more than 329 million in 2050—more than the combined populations of Germany, Japan, France, and Britain.

The consequences for China’s finances are profound. With more people now exiting the workforce than entering it, many Chinese economists say that demographics are already becoming a drag on growth. More immediately alarming are the fiscal costs of having far more elderly people and far fewer young people, starting with the expense of creating the country’s first modern national pension system.

Unlike residents of China’s prosperous eastern cities, hundreds of millions of peasants and migrant laborers have scant personal savings and rudimentary retirement coverage, if any. “One goal is to extend pension coverage to everyone,” says an economist with the Chinese Academy of Social Sciences, in Beijing. “But that will be very expensive, because most people haven’t paid anything into the system at all. Basically, what this means is a wealth transfer.” Providing health care to these same disadvantaged classes will also be vastly expensive.Mark L. Haas, a Duquesne University political scientist, has for some time warned of a looming contest between guns and canes—a variant on the old idea of guns versus butter—as the world’s major countries grapple with demographic change. “China’s political leaders beginning in roughly 2020 will be faced with a difficult choice: allow growing levels of poverty within an exploding elderly population, or provide the resources necessary to avoid this situation,” Haas writes in Political Demography. If China’s government decides in favor of the latter option, Haas argues, American power will benefit. More broadly, he foresees a coming “geriatric peace,” as nations around the world find themselves too burdened to challenge America’s military preeminence.

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