Will China Grow Old Before It Grows Rich?
How will China support its rapidly aging population while sustaining economic growth?
April 14, 2012
In 1979, China adopted a one-child policy to limit population growth and ensure economic stability. As a result, with fewer children and better living standards, the proportion of the elderly in the population has grown substantially and will continue to do so in the coming years. According to one study, within 20 years China will have 350 million citizens over the age of 60 — more than the current U.S. population.
This situation will present special problems, but also unique opportunities. This century’s leading countries will be those that consider their aging population not as dependents or liabilities, but that will empower them to continue to be active participants in the country’s economic growth. This is what some people now call “active aging.”
In this regard, the IMF reported last year that China’s economy should surpass the U.S. economy in real terms in 2016. In spite of this, one of China’s greatest fears is that the country will grow old before it grows rich. Professor Jiang Xiangqun, a gerontologist at Renmin University in Beijing, has argued that when developed countries initially entered periods of significant population aging, they did so at much higher levels of per capita income.
The situation of older people was also affected when China’s state-owned enterprises trimmed their ranks of tens of millions of older workers, letting them go with small pensions and replacing them with younger ones. The vast majority of retired workers now have extremely low pensions that, in many cases, leave them unable to meet some basic needs.
As a result, the vast majority of older Chinese live with their families, a situation that conforms not only with the Confucian tradition of respect for age and experience but also with a law that was passed in 1996 creating a legal obligation to take care of family elders.
According to some estimates, 98% of old people in China remain in their homes, or try to do so. Many remain mostly by themselves in “empty nests,” as their children migrate to cities for work or to start their own families in single-generation homes. Some researchers have called this phenomenon the 1-2-4 problem: one child taking care of two parents and four grandparents.
However, as China’s population ages rapidly, the young workforce available for economic growth will diminish. This may hinder not only the development of the country but also the quality of life for its senior citizens, since the young will be less able to support their elders. This is happening while the ratio of elderly dependants to people of working age will rise sharply. It is estimated that over the next few decades this ratio will rise from 10% in 2012 to 40% by 2050.
As the numbers of caregivers fail to keep pace with the growing elderly population, more of them — particularly those with poor health — will seek care in specialized institutions. The proportion of elderly who develop diseases such as diabetes, heart disease and different kinds of dementia will increase. It has been estimated that the total medical cost for treating these diseases could reach almost 9% of China’s GDP by 2025.
The government has responded to the challenge of caring for the elderly by constructing more nursing homes. However, most of these homes are located in big cities, and their quality varies widely. Also, they provide only basic healthcare and frequently lack trained social workers.
As things stand now, the Chinese government has to devise new strategies and policies to deal with the demographic challenge of its rapidly aging population. It will be necessary to improve its social security system to cover both rural and urban areas, provide better oversight of welfare institutions, and address the elderly’s special physical and mental health needs.
At the same time, it is critical to increase the training of social workers through special courses that teach them to understand and deal with the needs of older people. It is also important to increase the retirement age, which is now 60 for men and 50 for women, given that life expectancy is now 73 years. With medical advances, people can still be productive at later ages.
How the government meets this challenge will be a measure of the kind of society China intends to build for the future.