China’s demographics disaster

26th April 2012

 

China's looming demographic problem is not new news. Its one child policy was always likely to create a situation where, ultimately, a smaller working population was supporting a larger pensioner population. But the Economist suggests that the situation may be worse than originally thought:

"Over the past 30 years, China's total fertility rate-the number of children a woman can expect to have during her lifetime-has fallen from 2.6, well above the rate needed to hold a population steady, to 1.56, well below that rate (see table). Because very low fertility can become self-reinforcing, with children of one-child families wanting only one child themselves, China now probably faces a long period of ultra-low fertility, regardless of what happens to its one-child policy….

It summarises: "Most obviously, it means China will have a bulge of pensioners before it has developed the means of looking after them. Unlike the rest of the developed world, China will grow old before it gets rich." 

If true, this could have a severe impact on China's ability to grow, but many responses to the piece questioned its premise: Michael Zheng, for example, says: "4-2-1 phenomenon making it impossible for the younger generation to support the two elder genenrations? This is just blindly interpreting China data with western mindset. Did Economist know that many of the parents in the middle "2" seek employment, sometimes manual labour, after retirement so that they can support the "1"? The "2" in the middle support both the older and the younger generation(s)."

Jomo Smith believes the impact of the one-child policy has been overplayed: "The truth is that there are many segments of China's population that DO NOT FOLLOW the one child policy. People in some countryside areas continue to have multiple kids."  Others point out that without government pension provision in place, weak demographics are simply not the problem they are in developed economies. People do not view ‘retirement' in the same way.

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