For China, the world?s most populous economy, the wheel appears to have turned full circle. From being known as a country where young labour would never run out of supply, China is not only experiencing a decline in population growth, but also an increasingly ageing population.
The latest census of China shows more than 13% of the population to comprise people aged more than 60. This is a sharp increase compared to the previous decade when less than 10% of the population figured in the 60-plus cohort. At a more disaggregated level, almost 9% of the population, or around 118 million people, are aged 65 years and above, which is again an increase of 30 million over the last decade, from 88 million people in the 65-plus age group in 2000.
An ageing population is a problem of developed countries. Typically, as societies and economies mature and experience a rise in incomes along with improvements in healthcare, the rate of growth of population declines. The decline begins with a reduction in death rates, at which point, with birth rates still remaining high, population experiences rapid increases. This first phase of demographic transition continues till birth rates come down out of conscious decisions of households to restrict births. At the same time, death rates keep falling and longevities keep increasing, as better quality of lives and improved healthcare extends to almost all parts of the societies. Finally, with birth rates slipping below death rates, net additions to population might become zero and countries might start experiencing declines in their total population. At the same time, the demographic trends also give rise to large ageing populations.
This final stage of demographic transition is associated with a particular economic structure of societies. The OECD countries are noted to have the lowest rates of growth in population and also the highest longevities. The dependency ratio?reflecting the number of non-working age people to the working age?also tends to be high for these countries due to more aged people. Paradoxically though, dependency ratios are high even in Sub-Saharan Africa and South Asia. But that is due to a greater number of people below 15 years. On the whole though, demographic trends from other parts of the world appear to suggest that ageing populations are a problem of high-income countries with high human development indices. In other words, it is hardly an issue affecting the developing world and, in that sense, China is an exception. Unlike the developed OECD countries, China is still a medium human development country with health and education indicators below the developed world averages. Its per capita GDP is only around 8% of the OECD level and is less than the average of the Arab world.
How is then China ?blessed? with a problem that is typical of high-income countries? Two factors explain the paradox. First is the improvement in healthcare. In this respect, the improvement is not only in terms of expanding health coverage but also including health support as a part of the social security cover being extended to the population. The social security scheme pushed by China since the last decade following the exhaustive and fairly drastic restructuring of state-owned enterprises and large lay-offs of employees has helped in a greater number of people being included in the health cover net. This has particularly benefited the urban areas. With healthcare becoming more widespread, death rates have reduced significantly, leading to an increase in the aged population.
The second factor, of course, is the much discussed ?one child? policy pursued by China for years. The policy has reduced family sizes and has brought down the incremental rate of growth of population. Indeed, the fertility rate in China?the number of children a woman is capable of bearing in her lifetime?is among the lowest in the world. The debate is mounting over whether the low rate is natural or ?induced? by the restrictive policy. Experts argue that the remarkable decline in the fertility rate from 5.8 in the 1970s to 1.8 at present (the rate is as low as 0.8 in Shanghai) has much to do with the ?one child? norm. This is a rather disturbing decline for China because the current fertility rate may not be enough for replacing the population.
President Hu Jintao?s reactions to the census figures suggest that China is unlikely to revisit its restrictive policy at this point in time as it aims to maintain a ?rationally? low birth rate. The problem that is looming large for policymakers, however, is the enlarging community of elderly people, who are struggling to cope with higher costs of shelter and health. The stress levels for the elderly are indeed increasing as is evident from the higher rates of suicides among the aged in both urban and rural areas. Other than high costs of living, the lack of emotional support due to lack of children is presumably a driver behind the suicides. The ?one child? policy appears to be taking a much bigger toll than it was imagined to.
The author is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore. The are his personal views