In China, an Unprecedented Demographic Problem Takes Shape
Summary
Chinese
society is on the verge of a structural transformation even more
profound than the long and painful project of economic rebalancing,
which the Communist Party is anxiously beginning to undertake. China's
population is aging more rapidly than it is getting rich, giving rise to
a great demographic imbalance with important implications for the
Party's efforts to transform the Chinese economy and preserve its own
power in the coming decade.
Analysis
Two
reports in Chinese media highlight different aspects of China's
unfolding demographic crunch. The Ministry of Education reported Aug. 21
that more than 13,600 primary schools closed nationwide in 2012. The
ministry looked to China's dramatically shifting demographic profile to
explain the widespread closures, noting that between 2011 and 2012 alone
the number of elementary-aged students fell from nearly 200 million to
145 million. It also confirmed that between 2002 and 2012, the number of
students enrolled in primary schools dropped by nearly 20 percent. The
ministry's report comes one day after an article in People's Daily, the
government mouthpiece newspaper, warned of China's impending social
security crisis as the number of elderly is expected to rise from 194
million in 2012 to 300 million by 2025.
The
Communist Party is already considering measures to counter, or at least
limit the short-term impact of, demographic changes in Chinese society.
On one hand, the Party continues to flirt with relaxing the one-child
policy in an effort to boost fertility rates, most recently with a
potential pilot program in Shanghai that would allow only-child couples
to have another child. On the other hand, the government has proposed
raising the national retirement age from 55 to 60 for women and from 60
to 65 for men. If implemented, this would bring China's retirement
policy more in line with international norms and delay some of the
financial and other social pressures created by the ballooning number of
retirees dependent on government pensions and the care of their
children.
But
even sweeping adjustments to the one-child policy or the national
retirement age would create only temporary and partial buffers to the
problem of demographic change. It is no longer clear that the one-child
policy has any appreciable impact on population growth in China.
China's low fertility rate (1.4 children per mother, compared with an
average of 1.7 in developed countries and 2.0 in the United States) is
at least as much a reflection of urban couples' struggles to cope with
the rapidly rising cost of living and education in many Chinese cities
as it is of draconian enforcement of the policy.
Likewise,
lifting the retirement age by five years will only partly delay the
inevitable, and in the meantime it will meet stiff opposition from an
important constituency of professionals, including many civil servants.
In adjusting the retirement age, the government also risks aggravating
an employment crisis among the rapidly growing population of unemployed
college graduates in cities, many of whom are looking to filter into the
employment ladder as elderly workers exit the workforce. In this
context, the Communist Party must weigh policy adjustments carefully --
any change it makes in one area is likely to create new tensions
elsewhere in the workforce.
The
crux of China's demographic challenge lies in the fact that unlike
Japan, South Korea, the United States and Western European countries,
China will grow old before the majority of its population is anywhere
near middle-income status, let alone rich. This is historically
unprecedented, and its implications are made all the more unpredictable
by its coinciding with the Chinese economy's forced shift away from an
economic model grounded in the exploitation of inexhaustibly cheap labor
toward one in which young Chinese will be expected to sustain the
country's economic life as workers and as consumers. A temporary
reprieve from the demographic crisis will be difficult but possible with
reform, but a long-term solution is far out of reach.