In China, an Unprecedented Demographic Problem Takes Shape

Discussion in 'Current Affairs, News and Analysis' started by sunnoficarus, Aug 22, 2013.

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  1. At least the Japanese has the good sense to get rich before they got old.


    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.


    "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 the number of students in primary and secondary schools fell from nearly 150 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 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.


    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 the number of students in primary and secondary schools fell from nearly 150 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 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's population will grow old before the majority of it 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.




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    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's population will grow old before the majority of it 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."


    http://www.stratfor.com/analysis/china-unprecedented-demographic-problem-takes-shape?utm_source=freelist-f&utm_medium=email&utm_campaign=20130822&utm_term=FreeReport&utm_content=readmore&elq=c3e20baeea9448fc8f96582025acf804

    In China, an Unprecedented Demographic Problem Takes Shape is republished with permission of Stratfor."
     
  2. CplFoodspoiler

    CplFoodspoiler War Hero Book Reviewer

    Linkee no workee
     
  3. A bit out of date, the rule exempting families where both parents are only children from the One-Child policy has been in force for the best part of a decade. There's no mention of hukou reform or the small-city urbanisation programme either.

    Wishful thinking doesn't make for good analysis.
     
    • Like Like x 1
  4. There is a growing awareness of the difficulties faced by migrant workers in schooling their children in urban areas, and of reaching their basic health care needs. A demanding middle, urban class is pushing against urban growth (often as a result of grade quotas in high school qualifications for their kids), whilst at the same time depending on cheap labour migrants to preserve the growth required to maintain their lifestyle. A shift away from foreign NGO funding for migrant welfare to State sponsored funding would be a good combat indicator for serious reform, and an indication that fluidity and support for migrant workers was recognised as vital to the PRC's continued economic growth.
     
  5. India has a strange one where boys are valued more than girls, so baby girls gets aborted, eventually there will be more boys than girls and lots of blue balls, at some point there will be a big population slump.

    *The Indian blokes seem to treat their women like shit with rapes, gang rapes, acid attacks, murdered by their husband or families of the their husband.
     
  6. There's a fairly decent explanation of urban planning policy HERE. Basically, they see more than one type of urbanisation - the rise of megacities/municipalities like Beijing and Chongqing; and the development of smaller towns into small cities coupled with the consolidation of groups of villages into towns. There's a subtle difference in Mandarin between the two types of urbanisation, chengshihua and chengzhenhua but the implications for economic policy are massive.

    As I mentioned above, the One Child policy has exemptions - ethnic minorities, couples with daughters born first, farmers, couples who're both only children - but now it looks as if couples where only one partner is an only child will be exempt too. Given how long it's been in place, this reform will effectively render the whole policy obsolete for the overwhelming majority of the population.

    The other thing for governments to bear in mind is that a problem of too many old people is inherently self-correcting. You just need to wait a decade or two.
     
  7. Grumblegrunt

    Grumblegrunt LE Book Reviewer

    well japan got old on a mountain of debt and overpriced realestate something the chinese are doing well at replicating.

    at least their elderly can be productive and know how to grow and make stuff out of it, communist care homes are likely to be the future, clustered around the local soylent gleen factoly.

    the world needs to look at creating elderly projects where the really old are looked after by the not so old to keep them genuinely productive rather then forcing them to stay in the general workplace sitting in jobs the young should be in. the elderly are the charity workforce through choice so it cant be so hard to get them looking after their own.
     
  8. Local government debt is pretty horrendous and the first major headache for the Xi cabinet. Under PRC law it's illegal for local government bodies to borrow money so when they needed to raise capital for development projects they set up Local Development Companies (LDCs) which were ostensibly privately-owned but in reality firmly tied to the local body and which could borrow as much as they liked.

    Central government is regulating like crazy to cut those sort of monkeyshines out but more importantly to remove the motivation to play them. A major motivator behind Xi's Mass Party Line and all the Maoist doctrinaire stuff he's coming out with is to knock the Party into some sort of disciplined shape so that local cadres realise when 'no' means 'no'.

    Your point on elderly care is interesting. Traditionally, this is the role of the eldest son and his family with siblings chipping their share in and as a result nursing homes are still few and far between. Obviously, in the One Child era, this leaves the one child under a bit of pressure, particularly if she happens to be a daughter and has her husband's family too. If I was pressed to pin my money on any single factor resolving this it's the sheer pragmatism of Chinese culture in the face of economic necessity - they may start a rebellion over a ban on footbinding even though hardly any of them did it but they'll sure as hell make sure their only child gets the best education they can afford even if she turns out to be a girl.
     
  9. In the short term, China could shift the emphasis from One Child to One Grandparent, much in the same way that the UK appears to have embarked on a One Parent policy.
     
  10. Grumblegrunt

    Grumblegrunt LE Book Reviewer

    I thought it was a one mum three dads policy, have the tories changed it?
     
    • Like Like x 2
  11. I've been banging on about the demographic dangers of not having enough kids and too many old people for a while. China is an extreme example. Japan, Germany, Switzerland, Spain, Greece and to a lesser extent the UK all are going to face big economic problems because of a sharp dip in breeding after the baby boom years.

    Add to that Healthcare inflation driven by market forces, constantly enhanced demand from these services mostly elderly clientele for improved procedures and profit driven medicine.

    And in the UK the recent generational appropriation by the asset rich old from the increasingly cash poor young via a rigged dysfunctional housing market.

    What you have here is a formula for a society where young aspiration is crushed by the demands of their mostly state dependent elders. A democratically created desperation society.
     
    • Like Like x 1
  12. Another reason why all the main parties favour immigration into the UK despite what they may say publicly or whatever policy initiatives they push out.

    Our own demographic and the cost of pensions is headed towards the cliff top.
     
  13. Your first link (to thechinastory.org) isn't working. You have the URL repeated twice.

    More to the point, I don't imagine the demographics comes as a surprise to the government of China. This has been a long term plan and they will adjust rules as needed to meet it. The 'one child' policy is obviously something that was intended as a temporary measure since it isn't sustainable in the long run. They have evidently been phasing it out already. They will also obviously gradually raise the retirement age, just like most western countries are doing. Given that this is all a result of a long term plan, I don't imagine the Chinese government are standing about wringing their hands over it.

    The retirement costs relative to western countries misses the point, as it's not like there are absolute costs which must be met. The Chinese will simply not be spending as much money per capita on the very elderly. For one thing, their per capita costs will be a lot lower, as health care is by its nature a very labour intensive industry, and labour is cheaper in China. It's all relative.

    I'm also not sure this is "unprecedented". The world is a big place, and history is pretty long. There have been lots of poor places with stable or even declining populations. It would be quite an ambitious historical research project to prove this was "unprecedented".

    If I wanted to find a 'crisis' in Asia to worry about, I would look be looking at India's financial problems. Their currency, government finances, and economy in general are looking very shaky at the moment.
     
    • Like Like x 1

  14. Oops. That’s what comes of staying up late on a school night. Fixed, thanks.




    There isn’t actually any such legal measure as the ‘One Child’ policy, it’s just a convenient label slapped on the population control measures enacted in the late 70s. The exponential rate the population was rising was simply beyond the means of China to support and from the pragmatic (some would say amoral) perspective of Chinese governance had to be curbed to concentrate the available resources on a smaller number of mouths.

    The measure itself was designed from the get-go with flexibility to be adapted as circumstances changed. Any society where family and clan are so deeply embedded is not going to overlook the effects of fecundity.
     
  15. Necessary measures in reaction to Mao's pro-natalist policies of the 50' and 60's which hugely increased birthrates and continue to influence the top heavy population pyramid. They'll die off soon enough.