China's future: Growing old before it grows rich

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For 15 years, Zhang Binfa has been carrying the evidence of China's rapid economic growth on his narrow but powerful shoulders.

Mr. Zhang is one of the fabled bang-bang men of Chongqing, who carry goods up and down the steep inclines of the Yangtze River port city on bamboo poles slung across their backs. But at the age of 56, Mr. Zhang is not sure how much longer he can continue lifting cement blocks or piles of ceramic tiles, or items like the billboard-sized television he helped lift on Thursday for the substantial sum of 60 yuan (about $9). A dozen years, he hopes. He'll work as long as he can in order to postpone retirement and life on a meagre pension of just 150 yuan a month, if one is paid to him at all.

"I don't know when I can retire because my two children only make enough money to support themselves. They can't afford to support me. I have an 85-year-old mother-in-law, and she receives no pension at all," Mr. Zhang explained as he sat on a bench near Chongqing's central People's Liberation Square, hoping for one last job before he would head home at midnight.

The problem ahead for Mr. Zhang and his family is one that will be common all across China in coming years as the country, despite all its recent economic progress, is hurtling toward the challenge of becoming the first country in the world to grow old before it grows rich.

Figures released Thursday from China's once-a-decade census show a population of nearly 1.34 billion people, but one that is aging quickly. The census found more than 13 per cent of Chinese are now 60 or older, up from 10 per cent in the 2000 census. And those under the age of 14 now make up less than 17 per cent of the population, down from 23 per cent a decade ago.

Overall, China's population grew just 0.57 per cent a year between 2000 and 2010. Thirty-two years after the country's controversial one-child policy was introduced in an effort to curb runaway population growth - a step then-leader Deng Xiaoping saw as a precondition to the country getting richer - China's population is expected to start to decline as early as 2015, according to the government's forecasts.

While Beijing still hails the one-child policy as a success, its sustainability seems certain to come increasingly into question as the country ages, eventually leaving a growing number of retirees dependent on a dwindling number of working-age citizens.

The shift will be felt across the economy, including in the property and stock markets, as the older generation tries to sell assets to a younger generation without enough money to buy them.

Demographics will likely force major adjustments, said Wang Yijiang, a professor of economics and human resource management at Beijing's Cheung Kong Graduate School of Business. The service sector, including restaurants, shops and cinemas, will struggle to recruit workers. Businesses will have to incorporate more technology and rely less on human labour. Wages will increase, and employers may have to offer benefits and insurance programs.

The number of Chinese aged 60 or older is expected to reach 200 million by 2015. By 2025, one in five people who live in urban areas will be 60 or older.

While other Asian countries - notably Japan and South Korea - are also aging rapidly, China is on track to become the first developing country to have to deal with the phenomenon.

Li Wei, a professor of economics at Cheung Kong Graduate School of Business, said what is at issue is that China, like Canada and the U.S., has its own baby boom and echo generation - the latter being the children of parents born in the 1950s and 1960s.

But in China, he said, the associated challenges of employment and retirement will be much more dramatic because of the one-child policy. "The analogy for me is the difference between a tidal wave and a tsunami. If in Canada and the U.S. it's a big tide, in China it's a tsunami."

Part of the impact on China's economy, he said, will be the burden of care that will fall on the younger generation in a society where a social safety net for the elderly is not entrenched. "People who are now in middle age are expected to live another 30 years, and so what we see is today's young generation expected to care for them," Prof. Li said.

China's manufacturing belt is already feeling labour shortages, another problem that will grow in the years ahead. "China has benefited greatly from the demographic divide, which is a large number of young people to provide factories with fresh recruits," Prof. Li said. "As time goes by the number of young recruits available to the factories will shrink. We're already seeing wages are rising quite rapidly.

"As time goes by and the demographic gets greyer … the salary for factory workers will rise even faster."

China's economic miracle of the past few decades has relied heavily on men and women like Mr. Zhang, rural residents who were willing to go anywhere in the country and do almost anything as long as it offered better money than they could make in their home villages. But now the army of millions of migrant workers who built China's skyscrapers and roads and kept its factories humming is diminishing.

"[Migrant workers are]critical, [they're]the key. For 30 years of rapid economic growth, without that migrant market, this miracle is hard to imagine. It's impossible," Prof. Wang said. But already, he added, the impact of the shrinking work force is becoming evident in a second generation of migrant workers who are demanding better pay and working conditions than their parents.

At risk is China's position as the world's source of cheap goods. "It may be that China's export momentum will slow down," Prof Wang said, citing the country's first trade deficit last quarter as the beginning of a trend.

Even with the low population growth rate, the census found China still added some 73.9 million people over the past decade, or more than twice the population of Canada. (In contrast, Canada's population grows by about 1.2 per cent annually.) The government says that without the one-child policy, China's population would have grown by another 400 million over the past three decades, creating a drain on resources that would have made the country's rapid economic transformation impossible.

"The momentum of fast growth in our population has been controlled effectively thanks to the family planning policy," said Ma Jiantang, the director of the National Bureau of Statistics. "This has eased the pressure on resources and the environment and laid a relatively good foundation for steady and rapid economic and social development in China."

Despite the challenges that the rapid aging of society will cause, President Hu Jintao was quoted by the official Xinhua newswire this week as saying China would "stick to and improve its current family planning policy and maintain a low birth rate."

But analysts say the fact that Mr. Hu felt the need to address the population control policy at all suggests the debate over its future has reached the highest levels in Beijing and that changes to the one-child rule (which already contains a number of exceptions) may yet be on the way despite his seemingly dismissive words.

China's 2010 census was the largest head-counting exercise in history, involving some six million census takers, a number three times the size of the People's Liberation Army.

Nearly half of Chinese now lives in cities, the census also revealed, underscoring the remarkable rural-to-urban migration that has accompanied the country's rapid economic growth.

Carolynne Wheeler is a freelance reporter.

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CHINA AT A GLANCE

1,339,724,852

Population, an increase of 5.8 per cent since the 2000 census

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3.10

Average family household, a decrease from 3.44 people

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49.7%

Share of the population who are urban residents, a rise of nearly 14 percentage points

Source: National Bureau of Statistics of China