New research from Standard Chartered says that China’s ageing population will create a major challenge for economic growth by the end of the decade, and that the country could “get old before it gets rich.”
Standard Chartered economist Enam Ahmed, co-author of a new report on China’s ageing population, points out that Asian economies currently suffer from the most rapidly ageing population, and that this will affect economic growth due to its impact upon labour supply.
According to Ahmed the problem of an ageing population will begin to drag upon the GDP growth of China, Hong Kong, South Korea and Thailand by 2020.
The report expects some of these countries to grow old before they grow rich, with China and Thailand facing key challenges in this regard over the next several decades.
Changes in demographic structure as a result of an ageing population could put China’s old age pension system to be in the red by as early as 2030
Asia Host to Record-breaking Ageing Demographic
According to the report not only is Asia host to the world’s fastest ageing demographics, East Asian in particular is seeing an “unprecedented” ageing population.
The United Nations defines an “ageing’ society as one in which people over the age of 65 comprised 7 – 14% of the population. An “aged” society is one where they comprise 14 – 21%, while a super-aged society is one where they account for over 21% of the total population.
China, like Thailand, can expect to become a super-aged society in under two decades. For other Asian economies this timeframe is even shorter, with South Korea and Singapore expected to become similarly venerable by 2030.
Economic Behaviour of Asia’s Ageing Population is Distinctive
Standard Chartered researchers identified behaviours of Asia’s ageing populations which distinguish them sharply from those in developed economies.
The populations of other developed countries work hard while they are young to achieve peak savings later in their career, before spending it after they retirement.
Asia’s elderly differ in this final regard, however, with little spending of their savings post-reitrement.
Reproductive Policies Across the Region Have Failed
While the governments of many Asian countries have adopted concerted measures to boost rates of reproduction, the Standard Chartered report points out that these policies have achieved limited success.
Birth rates are still well below the replacement rate of 2.1 in a slew of the region’s leading economies, including China, Japan, Singapore and South Korea.
Advanced Asian economies are currently host to the world’s lowest reproduction rates, with the figure for Hong Kong, Japan, Singapore and South Korea ranging from 1.0 to 1.4.
Total fertility rates across Asia have dwindled continuously, and are expected to plunge from 5.1 for the period from 1970 – 75 to 2.0 by 2025-2030.