Download China`s Demographic Fortune

Reversal of China’s Demographic
Fortune
(Fundación Ramón Areces, Madrid, March 22, 2012)
Wang Feng
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The China Miracle
The Demographic Factor in China’s Rise
Reversal of Fortune
What’s Ahead?
The China Miracle
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Economic growth: second largest, largest exporter
and manufacturer, soon to be the largest economy
Poverty reduction: 500 million
What drove the recent growth?
The Chinese Growth Model
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Growth in the last thirty years has been based on a
heavily physical capital and labor intensive model
Internal constraints (costs): resources, environment,
and inequality
External constraints: export market, resources
The demographic factor
The Demographic Factor: Congruence of Two
Booms
(population age distribution, China)
30
Population (millions)
25
20
15
10
5
0
0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90
Age
1982
(Mason and Wang 2007)
2000
2050
30
Population (millions)
25
20
15
10
5
0
0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90
Age
1982
(Mason and Wang 2007)
2000
2050
Economic Growth
(demographic dividend: divergent paths)
(Mason and Wang 2007, Wang and Mason 2008)
China’s Demographic Fortune
(annual growth rate of effective support ratio, 1982–2000)
(Wang and Mason 2008)
Reversal of Fortune
(annual growth rate of effective support ratio, 2013–2050)
(Wang and Mason 2008)
New Demographic Era
Annual birth number
dropped by nearly 10
million from the peak
in the late 1980s
Growth rate only a
third of the level in
the late 1980s
Driving Force: Low Fertility
Anomaly No More
9.0
1975
Saudi Arabia1975
Kuwait1975
2005
Regression Linear
99% CI
6.0
UAE 1975
TFR
Equatorial Guinea 2005
3.0
China 1975
China 2005
0.0
5.0
6.0
7.0
8.0
9.0
GDP per capita (PPP, log)
10.0
11.0
12.0
Age Structure, China (1982, 2010, 2040)
1
Prospect of Rapid Population Aging
Number of elderly (65+)
will double in the next 20
years, from 117 to 238
million
Share of elderly
population will go up
from 8.7 to 16.8% in 20
years, and to over ¼ by
2042
Japan: 9.1% in 1980, 22.6
in 2010, and 35% by
2040
How does China’s Aging Differ from
Other Societies?
Pace
Size
Weak social and familial infrastructure
China’s Accelerated Demographic Transition:
Life Expectancy
China’s Accelerated Demographic Transition:
Fertility Decline
Pace of Aging, Selected Countries
140
130
Years 65+ from 9 to 25%
120
110
100
90
80
80
70
75
60
35
40
28
40
30
30
20
0
China
Japan
South Taiwan Brazil
Korea Province
Russia
U.S.
U.K.
Italy
Germany France
Old before Rich, China and its Neighbors
25000
19614
20000
GDP/P, ($)
16855
15000
13428
10000
7500
5000
0
China
Japan
South Korea
GDP per capita when population aged 65+ reach 9%, in 1990 International GearyKhamis dollar. Source: Maddison 2010.
Taiwan Province
Declining Support Ratio
(Number of working persons per 60+, China and other BRIC
economies)
Declining Support Ratio
(Number of working persons per 65+, China and other large
economies)
Young labor (20-24)
reached peak and will
decline by nearly 20%
in the next one and 1/3
in the next two decades
860
840
820
800
780
760
740
720
700
680
660
640
140
115.57
120
100
80
76.53
60
40
20
0
2000
2005
2010
2015
Year
20-59
2020
20-24
2025
2030
Young Labor (20-24, million))
Total size(20-59)
reaches a plateau,
moderate increase in
the next 10 years
Total Labor (20-59, million)
Changing Labor Supply
Smaller but more productive?
Available college age
youths actually smaller
due to educational
expansion – shortage of
unskilled young labor
A more productive
labor force in the long
run
Fragile Families
(share of women aged 35-49 with one or no child, 2005)
38.6% of all
women of
this age group
Fragile Families
(share of women aged 35-49 with one or no child, urban China, 2005)
67.2% of all
women of
this age group
What’s Ahead?
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Aging population: labor, consumption, savings and
government spending
Growth will slow down
Needs a new model driven by domestic consumption
Productivity increase and human capital deepening
Social infrastructure building
These tasks interact and will be extremely
challenging