Demography: China’s Achilles Heel

A pair of articles in the current issue of The Economist examines China’s demographic Achilles heel, which “will hobble the hero” by diverting more and more of a shrinking workforce’s output towards the care of an expanding retired population.

The shift spells the end of China as the world’s factory. The apparently endless stream of cheap labour is starting to run dry. Despite pools of underemployed country-dwellers, China already faces shortages of manual workers. As the workforce starts to shrink after 2013, these problems will worsen. Sarah Harper of the Oxford Institute of Population Ageing points out that China has mapped out the age structure of its jobs, and knows for each occupation when the skills shortage will hit. It is likely to try to offset the impact by looking for workers abroad. Manpower, a business-recruitment firm, says that by 2030 China will be importing workers from outside, rather than exporting them ….

In the absence of predictable institutions, all areas of Chinese society have relied on guanxi, the web of connections that often has extended family relations at the centre. But what happens when there are fewer extended families? One result could be a move towards a more predictable legal system and (possibly) a more open political culture. And, as shifts in China’s economy lead to lower growth, Chinese leaders will have to make difficult spending choices; they will have to decide whether to buy “guns or walking sticks”.

The second article explains one change already taking place, as authorities concede that religious organisations may have a useful role to play in the care of the elderly.

Mr Zheng’s nursing home draws together within its walls two profound changes in urban China: the growing number of old people whose children cannot or will not take care of them, and a government willingness to allow religious groups to take on the task. The Hangzhou home enjoys a subsidy from the local government of 10,000 yuan ($1,600) for each new bed. Funding has also come from Christian donors, and the deputy director, Zhou Wenjie, says any new resident must be a Christian or at least open to becoming one ….

Mr Sun, the care-home director, believes the government should encourage more private nursing homes, including those run by religious charities, because the need is so great. Central-government policy may be helping. In late February the government issued a document that seemed to encourage religious groups to do charity work. The proposal applies only to officially approved religious organisations, and the Communist Party remains cautious about the influence of religious groups. But it is also aware of the growing needs of society, and its own inability to meet them.

China editor Rob Gifford and Globalisation editor John Parker also discuss China’s demography in a video at The Economist’s Analects blog:

Read more about China’s demographics via CDT.


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