Abstract
Using the author’s AECI method and population simulations (with the initial sex- and age-specific population data of the simulations covering the 2010–2050 period coming from the United Nations population projections), we performed a systematic and quantitative analysis of the degree, trends, and adjustments of the economic pressure from population aging in China over the period 1980 to 2050, and offer international comparisons as well. We found that China will face an enormous economic pressure from population aging in the middle of the 21st century. Under our medium scenario, the pressure will grow most quickly from the mid-2020s to the late 2030s and may peak in 2040 or so, at which point the pressure will be four times its value in 2010. Enormous economic pressure from population aging may markedly weaken the stamina of China’s rise. Economic measures must play a primary role, and demographic measures a supplementary role, in alleviating this pressure. Given that we maintain the fundamental national policy of birth planning, a gradual, moderate relaxing of the current fertility policies will both effectively alleviate the coming economic pressure from population aging and maintain the total population size within acceptable bounds. This is the most reasonable course to address the economic pressure from population aging in China.
This essay first appeared in Renkou yanjiu vo. 2 (2011). It has been modified slightly for publication here.
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Notes
- 1.
To better understand this method, its reliability, and its limitations, please refer to the first paper of this book.
- 2.
Other than a few nations for which we lack data and therefore excluded, we included all the 103 nations (and regions) with population of more than five million into this analysis. We excluded all countries (or regions) with population of five million or under to avoid random demographic or economic phenomena from very small populations that affect the results of our study.
- 3.
The correlation coefficient between these two variables for all countries (and regions) with population of more than five million from 1980 to 2007 holds steady between +0.787 and +0.884 (Mo 2009). The correlation coefficients were even higher for 2008, 2009 and 2010, being +0.841, +0.841, and +0.822, respectively.
- 4.
The mechanisms by which population aging influences the economy are highly complex. The formulation of the AECI method should inform the reader that the economic pressure of aging referred to in this paper (as measured by the AECI) is the economic pressure a given nation experiences at the macro level as a result of population aging outstripping economic development. This index is also a relative one; it reflects only the relative extent of economic pressure from population aging of a given nation compared to the rest of the world. One should note that the AECI directly measures the economic pressure of population aging borne by a given country, not the actual results of the impact of ageing on that country’s economy, although there is often a high degree of correlation between the two. The relationship between the two is similar to the relationship between “the atmospheric pressure exerted on a person” and “the actual consequences of atmospheric pressure on a person.” For more information about how the AECI is calculated, as well as its principles, applicability, reliability, and limitations, see Mo (2009).
- 5.
None of these institutions directly made a per capita GDP estimate. We used their estimates of GDP growth in China over the period 2005–2050 (or 2010–2050) and World Bank data for China’s GDP in 2005 (or 2010) to make predictions for China’s total GDP in every year from 2010 to 2050. Then we used UN projections for total population in China (UN 2009) to calculate per capita GDP.
- 6.
- 7.
Calculated with 2010 as the base year, same hereinafter in the present paper.
- 8.
Our projections for economic pressure from population aging in China from 2011 to 2050 are built on the basis of projections for changes in per capita GDP and aging for the same period. If one agrees that our medium and long-term projections about aging are relatively accurate, then one must also agree that projections for per capita GDP over the medium to long-term are relatively difficult to make; the results of such projections are often of value only for reflecting trends. So our projections for the economic pressure from population aging in China from 2011 to 2050 can only reflect trends (particularly reflecting the trends of economic pressure from aging under different per capita GDP assumptions) and should not be interpreted as concrete forecasts.
- 9.
Except where specified otherwise, we adopt the medium scenario for the projections of per capita GDP and population aging.
- 10.
This is based on our medium scenario for per capita GDP. In coming sections, we will demonstrate that under both our high and low GDP scenario of projection, this peak will still arrive around 2040. Thus, we can almost confirm that so long as there are no particularly big changes in fertility policies (such as those detailed in our high scenario from Table 2.1 or an even greater degree of relaxation of fertility policies), then the economic pressure from population aging in China will peak around 2040.
- 11.
See Fig. 2.3 for definitions. We compare China with the most developed economies from the consideration of our research objectives. Our research objective here is to compare the economic pressure from population aging (AECI value) in China at its peak in 2040 or so with the AECI value of other countries when they reach the same or similar level of economic development (per capita GDP). As it is estimated that the most developed economies will all exceed China in per capita GDP by 2030, and as it is possible to calculate per capita GDP and AECI values for these countries over the period 1980–2030, it is possible to compare these most developed economies with China (see Fig. 2.3). Generally speaking, these most developed economies lead the world in both economic development and population aging, and as such, comparison of China with these countries is of special significance.
- 12.
Economic measures include adjustments to economic behavior, such as establishing a senior’ssocial security system and corresponding adjustments to basic economic systems for seniors in areas of income distribution, healthcare, employment, and housing.
- 13.
In theory, demographic measures include policies for population migration. In China’s case, it is not possible to alleviate population aging through large-scale international migration, but it is possible to use inter-regional population flows to adjust population aging.
- 14.
Meaning either unprecedented or very rare at similar levels of economic development.
- 15.
Here by “relaxation of fertility policies,” we mean not only the actual relaxing of policies, but also a corresponding increase in the fertility rate. For example, where we write “a medium degree of relaxing of fertility policies,” we mean a medium degree of increase in the fertility rate by adjusting the policies.
- 16.
See Sect. 2.2 above for an explanation on data.
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Mo, L., Wei, Y. (2020). The Economic Pressure of Population Aging and Its Adjustments in China. In: China’s Demographic Dilemma and Potential Solutions. Research Series on the Chinese Dream and China’s Development Path. Springer, Singapore. https://doi.org/10.1007/978-981-10-1491-8_2
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