Asia's graying populations could roil the global economy

Need something new to worry about? How about how the Old Age Tsunami will impact the global economy? If Eberstadt is correct “Tsunami” might be a bit of hyperbole, but this will prove to be one of the geopolitical Big Trends:

Over the past decade, an ocean of ink has been spilled over the problem of population aging in the world’s richest societies (Western Europe, Japan and North America). Low-income regions have attracted relatively little attention: Yet over the coming decades a parallel, dramatic “graying” of much of the Third World also lies in store, and it promises to be a far uglier affair than the “aging crisis” facing affluent societies. The burdens of aging simply cannot be borne as easily by the poor; low-income societies and governments have far fewer options, and the options available are considerably less attractive.

For some poor countries, the social and economic consequences could be harsh indeed: Graying could emerge as a factor directly constraining long-term growth and development. In fact, rapid and pronounced population aging may represent one of the most least appreciated long-term risks facing many of today’s developing economies.

Population aging is driven mainly by low birth rates rather than by long life spans–and since fertility levels in poor regions continue to drop, the momentum for Third World population aging continues to build. Not, to be sure, in sub-Saharan Africa, where the median age is likely to remain a mere 20 years some two decades from now. And certainly not in those parts of the Arab/Islamic expanse where total fertility-rate levels still apparently exceed five births per woman per lifetime (viz., Yemen, Oman, Afghanistan). But in much of East Asia, South Asia, Eastern Europe and Latin America, sub-replacement fertility is already the norm.

China: Of all the impending Third World aging tsunamis, the most massive is set to strike China. Between 2005 and 2025, about two-thirds of China’s total population growth will occur in the 65-plus ages–a cohort likely to double in size to roughly 200 million people. By then, China’s median age may be higher than America’s. Notwithstanding the recent decades of rapid growth, China is still a poor society, with per-capita income not much more than a tenth of the present U.S. level.

How will China support its burgeoning elderly population? Not through the country’s existing state pension system: That patchwork, covering less than a fifth of the total Chinese workforce, already has unfunded liabilities exceeding China’s current GDP.

Since the government pension system is clearly unsustainable, China’s social security system in the future will mainly be the family unit. But the government’s continuing antinatal population drive makes the family an ever-frailer construct for old-age support. Where in the early 1990s the average 60-year-old Chinese woman had five children, her counterpart in 2025 will have had fewer than two. No less important, China’s retirees face a growing “son deficit.” In Chinese tradition it is sons, rather than daughters, upon whom the first duty to care for aged parents falls. By 2025, a third or more of Chinese women approaching retirement age will likely have no living sons.

Paradoxically, despite all China’s material progress, the nation’s elderly will face a continuing, and quite possibly a growing, need to support themselves through their own labor. But as China’s elderly workers tend to be disproportionately unschooled, farm-bound and less well-trained than the general labor force, they are, perversely, the ones who must rely most upon their muscles to earn a living.

On the current trajectory, the graying of China thus threatens many tens of millions of future senior citizens with a penurious and uncertain livelihood in an increasingly successful emerging economy. The looming fault lines for “impoverished aging” promise to magnify yet further the social inequalities with which China is already struggling.

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