An Older China May Be More Unequal, Hitting Women and Rural Citizens Hardest

“Women hold up half the sky,” Chairman Mao Zedong said. As China’s male-skewed population rapidly shrinks and ages, it’s likely to be the heavier half that falls to the fairer sex. Having fewer, older people doesn’t automatically spell disaster. Yet without significant pension, health care and other reforms, already troubling inequities between social classes, regions and genders will increase. That’s bad news for a government that values social stability above all else.

With the results of its once-in-a-decade 2020 census due,

 Beijing has brushed off suggestions that the figures will show a decline. The statistics bureau said numbers grew, while the state-run Global Times quoted demographers predicting population would peak as early as 2022 before starting to decline — still far sooner than earlier estimates. In reality, a few years matter little. The direction of travel has been clear for some time, with previously unlimited rural labor beginning to dry up. Last year, there were nearly 1.8 million fewer registered newborns, an almost 15% drop compared to 2019. 

China is not alone: The world already has more people aged over 64 than children under five. But the world’s most populous nation is getting old before it becomes rich and is doing so extremely fast, thanks to decades of limiting families to one child. Fertility rates of around 1.7 births per woman, according to the United Nations, are already well below the replacement rate, but demographers like Peter McDonald at the University of Melbourne estimate a real rate closer to 1.3, implying a much swifter contraction. The effect is magnified, as he points out, by the gender balance of younger generations. In 2019, there were roughly 30 million more men than women.

Reforms have begun, but the most painful lie ahead. It’s no accident that the latest five-year plan hints at further change, including the gradual lifting of the retirement age, currently as low as 50 for blue-collar women. The central bank published a working paper in March that highlights, in forthright language, the dire need for fixes, from lifting all remaining restrictions on the number of children per couple to introducing support for schooling and child care, costs that deter couples from having any offspring at all. Given the lukewarm success of other countries’ efforts to increase births, and the limited improvements after the one-child policy was phased out from 2013 onward, that’s unlikely to make a big difference. Crippling housing costs alone will keep down family sizes for all but the wealthiest.  

Pension shortfalls loom, too. The Chinese Academy of Social Sciences estimated in 2019 that the main pension fund for urban workers will peak at some 7 trillion yuan ($1.1 trillion) in 2027, before declining to zero by 2035. 

Baby Bust

China’s one-child policy accelerated the decline in its fertility rate

Source: World Bank

It’s not all gloom. While population has been a strength — and a market of 1.4 billion consumers — China also frets about the resources needed to feed a fifth of the world’s people with a 10th of the world’s arable land. The working-age population is shrinking as a percentage of the total, but younger generations are (often) more educated and urban. Lauren Johnston of the China Institute at London’s School of Oriental and African Studies points out that unlike baby boomers in the West, China’s pensioners aren’t necessarily big consumers whose departure into retirement represents a major consumption crunch. Nor do they have the absolute pension entitlements, or indeed demands, of richer peers. Many continue to work, often informally.

Young populations, on their own, aren’t necessarily the path to prosperity. Older ones, conversely, need not mean the end of the road for countries moving up the income scale, as capital and technology contribute as well as labor. That’s good news for China. Countries like Hungary, Poland and Uruguay have managed to improve their fortunes, and so has South Korea, which by some metrics was old when it made it to high-income status in the 1990s. Aging, as Johnston argues, can be just a stage. 

Shift Work

A demographic dividend helped fuel China’s growth, but the working age population is now shrinking

Source: World Bank

The trouble is that a very rapid population crunch comes with consequences. These will not fall evenly.

China’s pensions are, on paper, generous when it comes to income replacement rates, and the International Monetary Fund estimates that three-quarters of eligible Chinese receive one. But the pension system is fragmented and workers who began contributing too late or didn’t pay in enough, frequently in rural areas, will find the payouts paltry. Research published by the Asian Development Bank in 2014 found that on average for those aged 75, the top quartile received pensions roughly 50 times larger than those in the bottom quartile. And figures from the 2010 census do suggest that pensions are not often the main source of income — until the mid-60s, that’s labor; from then on, family support. That leaves some far better off than others.

Health and other elder care are also shallow and unevenly distributed, despite being officially universal. Out-of-pocket expenses are high. Again, China will need to widen specialized care beyond the largest cities.

Not Less, But Fewer

India is set to overtake China as the world’s most populous nation

Source: United Nations World Population Prospects, 2019

Then there is the widening gender wealth gap, perhaps the toughest consequence to tackle. Rural women struggle with security after years of informal work, often in agriculture. In the cities, early retirement ages mean lower benefits. It’s little better for younger women. Fewer men around should be good news, given the struggle with basics like equal pay. In reality, even if single-generation households are growing, women bear the load when it comes to caring for growing numbers of elderly relatives and dealing with state pressure to marry.

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