On the Ageing Population

On the Ageing Population

The Issue

With the development of the advanced society, increasingly numbers of nations are facing the ageing problem. The aging population, the fraction of the population aged 65 and over exceeds 8-10%, has been universally recognized as one of the worldwide social issues in 21 century. We are ageing—not just as individuals or communities but as a world. In 2006, almost 500 million people worldwide were 65 and older. By 2030, that total is projected to increase to 1 billion—1 in every 8 of the earth’s inhabitants. Usually, the ageing problem would happen in the developed countries, however, some developing countries are facing the same problem as well. China, as the biggest developing nation, is facing serious ageing problem. According to 2010 census, China has already become an aging society, with 177.648 million elderly over 60 years old, about 13 percent of the total population. Depending on the report released by CASS (Chinese Academy of Social Science), the age of 65 in China will overtake that of Japan in 2030, which will make the world’s most aged society. Unfortunately, China is the only country with more than 100 million people aged over 60 in the world and the country's economy is not well prepared for a rapidly expanding aging population. In such situation, China faces more difficulties than any other nations. Chinese current pension system, medical care system and social service sectors cannot meet the demands of all senior citizens. As we all know, in the past three decades, China created a miracle thanks to the largest cheep labor force in the world, which had contributed nearly 27 percent to Chinese economic growth. Nowadays, because of the increasing life expectancy and low birth rate (one child policy), the demographic dividend is gradually disappearing. According to statistics, compared with 2000, the scale of young Chinese labor force aged from 20 to 29 has already reduced about 15% in 2010, which will affect Chinese economy, as the number of potential workers, especially from rural areas, will shrink. Chinese government as well as the outside is worrying about that China will slow or even stop the developing pace on account of the shrink of labor force, since Chinese economy benefits a lot from the demographic dividend. How can we solve this problem effectively has been attached great importance by Chinese government.
The Setting In the late 1970s, China has carried out one-child policy to control the population growth. With the launch of the one-child policy, Vice Premier Chen Muhua expressed his fear: “Young people under 30 years of age account for about 65 percent of the total population, or around 630 million. Some have already reached the age of fertility, and the majority of the remainder will do so within the next 10 to 20 years or so. If population growth is not controlled, it will reach a high peak, making it virtually impossible for the economy and our social institutions to cope with.” In that circumstance, China has put one-child policy into practice until now. There’s no doubt that one-child policy has played a role in contributing, along with urbanization, to a reduced rate of population expansion and the temporary creation of a population with a dependency ratio lower than it otherwise would have been. However, one-child policy as well brings some problems to our society. For instance, currently, China is undergoing a family restructuring process. The former pyramid shape is being replaced by an inverse pyramid. The typical Chinese family today can be classified as "4-2-1". "4" represents the parents and parents-in-law, "2" represents the husband and wife, and the "1" refers to the only child of the couple. And the center of the family is on the "1"— the grandchild. The form of 4-2-1 family leads to the condition that the "2" have to prepare for both the older and the younger generations. To the "2", they have to take care of their parents and child both on material and immaterial life. At present, the "4-2-1" family structure is emerging and will replace the previous family structure in China. Moreover, the middle "2" have to shoulder all the responsibilities of their families. Besides, because Chinese current pension system, medical care system and social service sectors cannot meet the demands of all senior citizens, the children of these aged people have to shoulder more responsibilities.
Policy Initiatives Based on the problem of ageing population, Chinese government has already launched a new policy to relieve the shortage of labor force market. If the couple matches certain conditions, they can have two babies. Here listed some conditions. Both parties are only child in their respective family; Their only child is diagnosed of having a non-genetic disease and unable to grow up to be a normal laborer; Either party is infertile but the wife becomes pregnant after having adopted a child legally; Remarried couples with the total number of children from previous marriages not exceeding one and so on. Furthermore, relaxing the requirements on emigration application can attract more immigrants to relieve the lack of labor force. Taking Canada as an example, Canada needs to attract hundreds of thousands of skilled workers from abroad to make up a labor shortfall. Since the 1990s, the federal immigration program has targeted people who have the experience and training that are in demand, including medical doctors, nurses, cooks, electricians, welders and other professionals. It is also a good idea for Chinese government to attract some skilled immigrants. Although ageing population challenges a certain nation’s pension system, medical care system, social service and economy, it is not always about negative effects. From the bright sight, the occurrence of the ageing problem is a good opportunity for China to switch from a labor-intensive country to a technology-intensive country. Actually, ageing population itself is not horrible; the key point is how to respond it wisely. If the government can handle this problem effectively, ageing can also become a moment for the Chinese society to promote economy and realize the economic transition. Chinese government can not only be satisfied with the current situation --“World Factory”, instead, it is time for us to transit to a technology-intensive country. Taking Finland as an example, Finland started its industrialization very late, in the early 20th century; Finland was stuck in the structural crisis of its leading industries-- forest industry, iron and steel, shipbuilding, textile and clothing. But, Finland used that chance and realized the transition successfully. Nowadays, although Finland is facing the ageing problem, it is still on the top list of worldwide competitiveness because of its pillar industry --electronics. The well-known mobile phone brand – Nokia is the best proof of the successful transition of Finland’s economy. Finland people are proud of their advanced technology and eager to innovate. Compared with Finland people, Chinese people like to plagiarize and copy others’ ideas and products rather than innovate by ourselves. Copying and manufacturing blindly can not make us profit a lot to promote the economy and compete with other nations. There’s no doubt that such kind of countries lack the competitiveness in the world and the prospects for development. As we all know, the price of iphone 4 is from $499 to $699, but the cost of an iphone 4 is only about $188 or even less. The Apple Inc. let some developing countries to manufacture these components of iphone 4 and pay the workers less money, since the labor force in developing countries is very cheap. Though China benefits a lot from the cheap labor force, the wages of Chinese workers often do not follow international standards. As we can see that the one who master the core technology can earn more money, while the one who just copies and manufactures can only get a little money. Therefore, the lacking of labor force urges China to switch from a labor-intensive country to a technology-intensive country. In that case, China will be able to achieve more balanced and sustained growth in the future. In addition, since the aged, purely a group of consumers who have many demands can bring a lot of opportunities. Due to the unique background of China, the industries related to the aged will have bright prospects, such as health care industry, entertainment industry, tourist industry and etc. The consuming on account of filial piety can contribute a lot to China’s economy.
Conclusion
With the development of the advanced society, the proportion of older people is steadily increasing. And the emergence of ageing population will cause repercussions on the labor market, economic growth potential, public finances and other fields. At present, the ageing population is going to become a mass phenomenon in the near future, which will not only change the economy system, but also shake the base of society as such. To China, answering ageing problem correctly is of great urgency. Encouraging couples to have the second child and relaxing the requirements on emigration application to attract more immigrants to relieve the shortage of labor force are both the solutions to the ageing problem of China. Additionally, China can not be satisfied with gaining benefits through manufacturing products all the time. It’s time to do the economic transition with the wealth which we gained from the demographic dividend. Chinese government can invest much money to develop the technology, which will acquire better economic profits and development prospect. In that case, China will be able to achieve more balanced and sustained growth in the future. Although China has not well prepared for the ageing population, China can regard it as an opportunity to realize the transition of economy. What’s more, we should not treat the aged as a burden or a threat to our society. On the contrary, the industries which are related with the aged will be the emerging industries in the future. If Chinese government can solve the ageing problem effectively, the chances offered by ageing population can be used to their full extent, which will bring more opportunities to China.

November 3, 2011 Wanqing Xu (Chelsie)