Could China be looking at a fundamental policy shift away from a focus on economic growth and towards population? Like most Western countries China is not immune from the demographic challenge of a an aging population with data showing that more than three decades after the industrial boom began population growth has slowed for the first time in 2014 which has some commentators suggesting a trend very similar to Japans of two decades ago. With the economy looking shaky some believe that the Government will review the countries growth target range from 7% to between 6.5% and 7% respectively.
With a decline in the population growth also comes a decline in the future workforce so those born in 2014 and who might reach working age in 17 years time could reach a market where jobs may be in supply, wage growth has been pushed up by demand for workers while at the same time the pressure on Government finances increases as more of the population begins to migrate out of employment and into retirement.
Mu Guangzong, a professor at Peking University’s Institute of Population research has called on the Government to relax the one child policy. “Reform is lagging too far behind and has been too cautious,” Mu said. “We must move from restricting childbirth to encouraging it as soon as possible. We must complete a thorough change of population policy.”
The one child policy limits most couples to one or two children depending on their ethnic background, where they live and what role they play in the local economy (skills). When the policy first came into effect more than three decades ago the general thinking was that a woman with three children could in fact be a drag on economic growth. As of May an estimated 1.5 million couples had applied to have a have second child but that lagged what officials estimates were to be (2 million). Some suggest that this lack of Chinese in taking up the second child is down to the fact that they themselves believe that financial and economic security is better managed when there is a single child family in play.
When the National Bureau of Statistics published the fall of working age people (by 1.6 million) for 2014 the suggestion was that this coincided with a slowdown in economic growth. The other suggestion being that this is the same trend that Japan experienced in the late eighties and early nineties as population growth decline so did its economic growth which then led to more nearly two decades of weaker than expected growth.
UN data shows that in 2050 a third of all Chinese will be aged 60 or older compared to just 12% as at 2010 population levels.
But, the news isn’t all bad and certainly not doom and gloom. With an aging population comes opportunity as is evidenced by some of the remarks made by Australia’s Treasurer, Joe Hockey, and Trade Minister Andrew Robb;
When referring to the growth of the middle class Robb told reporters back in 2014 that “This is creating an opportunity for Australia that won’t come again. If we can just capture the premium end of some of these Chinese markets we will set up Australia for the next 50 to 100 years.
“What is going on now is a once-in-a-millennium phenomenon and we can be in the middle of it.
“My own view, however, after extensive talks in China, is that we don’t sufficiently appreciate the strength of the Australian brand.”
This is exactly the sort of opportunities that could be found even amidst concern in slowing growth in China – a middle aged market today will begin to retire out in the next 20 years with an estimated more than 50 million retiring out in the next decade – this means an increase in demand for all services as they relate to an aging population from residential care to medial, from home care to pharma.
So, its not all doom and gloom.
About the author: Matthew Tukaki is the founder and publisher of the fastest growing news site for entrepreneurs, small business and start-ups in the world, the EntreHub.org. He is a respected business leader, executive board director and philanthropist as well as a best-selling author. Join him on twitter @tukakimatt
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