China’s demographic challenges

When the 18th Central Committee of the Chinese Communist Party (CCP) decided to abolish the one-child policy in October 2015 it made headlines throughout the world.

 

But while the abolition of the policy is the result of the Chinese government’s newfound concern over low fertility, the low birth rate is only one of several major demographic challenges facing China - including a rpidly ageing population.

When the one-child policy was first implemented in the late 1970s it did not lead to a drastic reduction in fertility rates. Instead in the 1980s China’s Total Fertility Rates (TFRs) fluctuated between 2.2 and 2.9 children per woman.

But by the early 1990s, the strong family planning program and profound socio-economic transformation led China’s fertility to fall below replacement levels for the first time. Since the mid-1990s, TFRs have generally remained below 1.6 children per woman. This has already resulted in a highly imbalanced population age structure.

The Chinese government slightly revised its previous fertility policy in 2013 to allow a married couple to have two children if one spouse was an only child. But this had very limited impact on fertility rates. According to President Xi Jinping, out of the 11 million couples who qualified to have the second child under this revised policy, only 1.69 million had applied to do so by the end of August 2015. This is because a large proportion of couples do not want to have a second child even if they are allowed to do so.

It is this reality that led the CCP to completely abandon the one-child policy.

Compounding the problems posed by China’s low fertility is the related challenge of rapid population ageing. Since the mid-20th century both the number and the proportion of China’s elderly have been growing. And this trend is set to continue throughout the first half of the 21st century.

According to the UN World Population Prospects: The 2015 Revision, the number of people aged 65 and over will increase from 131 million to 371 million while those aged 80 and over will rise from 22 million to 121 million by 2050. The median age of the Chinese population will increase from 37 years in 2015 to just under 50 years in 2050. Largely because of that China’s working age population (aged 15–64) will decrease from slightly more than 1 billion in 2015 to about 800 million by 2050. As a result, the old-age dependency ratio (the ratio of the population aged 65 and over to the working age population) will increase from 0.13 to 0.47.

The phenomenal pace of China’s ageing has put great pressure on its socio-economic development. China is facing enormous challenges in establishing a nationwide pension or superannuation system that will provide adequate financial support for its rapidly growing elderly population. There are also great challenges in consolidating, and further improving, China’s now nationwide health care system.

To help overcome these difficulties, the government is emphasising the need to consolidate a family-based old-age care system, supplemented and supported by old-age care facilities provided by the community and government.

To lower the financial pressure imposed by population ageing, the government has also proposed gradually increasing the retirement age.

The Author of this article, Zhongwei Zhao is a professor at School of Demography, College of Arts and Social Sciences, The Australian National University.

20 January 2016.