Coming of age

Country needs to implement a national strategy to actively respond to its aging population

According to the Ministry of Civil Affairs, China's population of senior citizens aged 60 or above is expected to reach 300 million by the end of the 14th Five-Year Plan (2021-25) period. It is predicted that the population of seniors aged 60 and above will increase by nearly 10 million annually over the next five years, much higher than the average annual increase of 7 million during the past five years. Due to its large population, China's aging demographic will account for one-fourth of the global graying population and two-fifths of the Asian. By 2035, it will exceed 4 billion, the combined population of France, Germany, Italy, Japan and the United Kingdom.

As a developing country, China's per capita national income is at the upper middle level in the world, with a social system in the process of continuous improvement. An aged society (the United Nations' standard says that a country with people aged 65 or above accounting for 14 percent of the total population is considered an aged society) can pose a significant challenge to its accumulation of social wealth, pension system and economic growth.

This tests the public financial expenditure such as medical care, pensions and the social security system. Due to the gaps in economic development and degree of aging in different areas, the income of social insurance funds in some provinces have failed to cover their expenditure in a certain period, prompting the central government to step in and take responsibility for the national coordination. The government has also increased public financial subsidies and expanded the basic pension coverage to mitigate the social security spending problems in some places. However, with the growing aging challenge, the increase of expenditure on pensions will accelerate to undermine the accumulation of pension funds in the long term.

The aging issue also calls for improvements to the social welfare system, medical services and healthcare, the elderly care industry and institutions for community care. For instance, from the perspective of elderly care services, social demand will increase as parents of one-child families enter the aging phase. But the situation is not in favor of them, because the elderly care system in communities lags behind the need and there are insufficient institutions and products.

There is an inverted U-shaped relationship: when the old-age dependency ratio rises to a critical point, its impact on potential economic growth will turn from positive to negative. China should plan for the negative impacts in advance and take advantage of a second demographic dividend.

China will meet its second demographic dividend that can hedge the risks of the aging population. The education level of the young population has been significantly raised, with higher education enrollment exceeding 40 million. It is expected that the labor force with a college degree or above will reach 300 million by 2030, accounting for one-third of the working-age population. As per our research, about 60 percent of the workforce, 500 million young people, in China will finish college, undergraduate or postgraduate education by 2050. It means that the country will embrace the world's largest highly educated workforce in the future. Although the supply of labor will decline due to the demographic change and constrain economic development, the technological revolution can create opportunities, improve the quality of labor and promote the competitiveness of industries driven by knowledge and innovation.

The proposals for the 14th Five-Year Plan urge the country to implement a national strategy to actively respond to its aging population. During the slow and long demographic transition, it will emphasize a long-term population development strategy and examine the impacts of population policies from the perspective of 50 to 100 years.

Couples should be encouraged to have more children. The law should protect women and families but also children's well-being. Authorities related to family planning need to shift their work from management to public services, including reproductive health and maternal and child health. Reducing the child care burden and education costs for families are also important. China's population policy will provide comprehensive support for families from parenting leaves, maternity allowance, labor rights protection, nursery care and children's education. The country should also improve public services and the allocation of public resources to enhance the willingness of couples to have children.

The government should also develop the healthcare industry to promote the coordinated development of the industry and economy. According to the World Health Organization, Chinese people's life expectancy at birth rose to 76.4 years in 2016. And Chinese newborns can look forward to 68.7 years of healthy life ahead of them. Those figures have surpassed some high-income countries. With the population aging, the central government will further expand medical and health investment to guarantee medical security. The healthcare industry is attracting increasing investment, which benefits pharmaceutical manufacturing, medical services, health insurance, environmental protection, food safety, recreation and fitness, and other fields related to a healthy life. Also, emerging technologies can stimulate the rapid transformation and upgrading of the health industry.

The author is an associate researcher of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.