Aging China has tremendous potential
To ride out the coming demographic challenges, nation must innovate, do more with les
As everyone knows, China is aging rapidly. Not only that, China is expected to see a sharp decline in its total population size over the next century. Against this backdrop, for China’s per capita GDP to continue to rise, productivity must grow more rapidly than the rate at which the population is declining.
Of course, China is not the first country that is going through the process of aging and a rapid slowdown in population growth. Many countries have gone through this transition and have been forced to transform their labor market systems in response.
The predominant mode is the shift from an industrial to a service sector base. This transition is far from complete in China and will inevitably develop further in the coming decades.
Rather than being only reliant on service industries, however, China should aim to climb further up the value chain of innovation. As a global leader in the development of technology, China still has tremendous potential to develop further in this field.
While China’s younger population has, indeed, declined in size, its characteristics have changed beyond all recognition in terms of skills and education. Harnessing both this skills revolution, as well as the entrepreneurial mindset of the younger generation, will be critical to China’s efforts to develop its innovative industries. Obviously, the development of the Greater Bay Area and the synergies between the strengths of Guangdong province and Hong Kong could prove to be a key engine for such development.
However, developing goods and services which are responsive to the growing demands of the Chinese consumer could also drive stronger growth. Rather than criticizing younger people for their consumption habits, the economy should instead try to understand them, and better pivot toward meeting their needs and innovating in key growth areas such as time-saving and laborsaving products and services; pet products; healthcare and entertainment.
Learning from the experience of other countries, developing unique cultural and leisure experiences could also be a means of revitalizing rural communities which are especially vulnerable to population decline and economic stagnation.
At the other end of the age spectrum, there is tremendous potential in developing the so-called silver economy in response to not only an older population, but one which is relatively well resourced and looking for new consumption opportunities. Developing gerontechnology — or technological solutions to support older persons — could be a win-win scenario. Currently, China lags far behind Japan as the world leader in innovation in this field. Leveraging its strengths in innovation and technology, and the burgeoning entrepreneurial mindset, could deliver rapid growth in this area. It would also offset some of the physical and financial obligations associated with rapid population aging. Developing telehealth and e-medicine platforms can also support the country’s plans to ensure healthy aging.
More broadly, the plan to develop 10 industrial parks specifically dedicated to developing silver economy products and services should be welcomed. However, as a government official rightly observed, the underlying goal of developing the silver economy should not only be growth for its own sake, but also to create “equal, attainable services and products for seniors with particular difficulties”.
However, in order to make the most of these opportunities, China must strive to ensure that the full potential of all its citizens is maximized. Further reform of the hukou (household registration) system will allow workers to move even more flexibly around the country and maximize the opportunities for all.
Clearly the education system requires some reform: not only to ensure fairer access to the best education to all, regardless of province of birth, but also to ensure it is better aligned with the needs of the contemporary labor market.
More broadly, adapting work cultures and systems to accommodate the changing expectations of the younger generation is an urgent necessity. Moving away from the “cult of 996” (9 am to 9 pm, six days a week) to a healthier work-life balance will increase retention and productivity and reduce burnout and ill-health.
In order to ride out the coming demographic challenges, China will have to “do more with less”. The good news, however, is that there is a lot of potential for the country to do just that.