Demographic tonic for the gerontocracy

2010-09-16Asia Times

BEIJING - Are you afraid of China? Do you fear the "yellow peril"? Do you think - or hope - that the country will break up sooner or later? For you, the horsemen of the Chinese apocalypse, the date from which to count is 2015. There will be no nuclear war, no financial collapse, nor an explosion of social unrest. But much more modestly and significantly, demographics will break through.

China, still on the path of rapid growth and hitched to the United States economy, will begin getting old - just when it could most use an injection of youthful energy. In fact, by 2015, 7.7% of the Chinese population will be over 65 years, a threshold that’s considered risky. In 2005, only 1% of the population was over 65.

This is the result of the one-child policy success, which since 1980 has been applied with great rigor and is estimated to have eliminated from the population about 400 million people. That is, without the one-child policy, in the past 30 years, China’s population could have climbed to some 1.8 billion.

But as the population begins to age, the situation creates a crucial contradiction. If the one-child policy is abandoned now, when just three or four hundred million people have reached the threshold of prosperity, a new population explosion will stop the overall growth. This will exacerbate the social contradictions because already the rich do not want to have many children while the poor want them even though they can hardly afford them. In that case, the rich will get richer and the poor will get poorer.

If China keeps on with its one-child policy, the country’s demographic profile will be more and more aged over the next 20 years and overall growth - economically, politically and socially - may slow as to a trickle.

Then there is also a financial risk for the state: from 2015, there will be fewer than two people working for every retired person. That would be no problem for the state in a country where until a few years ago pensions were considered a privilege. But since the financial crisis of 2008, Beijing has accelerated the construction of social safety nets.

These changes include the start of a pension system based on the insurance system of the US, where contributions are not taken directly from workers (as in Europe), but they must be invested in the active economy, which in turn will need more active workers. Rapid aging of the population, as evidenced by data from 2005 to 2015, could leave many older people in dire straits and deal a blow to the traditional family structure and ethics in China.

Indeed, today the generational pyramid is clear: a couple made up of young "only children" must maintain four seniors. Moreover, given that only children can have two children, they will have the burden of a greater number of offspring than their parents.

Given current trends, education and healthcare will cost more for those children. At this point, the parents may be forced to choose whether to take care of their children or help their parents. However, the older generation, more in China than in the West, is the deep root and fundamental part of life itself. The emotional and cultural cost of making such a choice would certainly be excruciating.

Debate on what to do and how to avoid this deadly trap has been open for some time in China, but there are no clear answers.

The pessimists simply think that by 2015, China will begin to descend into a spiral of problems that exacerbate each other.

The optimists think that in reality the aging population is already partly offset by more children being born in these decades in the countryside, where the one-child policy has already become almost a memory.

The government then ponders extending the retirement age, which today can start at just 55 years, to 65 or older. Moreover, the improvement of living conditions should create a longer working life than before.

But this fact alone already opened a political issue. Today, Chinese leaders must retire at 68 years Will the next generation extend its power, and will this not create a gerontocracy?

But who knows if the gerontocracy is really bad. Deng Xiaoping launched China's reforms when he was 75 years old and relaunched China, when he was almost 90, just when China seemed ready to sink. (2010-09-16 Asia Times)


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