China Population Day: Can ageing boost economic growth amid challenges?
An elderly couple running. /CFP
An elderly couple running. /CFP

An elderly couple running. /CFP

China Population Day falls on June 11. The country has been taking steady measures to improve basic elderly care services to provide a cushion for one of its most vulnerable groups as part of nationwide efforts to cope with China's ageing society.

Globally, the number of people aged 65 and above is expected to double from 761 million in 2021 to 1.6 billion in 2050, according to the latest United Nations population projections.

A younger population serves as the engine of economic growth by offering a large, productive workforce.

Countries in East and Southeast Asia, Europe, North America, Australia and New Zealand currently have the highest proportion of working-age population, which the UN describes as between 25 and 64 years old, in the world.

Yet, in 2018, for the first time, people older than 65 years outnumbered those below five, pointing to a future with an increasingly dependent population.

This fast-paced ageing population phenomenon has led to concerns about the future of the global economy amid various challenges.

Experts argued that ageing might slow down gross domestic product (GDP) growth rates but is unlikely to affect much on per capita income which matters most to people.   

Meanwhile, technology and higher life expectancy levels could increase productivity in the working-age population, potentially offsetting losses from a shrinking labor force, and the accumulated wealth of older generations could drive future investments, experts say.

China Population Day: Can ageing boost economic growth amid challenges?

China's ageing policies, 'silver' dividend

China will be a "severely ageing society" by 2035 when the number of older people aged 60 years and above reaches 400 million, accounting for 30 percent of its population, said Wang Haidong, director of the Department of Ageing and Health at the National Health Commission, at a press conference on September 20, 2022.

There were 280 million people aged 60 and above in China at the end of 2022, accounting for 19.8 percent of the entire population, according to data from the National Bureau of Statistics. The figure is expected to exceed 300 million by 2025, and 400 million by around 2035.

Recognizing the situation will last for a significant period of time, China has been adapting to the new demographic normal and taking a proactive approach to the challenge.

To improve senior employment, a website for China's elderly talent was launched in late August by the government, providing a platform of re-employment for the country's "elderly talent." Over 5,000 senior job-seekers and 110 recruiters registered within the first two days after its launch.

In addition, the country also released a set of guidelines last month to facilitate the building of a basic elderly care system, making clear that the focus through 2025 is on tackling difficulties that could hardly be overcome by families or individuals on their own involving older people incapable of performing self-care, people with disability, and those having no one to take care of them.

By 2025, China is expected to have a relatively sound institutional system in place, bringing its entire elderly population under coverage, according to the document. 

China Population Day: Can ageing boost economic growth amid challenges?

World's ageing population, economic growth

Besides China, the population in the world's biggest economies, from the U.S. and Europe to Japan, is also ageing.

According to the latest United Nations population projections, by 2050, one in every four people in Europe and Northern America would be aged 65 or older. Even developing economies across Asia, Latin America, the Caribbean and sub-Saharan Africa, home to the world's youngest population, will see an increase in the share of their above 65 population, from three percent in 2022 to almost five percent in 2050.

Some studies have shown that the growth in the income levels of a population slows in an ageing society. Yet, there is also growing evidence that if advanced economies can keep their elderly population in good health, they might be able to not just reduce the economic downside of ageing but even turn it into an advantage.

Ronald Lee, a professor in demography and economics at the University of California (UC), Berkeley, told Al Jazeera that "population ageing puts great pressure on those in the working ages because of these costs of supporting the growing dependent population."

Broadly, a slowdown in the population and labor force growth rates translates roughly one-to-one into a similar decline in GDP growth, said Lee, cautioning that the GDP growth rate itself is not always the best indicator of how an economy is coping with ageing.

For the well-being of the population, what matters most are income levels, which are measured by per capita GDP. As a country's population growth slows or declines, even anemic GDP growth "doesn't necessarily mean that per capita income growth is slowing down," said Lee.

By looking at data from 180 countries from 1990 to 2017, researchers have proven that the effect of an ageing working-age population on the per capita income levels is negligible.

"Our study shows that it's not age that matters too much, it's more about the functional capacity of the workforce," Jonathan Cylus, the head of the London Hubs of the European Observatory on Health Systems and Policies and senior research fellow at London School of Economics, told Al Jazeera.

Second dividend with ageing population

There is a "long-term idea" that countries should think of a second demographic dividend that comes with an ageing population, Gretchen Donehower, a demographer at UC Berkeley, told Al Jazeera.

"As your population shifts older, on sort of a permanent basis, you have more people in those ages, where they've had the chance to accumulate lots of capital for investment," said the demographer. 

"So even if you have a smaller working-age group, you have other kinds of capital that you can make use of for more productivity."

Donehower said this could lead to a situation where a country might be able to invest more capital in the health or education of fewer children, which could potentially prepare them for greater productivity relative to the generations they are replacing.

To achieve such a goal, Donehower said that governments should direct policies towards increasing the overall productivity of the economy where each person is able to produce more, aided by technology.

Lee echoed that research has suggested that ageing societies, which adopt labor-saving technologies more rapidly, are becoming more capital-intensive and leading to higher per capita income than other countries.

Read More:

China moves to improve basic elderly care as population ages

Will China's growing retiree population yield a 'silver' dividend?

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