China, a leader in the number of aged people in the world, accounts for 20 percent of the global figure, said the Office of the National Working Committee on the Aged in China (ONWCA) on February 23. In its first report titled A Study on the Aging Trend in China, ONWCA revealed that in China, people above the age 60 have topped 143 million, representing 11 percent of its total population and equaling the total number of old people in Europe. China has become an irreversible aged society in the 21st century, the study concluded.

Eight Million More Old Chinese People a Year

At present 21 Chinese provinces, regions, and cities have become areas with high concentrations of old people, with Shanghai taking the lead. Mr. Li Bengong, president of the China Society on Aged People, predicted at an academic meeting last year that the aged population in China will reach 400 million in 2040 and by then China, whose total population will be surpassed by India, will still stay on top globally in the number of older people.

Starting from 2010, China will experience an explosive rise of its aged population with an annual increase of eight million or four times the present rate of two million.

One Child Per Family Policy—the Major Cause of China's Aging

The aging problem in China, as characterized by its large number and fast pace, is mainly a result of the One Child Per Family Policy imposed by the state since the 1980s. China needed only 27 years for the percentage of the 65 and above population to rise from seven percent to 14 percent, whereas most developed nations needed 45 years–a fact that highlights the aging speed in China.

China Will Lose Its Competitiveness Due to Faster Aging

Mr. Hui Liangyu, Vice Premier of China's State Council, warned at the meeting on aging in January that the aging trend in China was characterized by its large base number, fast pace, geographic imbalance and heavy social burden. His statement implies that China is fast becoming a nation that has “aged before becoming rich.”

For China, whose competitiveness mainly depends on its cheap labor market, the forthcoming aged society means the disappearing of that market. Consequently, China's labor costs will rise drastically, diminishing its edge in the world's manufacturing sector.

China Lacks Economic Strength in Grappling with the Aging Problem

As a general rule, a developed nation, in taking the road of “becoming rich before becoming old” or “becoming rich and old simultaneously,” enters aged society when it has realized its basic modernization with its per capita GDP ranging between US$5,000 and US$10,000.

China, however, has barely made US$1,000 in its per capita GDP, still belonging to a lower-middle income nation. So its economic strength, as compared to advanced nations, is lacking in dealing with the aging problem.

In a nation that has become rich before becoming old, the available economic strength can be used to ease problems caused by aging. Whereas in a nation that has become old before becoming rich, it finds such ability wanting. Worse, the ensuing tension may even cause the collapse of society.

Weak Social Security

By 2030, every 100 working people will have to provide for 50 children and old people in China. As more rural youth and middle-aged individuals move to work in the cities, the aging problem will become more of a burden in the countryside. Mr. Hu Weilue, a research fellow of the Economic Institute on Population and Labor of China's Academy of Social Sciences, believed that the weakest link in China's social security system is in the countryside. In one of his studies, Hu found that the rural aged population is 1.24 percentage points higher than that of cities and towns, and he predicted that such an abnormal state will continue until 2040.

Less than 12 percent of China's present work force has pension plans of various kinds. But among the old people in the countryside who represent 60 percent of China's total population, 95 percent don't have any pension. According to Mr. Cao Bingliang, deputy director of the Office of the National Working Committee on the Aged in China (ONWCA), the gap in pension funds in China totals 2,500 billion yuan (approx. US$300 billion). Pensions, a major source of funding, are far short in filling the gap.

Diminishing Work Forces Will Slow Economic Growth

Mr. Wang Wende, associate research fellow of the Economic Institute on Population and Labor of China's Academy of Social Sciences, said that the increased number of old people would mean a reduction of workers and decreased work forces. The rise in percentage of old people will also lead to an increase ratio in supporting the aged, thus cutting into the economic growth rate.

Besides, medical expenses of the old people will jump, too, causing a relative scale back of investments in production and a drop in savings. As a result, China's economic development may experience a slow down.