China is facing a crisis over providing for the elderly as its population ages and the supply of labor diminishes.
The Beijing News reported in late March that state-run homes for the elderly in the capital are overcrowded. One had 7,000 applicants waiting for a vacancy, meaning a person who applied today would have to wait a decade for admittance.
The fundamental problem is who will take care of the elderly. In the final analysis, it is working people who support non-working people and young people who support the old.
But in today’s China, the number of elderly is quickly increasing while the population of young people is shrinking. China is the rare industrializing country that gets old before it gets rich.
China introduced its one-child policy in the early 1980s, and this predetermines that the country will be most unsuitable for old people to live in.
The nation’s economic takeoff over the past three decades has been largely powered by a huge labor force. But now, that labor force has shrunk and China is losing its population dividend.
To provide for the elderly, people must bear and raise children. If not, there would be no labor force in the pipeline and money becomes only so much paper.
The low birth rate in China will inevitably lead to shrinkage of purchasing power as the value of financial wealth drops significantly while prices for services surge. Elderly people will have to deal with a fast depreciation of their pensions, bank deposits, and other assets.
In recent years, Chinese couples have borne 1.3 children on average. Based on this, the number of newborns will drop every twenty to thirty years. If this continues, China will soon be reduced to an aging, shrinking and weakened nation.
Chinese young people are faced with huge working pressure. Even if the government encourages child-bearing in the near future, they are unlikely to raise two or three children to help maintain a healthy demographic structure. This raises a serious question: Who will take care of China’s elderly?
Liu Zhongliang is a media blogger for Caixin’s Chinese website.