Tài liệu Population Aging and Economic Growth in China doc

PROGRAM ON THE GLOBAL DEMOGRAPHY OF AGING Working Paper Series Population Aging and Economic Growth in China Judith Banister, David E. Bloom, and Larry Rosenberg March 2010 PGDA Working Paper No. 53 http://www.hsph.harvard.edu/pgda/working.htm The views expressed in this paper are those of the author(s) and not necessarily those of the Harvard Initiative for Global Health. The Program on the Global Demography of Aging receives funding from the National Institute on Aging, Grant No. 1 P30 AG024409-06. Population Aging and Economic Growth in China Judith Banister, David E. Bloom, and Larry Rosenberg March 2010 Executive Summary According to current UN projections, the population of the world age 60 or older will be 2 billion by 2050. With populations aging in nearly all countries, there has been widespread concern about the possible effects on economic growth and on the ability of countries to provide support for their elderly populations. In particular, because the elderly are in general less economically productive than younger people, a preponderance of old-age individuals would seem to suggest that (a) economic growth will be slower than in the past, and (b) relatively smaller working-age cohorts of the future will be burdened by the need to care for, and pay for the support of, the elderly population. These concerns have found resonance in China, where more than 30% of the population is expected to be age 60 or older in 2050. In part as a consequence of China’s process of population aging to date, the ratio of individuals age 15-64 to those younger and older, which grew rapidly during the last few economic boom decades, has reached its peak and is slated to decline rapidly in coming decades. Because a labor force that is large in size relative to the dependent population is plausibly crucial to rapid economic growth, the decline of this ratio could conceivably herald economic difficulties. The roots of population aging in China are the same as elsewhere: a low fertility rate, rising life expectancy, and the cumulative effect of past changes in birth and death rates. In China, obviously, the decline in the fertility rate, brought about in significant measure by the one-child policy and government efforts leading up to its adoption, has been a central factor in the changing age structure of the Chinese population. Greater longevity has also obviously been a key factor in population aging. If an older population is in fact cause for concern about the future of the Chinese economy, it would be prudent to identify, as soon as possible, measures that could serve to counteract any negative economic effects of population aging. Numerous countries have identified policies that might mitigate the potential economic problems associated with population aging. These policies seek to raise the age of retirement, spur higher savings, facilitate work for those caring for children, increase the labor force participation of women, liberalize immigration, and give more incentives for education. China could indeed begin to change the legal age of retirement, for those to whom this applies. It is unlikely to seek a higher savings rate, since its savings are already very high, and there is reason to think that increasing domestic consumption, rather than savings, will be a necessary policy measure in the coming years. However, China could attempt to redirect some of the household, societal, and private sector savings toward secure instruments to fund future retirements. Although education receives strong emphasis in Chinese families, and educational attainment, particularly in the cities, has risen rapidly, there are still large swaths of the population where even secondary education is not guaranteed and technical training is unusual. Improving the education and skill levels of Chinese workers could make the economy more productive and more able to compensate for the impending decline in the share of working-age people. In the short run, increasing the skills that the labor force brings to the production of goods and services is a central means for further raising productivity, which is the key factor underlying rising incomes. Strengthening education is the primary means of improving such skills. In the long run, the most promising avenue for China to avoid the possible consequences of population aging is to mobilize the portion of its potential workforce that is dormant or poorly utilized. Consideration of the possibility of adding to China's workforce when many millions are already unemployed or underemployed may be counterintuitive, but it is this very reserve labor force that can lay to rest concerns that China will not have enough workers in the future to preserve the country's impressive growth in GDP and in GDP per capita. In the cities, a higher proportion of women were employed in the past than now, and many women would like to work who cannot presently find jobs. Many people in cities are looking for work and will be available to fill most potential labor shortages as soon as they loom. In addition, the hundreds of millions of agricultural workers are not nearly as productive as those working in industry and services. China has benefited enormously by a large shift of workers out of agriculture, but there is scope for increasing this shift if the mechanization of agriculture is increased or if controls on internal migration are reduced. In an economy full of increasingly well-off consumers and that benefits from extraordinary demand for its exports, the forces of supply and demand will tend to raise wages in sectors where labor is in greater demand. Such increases will tend to draw more people into the workforce. In addition, the mix of goods and services that are produced will be affected by supply and demand. If hundreds of millions of elderly need something, the economy will produce it, unless it is restrained from doing so. Since the evolution of needs will not be sudden, there is every reason to believe that needs will be satisfied. The specter of shortages, whether of labor, goods, or services, has little basis. As the population ages, it will of course be necessary to devote more resources to the care and health of the elderly. And as China proceeds in its epidemiological transition toward an even greater preponderance of noncommunicable diseases, it will benefit by adopting programs that aim to diminish behaviors that lead to debilitating chronic conditions. Pension coverage is another arena in which governmental action may benefit the elderly. Rural areas are particularly bereft of this key element of social protection. China will face numerous choices in how to construct a financially viable pension system, and it will benefit from studying the experiences of other countries. At present, and for the foreseeable future, China, like many ii of its neighbors, benefits from a very strong system of family responsibility through which the elderly can count on extensive support. Population policies are also important. An easing of the one-child policy would allow for a gradual increase in the relative size of the working-age population, as compared with the elderly population. In addition, such easing might be effective in helping to reverse the extremely highly skewed ratio of males to females in the Chinese population – a circumstance that is based on selective prenatal abortions and the neglect or worse of girl babies, and that prevents millions of men from marrying and leaves them without the support of spouse or grown children or grandchildren in their old age. Current government efforts to spur economic development in the non-coastal provinces may also be important in avoiding any economic problems stemming from population aging. If the working population of the interior provinces is mobilized to be more productive, the Chinese economy as a whole will benefit, and regional economies will be better situated to provide care to the elderly. China's economic growth rate is expected to gradually slow down in the future, in comparison to the breakneck pace of economic development from 1978 to today. But population aging will not be the only, or even the major, cause. One of the most important reasons for this expectation is that nearly all countries, as they develop, experience a significant slowing in economic growth; other things equal, rapid growth is typically fastest at lower levels of income. China has made considerable gains, and its economic growth is likely to moderate as the country moves toward a higher level of income. The bottom line is that population aging is unlikely to cause significant economic problems for China. Its highly productive economy is awash with skilled workers and with those seeking to join the labor force. There is little prospect of a lack of workers leading to a marked slowing of growth in GDP or GDP per capita. To the extent that older workers are retiring, there are more than enough working-age people to fill their shoes and to support the daily needs of China's elderly population. Nevertheless, policy reforms – in education, health, pensions, labor policy, and internal migration – could make China's economic future all the more secure. iii Population Aging and Economic Growth in China Judith Banister, David E. Bloom, and Larry Rosenberg March 2010 Introduction Population aging is taking place in most countries of the world. During the next few decades, the share of global population ages 60 and older is likely to rise to historically unprecedented levels (see Figure 1). 1 The 680 million people in this age group make up 11 percent of world population, up from 8 percent in 1950. However, according to the latest estimates, by 2050 there will be 2 billion people aged 60 and over – 22% of world population. World population is projected to be 3.6 times as large in 2050 as in 1950; the corresponding growth factors for those ages 60+ and those ages 80+ are 10 and 27 (United Nations, 2009). 2 Figure 1 Projected Acceleration of World Population Aging 0.0 0.5 1.0 1.5 2.0 2.5 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Population (billions) 60-79 80+ Source data: United Nations, 2009 This extraordinary pattern of demographic change has aroused concern in many countries for three reasons. First, the elderly population in general does not produce nearly as much as the working-age population, so the economic growth rate of economies with a high share of older people would seem likely to slow. Second, it appears that a segment of the population (the elderly) that is relatively larger than in the past will have to be supported by a relatively smaller group of economically active adults. And third, that same elderly population, because of its size, will impose a substantial burden on economies as a whole, because the elderly require more medical care than younger people. 1 The figures in this paper cover the time frame 1950–2050. Therefore, some of the underlying data reflect past trends and others are projections. Projections involve assumptions about future fertility and mortality, around which there is considerable uncertainty that these figures do not reflect. 2 United Nations, World Population Prospects: The 2008 Revision. 2009. Various commentators, along with public officials, have expressed concern, and even alarm, about population aging and the economic effects that may accompany it. Perhaps the most dramatic of such statements came from Peter Peterson, the former CEO of Lehman Brothers, Secretary of Commerce, and Chairman of the New York Federal Reserve Bank, who opined that global aging is a “threat more grave and certain than those posed by chemical weapons, nuclear proliferation, or ethnic strife”. 3 The OECD has published a variety of papers that offer an array of conclusions regarding the effect of population aging on economic growth. It notes 4 that population aging is likely to bring fiscal problems to governments because there will be relatively fewer workers to make payments to the government, while there will be more retirees expecting financial support from the government. This situation has led to calls for altering work incentives so that people work until older ages, adopting family-friendly policies that encourage parents to work, and changing tax systems so that they do not penalize two-earner families. In another report 5 , the OECD concludes that "[u]nless policies change, lower growth or absolute falls in the size of the labour force can be expected." In the opposite direction, a Canadian government report 6 finds that population aging opens up opportunities for economies to invest in human capital formation that may stimulate economic growth and mitigate the possible negative economic effects of an older population. The research of Bloom, Canning, and Fink 7 finds that a close study of population trends suggests there is little reason for alarm in most countries. Taken together, an array of factors discussed in this paper (including lower youth dependency burdens, greater female participation in the labor force, increased savings in anticipation of retirement, and the flexibility of capitalist economies to adapt to changes in labor supply and demand and to alter management and labor practices in light of changing market conditions) suggests that population aging, in most countries, is not likely to have the dire economic consequences that some have predicted. In general, it is not yet clear whether population aging will have significant, negative economic effects, but the issue is of concern to many countries. Nearly every country in the world will see its population age considerably during the next few decades. In this paper we consider the reasons that aging may have economic consequences in many countries, and we explore the case of China to see if the factors that affect other countries apply similarly to China. It is important to note that, independent of the potential influence of population aging on economic growth, it is extremely likely that China's economic growth rate will decrease in the coming decades. The primary reason for such a conclusion – and the reason that so many economists inside and outside China agree on it – is that China has reached middle-income 3 Peterson, P. G. (1999) "Gray dawn: The global aging crisis", Foreign Affairs, January/February. 4 http://www.oecdobserver.org/news/fullstory.php/aid/1081/Population_ageing:_Facing_the_challenge.html 5 http://www.oecd.org/dataoecd/61/50/34600619.pdf 6 http://www.fin.gc.ca/wp/98-03-eng.asp 7 Bloom, David E., David Canning, and Günther Fink, "Population Aging and Economic Growth", forthcoming in Spence, Michael, and Danny Leipziger (eds.), Global Challenges and Growth, Commission on Growth and Development. 2 status. In 1978, when China's economic boom began, people throughout the country were desperately poor; hunger was widespread. The government grabbed the opportunities for rapid economic growth, and the economy expanded at a rate that is beyond all precedent, in terms of both GDP and GDP per capita. As China's income level rises, it is likely to experience the same phenomenon that other rapidly growing countries have undergone – a slowing of economic growth. In addition, some other constraints could modulate the country’s future economic growth, such as limits to global export markets, China’s worsening environmental pollution, water shortages, the poor quality of most of China’s universities, limited farmland, weaknesses in China’s financial system, and rising inequality. The supercharged-growth era will come to a close at some point, but it will not in any large measure be due to population aging. In all that we discuss below about population aging, we are talking about its effects, all things equal. Brief Background on China China includes one-fifth of the world population in a geographically huge and varied country. It has had an advanced civilization for around three millennia. Its strong hierarchical patriarchal family structure has persisted for 2 ½ millennia based on Confucianism. The Chinese empire was strong and widespread in the late 17 th and the 18 th centuries, but dynastic decline in China’s last dynasty (the Manchu or Qing Dynasty) then coincided with expansion of the European colonial powers in Asia in the 19 th and early 20 th centuries. Under severe military and political pressure, the dynasty was overthrown in 1911. After four decades of turmoil, Japanese invasion, World War II, and civil war, the Communist Red Army led by Mao Zedong emerged victorious and established the People’s Republic of China in 1949. The Communist government established strong central control and sealed China’s borders. Government initiatives rapidly reduced the death rate, China’s population began to grow rapidly, and the age structure became even younger in the 1950s and 1960s. Concerned about the difficulties of keeping the food supply growing at least as fast as the population, the government instituted a forceful family planning program in the 1970s in both urban and rural areas. The fertility level dropped in half in less than a decade, population growth was reduced to a more manageable level, and the process of the aging of China’s population structure began. Now, nearly four decades later, children constitute a much smaller share of the population, comparatively smaller birth cohorts have entered the working ages, the population has a bulge in the middle and older working ages, and the elderly population is growing in absolute size and as a proportion of the population. Chairman Mao Zedong died in 1976, and soon thereafter new economic reforms were instituted, reducing the role of central planning in China’s economy and expanding the role of markets and private enterprise. China’s economy has been one of the fastest growing economies in the world during nearly every year since 1978, for more than three decades. 3 China Demographic History and Projections The United Nations Population Division assembles demographic data from all countries and makes projections about future population trends. The numbers cited here are the UN's best estimate of past and future demographic indicators. The projections are based on the UN's medium-fertility scenario. The population of China has risen from just over 0.5 billion to 1.35 billion in the past 60 years and is projected to peak in 2030 at nearly 1.5 billion (see Figure 2). As is well known, China has seen many millions migrate to the coastal cities in recent years, so population trends vary considerably across regions. Figure 2 China's Population Size 0.50 0.75 1.00 1.25 1.50 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Population (billions) Source: UN, 2009 China's total fertility rate fell from around 6 in 1950-1955 to 2 in 1990-1995 (see Figure 3). By 1995, the fertility rate was below 2. The decline, which was especially rapid between 1970 and 1980, began when China launched the “later, longer, fewer” campaign (later marriage and age at first birth, longer inter-birth intervals, and fewer births), which was followed by the formal introduction of the one-child policy in 1979. Indeed, a large portion of the decline took place by 1975-1980. China’s population growth rate has dropped dramatically as a result. In the long run, the declining and now low fertility rate will be responsible for further slowing of China's population growth. But because of population momentum (a large population of people of childbearing age leading to a large number of births, even if the fertility rate is not very high), population growth, although slowing, will continue for another two decades. This momentum is declining as the proportion of women in childbearing years continues to decrease. 4 Figure 3 China's Total Fertility Rate 1.0 2.0 3.0 4.0 5.0 6.0 7.0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Children per woman Source: UN, 2009 Life expectancy has been rising rapidly in China (see Figure 4). Starting at 40 years soon after mid-century, life expectancy increased precipitously in the 1950s and 1960s, has now reached approximately 73, and is expected to be nearly 80 by 2050. Figure 4 China’s Life Expectancy 40 50 60 70 80 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Life expectancy at birth, years Source: UN, 2009 As a result of trends in both fertility and longevity, the elderly share of China's population has been increasing, and those ages 60 and over are set to form a rapidly growing share of the population (see Figure 5). By 2050, it is projected that the population ages 60+ and 80+ will reach 440 million and 101 million, respectively. Today, 37% of China’s population ages 60+ are employed. 8 Because most Chinese cease working before or in the years soon after they reach age 60, the demographic trend shown here has raised considerable alarm about the sources of 8 China Population & Employment Statistics Yearbook 2009, Tables 1-2, 1-10, 2-3, 3-5; pp. 4, 17, 36-38, and 161. 5 productive labor in China a few decades from now. If any policy or institutional adjustments are needed to allow China to respond to population aging, time is growing short. Figure 5 China Population Aging 0 10 20 30 40 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Percent % 60+ % 80+ Source: UN, 2009 Impelled by the declining fertility rate, the ratio of the working-age (15-64) to non-working-age population grew rapidly starting in the late 1970s (see Figure 6). It is reaching its peak right now and is projected to decline (in significant part because of the increasing elderly population) nearly to its 1980 level by 2050. This ratio is important because it is a direct indicator of the number of dependents each person of working-age will, on average, need to support. Persons older than 64 may well contribute in many ways, including economically, to a family and to China's overall economy, but many people have expressed concern about the future ability of China's working-age population to support the large, primarily older, dependent population. Figure 6 China’s Ratio of Working-Age to Non-Working-Age Population 1.0 1.5 2.0 2.5 3.0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Ratio of working-age to non-working-age population Source: UN, 2009 6 [...]... among China s provinces and regions is not likely to prove crippling for China Population aging may be more extreme and rapid in the provinces that have had lower fertility in recent decades, but overall those same provinces are more economically advanced and financially able to cope with their aging population structure China Population Aging in International Perspective The population aging that China. .. after China s economic reforms The population of India is today vastly poorer than that of China Rural-to-urban migration and urbanization in India are far less extensive and slower than in China Literacy and educational attainment in India trail far behind the progress in China India’s mortality rates remain much higher than China s Though the sex ratio at birth is much more distorted in China than India,... China India Source: UN, 2007 China is facing population aging much earlier than India By the time India confronts major issues of population aging, that country will have the China example from which to learn 30 In many other aspects of socioeconomic development, India is also trailing behind China India’s economic initiatives to free it from prior bureaucratic and socialist torpor began a decade and. .. pronounced in central and western China than in coastal China in the next few decades China s northeastern provinces of Heilongjiang, Jilin, and Liaoning are highly urbanized, giving them some economic advantages, but they are also China s rust belt Much of China s industrialization began in these Manchurian provinces when they were under Japanese control before and during World War II Mao’s China built... supply and demand will affect the mix of goods and services produced, in a way that will tend to satisfy the expressed needs of the population, even as those needs change in the face of population aging Finally, China may gain something by learning from the somewhat earlier aging experience of Japan and Korea Sectoral Trends in Employment and Productivity in China The distribution of employment in China. .. women 46.4% Population Aging Across China The demographic and economic chasms between rural China and the country’s cities and towns shape the biggest differentials in future population aging and economic growth But in addition, differences across provinces and regions of this enormous country also are important Labor migration moves workers from rural to urban China, but also from inland provinces to... growth in China But will this be so? One thing is clear: These new demographic realities are coming into focus in China much faster than in other countries at its level of development In summarizing concerns about China' s ability to care for its aging population, the Population Reference Bureau 10 cited the rapidly increasing total cost of healthcare in China and the increase in private spending on healthcare... girls, and women in all age groups and by most measures is worse in India than in China In all these respects, India could study and learn from the China example Some observers have recommended that China learn from India regarding certain innovations and elements of progress, for example India’s global outsourcing service sector, the development of democracy there, microloans and other banking initiatives,... Canning, Linlin Hu, Yuanli Liu, Ajay Mahal, and Winnie Yip, ‘The Contribution of Population Health and Demographic Change to Economic Growth in China and India’, Journal of Comparative Economics, forthcoming 2010 18 The Age Structure of China s Workforce Two decades ago, China still had a young workforce The employed population was strongly concentrated in the youngest working ages of the late teens and. .. microloans and other banking initiatives, and more openness and less government control over the media But India is not very advanced in preparing for population aging, nor is the situation quite as urgent as in China Economic Implications of Population Aging in China In any economy, economic output depends on the presence and productive functioning of capital and labor (and this paper focuses on the availability . the ground in China today, and the future aging of the population in both urban and rural China, how will China s older population be supported in the future?. http://www.prb.org/Articles/2006/ChinasConcernOverPopulationAgingandHealth.aspx 11 Cai, F., & Wang, M. (2006). Challenge Facing China s Economic Growth in Its Aging but not