The unprecedented aging crisis that’s about to hit China

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A boy sits on his father's shoulders as they pose for a photograph in front of the giant portrait of late Chinese chairman Mao Zedong on the Tiananmen Gate, in Beijing, China, October 2, 2011. China will ease family planning restrictions to allow all couples to have two children after decades of the strict one-child policy, the ruling Communist Party said on October 29, 2015, a move aimed at alleviating demographic strains on the economy. Picture taken October 2, 2011. REUTERS/Stringer   CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA - RTX1TSTQ

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JUDY WOODRUFF: In Southeast Asia, tensions continue to simmer as China claims sovereignty over the South China Sea, a busy international trade route.

The United States and China have both beefed up their naval presence there, leading to fears of a military confrontation. This is just one example of China flexing its military muscle in recent months, and it coincides with a slowdown in the nation’s economy.

Writing in “The Atlantic” magazine, journalist Howard French sees a connection between the two, pointing out that, as China’s population ages, the country faces a huge demographic problem that will affect all aspects of its economic and military aspirations.

HOWARD FRENCH, The Atlantic: China has its own Baby Boom generation. And China’s baby boom generation, because of the size of China itself, is the world’s largest baby boom generation.

JUDY WOODRUFF: Howard French, a former Shanghai bureau chief for The New York Times, has written extensively about China, and he’s photographed its people.

HOWARD FRENCH: This baby boom generation in China will start to hit retirement age in the very next few years, let’s say by the end of this decade.

And, at that moment, extraordinary numbers of Chinese people will exit the work force, and the Chinese work force, which has already begun to shrink, will shrink in a vastly accelerated way. And so China’s going to face huge retirement costs and Social Security costs, health care costs, related to this immense aging of the population.

JUDY WOODRUFF: What are the implications for China as a country and for the Chinese economy?

HOWARD FRENCH: China will have the biggest aging crisis that the world has ever seen over the next generation, and this happens at a time when Chinese ambitions, geopolitically speaking, are expanding.

And at some point, these two phenomena will collide, and very tough decisions will have to be made about guns vs. canes. In other words, how much can we afford to invest in our geopolitical ambitions, vs. how much must we invest in terms of supporting our population?

JUDY WOODRUFF: The massive number of baby boomers wouldn’t be such a problem if China’s younger generations were just as large. But they are not, mainly because of the one-child policy China imposed on all families beginning in 1978.

HOWARD FRENCH: The one-child policy was based on some faulty science and had, as an ambition, reining in Chinese population growth, so as to enhance the per capita wealth of the country.

Because the Chinese made a straight-line prediction based on what the present fertility rate was in the late 1970s, they made some big errors in their projections. Imposing the one-child policy meant that the fertility rate took additional hits. And the penalties of this decision are just now being borne.

This is a mistake of extraordinary significance for China’s place in the world, for Chinese power, for Chinese prosperity. And for the Chinese Communist Party to turn around all of a sudden and say, hey, wait a minute, that big one-child policy thing was a huge mistake is very difficult for them to do.

JUDY WOODRUFF: But you believe, today, the Chinese leadership understands what’s happened and are trying to do something about it; they just don’t want to be so public with their acknowledgement?

HOWARD FRENCH: They have been very grudgingly, very gradually coming — publicly coming to terms with what people have known for quite some time was a big issue.

And this came to a head in the last year, when Beijing decided to relax the one-child policy officially.

JUDY WOODRUFF: You, of course, were a New York Times bureau chief in Shanghai. You have lived in China. You know the country very well. What is that going to mean, in terms of the old China, the evolving China?

HOWARD FRENCH: Well, when you arrive in China nowadays, one of the first things you note is the emphasis placed on you, a non-Chinese person, being an outsider.

Sometimes, this is done aggressively. Sometimes, this is done rudely, but most of the time it’s just done routinely. It’s just a normal thing in the course of your encounters with Chinese people in every walk of life.

JUDY WOODRUFF: Were you able to capture that in your photographs, do you think, the in and out?

HOWARD FRENCH: Sure.

As I set out to begin photographing Shanghai, I encountered this insider/outsider phenomena in the most personal of ways. You would walk into an old neighborhood in the center of city, and people would begin to point at you. People would begin to talk about you, spreading the word about the outsider who has wandered into their midst, look at him, he’s got a camera, what’s he doing, is this allowed, is this OK, how should be respond to him, et cetera, et cetera.

JUDY WOODRUFF: And what were you trying to capture?

HOWARD FRENCH: Well, I was trying to capture a way of living in the city that was under immense pressure, that was being radically transformed right before my eyes.

These neighborhoods were filled in a hugely disproportionate way with relatively old people, people who the Chinese back then already were speaking of as a lost generation, people who, during the cultural revolution, had not gone to college because Chinese schools were closed, and who had often been sent to the countryside as a way of political training.

And then, so when China opens up at the end of the 1970s and begins to reform its economy and to become quasi-capitalist, these people, just by virtue of their own timing in the last century of their coming of age, they were not, most of them, eligible for these new competitive jobs that capitalism was providing to China. And so those were the left-behind people in those neighborhoods.

JUDY WOODRUFF: So, what does that mean the options are for the Chinese government and for the Chinese people? How do they reach some sort of equilibrium in terms of having enough people to fill the jobs to keep the engine of their economy going?

HOWARD FRENCH: China, the world’s most populous country, 1.3, 1.4 billion people, will in the next decade or so have to begin looking for people outside of China.

What does this mean? China will have to become a much more welcoming society. It means that China will have to attract immigrants from other countries in order to slow the aging of the population.

The problem is, if you’re 1.3 billion, 1.4 billion people, where do you find enough immigrants in order to have a significant impact on a population of that size? There’s no obvious candidate.

JUDY WOODRUFF: China’s need for immigrants stands in stark contrast to the situation in the United States, which French finds ironic, in light of the current political debate in the U.S.

HOWARD FRENCH: The reason the United States is not aging rapidly in terms of its demographics is because we accept people as newcomers to this society in numbers that far surpass any of our major peers or rivals.

And this is what replenishes the work force. It reinvigorates the society. It underpins our tax base. And so it is this immigration that, in a way, that has been largely unappreciated in our political debate, which really is a kind of churn of our economy.

JUDY WOODRUFF: Until China finds a similar churn for its economy, immigration, increased fertility or something else, French says its leaders are faced with some bleak decisions, starting with scaling back the military.

HOWARD FRENCH: Since the first Gulf War in 1991, the Chinese have been increasing their military budget roughly by 11 percent a year on average. There’s no way that China will be able to sustain that sort of military expenditure. And then the most important reason is because of its population changes.

JUDY WOODRUFF: And that, says French, may well mean Chinese leaders are eager to make aggressive military moves now, while they still can.

HOWARD FRENCH: This is the moment to go for the ring, if you will, to try to secure every gain that you can, before the huge costs come home.

And, therefore, we’re seeing China push very hard in its immediate neighborhood, particularly in the maritime zone surrounding China, to kind of create a security zone for itself, trying to lock in the territorial and maritime gains that it can now, before a period of much more difficult choices arises some time in the 2020s.

JUDY WOODRUFF: And you can read Howard French’s full article online at our partner, “The Atlantic”‘s Web site. That’s TheAtlantic.com.

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