China declared victory over rapid population growth as the release of its decennial census signaled the focus will turn to managing the impact of a faster- than-expected rise in the number of older people.
China had 1.34 billion people as of Nov. 1, the Beijing- based National Bureau of Statistics said yesterday. While still the most populous country, the higher birth rate of India’s 1.2 billion people puts it on course to take the title when the South Asian nation holds its next census in 2021.
Success in capping the population growth through the three- decade-old one-child policy presents China’s leaders with another problem as the swelling ranks of retirees create pressure to boost social welfare programs and pose a risk to the economic growth needed to fund them. The over-60s make up 13.3 percent of the population, 1 percentage point more than forecast and half as much again as in India, United Nations data show.
“The working age population is due to start falling within the next three or four years,” said Jim Walker, managing director at Hong Kong-based Asianomics Ltd. and former chief economist at CLSA Asia-Pacific Markets. “These 9, 10 percent growth rates people have become accustomed to are not sustainable for very much longer.”
Investors should put their money in countries where the prospects for return on equity are highest, such as India, Indonesia, Thailand, Malaysia and the Philippines, he said.
Trends Continue
Economic growth will slow “as demographic trends continue, highlighting the need to rebalance the economy over the next decade to prepare for such a transition,” RBC Capital Markets analysts, including Hong Kong-based Brian Jackson, wrote in a report published today. Growth would likely slow to 8 percent-10 percent in the coming 5-10 years, from the average 11.2 percent over the past five years, they said, citing government officials.
India will overtake China as the world’s fastest-growing economy by 2013 as it adds six times more workers to its labor pool, Morgan Stanley said in a report last year. People 14 years old and under make up 16.6 percent of China’s population, a decline of 6.3 percentage points from the 2000 census. Almost one in three Indians are in that group, Bloomberg data show.
China risks having to support retirees at per capita wealth levels that are only a fraction of aging developed countries and needs a better pension system to avoid what Goldman Sachs Group Inc. said is the danger of growing old “before getting rich.”
Fiscal Pressure
“The aging population is set to add fiscal pressure on the government in the medium and long term, which makes it imperative to put in place a well-functioning pension and health care system as soon as possible,” said Chang Jian, a Hong Kong- based economist with Barclays Capital who previously worked at the World Bank and Hong Kong Monetary Authority.
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