China’s aging is an overrated problem

Baozhen Luo has a good article on this theme.  The problem is well-known, but the potential solutions don’t receive enough discussion.

For instance simply raising the retirement age to sixty-five could keep more than forty million men in the work force.

The Chinese employment rate has been increasing steadily, as has Chinese productivity.  In other words, improvements in both labor quantity and labor quality can help offset the aging problem.  Countries on the technological and efficiency frontier don’t have nearly the same room for improvement.


Demographers project (the mid-range projection) China's population will continue to increase for the first half of this century, but then will decline by roughly 400 million in the second half of this century. Think that might have social and economic consequences? Again, that's the mid-range projection - the consensus is that China's population will decline but by how much is subject to debate. For those who like the idea of population decline, the news isn't that good, as the decline in China will likely be offset by an increase in Africa. Of course, today's fans of this blog won't be around: we'll be dead.

Africa's birth rates are falling too.

But not enough...NOT ENOUGH. Specially, in rural areas.

Stay tuned, it's almost axiomatic that over time they will fall further.

'The Chinese employment rate has been increasing steadily, as has Chinese productivity. In other words, improvements in both labor quantity and labor quality can help offset the aging problem.'

Dean Baker is going to be impressed that even someone of the stature of yourself can grasp a point he has been repeating for years regarding any number of countries, and following any number of scare stories.

'Countries on the technological and efficiency frontier don’t have nearly the same room for improvement.'

On the other hand, he will likely yawn at how the chairman and general director of the Mercatus Center is utterly unwilling to abandon a fundamental ideological goal when applied to the U.S.

Mercatus. Mercatus. Koch brothers. Koch brothers.

The comparison to Dean Baker is a good one. The article has the same problem he has (at least in the few things I have read of his). And that is the problem with math and the ability to understand that not everybody is collage educated. Raising the retirement age is easy if you are a banker or dentist. Not so easy to raise if you are factory worker. Moreover, a lot of what is in the article is hand waving and ignoring the math. What can't go on forever won't.

Yes, increasing the number of people in the workforce has offset the decline in working age population. But it should be obvious that can't continue for much longer.

The bottom line is that the math tells us that China will have the same demographic problems as Japan except they will not be as wealthy and educated when they hit that point. How can any sane person think that will go well? Granted, you can find people whose doom and gloom is excessive. But to say point to increasing work force participation as being something that will offset long term inverting of the population pyramid is just delusional.

I think you are missing, Apeman, the key point: China is not on the Production Possibility Frontier, so lots of "low hanging fruit" for the old people to pick. Japan on the other hand is on the PPF, and no more low hanging fruit for the oldsters to pick.

"Raising the retirement age is easy if you are a banker or dentist. Not so easy to raise if you are factory worker. "

Factory work isn't back breaking work that can't be done when you are older. I'm an automation engineer and have worked in various US factories. There are plenty of 60+ year old line workers.

Actual construction work is a different matter.

If you're capable of writing and basic excel, there's a ton of work in construction at the estimating/project management/client relationship management side that you can do well into your 70s. My grandfather did this type of work until he was 83 I think? He didn't finish high school.

Factory working in China is quite a bit different than what an automation engineer might have witnessed in various US factories. Young people actually die for suicide brought by overworking in China, you know, and you think people in their 60s could take those rhythms?

The US has had a retirement age of 65 since the 1940's. Perhaps the modern day Chinese factories are significantly worse than the ones in the US from 70 years ago, but if so, that's another issue that far exceeds the scope of retirement age.

I agree, but raising the retirement age is something that should considered and, in case, suggested having a look at present working condition, not conditions that should be fixed, at some point, in the future.

And yes, from what I've read (and told, by a few Chinese students I've been doing my masters.. well, a while ago), conditions in Chinese factories, in particular out of the SEZs, are similar to UK. Beginning of Industrial revolution, early XIX century, UK, that is.

Mercatus. Drink!

If you don't let people retire the labor force will be larger. A very clever solution.

If China do 65, we can 75, or perhaps even 85. Let's approach the abolition of retirement with an enthusiasm unknown to mankind.

PS I would like to hire a geriatric bricklayer to construct a pool house for me. Please have them contact my wealth manager directly.

My Dad was laying brick when he was 75, 12 inch block too. Probably only put in 20 hrs a week though.

That's seriously impressive. Deserving of a retirement bonus.

I have see some geriatric bricklayers and they are pretty good. But yeah, I agree with your point. Workers in the trades are starting to really feel it when they hit their fifties. By the time they are in there sixties, it is really noteworthy if they are still going strong. Most of them are foreman or out of the trades by that point.

I work with only one guy who has made it to 65 as a working man. He is a lot slower then he was even 10 years ago but he gets the job done and he has less heath problems then some of the younger workers in their forties. I think he is blessed with good genes because he drinks and smokes enough for a young man.

Workers are going to have no choice but to work longer, but it is going to have to involve changes in patterns of employment. You can't work older people the way modern employers are use to driving their employees. More part time work is going to be needed.

A nation of 150 million Wal*Mart greeters

In China people save money and can retire when they please

Imagine if the US has a savings rate of 50%. Jesus that would be the end of it.

Unless they invested that retirement savings in the market, with leverage...

Certainly, it's easy for someone in the US to propose that workers in another country work longer by "simply raising the retirement age."

But, is that really a simple thing to do anywhere? That has problems of its own doesn't it?

The suggestion is that China should raise it's retirement age to 65 and the current retirement age in the US is 67.

But then when you compare the life expectancy of the two countries, we live about five years longer. And I don't know but I bet if you compare rural life expectancy in China to the US equivalent you'd see an even greater disparity.

As expected. Keep in mind that average is over. Perhaps different retirement ages for different groups should be implemented?

"But then when you compare the life expectancy of the two countries, we live about five years longer."

The US instituted a retirement age of 65 in 1937, Jan.

Of course, aging is the least of China's problems, which begin with having reached the political limits to reforming away from a State-centric investment growth model.巴丢草-in-solidarity-with-detained-lawyers-and-activists/

In the short run it is not a problem....It was not a problem for Japan in 1991 either.

But the long run it could definitely be a problem as :

1) Once low birth rate urban population takes hold it is really hard to turn them around.
2) China is strong with infrastructure and manufacturing. But they don't make a lot profit with manufacturing (US brands get all the producer surplus here.) so they aren't very rich. You noted this reality in economic growth.
3) Judging by the stock market reaction by the government, the chinese are very concerned with economic growth.

Japan has low female labor participation because many women choose to be work as homemakers. In China it seems most women work, but families also rely on grandparents to do housework and raise children. It also seems like the grandparents retire very early.

Isn't it possible that elderly Chinese spending more time in thr workforce will just lead to more women exiting the workforce to raise children? It could have a relatively neutral effect

Now that's a good point.

Many of the suggestions are available to any country, doesn't mean they will happen though.

And regarding raising the retirement age, how much will that help rather than harm a country that isn't at the productivity frontier? Aren't you just suppressing employment for youth, who would be much more productive?

"Beijing enacted major reforms of its pension" but " Beijing will need to improve its pension system, putting more effort into managing funds" which like anything there will be constrained in investing only in the local securities. When they will not be blocked that is. What can go wrong?

A good portion of CHina's productivity gains have been from moving people from farms to factories. This ability is slowing down. The USSR did this years ago, too.

Jeb Bush is advising China?

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