The (Old) People’s Republic: Confronting Demographic Decline

The People’s Republic of China isn’t shrinking, yet. But it is certainly getting older, which presents a significant challenge to the country’s continued long-term economic growth. While the Communist Party of China is attempting to ensure growth through a few demographic policy instruments, some (including Z Geography) think that these are too weak and too late. Z Geography believes that the Communist Party is wary of stronger pro-natal policies because of the potential for demographic to outstrip economic growth, a future which could threaten the party’s singular hold over the country.

Z Geography stumbled upon a BBC article reporting that the PRC’s working age population decreased by over 2 million last year (uncited, of course). While statistics are always problematic (numbers have a nasty habit of differing based on source and definition), the statement in BBC appears sound. Unlike the BBC, Z Geography will give you sources. The U.S. Census Bureau’s International Data Base estimates that the working age population is shrinking.

The working age population is legally defined (in most cases), which provides effective bounding boxes for statistical estimates (of course,child labor isn’t captured in these statistics an important consideration for China). Article 15 of The PRC Labor Law prohibits employers from recruiting minors under the age of 16 (see the U.S. Library of Congress), with a few exceptions. As Bloomberg reports the current compulsory retirement age in China is 60 for males and 50 for females.

Utilizing 1-year age groups for males and females in China, Z Geography discovered that the PRC’s labor pool (16-59 for males, 16-49 for females) shrank for the first time in 2013. In 2012, 830 million (62% of the total population) were in these broad groups and available for (legal) economic employment. In 2013, their number fell to 826 million (61%). This population decline of about 4 million wasn’t due to a natural disaster, pandemic disease, or war – it was simple aging. Between those two years the population considered “elderly dependent” (60+ among males, 50+ among females) rose from 261 million to 274 million (an increase from 19% to 20%).

The Census population estimates over the long term expects a continuation of this trend. By 2025, the labor pool will have decreased by over 75 million persons to 817 million (53% of the population) and 403 million elderly dependents represent 28% of the population. One root of the problem lies in the low fertility rate of China’s women (thanks to the One Child Policy), tallying these ratios only 19% of the population is under the age of 16 (in other words, 19% of the population represents the country’s future workforce). In 2040, Census estimates 648 million workers (47%), 515 million elderly dependents (40%), 194 million youthful dependents (13%).

For comparative purposes, the U.S. in 2040 is expected to have 231 million workers (aged 15-64, 60% of the population) and 147 million elderly and youthful dependents.

More succinctly: by 2040, the number of retirees in China will be nearing the number of potentially active workers. While many of these retirees may have access to retirement benefits (presumably) it remains to be seen whether these benefits are sufficient to maintain quality of life for decades. For those without substantial benefits, or no benefits at all, they will have to rely on children or, more likely considering the one child policy, the government.

Recent news highlights at least two policy measures aimed at averting the potential economic consequences of having an overburdened workforce. The first, and somewhat earlier, concerns the infamous One Child Policy that stipulated below replacement-level family sizes. With few exceptions (minorities, rural inhabitants having a daughter, couples who are both only children) the law prohibited families from having more than one child. While the policy succeeded in slowing population growth it is one of the main causes of the declining labor force (another being emigration). The Times of India (via AFP) reported earlier in January 2014 that one province in China is relaxing the policy somewhat. The loosening of the policy, agreed to by Communist leaders in November 2013 and rubber stamped by the legislature in December, allows couples where at least one parent is an only child to have two children.

The Bloomberg article cited above highlights another policy approach, raising the retirement age.  As one analyst noted, this policy move provides a short term salve to the long term population shift predicted by relaxing the one child policy. The Party hopes that raising the retirement age will keep men and women in the workforce longer, increasing the labor pool in the short term, while more children are born. Of course, the labor pool won’t increase due to higher births for 16 years (when these babies enter the work force).

While Z Geography appreciates the complex approach taken by the Communist Party in stalling a potential economic crisis precipitated by demographics, I feel that the relaxation of the One Child Policy might not go far enough. The Party is presumably worried about relaxing the policy too much, thereby encouraging a baby boom that challenges social and political stability, if the economy can’t provide gainful employment for those youth. However, by taking a far more conservative approach (instead of scrapping the law altogether) the Party risks long term economic security, and its political legitimacy. If firms have to raise wages in order to compete for a smaller number of laborers, they may decide to relocate altogether. In fact, Bloomberg observes that Samsung has already decided to relocate to Vietnam (though Bloomberg doesn’t explicitly attribute that decision to rising labor costs). Steering a middle path is more likely an indication of the Party’s desire to hold on to power, rather than decisively correct the problem.

With enough cash, time may be on the Party’s side. As the BBC points out, another potential solution is increasing productivity of the labor pool. Increasing productivity with not only lower labor costs but make the lower birth rate easier to digest economically. However, the long term demographic question than becomes – as Japan has learned – how do families (and the state) care for an increasingly elderly population especially when the country’s population starts to decline (as China’s is expected to do by the mid-2020s)?

A less expensive and quicker way to increase the labor pool and birth rate is, as you may have guessed, immigration.

Population Decline: A Map

I’ve written a few times about demographics, most specifically population decline (see here, here, here, here, and here). Some time ago I volunteered to make a map showing those countries currently experiencing (i.e. in 2013) population decline. The results of this effort is below. The map uses data from the U.S. Census Bureau’s International Data Base. In addition to current population decline, I also highlighted those countries estimated  to experience population decline in a decade (2023).

Population Decline (via U.S. Census, ME!)

Population Decline (via U.S. Census, ME!)

In one of the earlier posts I discussed the eastern European concentration of declining populations. Currently, this belt of decline stretches from Russia to Germany and the Adriatic Sea (specifically to the former Yugoslavian republics of Croatia, Slovenia, and others). By 2023, Slovakia and Austria are also experiencing population decline. Reviewing the U.S. Census data, Austria is already experiencing a natural population decrease. However, immigration numbers are high enough to ensure a growing population. By 2023, immigration inflow isn’t enough to replace elderly Austrian citizens, who are dying of natural causes. The decline belt also spreads further west (to Belgium, Finland, and Portugal) and south (to Greece).

In addition to Europe, the East Asian region of decline also begins to emerge with South Korea joining Japan in experiencing negative population growth. By 2030, the People’s Republic of China joins South Korea and Japan with a declining population.

Finally, the United States is expected to continue grow about 0.8% per year in both time periods (2013 and 2023) due to a combination of natural increase (i.e. births being more numerous than deaths) and immigration (i.e. more immigrants than emigrants). Likewise, the United Kingdom and Canada also remain in positive growth due to the same factors.

Though nationalists would undoubtedly take issue with immigration as a policy tool to reverse demographic decline, it makes economic and demographic sense. After all, one of the problems associated with demographic decline is the greater burden that the elderly place on working adults. In less developed economies that burden is comprised of an overabundance of youth, where children are often a form of social security. In the advanced economies, there is far less pressure to have children. There is (typically) a social security program for the elderly as well as retirement and pension plans. Similarly, the cost for having children is also greater. Attempting to spur citizens into having more children would (probably) take decades of consistent policy, which is unlikely to happen (at least in a democracy). Such a policy would not only have to take into account the costs of children, but citizens’ (particularly the female citizens’) preferences.

In light of these challenges, why not encourage immigration?

Urbanization in China

Recently, my favorite remote sensing site (Earth Snapshot) released the below image taken at night over eastern, coastal China (People’s Republic of). Its a striking visualization of the extent of urbanization in the PRC, not to mention the almost continual stretch of development along one side of the island of Taiwan, which hosts the Republic of China. The upper (northern) urban areas are Shanghai and Hangzhou, the former being the largest city in China. The southern area is the former British dependency of Hong Kong.

Nighttime Lights over eastern Asia (via EOsnap)

Despite the size of the PRC’s urban areas, only a little more than half of the country’s 1.3 billion persons resides in cities, compared to rural areas, based on 2013 estimates from the U.S. Census Bureau.

Bloomberg news reported in January 2012 (based on 2011 data) that China’s population had just flipped from being primarily rural to urban. While a worthy news even in of itself, it is particularly significant considering that rural dwellers represented 81% of the population in 1979. Further, the growth in urban areas has really come since 1979 – as Bloomberg points out, the proportion of rural-urban proportion decreased about 9 percentages points between 1949 and 1979. Of course, Mao Zedong was in control of the People’s Republic of China during practically all of this time. It was he who undertook the Great Leap Forward and the Cultural Revolution, both programs emphasized the rural character of the country at the expense of the nascent urbanity.

One wonders to what extent these programs were “rewards” for the rural population’s support of Mao during the Chinese Civil War. Other academics have pointed out, that Mao’s initial communist rebellion failed because he attempted to fully replicate the Russian model in the sense that it began in the cities. After Mao’s initial failure he shifted his strategy to the countryside.

Now most mainland Chinese live in the cities, where they earn three times more than their rural counterparts, but rural incomes have grown faster than urban ones. The challenge now, as Bloomberg correctly points out, is properly managing this quickly expanding urban population. An explosion in the urban population necessarily requires a commensurate increase in the infrastructure and services that this population requires:  food, water, shelter, education, employment, and other things. While the PRC has reaped the benefits of a quickly expanding urban population (in terms of income generation for the state), it remains to be seen what will happen when the economy slows.

Brazen Belligerents Bound for Blood over Borders?: India, Japan and China

Remember Samuel Huntington? The theorist behind the “clash of civilizations”? One of his comments that has stuck to me is the “bloody borders” of civilizations. For him, he pointed to “Islam’s” bloody border as evidence to the veracity of his hypothesis. Quick note: I’m not a big fan of Huntington’s theory, primarily from the point view of the modifiable area unit problem (MAUP alert!). Like any theory its over-extrapolation of… humans. As any person over the age of 20 knows, people are wildly different even within small communities.

But I also believe in salvaging aspects of theories that could still be useful. From Huntington, I like the idea of the bloody borders. Why? Mostly because it makes sense and I like reason and logic. While no one is going to be able to define what constitutes a “civilization” (unless you’re Sid Meier), we have plenty of states to examine. And states’ borders are just as bloody. I could fly into a nice tangent about the organic state in regards to bloody borders, but I’ll save that, but in addition to the unclear and missing state presence in borderlands, there’s also the issue of population. Population groups in borderland regions are apt to be very different from population groups in the capitals, there’s bound to be a number of minority groups (some might actually be the majority), and there’s also likely to be population groups in one country whose brethren (I use this term very loosely) are the majority group in another country. For one example, consider the Chakma/Marma population in Bangladesh (who are loosely related to Burmans in Burma) or the Rohingya population in Burma (who are loosely related to Bengalis in Bangladesh).

One state making headlines (depending on the paper you read) is China. And its borders are bloody. Yet. But they seem to be getting hotter. And I’m not even talking about the South China Sea. China grabbed (Indian) headlines this past weekend with a 10-kilometer incursion into the disputed territory of Ladakh in India. While a Times of India article noted that there have been 600 border violations (across all three sectors: Ladakh, Uttarakhand/Himachal Pradesh, Arunachal Pradesh) India’s Ministry of Defense is concerned about the “brazen military assertiveness” of the Chinese People’s Liberation Army. An official noted that the PLA is going increasingly deeper into Ladakh, in particular, with a potential aim to stake “claims” in the disputed area (planting the flag). In this latest incident, the PLA erected a tent. And haven’t moved. Another Times article notes that the act of erecting a permanent structure (a tent) violates a “Sino-Indian” agreement on managing the disputed border.

In other words, its an escalation. Typically, both sides would retreat to their respective lines after a face-off and flag-waving. While the Indian border guards did so, the PLA pitched a tent and spent the night. The Indian border guards pitched a tent as well, a tit-for-tat escalation (guess the agreement’s void now). Senior military-leader meetings are being held but they have been inconclusive in resolving the dispute. India’s is keeping the option of “rushing troops” to Ladakh, if needed. China’s Ministry of Foreign Affairs points out that it did nothing wrong and is merely patrolling the line of actual control (LAC, which nominally divides China and India).

In the BBC’s headlines, Japanese Prime Minister Shinzo Abe warned that Japan would respond, with force, “if any attempt is made to land on disputed islands” in the East China Sea. As the article points out, the issue over the Senkaku/Diaoyu (Japanese and Mandarin names respectively) islands was reignited last year when the Japanese state purchased three of the islands from a private owner (“nationalizing” them).

Are these two groups of countries, India-China, Japan-China, heading for a violent conflict? Hard to tell. Violent inter-state conflict is becoming harder to discern these days. Gone are the days when an ambassador was summoned and war declared by a representative body or person of the body politic. I doubt anyone could predict such a cataclysmic event like the beginning of a war. What we can say, however, is that tensions are getting hotter (how hot would be the subject of a research paper, not a blog post). New lines are being crossed: China pitching a tent, Prime Minister Abe mentioning force. But these are a long way from someone pulling a trigger (or pushing a button). But as tensions raise, we have to wonder – how many other levers are there to pull to escalate a situation? And which lever, pulled with the intention to demonstrate resolve, accidentally ignites a conflict?

A lot of this is outside the scope of (political) Geography, of course. For me, the real interest is how these tensions are manifesting in the physical and human landscapes. Why Ladakh? Why the Senkakus? These are discussion points worth their own posts, but to me, Ladakh because there are so few people (civilians) there. Of the four areas listed (Ladakh, Uttarakhand, Himachal Pradesh, Arunachal Pradesh) Ladakh has the lowest population density (less than 10 people per square mile). If violence were to erupt, due to a miscalculation by the Chinese or the Indians, it would be largely isolated in a far-flung region dominated by mountains and glaciers. The Senkakus are more than just a set of rocks in the Pacific. They have potential economic value, thanks to local fisheries and underwater petroleum reserves. Beyond this they are symbolic, they are tied up in the turbulent history of East Asia, especially between China and Japan. Though I haven’t read it yet, Council on Foreign Relations published an article this month for “contingency planning” purposes.