East Asia’s high and middle-income countries are a global frontier of population ageing. This offers an important window to a future in which developing countries are increasingly home to a higher population share of seniors than in the past. Rising life expectancy and falling birth rates bring both new opportunities and challenges for development. China, recent host to the 2022 Winter Olympics and rising winter sports competitor nation, offers a useful case to study.
Demographically, China is already ‘old’ – over 7% of its citizens are aged over 64. Thanks to demographic momentum, that underlying retiree population will rise by tens of millions this decade. Ensuring that these changes do not lead to a surge in poverty among the elderly and that the resources needed by the aged do not derail economic development – China is only a middle-income country – is an issue confronting not just China, but an increasing number of ‘poor-old’ countries. What is unique, however, is China’s long-running approach to jointly navigating economics and demography.
After implementing the One Child Policy from 1980, Chinese academics forecasted that China had no feasible chance of getting rich before getting old. By getting old before rich, China would have to allocate substantive resources, human and financial, to cater to the needs of a large population share of older citizens when these were still needed for development. This would mean that China risked never getting rich at all. Moreover, China’s neighbouring economies, like Japan and Singapore, had got rich when demographically young.
From the 1980s and hence, when it was still young and poor, China implemented an economic demography-weighted development strategy. To capture the period over which the country was rich in low-wage workers, China adopted a broad set of policy reforms to promote labour transfer from agriculture to industry, and encouraged investors to establish labour-intensive manufacturing. There were also incremental and parallel increases in human and physical capital investments. The aim was to set up the foundations to help raise the productivity potential of China’s economy over time. Specifically, by the time China’s population was ageing rapidly, policy-makers wanted to be positioned to switch from quantity to quality growth drivers, like advanced manufacturing, services, and research and innovation. In line with national development, China also has gradually introduced health insurance and pensions and established basic care services to provide for the elderly. Only time, however, will tell if China’s preparations have been sufficient.
There is good news for China since it began its preparations for getting old before rich. Since the mid-1990s most economies entering the high-income group were ‘old’ at that time, including Croatia, Chile and Uruguay. In fact, countries now have a higher probability of entering the high-income group when old rather than young, especially in the absence of resource wealth. In other words, the demographic transition – the shift from high to low mortality and fertility - is happening at lower per capita incomes than in the past. But, only some countries are getting rich after getting old. Other developing countries are simply getting older without getting rich, and likely home to an ever-higher number of impoverished elders, women especially.
Still, there are mixed news for China from the economic frontier itself, rich countries. On the one hand, countries dominating global economic activity are also growing less quickly, in part due to population ageing. On the other hand, ageing in rich countries might offer Gershenkron-style ‘advantages of backwardness’ to poor countries. The case of China and Japan’s winter sports industry trajectory tells the story.
For more than half a century Japan has ranked as a top destination for winter sports. Japan’s Post-War economic success led to high per capita incomes that supported a thriving winter sports scene.The industry, however, peaked in 1993, when some 18.6 million (one in every seven) Japanese were engaged in skiing for leisure. Japan’s median age was around 37 years, and the working-age population share had peaked the year before, in 1992, at 69.8% (it stood at 59.2% in 2020). Japan remains one of the world’s richest countries but now it is also one of the oldest, ever, countries. Almost 30% of Japan’s population is aged over 65. The median age is heading toward 50 years. As a result, the number of skiers had dropped to just 2.7 million by 2020 – just 15% of peak. The number of ski facilities nationally has dropped from 661 at peak to just 442 in 2021.
Like Japan, China’s population is aging rapidly. The working-age population share peaked in 2011, at 73.2%; the median age is trending upward toward 40. Despite demographic commonalities, and in stark contrast to the skiing industry in Japan, China’s ski industry is only getting started with the 2022 Beijing Winter Olympics as its launch pad.
In China, low incomes prevented the late 20th-century demographic boom from enjoying expensive winter sports. The country’s per capita income, however, had surpassed $10,000 per capita by 2020. Many residents of frontier cities like Beijing and Tianjin now enjoy much higher incomes again, and deep pockets of property wealth. These cities are also proximate to winter snow fields. After China won the right to host the Winter Olympics in 2015, nearby snowfield facilities were upgraded and winter sports popularised. Between 2015 and 2020 annual visitors to China’s ski resorts doubled, to 20 million. Such numbers, however, are small compared to the national target of 300 million winter sports enthusiasts.
If one compares the skiing industry prospects of Japan and China, the potential for ‘advantages of backwardness’ become clear. In Japan, which was rich before it got old, the national and skiing population are moving in the same – downward – direction. In China’s case, however, the skiing industry is only just taking-off. It is even possible that its growing community of young skiers may therefore be positioned to rapidly converge to Japan’s winter sports frontier over years ahead. They will, however, need to do this while their country sustains a large population of retirees, but, in China’s case even this may be in relative favour: these retirees have only very modest, ‘poor-old’ country entitlements, unlike in ‘rich-old’ Japan.
Winter sports may seem of little relevance to most developing countries. But the example here in so comparing China with Japan highlights the absolute and relative importance of each country’s unique economic demography circumstances. Population ageing means different things for different economies, at different points in time. One important variable is when – in the economic development process – population ageing intensifies. Another important variable is how demographics are brought in by economic policy makers over time. For developing countries, it is important not only to capture the demographic rich years for development, but also to progressively prepare to sustainably cater to the needs of a rising share of elders – both in terms of the future workforce productivity and sustaining future elderly needs. This applies even where the total fertility rate remains higher than China’s did, since life expectancy gains also produce an elevated proportion of the elderly.
China here offers all developing countries a valuable lesson. The country illustrates the importance of pursuing economic development policies that account for demographic change over time. Having done this broadly since the 1980s, China’s poorest elders are today set to enjoy very modest pensions and access to government services including healthcare. China’s more prosperous younger citizens, in the meantime, are relatively well-positioned to continue pushing its economy toward the economic frontier – including as noted here, in being increasingly positioned to compete with their Japanese peers in winter sports.
From the outset, China set out to prosper in the long-term despite getting old before getting rich. All countries, especially developing ones, must similarly account for economic demography change over time – both at home and abroad.