Bloomberg Writes: Like Its Neighbors, China Struggles With an Aging Population

 

China’s population is aging, largely because of the one-child policy in place for decades.

With China’s population likely to peak by 2020 and then start declining sharply, the government will have no choice but to act soon, according to Ting Lu and Xiaojia Zhi, China economists with Bank of America Merrill Lynch (BAC) in Hong Kong. “We are highly convinced the Chinese government will announce a significant change (allowing families to have two children if at least one parent is a singleton) to the outdated one-child policy in the next few months,” write Lu and Zhi in a new report.

Further details of party policy decisions published Friday by the official Xinhua News Agency show that change is indeed coming: Couples will be able to have two children if either parent is an only child….

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When it comes to population control and its future economic growth I am not sure what to think here. China is either performing brilliantly or has dropped the ball big time.  

From the initial analysis it looks China has dropped the ball by about 10-15 years and that gap will cause significant disturbance in both the Chinese Economy and Chinese Society. Yet, if you look at the situation from an analytical standpoint, they might be right on the money. Unlike the US, China doesn’t have massively underfunded entitlement programs like Social Security and Medicare. As such, China’s generational transition will be much easier. Further, China’s government doesn’t have to worry that much about its older generation.  Chinese family structure requires younger generation to care of the older one, taking the government out of the equation and making things much easier (unlike in the US).

As such, I believe China is executing its population control strategies perfectly by now allowing couples to have more than one child. If these laws work as anticipated and lead to a baby boom in China, it will give the Chinese economy another  boost in growth in about 20 years.  

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