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An aging China will never overtake the US economy
Photo: AFP/Nicolas Asfouri
YI FUXIAN
Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest.
193SHARES
In 2010, China replaced Japan as the world’s second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030.
They have cited the history of other Asian economies which surged ahead as evidence. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986.
In the following two decades, those three Asian economies achieved annual growth rates of between 7% and 8%. As such, well-respected economists have argued that China is poised to go through a similar trajectory.
People also read:
China’s median age is forecast to increase to 56 in 2050, while America will have a median age of 44. Photo: EPA-EFE/Roman Pilipey
The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases, the economic growth rate could plummet.
In 1950, the median age was 22 in Japan and 30 in the US. Japan was younger than America and had faster economic growth. However, the average total fertility rate from 1951-2017 was 1.77 births per woman in Japan and 2.33 births in the US, which led to faster population aging in Japan.
As a result, Japan’s GDP growth has been lower than America’s since 1992 (excepting 2010). The size of Japan's nominal GDP rose from 8% of the US’ GDP in 1960 to 71% in 1995, and then fell to 24% in 2018.
Taiwan and South Korea had similar experiences. In 1960, the median age was 20 in South Korea and 17 in Taiwan, versus 30 in the US. However, in 2018, they were four and three years older than the US’ respectively. In the meantime, the nominal GDP of Taiwan and South Korea first increased in comparison with the US, then faltered, and may gradually decrease in the future.
Thanks to population aging, the size of Japan's nominal GDP dropped from 71% of that of US in 1995 to 24% in 2018. Photo: AFP/Kazuhiro Nogi
In 1980, China’s median age was 22, eight years younger than the US’. From 1980 to 2011, China's annual GDP growth averaged 10%, faster than the US’. The size of China's nominal GDP surged from 7% of US GDP in 1980 to 49% in 2011.
However, China's GDP growth slowed from 9.5% in 2011 to 6.6% in 2018. The slowdown can be blamed on a variety of factors. The first and probably the most important factor is that China is getting older, partly thanks to Beijing’s ruthless one-child policy. In 2014, China’s median age had increased to 38, surpassing that of America.
The cultural traditions of mainland China are similar to those of Taiwan and South Korea. Average fertility rates from 2001 to 2018 were 1.14 in Taiwan and 1.18 in South Korea. If China is fortunate enough to stabilize its total fertility rate at 1.2, the total population will fall from 1.28 billion in 2018 to 1.08 billion in 2050.
The US population, on the other hand, is estimated to increase from 328 million in 2018 to 370 million in 2050, according to the UN World Population Prospects.
China’s working-age population began to shrink in 2017, while the US working-age population will likely peak in around 2050. Photo: EPA-EFE/CJ Gunther
China is now facing an acute aging problem. The proportion of its population aged over 65 will rise from 12% in 2018 to 22% in 2033, and 33% by 2050. In comparison, the proportion in the US will only be 23% in 2050.
China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050. China’s working-age population aged 20-64 began to shrink in 2017, while the US working-age population will not peak until 2050.
From the above, we can conclude that China's GDP growth may start to fall below the US’ in around 2033, when its proportion of elderly people begins to exceed that of the US.
At that point the size of the Chinese economy should come closest to America, at 84% of US GDP.
China is simply getting old too fast for its economy to catch up with the US
Photo: AFP/Nicolas Asfouri
YI FUXIAN
Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest.
193SHARES
In 2010, China replaced Japan as the world’s second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030.
They have cited the history of other Asian economies which surged ahead as evidence. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986.
In the following two decades, those three Asian economies achieved annual growth rates of between 7% and 8%. As such, well-respected economists have argued that China is poised to go through a similar trajectory.
People also read:
- Why don’t Chinese women want more babies? It’s not just about money
- How a 3am call and a secret inspire film remembering China’s abandoned children
- China should ease pain from one-child policy repercussions
China’s median age is forecast to increase to 56 in 2050, while America will have a median age of 44. Photo: EPA-EFE/Roman Pilipey
The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases, the economic growth rate could plummet.
In 1950, the median age was 22 in Japan and 30 in the US. Japan was younger than America and had faster economic growth. However, the average total fertility rate from 1951-2017 was 1.77 births per woman in Japan and 2.33 births in the US, which led to faster population aging in Japan.
As a result, Japan’s GDP growth has been lower than America’s since 1992 (excepting 2010). The size of Japan's nominal GDP rose from 8% of the US’ GDP in 1960 to 71% in 1995, and then fell to 24% in 2018.
Taiwan and South Korea had similar experiences. In 1960, the median age was 20 in South Korea and 17 in Taiwan, versus 30 in the US. However, in 2018, they were four and three years older than the US’ respectively. In the meantime, the nominal GDP of Taiwan and South Korea first increased in comparison with the US, then faltered, and may gradually decrease in the future.
Thanks to population aging, the size of Japan's nominal GDP dropped from 71% of that of US in 1995 to 24% in 2018. Photo: AFP/Kazuhiro Nogi
In 1980, China’s median age was 22, eight years younger than the US’. From 1980 to 2011, China's annual GDP growth averaged 10%, faster than the US’. The size of China's nominal GDP surged from 7% of US GDP in 1980 to 49% in 2011.
However, China's GDP growth slowed from 9.5% in 2011 to 6.6% in 2018. The slowdown can be blamed on a variety of factors. The first and probably the most important factor is that China is getting older, partly thanks to Beijing’s ruthless one-child policy. In 2014, China’s median age had increased to 38, surpassing that of America.
The cultural traditions of mainland China are similar to those of Taiwan and South Korea. Average fertility rates from 2001 to 2018 were 1.14 in Taiwan and 1.18 in South Korea. If China is fortunate enough to stabilize its total fertility rate at 1.2, the total population will fall from 1.28 billion in 2018 to 1.08 billion in 2050.
The US population, on the other hand, is estimated to increase from 328 million in 2018 to 370 million in 2050, according to the UN World Population Prospects.
China’s working-age population began to shrink in 2017, while the US working-age population will likely peak in around 2050. Photo: EPA-EFE/CJ Gunther
China is now facing an acute aging problem. The proportion of its population aged over 65 will rise from 12% in 2018 to 22% in 2033, and 33% by 2050. In comparison, the proportion in the US will only be 23% in 2050.
China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050. China’s working-age population aged 20-64 began to shrink in 2017, while the US working-age population will not peak until 2050.
From the above, we can conclude that China's GDP growth may start to fall below the US’ in around 2033, when its proportion of elderly people begins to exceed that of the US.
At that point the size of the Chinese economy should come closest to America, at 84% of US GDP.
China is simply getting old too fast for its economy to catch up with the US
