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Daniel Burrus

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Asia's Aging Population Is Both Predictable and Unprecedented

Posted: 10/02/2012 8:57 pm

Demographics provide an excellent source of hard trends that can give us a powerful window into the future of any nation. If you look at Asia in general, it has an aging population that is unprecedented in human history. What might surprise you is that China is the centerpiece of this hard trend due to its sheer size.

Currently, China has 8.5 million elderly and 180 million people over age 60. That's a lot of people getting older every year, but that's today. If we jump ahead 20 years, they will have over 360 million people over age 60. That's a huge number, especially when you consider that China has not built a strong social safety net to provide pensions, affordable health care, or homes for the elderly.

For example, currently in Beijing there are only a few hospices -- not nearly enough to meet the current nor enormous future demand. Additionally, while there are workers who pay taxes, many more have never paid taxes and therefore won't have access to pensions. Most of those who have never paid taxes also have no savings. They must rely on their children to take care of them.

The population that has been paying taxes does have access to a government pension, but it is a meager one at best. There are currently six workers paying taxes for each retiree. If we look 20 years ahead, there are two workers per retiree -- not a good combination.

Another interesting fact is that life expectancy in China rivals the West. It's one of their great achievements and, ironically, part of the problem.

Where did this future problem come from? In the 1970s and 1980s, the Chinese government asked their people to marry later, to have longer gaps between children, and to have fewer children. That mandate ended up giving birth to the "one child per family" policy, which created a smaller generation that is following the boom.

This is giving birth to what I call the 1/2/4 effect, which affects all the only-children in China. When those children start working, as many of them are now, they're going to be supporting two parents. So it's one person supporting two. But in reality, they're also going to be supporting two, and in many cases four, grandparents. So their wages are going to have to support an ever-widening group of elderly.

Between the rising number of elderly and the shrinking number of young workers, China will be increasingly looking for solutions.

One of the things that will help the situation is robotics and automation. In fact, I would suggest that China take a look at their neighbor, Japan. While the two countries aren't always friendly toward each other, they have much in common. Japan is also facing a serious aging population, and they have been facing it even faster than China. The difference is that Japan identified this hard trend years ago and has been taking positive actions to solve predictable problems before they happen.

Japan is a very insular culture, which means they don't like the idea of bringing in large numbers of younger immigrants to help out. So Japan has decided to take care of itself.

One of the ways Japan has been doing this is to encourage Japanese companies to develop advanced robotics and automation systems that can take the place of human workers, as well as help take care of its rapidly aging population. A good example would be the company that recently developed a robotic exoskeleton that a hospital worker can wear to gain extra strength. By wearing the robotic exoskeleton, that hospital worker can lift a 250- or 300-pound patient with ease.

Of course, this is just one example. I'm sure you have seen some of the highly advanced humanoid robots made by Honda and Sony walking up stairs and even dancing on television or YouTube. These are just a few quick examples of how Japan is working now to solve tomorrow's problems today.

Everyone, including the United States, can learn from what's taking place in Japan. China's aging population is growing faster than the U.S.'s aging population, and it's going to have global and predictable ramifications. The only way to avoid major problems and disruptions is to pay attention to the hard trends... and take action now.

 

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