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China's Aging Population

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While UK Prime Minister David Cameron's visit to China earlier this month made progress on the importance of free and open trade and investment, an even bigger help to China was his move as head of the G-8 to hold a Dementia Summit. It is the challenge of Alzheimer's and other Dementias, correlated perfectly with aging, that is the huge barrier to China's growth. With one in two people over 85 at risk of Alzheimer's, China will have about 55 million at risk by mid-century (or roughly the population of the entire U.K. today). And while economic growth animates China's leadership, it is black clouds such as this that could derail growth. China's recently announced economic reform plan is, indeed, a massive undertaking intended to continue to propel them to the global leadership they covet. The Chinese leadership fully understands that economics is essential to 21st century power.

Bob Zoellick, former president of the World Bank, explains that a central plank in China's economic success will be based on how it urbanizes. China's president Xi Jinping and the Chinese political leadership also recognize that the looming labor crisis associated with their urbanization must be married to successful policy on aging. With China's rapidly aging society -- threatening to become old before they become wealthy -- understanding how to deal these changing demographics is a critical factor in their economic growth plan upon which all else hinges. The Chinese were not doubt looking even more carefully at Cameron's G-8 Dementia Summit than even at Obama's planes to their east.

Moreover, as Chinese leadership looks around the region, they observe the impact of not getting it right. They need look no further than Japan -- which has the oldest population on the planet. Surely, China's leaders are looking closely at whether Japan's Prime Minister Abe can pull his country out of what is now going into their 3rd decade of economic malaise. President Xi must be considering that Japan's economic challenges are connected to their disproportionately old society, and that Japan's economic recovery will depend on how they integrate their aging population into an economic growth model. President Xi can also be certain that others in his neighborhood, from South Korea and even the once "young" Thailand (both well below the 2.1 replacement birth rate at 1.23 and 1.4, respectively) are also looking for the 21st century growth model that leverages their aging populations as drivers of economic growth.

The difference between China and Japan and other societies as they develop, including the U.S., Germany, Australia, the U.K. or Thailand was and is the natural decrease of birth rates, contrasted with China's strict one child policy. Increasing evidence globally is proving that these declining birth rates are associated with features of modernization such as education and urbanization. That correlation can help to explain the plummeting birth rates across Europe, including "Catholic countries" such as Italy and Spain, and among emerging markets like Brazil and Turkey. It is particularly instructive that even in India, known for its "youngness" has gone from roughly 6 children per woman in the post-World War II era to just above the replacement rate today, at 2.2 children per woman. This means that in the a few short decades India, too, will be more challenged by an aging society than overpopulation.

Our 21st century is marked by the phenomena of aging societies -- with more old than young -- that will have as much impact on economic growth as any single factor currently more popular on the global agenda. It is at least conceivable that China did indeed get the memo from Standard & Poor's report "Global Population Aging 2010: An Irreversible Truth" that bluntly stated "No other force is likely to shape the future of national economic health, public finances, and national policies as the irreversible rate at which the world's population is growing older."

Yet, for China, as with the rest of us, there is still the compelling question of what is to be done. The implications across news accounts and editorial pages is that a lifting of the one-child policy is a step toward realizing Xi's economic growth manifesto. However, these things take time and the current demographics are baked in at least through mid-century in the best of scenarios. Solutions must also involve a new way of thinking about "aging" that was put forth two years ago in the World Economic Forum book, Global Population Aging: Peril or Promise? The book offered a set of policy prescriptions that would keep aging populations healthier and active longer -- so that those 20th century assumptions that people over a certain age should be considered "retired and unproductive" could be transformed to see many within this cohort as economically active and engaged in the 21st century. For China, this will mean direct applications of new public policies for their 60+ population, a model that will apply equally to other countries around the world.

So, President Obama and PM Cameron would both do well to keep in sight the changing demographics of China and design their policy agendas with the understanding that China's aging population is likely to influence China's global leadership prospects as other more conventional areas of foreign policy attention.