Demography Is Destiny: China Will Grow Old Before It Gets Rich
By 2036, 29% of households will have a child at home and 18% will be headed by someone over 65. Twenty years earlier, nearly half had a child at home and one in eight an older head. Those changes herald what the Plan calls the“silver economy”.1
Behind that silver economy, China is quickly facing the same demographic threat that has plagued Japan since 1996, when people over 65 passed 15% of Japan's population, the share China reaches this year.
World Data Lab projects that by 2050 China will have the shape of Japan today, with about 31% of Chinese over 65, roughly Japan's share. In 2026 that threat has taken the form of a fear that China's workforce will shrink.
Reuters wrote in January of“hundreds of millions of people set to leave the workforce”, the Financial Times of factories turning to robots ahead of labor shortages, and Nikkei Asia of rules to keep older people working past retirement age.2
The same Reuters report added that China's shrinking, aging population has complicated Beijing's plan to lift domestic consumption.
China will experience aging far worse than Japan has, because Chinese consumers are not rich enough. One Japanese in five was over 65 by 2005, a mark China will reach in 2032.
At that point, Chinese consumers will spend per person about three-fifths of what Japanese consumers spent in 2005, at purchasing power parity. China will also have fewer people of working age, with the number of Chinese aged 15 to 64 falling by a quarter by 2050, from 990 million today to about 745 million, a 245 million person decrease.
On the contrary, those 65+ will rise from 214 million to 390 million. This fall in the working-age population means that an increasing share of spending will be done by consumers who are not in the workforce. Today, one in seven yuan spent is by someone above the age of 65.
By 2050, that will be one in every three yuan. Most of those older Chinese will live on modest budgets.
How large will China's older market grow, and where?Added together, those modest budgets will still make older Chinese a larger consumer market than almost any country.
As a country of their own, older Chinese would by 2035 rank fifth among the consumer markets outside China, behind only America, India, Britain and Germany. There will be 313 million of them, spending $3.2 trillion a year, about $10,300 per person.
In China's big cities, those older customers are just beginning to form a large share of residents. Today, there are 212 cities in China with more than half a million residents. In only 7 of them do the 65+ individuals account for more than a fifth of the city's population, a mark that Shenzhen (4%), Beijing (15%) and Shanghai (17%) all fall below.
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