Japan's greying population is one reason its economy is struggling with recession, and demographics across Asia are not looking too bright either.
China's working-age population peaked this year and South Korea's will start contracting in two years' time, warned HSBC in a note Friday.
"Much of Japan's economic malaise over the last two decades is a result of its adverse demographics," wrote HSBC economist Frederic Neumann, noting that Japan's working-age population of people, aged between 15 and 65, started to shrink in 1997, weighing on the nation's output growth year after year. "China and Korea are swiftly following Japan, with their working-age populations shrinking."
Alarmingly, Neumann estimates that when South Korea's working-age population starts to shrink, the contraction will be even sharper than that in China and Japan.
"In South Korea's case, slowing productivity growth amid climbing wages could ultimately dent the economy's competitiveness, although the country remains, for the time being, a powerful export force in many key sectors," he added.
In China, a doubling in working-age population growth from the late 1990s until the mid-2000s stoked the economy's remarkable growth spurt, but that boom is over.
Neumann sees wage costs climbing unless the country can maintain its current pace of expansion. "China's (expansion) is still associated with big strides in productivity, so the mainland isn't losing competitiveness at the moment," he noted.
Adverse Impact
Across most of Asia, working-age population growth has also decelerated sharply over the past 15 years, and is expected to slow further, said Neumann. But even as the workforce ages, dependency ratios in all countries, except Japan, are still lower than they were in 2000, he noted, which blunted the adverse impact on national output growth.
Even so, the good news will not last long as dependency ratios are on track to rise again for all countries except the Philippines, India and Indonesia, said Neumann.
For the rest of Asia, demographics need not be their destiny. "Governments can adopt policies that mitigate adverse effects, such as raising the level of education of the existing, yet shrinking, workforce," he said.
One Child Policy
A few weeks back Chinese officials announced the “abandonment” of their decades-old one-child policy that was to prevent any woman from having a second child.
It involved assembling an army estimated at one million public family planning officials and specific plans to force abortions on women for any pregnancy after their first, imposing massive fines on them, and even preventing those children who avoided the abortionists’ death chamber from getting an education.
Experts say the change was because of China’s foreboding demographics: There are too few young people to support the old.
Littlejohn’s organization has been warning for a long time about China’s future. With a policy of killing so many children, its population is not replacing itself. That means a society where elderly rely on the younger generation for support during their senior years is running full-speed into a brick wall–where there will not be enough young people to support seniors.
Littlejohn said China’s change from a limit of one to two children is an admission its population control plan has failed.
Wang Peian, the vice-minister of the National Health and Family Planning Commission, which commands an estimated one million bureaucrats, said his nation “would not abandon its family planning restrictions.”
China’s society relies so heavily on male offspring, the “gendercide” that has had abortionists target female children and means an estimated 37 million Chinese men likely will never find a wife, will continue, she warned.
“The one-child policy does not need to be modified. It needs to be abolished,” she said.
