The People’s Republic of China is facing an increasingly serious demographic problem.
New data show the reversal [in the one-child policy] isn’t having the anticipated impact. The number of newborns in China dropped to 15.23 million in 2018, according to the National Bureau of Statistics. That’s two million less than 2017 and 30% below the median official forecast of more than 21 million.
This has serious implications for, among other things, the PRC’s old-age pension and medical care capacity (eliding the impact on the PRC’s ability to man an armed forces establishment of the size it currently has).
By 2050, there will be 1.3 workers for each retiree, according to official estimates, compared with 2.8 now.
Most of these retirement programs are funded by local jurisdictions, rather than from the center, and most of those jurisdictions’ facilities are badly underfunded and getting more so (sound familiar?). As a result, the PRC is trying to increase national control of those retirement facilities and to increase the bite on businesses to pony up more for the programs. That last, especially, has its own problems.
Huang Weibin, the general manager of a property-management firm in Guangdong province, said higher pension costs mean his business will suffer a loss this year, likely forcing him to lay off some of his 80 employees.
“If the government doesn’t help us out with subsidies or tax breaks, we will go broke for sure,” he said.
He and the PRC government need only consult with that famous American economist and blogger, David Roberts:
If the question is what the [PRC] can afford…, the way to think about it is not in terms of how much money the country has. It literally has as much money as it wants. It prints its own money!
Problem solved. Or maybe not.