Aging doesn't signify declining economy

The United States and China published the initial results of their respective censuses not long ago. The two countries have much in common, as the results show. The population growth rates have fallen to their lowest levels in decades in both countries. The average age of the Chinese and US populations is about the same－around 38 years. The results also reflect their overall demographic changes.

And due to their slow population growth, both China and the US face the pressure of population aging to varying degrees, which could add new uncertainties to China-US relations.

The COVID-19 pandemic delayed the publication of the census results in the US by several months. In the decade from 2010 to 2020, the US population grew 7.4 percent, with three states showing a net decline in population, a record since 1980. More data will be available when the final results are released in August.

China published the results of its seventh census on May 11, which show its population grew 5.38 percent in the past decade, the lowest in nearly a half a century. The results also show that 18.7 percent of Chinese people are aged 60 or above, and 13.5 percent are 65 or above, an indicator of overall population aging. As a result, at the end of May, China announced a universal three-child policy－a vital policy shift triggered by the census.

In recent years, the aging of Chinese society has attracted the attention of the US media and academic circles alike. According to some experts, an older average age will deprive China of some of its demographic dividends and put pressure on its social safety net. Among other things, it will significantly increase labor costs, leading to decreased global competitiveness in manufacturing, which in turn will affect China's medium- to long-term growth potential and delay the country's drive to catch up with the US in economic aggregate.

Some other experts believe that population aging will gradually change the social ecology in China and weaken its innovation vitality. According to some US think tanks, declining birthrates combined with population aging will make it more difficult for China to recruit soldiers, thereby undermining its military potential and strategic direction in the medium to long term.

These views reflect the US' strategic misperceptions about China, for Washington sees China's weaknesses as a developing country and then uses those to support the argument that China's development is bound to slow down or stagnate. Population aging seems to be the latest point of weakness the US has found.

But the US observation neglects the fact that China is a super large economy with a super large population. It also underestimates the power of the Chinese political system to deal with major challenges. Despite the increase in the population of senior citizens, China still has 880 million working-age people, more than twice the total population of the US. Not to mention that significant improvements in population quality will also increase the competitiveness of the labor force.

Yet such misperceptions could create new risks for China-US relations. For example, Global Trends 2040, which reflects the views of the US intelligence community, cites population aging in China as a decisive variable. In one scenario, the US builds up a circle of democracies as China's economy stalls because of population aging.

In another scenario, population aging will "quickly close the window for China to use military force externally", thus increasing the country's sense of urgency to use military means to settle territorial disputes which have a bearing on its core interests.

The former argument is a disguised China-collapse theory that is based on a significant underestimation of the country's reform potential with regard to population aging. The latter is a new type of China-adventure theory that is contradictory to China's diplomatic philosophy and practices, which promote global peace and common development. These two judgments, which are based purely on brainstorming, may lead to mistakes by US decision-makers in perceiving China and cause new twists and turns in Sino-US relations.

In fact, an aging society is a challenge not only for China and the US but also for many other countries. And compared with other global issues such as climate change and the risks of cutting-edge technologies, the broader implications of population aging and its long-term impacts on the political ecology of countries are not fully understood by the international community.

Most developed countries face aging populations and labor shortages, while most of the least-developed ones have the fastest growing populations. This huge disparity in wealth and population distribution will inevitably lead to cross-border movements of people. At the same time, population aging will also mean enormous added demand and social burdens in the fields of medical care, rehabilitation and home care. At present, the operating costs in these areas are prohibitively high. And it will take international cooperation to promote technological innovation so that senior citizens in more countries can be taken proper care of.

In addition, population aging also puts greater pressure on pension funds. So financial institutions need to guarantee the sustainability of pensions through new product design and investment channels.

On these issues, China and the US face a similar situation, and they have plenty of room for cooperation to address common interests. As the numbers of elderly people grow in both countries, the impacts on their respective agendas will become more pronounced. The two sides should therefore explore cooperation on this issue, including how to make full use of their respective comparative advantages, how to promote further two-way opening-up of the financial market, and how to avoid political interference in pension investment.

In dealing with uneven population growth, China and the US also need to work together to ensure the international community appropriately responds to such global challenges as extreme poverty, food security and refugee flows. Besides, they should advance the United Nations Sustainable Development Agenda with a greater determination and a shared will to alleviate the long-term international impacts of this problem.

The author is an assistant research professor, China Institutes of Contemporary International Relations.

Source: chinausfocus.com

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