Making labor quality a force for growth

Aging may spur pension, wealth and fund products, and help optimize human capital

A demographic conundrum has been baffling economists in China of late. On the one hand, life expectancy has increased. On the other, aging is raising the specter of labor shortage when the economy is trying to shake off the COVID impact as well as myriad other domestic and overseas headwinds in order to stabilize growth, and pursue consumption upgrade and high-quality development.

To ensure aging and "deep aging"－that is, 14 percent of the population being aged 65 or older－do not hurt growth but aid it, experts are focusing on turning adversity into opportunity.

Thus, the multibillion dollar potential in pension and wealth management products for the elderly is being sought to be harnessed, raising hopes this will eventually lead to innovative utilization of resources, including human resources, and support long-term economic growth.

This narrative started gaining traction since July 12 when the National Health Commission announced that the average life expectancy in China rose from 77.93 years in 2020 to 78.2 years in 2021.

From a general perspective, rising life expectancy bears testimony to improving medical services, food safety, life quality and proliferation of physical exercises.

China now ranks higher among upper-middle-income countries in terms of key health indicators, said Mao Qun'an, director of the commission's department of planning and information. In China, however, longer life expectancy coincides with aging and deep aging.

Data released by the National Bureau of Statistics in late January showed that people aged 60 and older accounted for 18.9 percent, or around 267 million, of China's population (1.413 billion at the end of 2021). Those aged 65 and above constituted 14.2 percent, or more than 200 million, of the population by the end of last year.

China also seems to have entered the societal deep aging phase much earlier. When the United States reached the tipping point of deep aging in 2015, its GDP per capita was above $56,000. In Japan, the GDP per capita was around $35,000 when the country faced deep aging in 1993.But China's GDP per capita was sharply lower at $12,551 last year.