Clock ticks for China's demographic challenge

POLICY HANGOVER

When China introduced the one-child policy in the late 1970s, it was meant to rein in explosive population growth. However, as people born in the 1950s and 60s begin to retire, the policy is widely considered to be outdated and counter-productive to improving the country's labor force.

A marked effect of the policy is a highly skewed gender ratio. Chinese people, especially those in rural areas, have traditionally preferred boys for inheriting the family's bloodline, labor and supporting aged parents. As a result, China has 117 boys born for every 100 girls, far exceeding a balanced ratio of 107 to 100.

Also, the world's most populous country with 1.3 billion people is facing a graying population. A declining fertility rate has reduced the share of children younger than 15 years old to 16.6 percent of the total population, while pushing up that of people older than 60 to 13.26 percent, statistics from a national census in 2010 show.

Developed economies have all faced similar challenges, but this is particularly disturbing for China, a country that is already seeing signs of a rapidly aging society before it crosses the threshold to become a high-income nation.

This calls into question the country's readiness to care for its growing numbers of senior citizens. As the single child of each family comes of age, most of them find themselves in the middle of an inverted pyramid structure - each couple has to support four parents while raising their own child.

ECONOMIC CALCULUS

"China's population used to provide a cost advantage to compete globally, but it is turning into a liability," said Ba Shusong, a researcher with the Development Research Center of the State Council, a government think tank.

Ba added that China is approaching the Lewis turning point, which marks a watershed from abundant labor supply to a shortage.