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August 28, 2009

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Aging population puts pressure on services

WHEN Lin Xu, an office worker, crams himself into a crowded bus every morning, sometimes with his face pressing against a window, he cannot see what could possibly be wrong with China's one-child policy.

The family planning policy was introduced in the 1970s to rein in China's surging population by encouraging late marriages and late childbearing and limiting most urban couples to one child and most rural couples to two children.

It's estimated that without the policy, the country's population would be 400 million more than the current 1.3 billion people, according to National Population and Family Planning Commission.

But there is a price to pay. Recently the aging workforce and its subsequent social problems have led Shanghai to encourage eligible couples to have two children, a move triggering widespread speculation of a policy shift.

China's family planning authority refused to comment on the prospect of a change in policy, but some scholars are advocating changes, because threats are real.

Across China, each couple has 1.6 or 1.7 kids on average, a fertility rate kept for 17 years. The number of offspring for population maintenance is 2.1, according to Wang Guangzhou, professor with Chinese Academy of Social Sciences (CASS).

At this rate, the working population will dwindle by 10 million each year after 2025, and the number of young people between 20 and 24 will drop by one-fourth in the next decade, estimates Zeng Yi, a population economist with Peking University.

"Young people of this age group are most energetic, productive and willing to learn," says Ji Baocheng, president of Renmin University of China.

For the past two years, he has submitted a proposal to reconsider the family planning policy to China's top legislature.

Opponents argued the loss of workforce would be complemented by artificial intelligence, according to an article on an online forum,

But that takes time. China is already experiencing a shortfall of skilled workers starting from its southern economic powerhouse, Pearl River Delta, in 2004.

About one-third of the region's employers say they had difficulties in recruiting enough people, according to Cai Fang, director of Institute of Population and Labor Economics under CASS.

Some experts attribute the shortfall to fewer skilled workers available in the market. As the country expanded college enrollment from the 1990s and its people became more affluent, more parents choose to send their children to colleges rather than vocational schools to improve their prospects of a better job with more pay.

Graduates from vocational schools in China are popular with employers in recent years as they have practical skills and demand less pay than people with a college degree.

Cai, however, says: "The population entering the workforce has fallen short of demand since 2004, and this gap is yawning if the current fertility rate remains unchanged."

While people still count on the surplus labor in the country's vast countryside, a report on China's population and labor issues published by the Social Sciences Academic Press says that three-quarters of villages were running out of surplus labor.

Some scholars are concerned that the increasing labor costs in China might reduce its competitive edge. Peking University professor Zeng Yi feared China might fall behind India based on the projection that Indian workforce would be double that of China in 20 years.

Feel the pinch

But Lin Xu doesn't care. Lin, a single child at 25, interprets the shrinking workforce as "less competition, hence more job opportunities and higher income."

"Chinese are used to dividing everything by 1.3 billion and feel the pinch of everything 'per capita'," said Wang Guangzhou with CASS.

Perhaps rightly so. China feeds the world's 22 percent of people with 8 percent of the world's arable land. Per capita resource of drinking water represents a quarter of the world's average, forestry one-eighth.

Another threat, as demographer Mu Guangzong with Peking University says, is the inability of single-child couples to support their elderly parents.

Lin's family has been babysitting his grandmother since she lost the ability to move 10 years ago. Luckily his mother has brothers and sisters, each taking a share of the burden. Lin worried, "What if my parents turned so needy?"

Chinese support their parents mainly by family care, as a practice of filial piety. However, for a single-child couple, that would mean two people looking after four people.

China has 41,000 assisted-care institutions providing 11.6 beds for every 1,000 senior citizens, far less than the 50 to 70 beds of developed countries, China National Committee on Aging indicates.

Among these institutions, nonprofit agencies mainly accommodate the childless, while private ones are usually under resourced, the committee says.

What might also be under resourced is the pension fund.

Currently, 10 percent of Chinese are aged over 60. The proportion is estimated to hit 30 percent by 2050, and there will be 2.1 working-age adults for every retiree by then. The rate was 13 to 1 in 1980 and 3 to 1 in 2003, according to Ministry of Human Resources and Social Security.

With fewer working-age people to pay into the pension fund, but more to cover, economic woes loom large.

"China grows old before it grows rich, and the social security system is not well in place yet," says Ji Baocheng, president of Renmin University of China.

The latest figure suggested the pension fund covered 76 percent of urban employees, according to a report by Ministry of Human Resources and Social Security.

Coverage for the countryside is not yet available, but Beijing has set the target at 60 percent for 2009.

Scholars such as professor Wu Cangping of Renmin University, suggest fixing the social safety net rather than relaxing birth control.

Last week, China introduced a pilot pension plan for its 900 million farmers, a move in this direction.As to a policy shift to relaxing birth control, many scholars are still pushing for it.

"Since it takes time for the population policy to work, we must act before it is too late," Ji says.


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