China's looming demographic challenges

I've been catching up on China's demographics lately, and have been fascinated to read a presentation Richard Jackson, a senior fellow at the Center for Strategic & International Studies' Global Aging Initiative, gave in May. It's well known that China's one child policy has had a profound effect on the country's development, that the country will get old before it gets rich. But the numbers Jackson cites are staggering: in 1972, when Japan's elderly comprised the same proportion of its population as China in 2005, its per capita income (in 2005 PPP) was nearly $15,000. America hit that share in 1943, when its per capita income was more than $15,500. China? Just over $4,000. The number of dependents (children and elderly) per 100 working age people will rise from 47 in 2010 to 87 in 2050. With a public pension system that Jackson estimates only covers one in three people, and smaller families meaning fewer children to support their parents, something has to give. He argues for pension reform. I agree. But as Japan, the US and other developed countries confront their own aging societies, it's worth asking how these social challenges will affect countries' foreign policy. I think we should expect rapidly aging countries to be more inwardly-focused, for profits of companies to decline as they are expected to shoulder more of the retirement burden, and for countries to revise their economic models based on a shrinking, not a growing, labor force.

On migrants returning home

I've been arguing for a while now that in this economic downturn, China's migrants will not be a source for instability - despite warnings from authorities in Beijing and fear-mongering from China-watcher friends of mine. Pieces like this one in last week's Financial Times echo my views. But I have also argued that many migrants will not be excited about returning home during this crisis because the Chinese countryside is a step back developmentally to people accustomed to life in the big cities. The second generation of Chinese migrants - the generation born in the 80s - is not in it so much for the money as for the experience. This is why a blog written by one of these young migrants and translated into English by China Labor Bulletin is so fascinating. It's important to remember that the writer, Xiao Sanlang, is the only person from his village to go to graduate school - so he's not typical. But his comments are sympathetic and fascinating. They raise an interesting question about the transformation of the China price from a coastal China price to an inland China price: Will workers who have been working in Shenzhen and Shanghai really want to live in the same basic conditions they fled to work at an export factory near their home, particularly if the conditions are no better and wages are lower than on the coasts?