China: Workforce Potential To Decline Due to Aging Population

China's workforce population is at a turning point because of an aging population, according to an Allianz Group. Drawing on latest census, it says that China has a population of around 1.34 billion people, though population growth has nearly halved in the past decade compared to the decade before, and that population aging increased further not least due to the fact that according to estimates some 400 million fewer children were born as a result of the one-child policy introduced in 1978.

"Even if the one-child policy were relaxed or lifted, the decline in the workforce potential could be alleviated but no longer prevented," says Professor Michael Heise, Chief Economist and Head of Corporate Development at Allianz. The turning point for China's labor market will be reached in 2013, according to findings from the recent Allianz Demographic Pulse.

According to Allianz, it is important for China to establish a demographically sustainable social system as a matter of urgency in which capital-funded private provisions play a key role. Among other things, this could include increasing the retirement age to 65 years, thus delaying the demographic turning point by another three years and significantly lowering the age ratio in the long term.

Source: Allianz Group Allianz Demographic Pulse (July 1, 2011)