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China's demographic nightmares

By Simon Louie - posted Friday, 12 August 2016


In October of last year, the Chinese Communist Party abolished the one-child policy allowing all couples to now have two children. Despite this attempt by the Communist Party to encourage more births, China is headed for a two-pronged demographic disaster which will likely produce massive headaches for it throughout the 21st century. Due to its sheer size, these problems will likely not remain within China's borders, and they have serious implications for both the security and economic well-being of the Asia-Pacific region.

The first major problem which China faces is a surplus of men who will never find wives. A cultural preference for boys coupled with China's draconian one-child policy meant that millions of female babies were aborted or killed at birth in an attempt by couples hoping that their only child would be a boy.

By 2020 it is estimated that about 24 million men will be 'leftover' - men of marriageable age who will never marry. The presence of these unmarried men, derogatorily known as guangun (bare branches) has enormous implications for social stability as societies with huge numbers of unmarried men have historically been unstable. One Columbia University study, which analysed the period from 1988-2004, found that a one percentage increase in the sex ratio in China meant a 6-7 percentage increase in the crime rate.

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Furthermore China's history is full of examples of large numbers of unmarried men, with few prospects causing internal chaos-the Nien Rebellion and the Taiping Rebellion stemmed in large part from the huge numbers of unmarried men with few prospects venting their frustration at a corrupt society which had nothing to offer them. Political scientists Valerie Hudson and Andrea der Boer argue that in both cases a huge amount of female infanticide had occurred in the famines which had preceded both rebellions.

It should also be noted too that Chinese civil society is becoming ever more disillusioned with the way China is heading-- the number of strikes and labour protests in China is rising year by year as the country's rulers attempt the extraordinarily difficult task of transitioning from an investment based economy to a consumption based one. All this is occurring despite the fact that the economy is still supposedly currently growing at over 6% a year, and has experienced more than thirty years of unbridled growth. At the same time, China is becoming ever more nationalistic and angry-witness the vitriol expressed by the People's Daily at the recent Hague ruling which went against China.

From this it is not unfeasible that the ruling Communist regime may at some point in the future try to use this huge pool of surplus males to solve its ongoing territorial disputes with its neighbours by force. China's blatant bullying of smaller countries such as the Philippines does not auger well for peace in this respect.

The second demographic crisis which China faces is that of having to take care of a huge number of senior citizens. China already has at least 123 million people over the age of 65. It is estimated by the Chinese Academy of Social Sciences that by 2030 China will be the world's most aged society with the proportion of Chinese exceeding 65 greater than that of Japan. Whilst this is more benign to the rest of the world than large numbers of potentially violent bachelors causing trouble, it nonetheless has enormous global economic implications. For one thing, China's greying population means that it will not become the economic powerhouse that many expect it to be-much of the nation's resources will be devoted to caring for elderly people, and furthermore societies with large numbers of older people are relatively less productive.

To be fair, it should be noted that China is not unique regarding its aging population-all across Asia countries such as Japan, South Korea, Taiwan and Singapore all have birth-rates well below replacement level and will face similar problems. However, unlike the aforementioned countries, China's economy is still a long way off from being developed, and the country's pensions are woefully underfunded. Estimates of the shortfall in pension provisioning vary considerably-- according to the Chinese Academy of Social Sciences, there will be an accumulated shortfall of 802 trillion RMB by 2050, whilst a report by former Deutsche Bank economist Ma Jun estimates that the shortfall could reach 5.5% of the country's GDP by 2050 if no reform measures are taken.

The twin demographic crises which China faces are a direct result of its misguided belief in central planning and by extension socialism. Despite its ability to slow down population growth through brutal measures such as forced abortion, sterilization and fines, it is unlikely to be able to reverse this decline. For example, Japan and Russia have been experiencing steadily declining populations for a number of years yet have only seen marginal birth rate increase despite having more incentives in place for encouraging multiple births per family. Evidence seems to suggest that once a society experiences lower birth rates, self-reinforcing mechanisms for sustaining low birth rates set in.

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How does this affect Australia? For one thing, a China full of angry unmarriageable males does not bode well for its stability. Should an economic crisis occur at some point in the near future, then China's surplus males will have even more to be angry about. The possibility of an economic crisis is already growing, and the regional instability that would occur in the event of regime collapse would be immense. For a sense of scale, consider the impact which the current Middle-Eastern conflicts have had on Europe in terms of refugees and social upheaval and then consider that China is much larger than the Middle East.

Another possibility is that China, already angry with the recent Hague ruling, could use this surplus population of males to solve its territorial disputes. China already sees the United States as its main enemy, and as a treaty ally with the United States, we would almost certainly be pulled into conflict with China. China's aging crisis presents another set of problems-as our largest trading partner Australia has become far too dependent upon China and the assumption that it will continue to grow indefinitely. Australia therefore needs to be far more prepared to deal with China's looming twin demographic crises, and formulate policies and responses accordingly.

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About the Author

Simon Louie is research associate with Risk Intelligence Solutions.

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