China’s Demographic Balkanization
Developing countries should eye China’s demographic decline with worry. Unlike other rapidly aging countries in Europe and Asia, China’s pension scheme is basic. The Economist shows just how few workers are now paying into it and the numbers are alarming:
…the national authorities have been slow to recognise the problems of demographic decline. As a result, low fertility, ageing, labour shortages and dependency have all taken on a provincial aspect. The three great cities look relatively healthy, as do Guangdong and Zhejiang, a nearby province that shares some of its features. But provinces with low fertility, declining or ageing populations, and rising dependency are in deep trouble. These include the north-east, Sichuan and Chongqing in the west and several provinces in the third category in terms of fertility, such as Anhui.
The result is a big problem for the national government. Even now, it is having to bail out some provincial pension funds. But the threat is also philosophical. The Communist Party has long sought to narrow economic differences and erase local political distinctions because it is terrified of regional challenges. It thinks the only way to keep China together is to impose strong central control. If it is right, its failure to deal with demographic problems is setting back that cause.