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How prepared is Asia for its changing demographics?

Posted By Travis B. Kupp, Friday, March 27, 2020

Travis Kupp, a member of our Emerging Fellows program checks the preparedness of Asia for demographic changes in his third post for our EF blog. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Among the most significant determinants of an Asian Century is demographics. The expectations and behaviors of a nation’s people—driven in part by attributes that can be measured in aggregate, like age—influence economic performance and political dynamics. Projected declines in the working age populations in East Asia present a major challenge to maintaining their gravitas. Meanwhile, the rest of the continent generally has a much better outlook, at least in terms of potentially productive youth. Immigration policies that succeed in overcoming ideological intolerance may be the key to sustaining Asia’s rise to global dominance.

 

Japan is a preview of what could potentially happen at a different scale for its neighbors. The archipelago nation is now selling more adult diapers than baby diapers in supermarkets. The increased spending on healthcare that comes with this age demographic inversion is unsustainable with a simultaneously shrinking workforce and tax base. Japan recognizes that efforts to raise its fertility rate will not be sufficient to address the problems already emerging. Longevity of life is coming to also mean longevity of work-life well beyond the age of 60. Automation of care is being developed, where possible, to lower the costs of the ballooning system. It is yet to be seen whether this will be a successful formula for saving the nation’s economy.

 

China is taking a different approach. Demographic data shows their working population shrinking and the trend portends a net population decline starting as soon as 2032. Like Japan, China has started offering cash bonuses and subsidies to encourage more births, but it is unlikely that this will be enough to cover the dearth of young people to care for the elderly in the short term. Nor will automation of such services soon be ready to take on the task at scale. Instead, China is bolstering its economy by moving the value chain from the Middle Kingdom to tributary states in Central, South, and Southeast Asia through its Belt and Road Initiative. In a time of national economic war, however, it is not unthinkable that some of these target states may attempt to limit the extent to which others draw on their resources.

 

Migration will increasingly be a flashpoint as Asian demographics change. Cultural similarities make Southeast Asia the clearest option from which China and Japan could draw human capital, or at least extract the output. China is adamant that newcomers assimilate to their norms, an approach that may need to be loosened in light of its expanding global reach. India’s government, particularly in the case of Muslims, seems determined to reject even its own over ideological differences. West and Central Asia have growing populations that could strengthen the Asian position but are better poised to bolster Russian and European populations, even though immigration policies in both destinations are lacking. All of these tensions will escalate if regimes do not adapt quickly enough to the inevitable changes in their constituencies.

 

Asian nations, on the whole, are unprepared for what lies ahead demographically. Economic and social policies are slowly and insufficiently trying to adapt to a future in which families are small and the old outnumber the young. Regimes attempting to unilaterally solve for these shifts without sufficient regard for pressures beyond their centralized control, like accelerated migration, will face the most serious challenge. While some nations may have more reason to be optimistic, they will need to be ready to compete to keep their workforce from migrating to other more attractive markets. If an Asian Century does come to pass, one thing is certain: it will be with a populace that looks quite different than the one we know today.

 

© Travis Kupp 2020

Tags:  Asia  China  demographics 

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