China
China is ageing gracefully, for now
Author: Editorial Board, ANU
China has a new Premier. Former Shanghai Party Secretary Li Qiang has taken the number two spot in China from Li Keqiang, who retired after two terms even as his boss, President Xi Jinping, is delaying his own departure. At a press conference, the new premier cautiously suggested that President Xi would not be the only one working longer than expected: ‘“careful studies” would be made about raising the retirement age for some, perhaps all, Chinese workers’.
The news that China’s population shrank this year for the first time since the 1950s on some reckonings presages an end to the country’s economic modernisation. Without a young and rapidly growing workforce, the impetus to economic growth and modernisation could peter out, some contend.
With an ageing population, a smaller proportion of the workforce has to cover for those not engaged in productive employment and, by simple arithmetic, that drags down average per capita output. A young and rapidly growing population has the potential at least to lift average per capita output because it more readily absorbs the new skills and knowledge to boost productivity or output per head. That’s what gives the old aphorism that China will grow old before it grows rich its ominous ring.
Those who worry about China’s rising power suggest that India is now the best hedging bet, with its much younger and rapidly growing population, although that will depend on whether there is sufficient investment in physical and human capital to stave off immiserising growth. In any case, India’s income is still less than one-fifth that of China. Even if China were to stop growing altogether and stagnate completely, and India were to grow at 7 to 8 per cent every year and double its income every decade, India won’t catch up with China until 2050.
The impact of China’s demographic transition on its economic modernisation is more complex and gradual than these accurate propositions, qualified by the assumptions on which they rest, suggest. Transition takes time. And its character will be qualified by both feasible policy responses and the behaviour of ordinary people to the new circumstances they face.
As Peter McDonald argues in this week’s lead article from the latest issue of East Asia Forum Quarterly, edited by Jocelyn Chey and Ryan Manuel, ‘[i]n the short to medium term, between now and 2040, China’s labour force will fall by only 8 per cent assuming constant age and gender labour force participation rates … because the size of the labour force will increase at older ages while falling at younger ages’.
As Premier Li Qiang somewhat cheekily hinted, the Chinese government has scope to lift older age labour participation rates. That can offset the projected fall in the labour force. In China, older people also have an incentive to continue working because of low pension coverage and few children to provide support, although they are overwhelmingly low-skilled.
A shift from low-skilled, labour-intensive production to higher value-added production based on advanced technologies, McDonald reminds us, is what’s necessary for transition from middle income to higher income status. China can no longer depend on the demographic dividend (a growing workforce, higher labour participation and higher employment) but needs higher labour productivity to drive growth. This is a transition that has been successfully navigated in Japan, South Korea and Taiwan and is already well under way in China, a country ‘which has almost half of the world’s industrial robots and is a manufacturer of electric vehicles, lithium-ion batteries and photovoltaic solar panels’.
The next two decades will be critical.
In the years leading up to 2040, ‘China’s highly productive young workers (who unusually earned roughly twice that of their 50 plus year old counterparts in 2014) will age and increase labour productivity across the age range of the labour force. Each new generation entering the labour force will be better educated than its predecessors. This should ensure healthy economic growth in China over this period’, says McDonald.
Demographic changes that are now underway will certainly have major impacts on the economy of China. But how these changes will all play out is unclear, McDonald points out — especially in the longer term where there is a high degree of uncertainty in population predictions — because there is no precedent of a population falling by such vast numbers (around 658 million between now and 2100). In the medium…
Business
Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
Gordonstoun school severed ties with Hampton Group over espionage allegations against chairman Yang Tengbo. He denies involvement and claims to be a victim of political tensions between the UK and China.
Allegations Lead to School’s Decision
Gordonstoun School in Moray has cut ties with Hampton Group International after serious allegations surfaced regarding its chairman, Yang Tengbo, who is accused of being a spy for the Chinese government. Known by the alias "H6," Mr. Tengbo was involved in a deal that aimed to establish five new schools in China affiliated with Gordonstoun. However, the recent allegations compelled the school to terminate their agreement.
Public Denial and Legal Action
In response to the spying claims, Mr. Tengbo publicly revealed his identity, asserting that he has committed no wrongdoing. A close associate of Prince Andrew and a former Gordonstoun student himself, Mr. Tengbo has strenuously denied the accusations, stating that he is a target of the escalating tensions between the UK and China. He has claimed that his mistreatment is politically motivated.
Immigration Challenges and Legal Responses
Yang Tengbo, also known as Chris Yang, has faced additional challenges regarding his immigration status in the UK. After losing an appeal against a ban enacted last year, he reiterated his innocence, condemning media speculation while emphasizing his commitment to clear his name. Gordonstoun, on its part, stated its inability to divulge further details due to legal constraints.
Source : Gordonstoun cuts ties with business chaired by man accused of spying for China
Business
China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
The Chinese government demolished the Rebiya Kadeer Trade Center in Xinjiang, affecting Uyghur culture and commerce, prompting criticism from activists amid concerns over cultural erasure and human rights violations.
Demolition of a Cultural Landmark
The Chinese government recently demolished the Rebiya Kadeer Trade Center in Urumqi, Xinjiang, a vital hub for Uyghur culture and commerce, as reported by VOA. This center, once inhabited by more than 800 predominantly Uyghur-owned businesses, has been deserted since 2009. Authorities forcibly ordered local business owners to vacate the premises before proceeding with the demolition, which took place without any public notice.
Condemnation from Activists
Uyghur rights activists have condemned this demolition, perceiving it as part of China’s broader strategy to undermine Uyghur identity and heritage. The event has sparked heightened international concern regarding China’s policies in Xinjiang, which have been characterized by allegations of mass detentions and cultural suppression, prompting claims of crimes against humanity.
Rebiya Kadeer’s Response
Rebiya Kadeer, the center’s namesake and a notable Uyghur rights advocate, criticized the demolition as a deliberate attempt to erase her legacy. Kadeer, who has been living in exile in the U.S. since her release from imprisonment in 2005, continues to advocate for Uyghur rights. She has expressed that her family members have suffered persecution due to her activism, while the Chinese government has yet to comment on the legal ramifications of the demolition.
Source : China Demolishes Uyghur Business Landmark in Xinjiang – Shia Waves
China
China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
China’s private pension scheme, previously piloted in 36 cities, will roll out nationwide on December 15, 2024, enabling workers to open tax-deferred accounts. The initiative aims to enhance retirement savings, address aging population challenges, and stimulate financial sector growth.
After a two-year pilot program, China has officially expanded its private pension scheme nationwide. Starting December 15, 2024, workers covered by urban employee basic pension insurance or urban-rural resident basic pension insurance across the country can participate in this supplementary pension scheme. This nationwide rollout represents a significant milestone in China’s efforts to build a comprehensive pension system, addressing the challenges of a rapidly aging population.
On December 12, 2024, the Ministry of Human Resources and Social Security, together with four other departments including the Ministry of Finance, the State Taxation Administration, the Financial Regulatory Administration, and the China Securities Regulatory Commission, announced the nationwide implementation of China’s private pension scheme effective December 15, 2024. The initiative extends eligibility to all workers enrolled in urban employee basic pension insurance or urban-rural resident basic pension insurance.
A notable development is the expansion of tax incentives for private pensions, previously limited to pilot cities, to a national scale. Participants can now enjoy these benefits across China, with government agencies collaborating to ensure seamless implementation and to encourage broad participation through these enhanced incentives.
China first introduced its private pension scheme in November 2022 as a pilot program covering 36 cities and regions, including major hubs like Beijing, Shanghai, Guangzhou, Xi’an, and Chengdu. Under the program, individuals were allowed to open tax-deferred private pension accounts, contributing up to RMB 12,000 (approximately $1,654) annually to invest in a range of retirement products such as bank deposits, mutual funds, commercial pension insurance, and wealth management products.
Read more about China’s private pension pilot program launched two years ago: China Officially Launches New Private Pension Scheme – Who Can Take Part?
The nationwide implementation underscores the Chinese government’s commitment to addressing demographic challenges and promoting economic resilience. By providing tax advantages and expanding access, the scheme aims to incentivize long-term savings and foster greater participation in personal retirement planning.
The reform is expected to catalyze growth in China’s financial and insurance sectors while offering individuals a reliable mechanism to enhance their retirement security.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
- How a scandal over sanitary pads is shaping feminist activism in China
- Yakult Unveils Restructuring Plans for Its China Operations | ESM Magazine
- Italy’s Strategic Shift Towards China After Exiting the Belt and Road Initiative