Sun, Jul 02, 2006 - Page 17 News List

China's gray revolution

As its population ages rapidly, Shanghai may become a city of Zimmer frames within 30 years and could soon face manpower shortages

By Howard French  /  NY TIMES NEWS SERVICE , SHANGHAI

Liang Yunyu, left, 100-years-old, with Chen Meijuan, 49, right, in Liang's apartment in Shanghai. Chen is one of 15 agents who are responsible for monitoring the neighborhood's elderly population. Her case load includes over 200 seniors.

NY TIMES NEWS SERVICE

Shanghai is rightfully known as a fast-moving, hypermodern city full of youth and vigor. But that obscures a less well-known fact: Shanghai has the oldest population in China, and it is getting older in a hurry.

Twenty percent of this city's people are at least 60, the common retirement age for men in China, and retirees are easily the fastest growing segment of the population, with 100,000 new seniors added to the rolls each year, according to a study by the Shanghai Academy of Social Sciences. From 2010 to 2020, the number of people 60 or older is projected to grow by 170,000 a year.

By 2020 about a third of Shanghai's population, currently 13.6 million, will consist of people over the age of 59, remaking the city's social fabric and placing huge new strains on its economy and finances.

The changes go far beyond Shanghai, however. Experts say the rapidly graying city is leading one of the greatest demographic changes in history, one with profound implications for the entire country.

The world's most populous nation, which has built its economic strength on the basis of seemingly endless supplies of cheap labor, China may soon face manpower shortages. An aging population also poses difficult political issues for the Communist government, which first encouraged a population explosion in the 1950s and then reversed course and introduced the so-called one-child policy a few years after the death of Mao in 1976.

That measure has spared the country an estimated 390 million births but may ultimately prove to be another monumental demographic mistake. With China's breathtaking rise toward affluence, most people live longer and have fewer children, mirroring trends seen around the world.

Those trends and the extraordinarily low birth rate have combined to create a stark imbalance between young and old. That threatens the nation's rickety pension system, which already runs large deficits even with the four-to-one ratio of workers to retirees that it was designed for.

Demographers also anticipate strains on the household registration system, which restricts internal migration. The system prevents young workers from migrating to urban areas to relieve labor shortages, but officials fear that abolishing it could release a flood of humanity that would swamp the cities.

As workers become scarcer and more expensive in the increasingly affluent cities along China's eastern seaboard, the country will face growing economic pressures to move out of assembly work and other labor-intensive manufacturing, which will be taken up by poorer economies in Asia and beyond, and into industries based more on services and information.

"For the last two decades China has enjoyed the advantage of having a high ratio of working-age people in the population, but that situation is about to change," said Zuo Xuejin, vice president of the Shanghai

Academy of Social Sciences. "With the working-age population decreasing, our labor costs will become less competitive, and industries in places like Vietnam and Bangladesh will start becoming more attractive."

India, the world's other emerging giant, also stands to benefit, with low wages and a far younger population than China.

Even within China, Zuo said, many foreign investors have begun moving factories away from Shanghai and other eastern cities to inland locations, where the work force is cheaper and younger.

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