China’s economy: what’s its weak spot?

china has a problem its young people aren't having enough children [Music] last year the birth rate fell by almost 20 percent and at the same time its population is getting older this could affect the planet's biggest power struggle china versus america and the fight for economic dominance china is in its post-covet phase and it's ready to take on the world president xi has ambition to double the size of china's economy by the middle of the next decade officials in the ruling communist party or ccp are worried they've not been moving quickly enough to grapple with it now china needs to take radical steps to change the nature of its economy or it risks getting old before it gets rich are children of one of the greatest social experiments in history china's one child policy from 1979 to 2016 this limited couples to having one child and this coupled with rising education and urbanization dramatically reduced the birth rate now even though having more than one child is permitted most people in this generation would bulk at the idea of having larger families or in fang and wang's case any children at all [Music] either they're not alone even after the one child policy was relaxed the birth rate did not rise significantly and this is one of the major factors in the changing shape of chinese society this represents the chinese population it used to resemble a pyramid with young people at the bottom outnumbering the elderly at the top in 1980 there were over three times as many people in their 20s as there were in their 60s and this helped to fuel china's economic transformation but these days it's almost neck and neck this poses a serious problem for china many analysts think it will overtake america as the world's largest economy around the end of this decade but china's economic growth has actually slowed in recent years and a fall in the working age population could place further strain on the economy china one of the reasons that it did so well uh was that it had what economists referred to as a demographic dividend which meant that you had this massive potential labor force to staff its factories so china became the world's biggest manufacturing power um well now the working age population is beginning to shrink which is going to push wages up and equally for the government you know it's looking at a pension system which is incredibly underfunded right now so the spending priorities are going to look very very different to how they've looked over the past few decades the scale of the problem was revealed in china's once in a decade census china has released data from its 2020 national census and it shows the slowest population growth for decades the chinese communist party was quick to act and announced that families would be able to have three children in the future but it may not be enough to encourage a baby boom fang and wang are the target audience for the ccp's campaign to boost the birth rate but they are part of the generation least likely to respond to it china has changed dramatically since their parents were growing up and their expectations from life are totally different they have social freedoms that their parents never enjoyed they have no memory of a time when party-run work units called the danwei allocated their parents jobs and homes and even gave them approval to get married these days marriage and children are not high on many young people's agenda in 2005 most women in shanghai were married by the time they were 23 but in 2019 this had shot up to 29 and most women here will have just one child as opposed to 2.4 on average worldwide but for some delaying family isn't a choice despite having newfound freedoms some young people particularly those working in tech are still expected to work punishingly long hours it's called the 996 because it involves working from 9 am to 9 pm 6 days a week and this doesn't leave much time for having children it's 6 30 a.m and on the other side of town jeju is getting ready for work she and her husband ran routinely work until 10 p.m as well as caring for their 18 month old it's not just the 996 the pressure is high in lots of areas of life average house prices in shanghai are 23 times median incomes that's twice the ratio in london so anything more than a two-bedroom flat is well beyond the reach of most middle-class people [Music] juju's parents have moved into their small flat in shanghai to care for their granddaughter state subsidized child care for children under three is almost non-existent in china so many young people rely on their parents or in-laws for support given these pressures initiatives like the three child policy are unlikely to entice many people to have more babies but there are some signs of change along with the announcement that couples could have more children the three-child policy included pledges to improve maternity benefits lower the cost of education and improve state-funded nursing homes all of which could help boost the birth rate and improve women's lives it's clearly a signal to a variety of ministries in china that they need to get their act together on this and start investing serious money [Music] china is trying to turn a very heavy ship around at the moment it's going from decades of spending on infrastructure to now trying to plow money into threadbare pension plans and set up child care facilities that are simply not there some fear this demographic conundrum could jeopardize china's ambition for global economic dominance but this might not be the case as even if china can't encourage its young people to have more children it has found other ways to make up for the shortfall in workers the first is through automation china now accounts for about a third of all industrial robots installed globally each year companies are investing heavily in automation they recognize that wage costs have been going up that it's harder and harder to find to recruit employees so businesses are becoming much more digitized manufacturing is becoming much more automated but this isn't just about robots the workforce is also becoming better educated [Music] since 2010 the number of graduates in china has doubled you're going to have a labor force that's getting smaller but that's also getting more highly skilled even if the size of the workforce shrinks at least for the next 10 to 15 years the the increase in the skill set will more or less cancel out the decrease in the actual size of the population this increased skill set has also allowed china to move to so-called higher value economic sectors so rather than being the workshop of the world as it was 20 years ago the country is fast becoming a world leader in technology like mobile payments and e-commerce ran works in electronics and has seen how quickly china has progressed on the world stage against [Music] foreign no longer need to have factories with thousands of people in them uh instead you could have small laboratories that are producing cutting-edge sciences so those are the kinds of industries that china is trying to develop the final factor driving this development is the number of people moving to cities [Music] 64 of people in china now live in urban areas up from less than 50 10 years ago and this could help because those working in cities are generally more productive than rural laborers but for economic growth to really take off one aspect of city living needs to change the grueling 996 when you think about you know productivity going forward it's not just about squeezing more out of every individual worker it's about having a society that's happy and a happy society is likely to be one that's going to be more innovative so just having people being stapled to their desks trying to crank out code morning to night that's not a recipe for a happy productive society in the long term here too young people are leading the way yuan used to work for a tech firm but she has recently dropped out to do a phd as she felt the demands of the 996 just weren't worth it [Music] she and her partner are just two of the increasing numbers of young people who are turning away from the rat race to pursue their own interests in [Music] the pressure is so intense um and actually it's led to um new slang in china najin and it's literally been translated into english as turning inward on yourself and it's meant to convey the pointlessness of all this competition that young people feel they have to engage in yuan and her partner are more focused on enjoying life than having children or working from don to dusk but perhaps that need not concern the ccp as the odds are that china will be neck and neck with america to become the world's largest economy within the next decade despite its demographic challenge china will both get old and will get rich at the same time one doesn't necessarily cancel the other out but in the future china will need to invest heavily in social care both for young children and the elderly and this is something the country has never done before so while it may not stop china from getting rich its aging society will undoubtedly change what it feels like to live in the world's second largest economy i'm stephanie studer the economist china correspondent based in beijing if you'd like to read more about the challenges of china's aging population please click the link thank you for [Music] watching

Channel: The Economist

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Keywords: The Economist, Economist, Economist Films, Economist Videos, Politics, News, short-documentary, china, china news, chinese economy, china economy, economy, three child policy, china three child policy, one child policy, two child policy, china three child policy news, population, china population, ageing population, xi jinping, chinese government, chinese population

Id: zgDLl1tXd0s

Length: 13min 23sec (803 seconds)

Published: Fri Jun 25 2021