What are China's demographic challenges?
Sources:
China faces significant demographic challenges, which include:
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Dependency Ratio Problem: A critical issue is the high dependency ratio, where the number of non-working individuals (either due to age or unemployment) outweighs the number of working individuals. This imbalance strains the economy, slows down growth, and affects the country's ability to sustain social welfare systems and infrastructural developments like hospitals and schools. As the economy slows, it might even threaten China's national credit rating 1.
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Outward Migration: China also experiences substantial outward migration, with more people leaving the country than arriving, a trend observed since the 1950s. Many of these emigrants are not likely to return, preferring life in countries like the USA or Canada over returning to China. This exodus further exacerbates the demographic imbalance 1.
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Aging Population: The population segment that is growing in China is that of people over 65 years old, while the workforce-age population (16 to 64 years old) is shrinking. Compounded by a high life expectancy and early retirement ages in some sectors, this demographic shift is creating additional economic burdens 2.
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Product and Service Sector Challenges: As China transitions from a manufacturing to a service-based economy, there is a mismatch in workforce skills. Additionally, China struggles with having globally recognized brands, which affects its economic influence and global trade potential 2.
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Potential Regional Instability: With a declining population and ongoing territorial disputes, particularly with rising powers like India, there is a risk of regional instability. The combination of demographic challenges and geopolitical tensions might lead to further complications 3.
These challenges interlock to create a complex situation that could have long-reaching effects on China's economic stability and global standing.
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