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China Briefings

Reports on China issued by Samsung Economic Research Institute

Aging China

Aging China

KIM Jeung-Kun

Apr. 6, 2011

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Since China adopted the "one child policy" in 1979, the nation's birth rate has been on a rapid decline. On the other hand, its life expectancy has increased along with its economic growth. As China is on track to experience rapid population aging even before achieving income levels that can fund the retirement years, it is expected to feel the fiscal pressure arising from the establishment of various social security systems. A population aging-caused decrease in labor force will lead to a growth in labor costs and the prices of export goods, thereby undermining China's long-term economic growth.

Korea is also expected to be affected by China's aging. Overall price will increase as labor shortages in China will raise import prices from the country while a rise in the elderly dependency ratio may reduce the savings ratio, which in turn may stunt China's economic growth, decreasing Korea's export to China. Korean companies are prompted to seek a change in their business in China and manufacturing companies are encouraged to relocate to inland areas and other countries where wages are relatively low. Meanwhile, the growth of the elderly population and quality of life will provide Korea's senior care industry with the opportunity to move into the Chinese market.

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