After half a century of staggering population growth (from 700 million in 1960 to 1.3 billion today), China is about to enter a new demographic phase characterized by slower growth and rapid aging. This Bloomberg report shows that China’s working-age population will start to shrink in 2020, while its median age will continue to increase rapidly.For a country whose economic boom was driven largely by a plentiful supply of cheap, young labor, this shift portends major adjustments—not just for China, but for all Asia. The ten ASEAN countries, among them the democracies of the Philippines and Indonesia, with 102 million and 238 million people, respectively, stand to benefit from an aging, shrinking China. These young, fast-growing competitors will be attractive places to invest for older and richer Chinese and Japanese in search of low-hanging fruit abroad:
“Investments in Asean will continue for the next decade,” said Jan Oosterveld, former head of Royal Philips Electronics NV (PHIA)’s Asia Pacific operations and now a senior lecturer at the University of Navarra’s IESE Business School in Barcelona. “Simple manufacturing will go to the cheapest countries: It’s going now from China to Vietnam, Laos, Cambodia, Myanmar and Bangladesh. More advanced industries will go to Singapore, Malaysia, the Philippines.”
As David Brewster at the Lowy Interpreter notes, America’s pivot to Asia will also involve a shift of focus in the region, away from the older, northern countries like Japan and South Korea and toward the younger powers further south like Singapore and the Philippines. Giving the shifting demographic balance in Asia, this looks like a smart move.