http://www.wikinvest.com/concept/Chinas_Aging_PopulationChinas AgingPopulationneutral bulls bearsContents1 Chinas Aging Po...
costs, pensions, and the capacity of its workforce.Recently to fight this trend Shanghai ( the largest city in China)rever...
hi all i just wanted to say hi and say have a happy halloweenThe Aging of China Population: Lower Mortality and The One-Ch...
Growing Pension ProblemEven if China had a greater population of young people to fund retirement for the burgeoning older ...
enterprises. Fitch recently estimated Chinas non-performing loan at $673 billion, but it warned that, given vagaries inChi...
China urgently needs to establish a social care insurance system, a researcher at the ChineseAcademy of Social Sciences sa...
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Health care and pension system

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Health care and pension system

  1. 1. http://www.wikinvest.com/concept/Chinas_Aging_PopulationChinas AgingPopulationneutral bulls bearsContents1 Chinas Aging Populationo 1.1 Higher Mortality Prior to 1962o 1.2 Improved Healthcare2 Opportunities for Pharmaceutical Companies3 The Aging of China Population: Lower Mortality andThe One-Child policyo 3.1 Growing Pension Problem4 China’s Future Compared to the Developed World5 How is the Chinese Government Going to Pay For ItsAging Population?6 How Will China Compete Once Its Population Ages?Np1The Chinese population is rapidly aging, due to a lower mortality rate and the one child policy. This will lead to apension problem for the Chinese government and may reduce Chinas ability to compete in the future. At the sametime, this creates a growing market for healthcare products and services in China.Advances in healthcare and nutrition, combined with the one child policy, have led to rapid aging of Chinaspopulation. Just as the rise of the Baby Boomers had placed an indelible mark on the U.S. economy, Chinasdemographic shift to an older society will have a profound impact on the Chinese economy and investmentopportunities in China. Western pharmaceutical manufacturers may be able to sell more offerings for older adults inChina, while the Chinese government may need to alter its budgetary policy to accommodate heightened expenses.Chinas Aging PopulationOne of the key factors in China’s population spurt, from slightly more than 500 million in 1949 to its presentpopulation (as of mid-2007) of 1.32 billion is its rapidly falling mortality rate. This increase in lifespan and the aging ofChinas population with over 11% of the population over the age of 65 in 2020[1], has future implications in healthcare
  2. 2. costs, pensions, and the capacity of its workforce.Recently to fight this trend Shanghai ( the largest city in China)reversed its one child policy.Higher Mortality Prior to 1962After World War Two and the Nationalist’s departure to Taiwan, peace largely reigned on China’s mainland, howeverone manmade event triggered a great population loss in China. Specifically, Mao’s homegrown industrial policyimplemented during the Great Leap Forward (part of China’s Second Five Year Plan: 1959-1962) lead to somewherebetween 14 million and 43 million deaths, mostly due to famine. Afterwards, China’s population continued to climb.Improved HealthcareFrom 1990 to 2000 the average expected lifespan of the Chinese people had increased nearly three years, from68.55 in 1990 to 71.4 in 2000. At the same time, the pregnancy and infant mortality rate decreased by 3.1 percent.During this time, childhood nutrition made significant strides, increasing both the average height and weight ofChinese children.China’s mortality rate is bi-modal. Urban Chinese residents have an expected lifespan of nearly 6 years greater thanrural residents. This may be attributable to greater access to modern healthcare in urban areas, as well as a higherincome and thus higher standard of living of urban dwellers. There has always been a weight difference betweenchildren in rural versus urban area, although this has decreased somewhat in recent years, according to a 2005report by the People’s Daily newspaper.While diet and nutrition conditions for the rural and urban residents have improved dramatically over the last twentyfive years, new ailments have begun to emerge. The occurrence rate of high blood pressure in rural areas has risenand the number of urban adults residents suffering from diabetes has risen from 4.6 percent to 6.4 percent.Researchers from Tulane University recently determined that more than 155 million adults in China have increasedtotal cholesterol levels, and another 117 million have high levels of bad cholesterol.Opportunities for Pharmaceutical CompaniesDrug sales into China represent an opportunity for companies like : Pfizer (the maker of Lipitor, aka atorvastatin), Merck (the manufacturer of Zocor, aka simvastatin; and Mevacor,aka lovastatin), Bristol-Myers Squibb (the manufacturer of Pravachol, aka pravastatin), Novartis (themanufacturer of Lescol, aka fluvastatin), and AstraZeneca (the manufacturer of Crestor, aka rosuvastatin). GlaxoSmithKlines Advair, or Schering Plough and Novartis jointly-marketed Foradil are popular asthma drugswhich could be used the rising respiratory ailment problems in China. Drugs for treating non-small cell lungcancer could see higher demand.
  3. 3. hi all i just wanted to say hi and say have a happy halloweenThe Aging of China Population: Lower Mortality and The One-Child policyChina’s lower mortality rate, when combined with the one-child policy, has resulted in a dramatic aging of China’soverall population. By 2005, citizens over 65 years of age rose to 6.96 percent of the whole population. According tothe New England Journal of Medicine, the rapid decrease in China’s birth rate, combined with stable or improving lifeexpectancy, has led to an increasing proportion of elderly people and an increase in the ratio between elderly parentsand adult children. By 2020, over 23 percent of China’s citizenry is expected to be over age 65, resulting in a majorchallenge to China’s medical and social insurance system. A graph of China’s population in 2020, according to UnitedNations Population Division projections is shown below:Figure 1Source: United Nations Population DivisionFamily planning policies have become somewhat more relaxed in an effort to smooth out the population’s aging.In rural areas, couples have been allowed to have a second child if the first was a girl and minority groups can nowhave up to three children. In urban areas, if a couple is both from a one-child family, they are now allowed to have asecond child, provided that it is at least four years later than the first child. Nonetheless, according to University ofCalifornia at Irvine Sociology Professor Wang Feng, at present, 63 percent of Chinese couples are still limited to onechild under existing policies.
  4. 4. Growing Pension ProblemEven if China had a greater population of young people to fund retirement for the burgeoning older class, pensioncoverage is available only to those employed in the government sector and large companies. Thus, children areresponsible for the retirement of many parents. According to the Asia Pacific Population Journal, the lack of adequatepension coverage in China means that financial dependence on offspring is still necessary for approximately 70percent of elderly people. This problem is nicknamed the "4:2:1" phenomenon, highlighting the idea that meaning thatan increasing numbers of couples are now responsible for the care of just one child, but four parents.The Population Development Review reported in 2002 that initiatives are under way to improve access to governmentpensions and to encourage saving for private pensions in an attempt to reduce the burden of the 4:2:1 phenomenon.The ability of urban parents who are only-children to have more than one child themselves may somewhat reducethis burden. The United Nations Population Division (UNPD) forecasts that the turning point for greater burdens -comprised of both child dependency costs and elderly dependency costs - on the working population is 2010. By2050, the UNPD forecasts that Chinese workers will have a 70 percent greater elderly dependency burden thantoday, combined with a significantly lower child dependency burden.China’s Future Compared to the Developed WorldIn the UNPD’s "medium" scenario, the median age of China’s population in 2050 will be forty-five years old —about15 years higher than today’s median population age. This means that over a third of the citizens of that future Chinawould be sixty or older. According to UNPD projections, China’s population half a century from now would be moreelderly than the future populations of countries like Denmark, Finland, and Norway, despite the fact that thoseScandinavian countries are already "gray" today.The difference is that China’s per capita income is significantly lower and it is already facing these “DevelopedCountry” problems due to its implementation of the one-child policy. By comparison, other developing countries likeIndia and Indonesia continue to boast high birthrates and are expected to have, on average, a younger populationthan China in the coming decades. According to Chao the population is expected to have a dramatic decrease. By2050 the population of China is expected to be 1.395 billion.How is the Chinese Government Going to Pay For Its Aging Population?At present, China has a significant foreign exchange surplus and its citizens have a high savings rate. If China caninvest its savings at a sufficiently high rate of return, this will help finance flow pension shortfalls thereafter.Compared to many countries, China has a relatively low amount of debt outstanding. Official Chinese governmentdebt is slightly more than 30% of GDP. Of course, astute observers are quick to point out that the Chinesegovernment also bears the liability of fixing its banking system, which has proliferating non-performing loans to state
  5. 5. enterprises. Fitch recently estimated Chinas non-performing loan at $673 billion, but it warned that, given vagaries inChinese accounting and reporting, $673 billion is a low number. While some analysts estimate that China’s bankcleanup could cost as much as 20% to 30% of GDP in over the coming decade, there is still room for China to borrowmore than it does at present, if necessary to cover its social welfare expenses, in the short-term, as the populationages. This could impact interest rates in the U.S.Another source of income for the Chinese government is its assets. Unlike many other developing countries, thegovernment owns the lion’s share of the country’s assets. As of 2003, China’s national and local governments held atleast a majority share in more than 150,000 enterprises, representing an asset value (on a balance sheet basis) ofnearly 10 trillion yuan. Given that many loss-making state enterprises were already shuttered in the 1990s, it is likelythat many of these assets generate at least breakeven, and perhaps positive cash flow. As such, they may be worthmore than 40% of China’s GDP if they were privatized. These asset sales could be a potent source of funds for theChinese government to cover increased social costs from an aging population.How Will China Compete Once Its Population Ages?According to a recent survey by the Ministry of Labor and Social Security manufacturers in the Yangtze and PearlRiver Deltas are reporting labor shortages of 10% or more. Many migrant laborers from inland areas are returninghome after working several years on the coast and building a nest egg to invest back home. China’s breakup of ruralcommunes in the early 1980s means that many rural families have a long-term lease on their own farm, thus migrantworks have a destination to which they can return. Because many migrant workers are the only child in their families,there is an extra strong family desire for them to return home to live near family.As China’s workforce ages, young workers will be even less available and China’s manufacturing and servicessectors will be forced to keep existing workers for a longer tenure or find older workers. This could also slowdown theability for China to be an outsource supplier for developed countries. Either of these approaches will raise labor costs.Ultimately, it means that China will no longer be able to rely solely on inexpensive labor to fuel its growth. Instead,China may only be able to grow in line with the growth of its labor force. China may try to respond by moving moreinto electronics and other medium-tech industries, however increased investment in China’s labor force andmanagement cadre is necessary before such a transformation can be successful.http://www.chinadaily.com.cn/china/2010-10/08/content_11386032.htmSocietyChinas aging population needs care systemBy Li Yao (chinadaily.com.cn)Updated: 2010-10-08 16:01Comments(2) Print MailLarge Medium Small
  6. 6. China urgently needs to establish a social care insurance system, a researcher at the ChineseAcademy of Social Sciences said on Monday at an international symposium on protecting the rightsof people with disabilities.Liu Cuixiao, an expert at the Academys law institute, identified three reasons why the country needsto create a welfare system."Demographic ageing is accelerating in China, and concentrated in its rural areas," Liu said.By the end of 2009, the number of Chinese aged 60 and above reached 167 million, 12.5 percent ofthe total population. This number will climb to 248 million by 2020, and the yearly increase will jumpfrom the current 3.11 million to 8 million, according to Liu.Liu estimated by 2030, people aged 65 and above in rural areas will account for 13 percent ofChinas rural population, rising to 19 percent in 2040."A large number of the elderly in China are extremely frail and need proper care," Liu said. Theelderly face higher risks of cerebrovascular diseases and dementia, and a higher rate of morbidityand disability, due to their declining physical functions, Liu said.The elderly made up 75 percent of the 20 million additional populations of people with disabilities inChina from 1987 to 2007, according to the second nationwide survey on people with disabilities."An increasing ageing population means growing need for old-age care. But available services fail tomeet that need," Liu said.The tradition of old-age care provided by children and relatives is no longer sustainable in todaysrapidly developing and urbanizing China, as many elderly live in empty nests, their children oftenunavailable for their needs, according to Liu.Ten percent of those in need receive care at public nursing homes, but the majority cannot affordexpensive services from private agencies, which are running with variable qualities under laxregulations, Liu said.Liu Jitong, professor at the Department of Health Policy and Management of Peking University, toldChina Daily that creating a social care insurance system is a timely response to the ageing problemof China.Liu said installing such a system will not involve much extra public spending, as individuals andemployers will pour in their contribution. And the system will benefit a wide range of people,including the elderly and other disadvantaged populations.But with limited budgets, policy-makers constantly face the thorny problem of addressing differentdisadvantaged groups needs, according to Ding Yuanzhu, a professor at the Chinese Academy ofGovernance, also a veteran at Chinas National Development and Reform Commission for over adecade.Li Jianfei, professor at the Law School of Renmin University of China, told China Daily thatinstitutionalized social care for the elderly is an imminent step for China to take."Whether such a system is doable or not, this is the right question to consider for China now," Listressed, "How much it will cost, that is the next question to ask."Women, living on average five to six years longer than their husbands, face a more difficult situationin old age, Li said.

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