China's demographic problem – Commerzbank

Chief economist, Dr Jörg Krämer at Commerzbank, suggests that the China faces the prospect of an exceptionally rapid rise in the percentage of over-65s in the overall population from 2020.

Key Quotes

“The number of those of working age is already declining. It will be difficult for the government to counter the trend, and economic competitiveness will continue to suffer. This will condemn strong Chinese economic growth to be a thing of the past.

It is not yet clear how China will organise and finance all this, but irrespective of whether the necessary funds are raised via higher taxes or social-security contributions, China's labour costs will rise sharply, thus impairing price competitiveness. Strong growth rates based on a large, cheap labour force are at any rate a thing of the past.”