Age & Reason
China and Japan: Test Cases for Aging
Monday, September 24, 2012 - 10:00am
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The global competitive balance of the 21st century is soon going to look very different than it does today – and China and Japan will play integral roles. The question is: How will they tap into the potential of their aging populations

Conventional wisdom, of course, says that China is Asia’s emerging tiger economy and that it will overtake the U.S. as the world’s next economic superpower – while Japan, on the other hand, has seen its sun set and its once-dominant economy will fail to keep pace with the world’s emerging markets

A lot of smart people have used a lot of compelling data to build these long-held arguments, but missing from their predictive modeling is the notion that success or failure for these countries will be based on how well aging populations can be integrated into social and economic life – and become growth drivers for society, transforming 60-, 70- and even 80-year-olds from presumed dependent to active contributors.

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When population aging is factored into the equation, China and Japan become veritable teaching labs for the rest of the world. Here’s why:

CHINA : Individual longevity has increased rapidly. Over the last 50 years, life expectancy has shot up, on average, from 40 to 70. Recent improvements in health, medicine and sanitation are enabling people to live far longer than they did just a generation before.

Birth rates are also way down. China has had a mandated one-child policy, of course, but the birth rate is declining in countries from Vietnam to Peru, and happening far more rapidly than it did among developed economies. By 2030, China will have 340 million people over the age of 60, a number that exceeds the U.S. population.

JAPAN : As in the U.S., Europe, Australia, and a few other nations, Japan’s aging population has been emerging since the end of the baby boom, and the country must now figure out how to align its social welfare model with 21st-century demographics. The need is pressing. Already, nearly one third of its population is over 60; this number will rise to 42 percent by mid-century.

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This is why, instead of asking, “How can we afford pensions and social security?” Japan would be far better off asking, “How can older adults remain vital contributors to economic growth and wealth creation, so that limited entitlement funds can be used for those who are really in need?” Innovative tax policy could enable entrepreneurship for seniors, incentives for new and different financial instruments, and investments for cures to the major non-communicable diseases that are crippling government and household budgets.

The leaders of both countries seem to understand the need for measures that tap into the potential of older adults. In China, population aging has become a policy priority with business implications. The country’s 12th Five-Year Plan emphasizes “strengthening the role of families and developing an aging industry to respond to the health care needs of the elderly.” Recently Xiao Caiwei of the China National Committee on Aging said that China aims to keep “97 percent of older people either living at home or depending on community-based services.” To do this, China intends to create “virtual institutions,” or information platforms that connect seniors who “age in place” with service providers.

In Japan, population aging is driving technological innovation. The country recently hosted an OECD/APEC conference in which academics, policy leaders and other thought leaders lay out the roadmap for where and how technology can enable a more integrated, engaged path of aging. Of the numerous exciting possibilities, Toyota’s “independent walk assist” robots are just one example.

Michael W. Hodin, Ph.D., is Adjunct Senior Fellow at The Council of Foreign Relations and Executive Director of The Global Coalition on Aging.

Executive director of the Global Coalition on Aging, Michael W. Hodin, Ph.D., is also managing partner at High Lantern Group and a fellow at Oxford University's Harris Manchester College.