Like many other countries in Asia, China is aging. This has far-reaching implications for Chinese society, labour supply and social services. However this will also lead to a range of innovations in areas such as elder care, innovative housing and home support, insurance services and leisure activities. Veli-Antti Ruismaki, Asian Insiders partner for China takes a closer look at China’s silver economy and where opportunities may lie for innovative foreign participation.
Recent government statistics out put China’s population of over 60 at 297 million, or 21%. By World Bank standards, that makes China a ‘super-aged society’ already and this total number is expected to grow to over 509 million folk over 60 by the year 2050. While this phenomenon is not unique to China, or even to Asia, each country is developing its own responses, based on its heritage and scale (see here about Japan).
This demographic shift is driven by a number of factors including the recent one-child policy, improving healthcare and rapid industrialisation and has put tremendous pressure on the traditional social safety net, usually heavily reliant on younger generations. With more of the over 60’s generation forced to rely upon themselves, the healthcare system must contend with age-related ailments and chronic diseases. In addition other issues such as loneliness, isolation and mental well-being amongst the elderly become issues to manage in both rural and urban settings.
Commentators warn that the rapidly shifting demographic imbalance, if not dealt with adequately, represents a very serious threat to the globe’s number two economy. Of particular concern is falling labour supply and accordingly, rising wages. China already faces worker shortages as young people avoid jobs in factories and construction sites. Average wages in China have increased by over 100% over the past decade significantly outpacing wage growth in nearby Southeast Asian countries. Chinese companies are joining others around the world in seeking cheaper labour abroad.
The present silver economy is valued at around USD 980 billion, approximately 6% of China’s total GDP. This is anticipated to grow to some USD 4.2 trillion by 2035, or around 10% of the then GDP. In a recent policy announcement, the Chinese State Council issued 26 guidelines across four specific areas to develop solutions for the needs of the aging population. These range from various medical initiatives including anti-aging technologies and treatments and promotion of medical and cosmetic treatments, to financial planning, smart healthcare, assisted living systems and more.
Beijing plans to mobilise the state sector along with the private sector in several areas. They will be encouraged to develop age-related consumer products in areas like clothing and wearable technology, adapted vehicles, meal delivery along with food preparation and a wide range of innovations in pharmaceuticals and leisure products and services. Local governments will be able to issue special bonds to support silver economy development while banks are encouraged to offer credit to elderly care facilities and businesses dedicated to improving lives of senior citizens. Around the country, ten new silver economy industrial parks are planned. With only 3% of elderly Chinese now in serviced nursing homes, entrepreneurs in this sector are moving quickly to expand operations.
The promotion and development of industries related to elderly care services will encourage further research and development and the planning and centralising of several related sectors. This will increase the value of China’s silver economy and stimulate domestic demand, cultivate emerging technologies and lead to increased employment. This is going to be particularly welcome to a growing community of Chinese biotech and pharma companies, recovering from a post-pandemic industry slowdown – companies such as Sinopharm, WuXi Biologics, Jiangsu Hengrui and others.
As China also pushes ahead in factory automation, technical developments in robotics, virtual reality and AI will become leading beneficiaries as more funding is poured into China’s silver economy. In summary, into a sector likely to triple in total value over the next decade. Education is also rallying to China’s silver economy with many local universities developing specialised training programmes, often in partnership with foreign institutions, to train and deploy the many thousands of required physicians and care personnel.
As mentioned above, China is not the only Asian country to be facing a greying society and likely, the innovations and technologies developed in response will likely contribute to solutions for similar conditions elsewhere in the wider region. For long term investors, China’s silver economy might appear particularly attractive.
China’s silver economy is poised for considerable growth and expansion. There are plenty of opportunities for companies in this broad space to develop partnerships and investments in a market that is set to boom across China and Asia. Asian Insiders offers expertise and capabilities spanning China’s many provinces. For a no-obligation call, please contact Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com or Veli-Antti Ruismaki, China Partner: veli-antti.ruismaki(at)asianinsiders.com
