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2point6billion.com discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.




ASEAN’s Demographic Dividend

By Shawn Greene

Nov. 26 – More than 30 years after Deng Xiaoping first introduced China’s famous “one-child” policy, President Xi Jinping’s government appears set to finally relax the country’s approach to family planning. Announcing this month that many urban couples will soon be permitted to have two children under broader exemptions to the “one-child” rule, the government’s policy shift comes amidst concerns that the country’s low fertility rate and rapidly ageing population may threaten its long-term social and economic stability.

With China’s tax-paying, working-age population declining by millions each year – and its population of benefit-dependent retirees expected to reach 200 million by the end of 2013 – sustaining China’s rise arguably depends upon its fertility levels normalizing at or above the level of replacement. Many, including the Brookings Institute, characterize China’s impending demographic deficit as a severe and potentially fatal crisis for its economic growth. By 2050, even with recent changes to its family planning policy, there will be fewer than 1.6 workers for every retired person in China, and the fertility rate is predicted to remain significantly below the 2.1 children per household needed to hold its population level.

While China’s low fertility rate and controversial family planning policies are among the most well-known in Asia, China’s ASEAN neighbors also rank among the world’s lowest-fertility societies and appear poised to reap significant economic benefits from their relatively young populations and rapidly decreasing dependency ratios (proportion of young and retired to working-age adults).

Oftentimes referred to as ASEAN’s demographic dividend, ASEAN countries’ decreasing dependency ratios have the potential to translate into significant GDP growth if accompanied by effective government policies that liberalize trade, attract FDI, and mobilize capital and labor productively.

Continue reading this article on ASEAN Briefing

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