Demography Rebalances Asia

The potential implications of these patterns are substantial. For example, "China will get old before it

fully succeeds in getting rich." The political implications of that fact, given that the Chinese Communist Party has essentially been using economic growth as a justification for maintaining its hold on power, could be severe. If China, which by some measures is now the largest economy in the world, follows Japan's pattern of aging and economic stagnation, it will have a powerful effect on the growth rate of the global economy. 

Of course, there is no guarantee that the growth of India's working-age population will power economic growth. But there's a powerful opportunity for it to do so, if India can continue with economic and social reforms (for some discussion, see here and here).

The global face of aging is going to shift dramatically in the next few decades. The report notes: "There are already more over-65s in Asia than there are people in the United States. The number of over-65s in Asia will exceed one billion just after the middle of this century. In fact, by 2042—in just a quarter of a century—there will be more over-65s in Asia than the populations of the Eurozone and North America combined. Yes, you read that right: More people aged over 65 in Asia than the total combined populations of North America and the Eurozone, and in just 25 years from now."

Here's a figure to emphasize the point. Europe and North America are aging. What's happening in Asia in the next few decades will be such a powerful demographic that it seems to require a stronger word than "aging." 

Two underlying patterns that will affect these workforce trends are migration and female labor-force participation. Countries like China or Japan, with low labor force growth, will face some economic pressures to allow greater in-migration. Japan, with relatively low female labor-force participation, will face pressures for that figure to rise. India has extremely low female labor-force participation, but if India wishes to take full advantage of its working-age demographic boom, this will need to change. Here are some female labor-force participation rates across Asia. 

It is of course not literally true that "demography is destiny," as an old saying has it, but it can matter a great deal for the growth rate and sectoral patterns of economies. With China's working-age share of its population topping out and India's on the rise, we are at the hinge of a demographic transition that will reshape relative economic (and probably also political) power across Asia. 

A version of this article first appeared on Conversable Economist.