Leadership and Democracy LabWestern Social Science

Optimization of China’s Aging Population

Main Contributor: Adora Fernandez

Team Leader: Marissa Vaillant

Keywords: China, health care, aging, pharmaceuticals, pharma, prescriptions

China’s rapidly aging population is a rising concern for the socioeconomic landscape of the country. This large demographic shift has created a gap between those born during the One Child Policy generation and their parents, diminishing the number of people in the working class that can continue to support the Chinese economy. With a larger portion of the population progressing into retirement, the burden of supporting numerous elders falls onto those individuals still in the labour force. The support that these families contribute to through social programs includes the expensive health care that elderly people may require, proving to be a difficult task when access to health care facilities is limited throughout the nation. Via the 2009 Health Care Reform Plan, the Chinese government is tackling the discrepancies in the system by imposing regulatory requirements. The lucrative pharmaceutical market, however is expected to continue to grow, increasing the opportunity for outside investment or market participation.

Demographics and the One Child Policy

It has been projected that in 30 years, the percentage of people aged 65 years and over will increase by 7.8%. The increase of people entering retirement has led to labor shortages, drastically affecting the social landscape of China’s society. Life expectancy has increased from 66.5 y/o in 1980 to 75.5 y/o in 2016. However, this new life expectancy has changed the familial structure and social development of China, leaving family’s to take care of more elderly people for a longer period of time. The tradition for older members of the family to live with their children has recently become an issue for the one child generation, leaving the onus of support on that one child, rather than dispersed among many. In 2010, a survey was conducted in the elder population of people living in both urban and rural China, it published that 22.7% of elderly people were unable, or not fully able to take care of themselves, relying on the support of their children.

The One Child Policy was implemented with the hopes of limiting China’s population growth in the early 1980s. It was one of many ways that the Communist Party attempted to curb the population growth to zero by the year 2000. This policy provided a solution for the pressing issues of the 1980s, however, it was almost too effective as it gave rise to another matter. China utilized the One Child Policy for more than three decades, but in October 2015, a decision was made to enforce slightly less draconian restrictions. The country's notorious one-child policy has now become a two-child policy. Commissioning this new policy addresses the government’s concern in the potential demographic collapse that is on the horizon, unless a graying population receives an infusion of youth.

 Healthcare Access

The extensive geographical span of China has led to disparities in the distribution of healthcare facilities across the nation. Its health care system was not sufficiently providing its citizens with adequate access in both urban and rural areas, leaving privatized institutions to be the only option. This was increasing widespread public discontent; as many of China’s citizens have encountered financial strife in the attempt to access these amenities. In 2009, China unveiled a Health Care Reform Plan to amend the situation by building new health care facilities, and hoping to work towards adequate insurance coverage for all citizens. This tedious reform has created improvements although the pharmaceutical industry is still fragmented and inefficient. The Chinese government is enforcing regulations to promptly making changes, although the China Food and Drug Administration believes that imposing these regulatory requirements will shut down numerous pharmaceutical manufacturers.

Currently, China is home to the second largest pharmaceutical market in the world. With its rapidly aging population, China’s healthcare landscape has proven to be an increasingly lucrative market for competitive pharmaceutical companies. Annual growth of the pharmaceutical market from 2015 to 2020 is projected at 9.1% (approximately $167 billion by 2020). The government has not claimed any disapproval of allowing foreign market participants; the only stipulation that seems to exist is following the reformed health care regulations to ensure adequate services are provided. The optimization of the aging population in China would be beneficial to not only the pharmaceutical companies looking to invest or participate but also to the millions of citizens that require access to health care.