Population in the Asian Century

The world’s population grew by two per cent per annum in the late 1960s, and if this rate had been maintained, it would have exceeded 18 billion in 2050.

Today, the United Nations Population Division projects a population of around nine billion by that time. The world’s population is now estimated to be half of what it might have been primarily because of the widespread success that Asian countries have achieved in reducing their birth rates.

In their classic 1958 book, Population Growth and Economic Development in Low-Income Countries, Ansley Coale and Edgar M. Hoover argued that a reduction in fertility would reduce the number of children that a country needed to support while, at the same time, having little or no impact on the size of the labour force for the following two decades. They argued that the reduction in child dependency would reduce consumption and increase savings and investment, which, in turn, would stimulate economic growth. Additionally, greater emphasis could be placed on the education and development of the next generation so the country’s pool of human capital would also be enhanced.

Many Asian countries accepted this idea, leading to family planning programs that have had a huge impact on population growth in the past 40 years — and, in China, the idea also led to the one-child policy. It is hard to argue that rapid economic development in most of the countries that lowered their birth rates — including Japan, South Korea, China, India and some Southeast Asian countries — is not associated with this strategic approach. Today, very few countries in Asia have birth rates above three children per woman. The remaining countries with high fertility, countries such as Pakistan, Afghanistan, Timor-Leste and Iraq also support the case that high fertility is a major obstacle to economic development.

Population growth rates in Asia have fallen despite significant increases in life expectancy. For Asia as a whole, life expectancy at birth has risen from 48 years in 1960 to 70 years in 2010. Substantial and simultaneous falls in both fertility and mortality mean that Asian countries are ageing much more rapidly than has been the case in Western countries. With 30 per cent of its population aged 60 years and over, Japan already has the oldest population in the world. Japan will get a lot older than this in the next 40 years, with nearly half of its population projected to be 60 and over in 2050. Again, in comparison with the West, Asian countries have had little time to develop policies that prepare them for rapid ageing.

The emergence of very low fertility rates, particularly in East Asia, has exacerbated this trend toward ageing populations. The average number of births per woman in 2010 was 1.39 in Japan, 1.15 in South Korea, 1.16 in Singapore, 0.91 in Taiwan and 1.11 in Hong Kong. The fertility rate in China is disputed but is probably between 1.2 and 1.4 births per woman. These are the lowest fertility rates in the world and are a real cause for concern: a country with a sustained fertility rate of 1.3 will see the grandchild’s generation fall to 40 per cent of the size of the grandparent’s generation.

But well before population decline becomes a problem, such countries will experience a sharp fall in the size of their labour forces, which will coincide with the most rapid expansion of the number of citizens making up a country’s aged population.
This process is more advanced in Japan and is referred to as a demographic malaise. Countries may well adjust to gradual falls in labour supply, but it is unlikely that they can adjust easily to precipitous falls, especially at a time when the aged population is increasing rapidly. All Asian countries with a fertility rate of under 1.5 births per woman, except China for the time being, see this as a major issue and are looking for policy approaches to increase fertility. So far, they are failing badly. For small countries like Singapore, immigration is a possible approach, but it is faced with popular resistance. A shortage of young, skilled workers is a greater problem in periods of rapid technological change because young workers tend to be the assimilators of new technology.

Under these circumstances, China would be wise to end the one-child policy. But its government remains under the illusion that fertility would rise rapidly if the policy were to be ended. Will other countries such as Japan and South Korea be able to raise their fertility rates in the future? Very low fertility often results from the difficulty that many women face in combining paid employment with having children. But there is little sign that employers in low-fertility East Asian countries like Japan and South Korea are willing to make the changes to employment conditions that would facilitate the combination of work and family. Consequently, very low fertility is expected to continue.

By Peter McDonald Professor of Demography and Director of the Australian Demographic and Social Research Institute at the Australian National University.
This post is part of the series on the Asian Century which feeds into the Australian government White Paper on Australia in the Asian Century.East Asia Forum