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China

Meeting the challenge of China’s changing population

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An elderly woman walks with a stick along a street in downtown Beijing, China 30 July, 2019 (Photo: Reuters/Lee).

Authors: Xiaoyan Lei, Peking University, and Chen Bai, Renmin University

The shrinking demographic dividend and managing an ageing population are now major challenges to China’s economic development. According to the most recent population projections released by the Population Division of the United Nations, World Bank and China’s Population and Development Research Center, the ageing of China’s population will have four main characteristics in the coming years.

First, the elderly population will enter a period of sustained high growth, especially after 2030 when the average annual growth of the population aged 65 or above will exceed 11.2 million. In 2050, the number of people over 65 is expected to exceed 400 million, close to one-third of the population. At that time, about 10 per cent of all households will have at least one member over 65. The proportion of the elderly in China will not only be higher than the average for OECD countries, but twice that of less developed countries.

Second, the growth of the elderly population will gradually transition from the young-old (60–80) to the oldest-old (over 80). While the proportion of the young-old is decreasing year by year, the growth rate of the oldest-old can be expected to increase. Around 2050, the number of the oldest-old will reach 144 million and exceed the total number of oldest-old in Europe and North America.

Third, the total dependency ratio will continue to increase and will reach about 73 in 2050. That is, every 100 people of working age will need to support 73 people, including 22 children and 51 individuals aged 65 above. At that time, China’s total dependency ratio will be 32 points higher than it was in 2018 at 41.

Fourth, by around 2030, the old-age dependency ratio will be greater than the child dependency ratio. This means the obligation of care for the elderly is increasingly becoming the main burden for the working-age population. By 2050, the old-age dependency ratio in China will have risen to 49.9, which is 6 points higher than the average level of the OECD countries.

The decline in household size in China is occurring primarily because of the country’s demographic transition. The country’s average household size started to decrease in 1982 when strict family planning policies were launched. Since then, the average family size has continued to drop, from 4.4 in 1982 to 2.89 in 2015. Over the next 30 years, China’s average family size will decrease to 2.51 and the downtrend will be most dramatic in rural areas.

Correspondingly, there will be unprecedented growth in the number of elderly individuals living alone. The number of ‘empty-nest elderly’ suffering from insufficient care and companionship from family members is projected to increase from 17.5 million in 2010 to 53.1 million in 2050.

In general, there are two mechanisms through which population ageing is likely to affect economic growth in China. The first mechanism is the decreasing supply of labour. With a low overall fertility rate, the ever-expanding population of people over age 65 will continue to compress the growth of the working-age population. By 2050, the number of working-age people will fall by about 200 million.

While delaying the retirement age somewhat alleviates the problem of a shrinking labour supply, older workers are not perfect substitutes for younger workers and productivity per worker may decrease.

The second mechanism is the effect of ageing on savings and investment growth. A growing elderly population tends to reduce the savings rate as savings become the source of spending. As a result, it will be difficult for China to maintain high levels of domestic savings. A larger ageing population will also lead to an increase in government spending, especially on health care, pension security and other welfare benefits.

The resources available for productive investment will reduce, which will ultimately affect economic growth. Private consumption may also weaken. This might drive down aggregate demand and the incentive for businesses to invest.

The Chinese government will not only have to promote the reform and innovation of its social security system, but also address urgent issues such as building a long-term care system and providing medical security for ageing workers. It is also necessary to make full use of modern technology to improve the utilisation and efficiency of human resources and to cope with the challenge of a shrinking future labour supply.

The practical results of the ‘universal two-child’ policy launched in 2015…

Read the rest of this article on East Asia Forum

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Trends and Future Prospects of Bilateral Direct Investment between China and Germany

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China and Germany experienced a decline in direct investment in 2023 due to global economic uncertainty and policy changes. Despite this, China remains an attractive destination for German FDI. Key industries like automotive and advanced manufacturing continue to draw investors, although FDI outflows from Germany to China decreased by 30% in the first three quarters of 2023. Despite this, the actual use of foreign capital from Germany to China increased by 21% in the same period according to MOFCOM. The Deutsche Bundesbank’s FDI data and MOFCOM’s actual use of foreign capital provide different perspectives on the investment trends between the two countries.


Direct investment between China and Germany declined in 2023, due to a range of factors from global economic uncertainty to policy changes. However, China remains an important destination for German foreign direct investment (FDI), and key industries in both countries continue to excite investors. We look at the latest direct investment data between Germany and China to analyze the latest trends and discuss key factors that could shape future business and commercial ties.

Direct investment between China and Germany has undergone profound changes over the past decade. An increasingly complex investment environment for companies in both countries has led to falling two-way FDI figures in the first three quarters of 2023, in stark contrast to positive trends seen in 2022.

At the same time, industries with high growth potential, such as automotive and advanced manufacturing, continue to attract German companies to China, and high levels of reinvested earnings suggest established firms are doubling down on their commitments in the Chinese market. In Germany, the potential for electric vehicle (EV) sales is buoying otherwise low investment among Chinese companies.

According to data from Deutsche Bundesbank, Germany’s central bank, total FDI outflows from Germany to China fell in the first three quarters of 2023, declining by 30 percent to a total of EUR 7.98 billion.

This is a marked reversal of trends from 2022, when FDI flows from Germany to China reached a record EUR 11.4 billion, up 14.7 percent year-on-year.

However, according to China’s Ministry of Commerce (MOFCOM), the actual use of foreign capital from Germany to China increased by 21 percent year-on-year in the first eight months of 2023. The Deutsche Bundesbank’s FDI data, which follows standards set by the IMF, the OECD, and the European Central Bank (ECB), includes a broader scope of transactions within its direct investment data, including, broadly, direct investment positions, direct investment income flows, and direct investment financial flows.

Meanwhile, the actual use of foreign capital recorded by MOFCOM includes contracted foreign capital that has been concluded, including the registered and working capital paid by foreign investors, as well as the transaction consideration paid for the transferred equity of domestic investors.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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Manila blasts China’s ‘unprovoked aggression’ in latest South China Sea incident

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China’s coast guard on Saturday fired a water cannon at a Philippine supply boat in disputed waters in the South China Sea, causing “significant damages to the vessel” and injuring its crew, the Philippine coast guard said.

Manila was attempting to resupply troops stationed on a ship at the Second Thomas Shoal, known locally as Ayungin Shoal, when the Chinese coast guard and maritime militia “harassed, blocked, deployed water cannons, and executed dangerous maneuvers against the routine RoRe (rotation and resupply) mission,” said the Philippine National Task Force for the West Philippine Sea.

The West Philippine Sea is the part of the South China Sea that Manila claims as its jurisdiction.

The Chinese coast guard also set up “a floating barrier” to block access to shoal where Manila ran aground an old warship, BRP Sierra Madre, to serve as a military outpost.

The Philippine task force condemned China’s “unprovoked aggression, coercion, and dangerous maneuvers.”

Philippines’ RoRe missions have been regularly blocked by China’s coast guard, but this is the first time a barrier was set up near the shoal. 

The Philippine coast guard nevertheless claimed that the mission on Saturday was accomplished.

Potential consequences

The Second Thomas Shoal lies within the country’s exclusive economic zone where Manila holds sovereign rights. 

China, however, claims historic rights over most of the South China Sea, including the Spratly archipelago, which the shoal forms a part of.

A Chinese foreign ministry’s spokesperson on Saturday said the Philippine supply vessel “intruded” into the waters near the shoal, called Ren’ai Jiao in Chinese, “without permission from the Chinese government.”

“China coast guard took necessary measures at sea in accordance with law to safeguard China’s rights, firmly obstructed the Philippines’ vessels, and foiled the Philippines’ attempt,” the ministry said.

“If the Philippines insists on going its own way, China will continue to adopt resolute measures,” the spokesperson said, warning that Manila “should be prepared to bear all potential consequences.”

Chinese Maritime Militia vessels near the Second Thomas Shoal in the South China Sea, March 5, 2024. (Adrian Portugal/Reuters)

U.S. Ambassador to the Philippines MaryKay Carlson wrote on social media platform X that her country “stands with the Philippines” against China’s maneuvers.

Beijing’s “interference with the Philippines’ freedom of navigation violates international law and threatens a free and open Indo-Pacific,” she wrote.

Australian Ambassador to the Philippines Hae Kyong Yu also said that Canberra shares the Philippines’ “serious concerns about dangerous conduct by China’s vessels adjacent to Second Thomas Shoal.” 

“This is part of a pattern of deeply concerning behavior,” Yu wrote on X.

Edited by Jim Snyder.

Read the rest of this article here >>> Manila blasts China’s ‘unprovoked aggression’ in latest South China Sea incident

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Foreigners in China: 2024 Living and Working Guidelines

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China’s Ministry of Commerce released updated guidelines for foreign businesspersons living and working in China in 2024. The guidelines cover accommodations, visas, work permits, and emergency protocols. It also outlines responsibilities regarding social security premiums and individual income tax obligations. prompt registration for temporary accommodation is required upon arrival.


The updated 2024 guidelines for foreign businesspersons living and working in China, released by the country’s Ministry of Commerce, outline essential procedures and considerations covering accommodations, visas, work permits, and emergency protocols.

On January 25, 2024, China’s Ministry of Commerce (MOFCOM) released the latest version of the Guidelines for Foreign Businessmen to Live and Work in China (hereinafter referred to as the “guidelines”).

The document is divided into four main sections, labeled as:

Furthermore, the guidelines elucidate the regulatory framework governing foreign businessperson’s responsibilities concerning social security premiums and individual income tax obligations.

This article provides a comprehensive overview of the guidelines, delving into their significance and implications for foreign businesspersons in China.

Upon arrival in China, prompt registration for temporary accommodation is required.

If staying in a hotel, registration can be facilitated by the hotel staff upon presentation of a valid passport or international travel documents.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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