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How can India beat China? Will China’s aging population problem lead to its economic downfall?

How can India beat China? Will China’s aging population problem lead to its economic downfall?

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  • GS 2 || International Relations || India & its Neighbours || China

Why in the news?

  • China and India are the two emerging economies in the world. As of 2021, China and India are the 2nd and 5th largest economies in the world, respectively, on a nominal basis. On a PPP basis, China is at 1st, and India is at 3rd place.
  • Both countries share 21% and 26% of the total global wealth in nominal and PPP terms, respectively. Among Asian countries, China and India together contribute more than half of Asia’s GDP.
  • Also China and India, together constitute about 36% of the world’s population.

Growing Population

  • Two Populous countries
    • China and India are the two most populous countries in the world, with China home to about 1.44 billion people and India to 1.38 billion in 2020. China and India together account for about 36% of the total world population and 67% of the Asia population.
  • Margin coming down
    • As of 2020, the population of China is 59 million more than in India. Due to the higher population growth rate of India, the margin between these two countries is coming down quickly. By 2027, India will have more people than China with approximately 1.47 billion people.
    • The population of China and India will peak in 2031 and 2059, respectively.
  • UNWPP Report
    • According to the UN’s World Population Prospects 2019 report, India is projected to become the most populous country by 2027 surpassing China, and host 1.64 billion people by 2050.

Impact of the growing population

  • Meanwhile, India will have a vast number of young people and insufficient natural resources left for exploitation so, with the rising population, India will have to face a herculean task of providing basic amenities of life to its people like food, shelter, healthcare, and education.
  • The median age for India is 28.43 and for china, it’s 38.42
    • With a median age of 28.43, India is 10 years younger than China having half of the population below 38.42 years. For the group aged below 29, China’s population is roughly 72% of India. But for people over 30 years old, China has 40% more people than India.
  • Male and female ratio
    • Both countries have a higher male population compared to females. With 108.18 males per 100 females, the sex ratio of India is slightly higher than China’s 105.32. India is more than three times denser than China as the population density of India is 464 people per square km compared to 153 of China.

Challenges for India

  • Stabilizing Population: Reducing fertility rates is one of the prerequisites for stabilizing population growth, and achieving optimal fertility rates in states such as Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Jharkhand, and Chhattisgarh which have higher fertility rates according to Sample Registration System data would be difficult.
  • Quality of Life: To provide a minimum standard of living for all citizens, India will need to invest in expanding its education and healthcare systems, growing more food, providing more housing, significantly increasing its drinking water supply, and increasing capacity in basic infrastructures such as roads, transportation, electricity, and sewage.
  • Heavy expenditure is required to fund basic needs and augment India’s social infrastructure to accommodate the growing population; to do so, India will need to raise resources through taxation and other means.
  • The twin challenges of rising population and old age dependents will exacerbate India’s difficulties in providing jobs, education, health care, and geriatric care.
  • Inequitable income distribution: With a growing population, unequal income distribution and inequalities within the country are a possibility.

Challenges For China

  • The new demographic projections are in contrast to the United Nations Population Division (UNPD) programs of “continuing” global development.
  • Major obstacles to a declining workforce’s economic growth, the heavy pressure the aging population poses on health and social support systems.
  • When countries move towards priority growth, there is an imminent need to increase
  • At the same time, improved survival at all ages will lead to the rapid aging of the population, particularly at the older ages.
  • Impact on global chain supply- The trend of old-age dependency is going to rise. This is a warning not only for China but also across the whole world, as China is the core of the supply chain,”
  • A problem unique to China
    • Though unlike the other developed countries, it is still a middle-income society, despite being the world’s second-largest economy.
    • Prosperous countries like Japan and Germany, which face similar demographic challenges, can depend on investments in factories, technology, and foreign assets. China, however, still depends on labor-intensive manufacturing and farming.
    • A drop in demographic dividend could thus hurt China and other developing nations like India more than those in the rich world,
  • China’s slowing population growth is part of a trend seen in many countries in Asia and the West.
    • South Korea saw its population decline for the first time in history.
    • In the United States too, the birth rate has dropped to 1.6, the lowest on record.
  • When the young population in a country declines, it creates labor shortages, which have a major detrimental impact on the economy.
    • More older people also means that demands for healthcare and pensions can soar, burdening the country’s social spending system further when fewer people are working and contributing to it.

China’s Response

  • Increasing retirement age
    • To tide over this challenge, the Chinese government announced that it would increase the retirement age by a few months every year — a decision that has received a mixed response.
  • Incentives
    • The Chinese government is also expected to increase incentives for couples to have more children, although such sops have failed in the past in the face of higher cost-of-living challenges and career choices.
  • Doing away with the one-child policy
    • Authorities have also been urged to completely drop restrictions on the number of children allowed per family.

Way ahead for India

  • The possible disastrous effects of a declining working-age population should be addressed by countries.
  • A shift in policies
    • India is on the right side of demographic change, offering a golden opportunity for its rapid socio-economic growth if policymakers agree with this shift in development policies.
    • India will face demographic catastrophe if the increased workforce is not adequately qualified, trained, and given gainful jobs.
  • Imparting Skill: The quality of teaching in schools and colleges must be improved. The high-quality vocational training must be provided within the education system.
  • India’s labour productivity, though increased in the last decade, is lower than that of China. This should be addressed to compete in the global market. Introduction of vocational courses under New Education Policy 2020 is a welcome step.
  • Poverty reduction
    • Progress in poverty reduction, greater equality, better nutrition, universal education, and health care, needs state support and strong civil society institutions.
      • China has eliminated poverty over entire regions and eradicate extreme poverty.
      • In 2020, India contributed 57.3% of the growth of the global poorIndia contributed to 59.3% of the global middle class that slid into poverty. So, India is again a “country of mass poverty” after 45 years. This has thrown a spanner in the so-far uninterrupted battle against poverty since the 1970s.
    • Employment
      • Rising life expectancy and a growing population of older adults opens up prospects for employment in many new services catering to them.
      • Efforts to revive GDP growth are laudable, but the generation of jobs needs special attention. State support measures should be aimed at sectors that employ people in large numbers.
      • India’s unemployment rate rose to 9% by the end of 2020, by data from the Centre for Monitoring Indian Economy, with around 9 million losing their jobs.
    • Improving TFR
      • Suggested initiatives include, for example, incentives to improve TFR and the use of artificial intelligence as a road to self-sufficiency.
      • The effects of a decrease in fertility on women’s rights to reproductive health must be balanced by greater economic independence.
      • This will allow women to negotiate on their terms with the system and for more support services as well.
    • By learning from global strategies from countries like Japan and Korea, and by developing solutions that take into account domestic challenges, India could reap the benefits.
    • Proper investment in human capital is required to reap the benefits of the change by concentrating on schooling, skill creation, and healthcare facilities.
      • India is home to the world’s youngest population as half of its population is below the age of 25.
      • This demographic advantage in India is available for five decades from 2005-06 to 2055-56, longer than any other country in the world.
      • In 2020, the OECD found that countries with people who had grammar and high school education experienced an employment rate among 25-34 year-olds of 72% for men and 45% for women. However, those who had college or graduate education levels experienced an employment rate of 89% for men and 81% for women.
  • Focus on manufacturing Industry
    • India lags far behind China in manufacturing prowess. China ranks first in contribution to world manufacturing output, while India ranks sixth.
    • Against India’s target of pulling up the share of manufacturing in Gross Domestic Product (GDP) to 25% by 2022, its share stood at 15% in 2018, only half of China’s figure.
    • There is a fear of Chinese dominance over the supply of essential industrial goods. This is an alarming situation for any country and its industry as this puts their independence and autonomy in peril.
    • Through Atmanirbhar Bharat Abhiyan, India can try to replace Chinese products with domestic products in the sectors where it is possible. Further, it needs to boost up its economic relations with other countries.
    • States like Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, Odisha, Rajasthan, Telangana, and West Bengal also have large land areas that can contribute to the success stories of Indian

Conclusion

  • The government of India is taking the initiative to fill the existing skill gap through a skill development mission to leverage its position to fulfill the domestic and global requirements and at the same time fulfilling its domestic requirement of the skilled labor force. Skilling would enhance the human capital quality needed to reap the demographic dividend which might turn into a demographic disaster.
  • Indian has the potential to surpass even China in low-cost manufacturing if the government and industry work cohesively. The government should focus on increasing the competitiveness of the Indian industry.

Mains model question

  • India is projected to surpass China as the world’s most populous country by 2027. Discuss the challenges of the rising population and suggest a way forward.

References