BIJIE, CHINA – MARCH 27, 2021 – Old People’s Daily life at a health care center in Bijie, southwest China’s Guizhou province, March 27, 2021.
Costfoto | Future Publishing | Getty Images
Plagued by shrinking birth rates and a rapidly aging population, tens of thousands of Chinese kindergartens have scaled back operations, closed down entirely or pivoted industries to survive.
One preschool in the eastern province of Zhejiang still operates as a daycare, but instead of serving children, they’re now catering to senior citizens.
Last year, Zhuang Yanfang, 56, repurposed her kindergarten in the city of Jinhua, Zhejiang, into a senior nursing center. She told local media that she came up with the idea after she struggled to get enough babies and toddlers to fill her classroom.
Barely any remnants of a kindergarten could be seen in photos of the renovated quadrangle-shaped building. Its once-colorful walls were repainted milky white, and the chalkboard was replaced with a bulletin board, littered with information about health care and nutritional meals for the elderly.
Births in China have been on a drastic downward trend since the government implemented the harsh “one-child policy” nationwide in 1980. Even though the country eased the policy in 2016, the birth rate has continued to plummet.
Between 2021 and 2023, the number of children in preschool education dropped almost 15% to just under 41 million.
It’s no surprise then, that preschools — including public and private — also closed down over those two years, dropping by 20,000 across the country, according to CNBC’s analysis of data from China’s Ministry of Education. That coincided with an effort by the government to shutdown private-owned kindergartens while attempting to open more state-backed ones to lower costs for families.
Conversely, as preschools suffer, the senior care industry is thriving in China’s aging population crisis. The number of elderly care service institutions and facilities has doubled from 2019 to more than 410,000 this month, according to China’s Communist Party.
The Chinese government have intensified policy measures to bolster its “silver economy,” a sector that provides goods and services for people over 50, in efforts to tackle the country’s aging population. In guidelines, the General Office of the State Council has called for expediting “the development of elderly care institutions” and stimulating “senior citizens consumption.”
“China’s aging will only intensify,” said Harry Murphy Cruise, an economist at Moody’s Analytics. He predicted that by 2040, around 30% of the total population would be over 65 years old, from 15% today, with people below 15 years old falling to just over 10%, from 17% now.
“This aging will increase the potential market size for goods and services targeting the seniors,” Cruise added.
People exercise in a park in Shanghai, China, on Saturday, April 10, 2021.
Qilai Shen | Bloomberg | Getty Images
A bright spot in the economy: the elderly
The elderly population is “the next big market opportunity with high certainty”, Tianchen Xu, economist at Economist Intelligence Unit told CNBC. Xu indicated that senior citizens also tend to be more financially-sound, having accumulated their wealth along with China’s economic rise.
The retiring or retired population has “money to spend,” Lynn Song, chief China economist at ING said, and they are seeking a “high-quality post-retirement life.”
Some Chinese dairy companies that make milk products for infants and toddlers have started a new product tailored for the middle-aged and elderly, marketed with special benefits such as better sleep quality, bones density and immune system.
As China evolves into a rapidly-ageing society, demand for elderly-focused goods and services will increase dramatically from 2030.
Erica Tay
Director of macro research at Maybank
Zhenmu Dairy, a producer of specialized sheep-milk based in Shanxi province, a major sheep-farming area in China, have been promoting its products by holding events at senior care centers, during which its top management would speak and give out free samples, according to the company.
Over in Shanghai, an increasing number of gyms are seeking to attract older fitness enthusiasts with equipment suited to their needs, installing real-time health monitoring devices and offering physiotherapeutic sessions against chronic diseases.
China has the manufacturing capacity to be a leading producer of elderly-specific goods, Xu said, “think of robot carers, smart home products for seniors and AI-enabled pillboxes.”
Raising the retirement age
Despite the growth of its “silver economy,” Beijing is still attempting to mitigate the disastrous effects that its aging population crisis poses to the long term health of its economy.
In September, the country’s top legislative body passed an official plan to begin incrementally raising the nation’s statutory retirement age, as it tries to tap into its growing pool of older workers to alleviate its overall shrinking workforce.
A staff member is shaving the head of an elderly man in Zaozhuang, China, on January 28, 2024.
Costfoto | Nurphoto | Getty Images
The move was controversial and unpopular among younger people on Chinese social media, but economists say it was a “necessary” step to take.
China had a relatively lower retirement age compared to the global average. That coupled with a rapidly aging population has created a growing number of “under-utilized labor,” EIU’s Xu said, calling this group of people “young olds.”
By 2040, China aims to bring the retirement age for all men from 60 today to 63, and for female white-collar workers from 55 to 58. Female blue-collar workers, who previously retired at 50, would have to wait until they are 55 to retire.
Even then, those ages are still notably lower than the U.S., where the statutory retirement age is 67 for all workers born in 1960 or later, as well as Japan, where the retirement age is 65 for both men and women.
By “tying seniors to the workforce longer,” China hopes to not only ease the financial burden of paying pensions but also increase tax revenue, Moody’s Analytics’ Cruise said.
Last month, China’s civil affairs ministry issued a guidance on the “Silver Age Action,” an initiative that encourages senior citizens who have worked in education, science and agriculture, and other skilled fields, to volunteer for programs aimed at bolstering growth in underdeveloped regions.
— CNBC’s Sonia Heng contributed to this story.
