China rising, but faces demographic landmines

"The one-child policy gave China the best of all worlds — a seemingly limitless labour supply and an artificially low dependency ratio. But the labour force will start shrinking a mere six years hence; elderly dependants will outnumber children within 20 years; and by mid-century the labour force will have plunged by 23 per cent. A third of Chinese will then be over 60 — 438 million, outnumbering the entire population of the US. And there will be only 1.6 working age adults per pensioner, compared with seven before 1979.

This means that hundreds of millions of elderly will depend on shrinking families. Beijing is reluctant to divert public investment from physical to social infrastructure; yet failure to do so will render the “harmonious society” unstable. Unpaid pensions are already a potent grievance."