Geopolitics of Aging Populations in East Asia

The Shadow Government blog of Foreign Policy had a very interesting article this week discussing the demographic background of the current battle between China and Japan about who has sovereignty over the Senkaku Islands in the East China Sea:

The Sino-Japanese dispute is coming perilously close to conflict, as China finds in Shinzo Abe's government a wall of resistance to its recent pattern of aggression in its near seas. Abe has ambitious plans for reviving both the Japanese economy and its national security institutions to deal with dual threats from China and North Korea.

The thrust of the article, however, is that this conflict is between two rapidly aging populations ("grumpy old men") and it is not clear how that will play out.

Never before have we seen a strategic rivalry in which the opposing sides are getting so old. While both countries are using the tools of traditional statecraft -- rising military budgets, high-stakes diplomacy, economic leverage -- to gain strategic advantage, they are rapidly losing the actual people to sustain this great game.

According to Chinese statistics, the 15-64 age-group cohort, the most productive age group, shrank by 3.45 million last year. Meanwhile, the China Research Center on Aging announced that there are now 202 million elderly in China -- the size of a large country.

As for Japan, more than 23 percent of the population is already 65 or older. Over the next few decades the proportion of elderly in Japan could grow to one-third of the total population Already, the total population is shrinking and not being replaced through either birth or immigration. Over the next two decades, the working-age population will decline by about 17 percent from 81 million to 67 million.

The costs of the coming old-age tsunami are mind-boggling. China is relatively poor and has no national pension system and a limited patchwork of locally run systems. Japan is far wealthier but deeply indebted. Neither country has enough kids to support aging parents.

As the article implies, we are genuinely in uncharted territory here. We have never had a large older population in the world--rich or poor--and so it is impossible to know how this will turn out. We're going to have to take the traditional grumpy old men approach of hoping for the best while preparing for the worst.