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Opinion

China's baby boomers are about to reshape the global economy again

No region tells the story of the aging population challenge better than Dongbei

| China
An elderly woman looks at a young boy in Harbin, northeast China's Heilongjiang province: Dongbei has the world's lowest total fertility rate of 0.55 births per woman.   © Imaginechina/AP

Dr. Lauren A. Johnston is a research associate, China Institute, SOAS, University of London. She is founder and managing director of New South Economics.

The hundreds of millions of babies born in Mao's China during the 1960s are on the cusp of exiting the workforce.

With Beijing expected to release results of the once-in-a-decade census on Tuesday, how China responds to this mass retirement over the next decade will reshape the world economy, just as those people themselves have remade the global economy through their working lives. This time though, it will be China catering to their needs, not they working to satisfy global consumption.

No region tells the story of China's aging population challenge, and potential, more starkly than China's three northeast provinces together known as 'Dongbei': Heilongjiang, Jilin and Liaoning.

According to University of Wisconsin-Madison professor Yi Fuxian, Dongbei has the world's lowest total fertility rate of 0.55 births per woman, around a quarter of the replacement rate of 2.1.

An extended period of economic stagnation that began in the 1990s helps explain how that happened.

Reforms imposed on the region's state-owned heavy industry economy ahead of China's entry to the World Trade Organization not only made thousands of workers redundant, they drove away many of the region's young people too.

Geographically remote and frozen over in winter, Dongbei, with the exception of the upscale coastal city of Dalian, has struggled to recover ever since, with the central government having to bail out its pension schemes repeatedly over the last decade.

A visit by China's Vice Premier Liu He to Liaoning in March 2021 signaled that broader geopolitical challenges may shift history back in Dongbei's favor.

"Liaoning enjoys geographical advantages and has a number of strategic industries that are the lifeblood of the national economy and national security," Liu said. In other words, Dongbei, as one of China's leading grain-producing regions, is key to China's food security. The region's long-standing technology and defense pockets are also back in focus.

Local farmers harvest ripe rice in Dalian, northeast China's Liaoning province: Dongbei is key to China's food security.   © Imaginechina/AP

But even that unexpected turn will not itself provide actual farmers, or convince China's best scientists, to move northeast. Moreover, recent efforts to attract new workers and youth to the region have not found national support.

Prior to the Chinese Communist Party's two sessions, the annual meeting of the National People's Congress and the Chinese People's Political Consultative Conference earlier this year, the National Health Commission floated the idea of relaxing all child-bearing quantitative limits in Dongbei. After other regions protested against the region being granted such a special privilege, the idea did not gain traction.

Also in March, Liaoning representative Chen Xiangqun proposed that the northeast be allowed to implement a preferential income tax policy, including a proposed income tax cut of up to 50%. The idea was that such a cut could apply to key workers such as teachers who would ensure the region's precious few children can become the nation's best-educated, thereby attracting families with school-age children to the region. Again, this idea seemed to disappear as quickly as it was floated.

Online chatter proposing that Dongbei become something of a fast-track to permanent residency for talented young migrants, with a focus on citizens from former Soviet bloc countries, also appears to have stayed out of official debate.

Dongbei will, however, benefit from China's new five-year plan's focus on population-related services related to the elderly and childcare. But it remains to be seen whether the region will benefit sufficiently, given its extreme demographic situation and the recent negative national response to ideas that Dongbei be given special treatment.

Still, Liu He's visit may yet serve to change national minds, given the region's elevated strategic importance in key sectors.

Either way, if Dongbei, as an acute example of aging China and its new capital-intensive push, fails to re-elevate its high-tech sector and raise agricultural productivity in the region overall, then it is likely to continue to stagnate, and its birthrate flag accordingly. So too the hopes of its millions of retirees for a moderately comfortable retirement, especially should residents in richer provinces grow tired of cross-subsidizing their minimal pensions.

But if Dongbei can successfully elevate productivity per worker and enter higher capital-intensive value-chain ranks, this will mark the success of China's agenda to proactively respond to population aging. A step also toward preparing for a period of population decline, with China's total population expected to start falling this decade.

Dongbei, already one of China's less populated regions, may yet offer a glimpse of what a less populated - but better off per capita - country might look like.

Home to one of the world's lowest total fertility rates, as well as some of China's most important strategic industries, Dongbei is in some regards China's ultimate 21st-century population and development frontier. Given China's global footprint, its progress is worth watching accordingly.

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