Still-growing China faces crisis supporting ageing population
LINDSAY BECK
IN BEIJING
THE world’s most populous nation is still growing, with China’s official population expected to hit 1.3 billion tomorrow, despite a quarter-century-old policy of allowing couples to have only one child.
The strict rules were intended to put the brakes on growth after Chairman Mao-era exhortations that more children would make China strong.
But while they have helped China curb its birth rate from more than 33 per 1,000 population in 1970 to less than eight per 1,000 three decades later, the country faces new demographic challenges over how to support an ageing population.
Lou Binbin, of the China Population Information Research Centre, said: "I would say right now we have a 20-25 year golden period to resolve this problem. The numbers of old people haven’t yet reached a serious level. We will have to rely on the speed of our economic development to resolve this problem of old people."
China is expected to add about eight million to its population each year, the UN Population Fund (UNFPA) says, and has no plans to ease the one-child policy, apart from some minor concessions in urban Shanghai where low birth rates have left a massive shortage of young people.
The strict rules on family size have also created a gender imbalance, with about 117 boys for every 100 girls, as a cultural preference for sons prompts couples, usually in rural areas, to abort girls.
The birth rate is highest in the largely rural west, where farmland is poor and jobs scarce, while it is lowest in Shanghai.
"In reality, in the cities it has been a one-child policy, but in the countryside, fundamentally it’s been two kids. We call it the one-and-a-half-child policy," Ms Lou said.
Demographers say the most immediate issue is not how to support China’s greying masses - which they point out will not hit numbers comparable to Europe’s until about 2020 - but how to employ them.
Siri Tellier, the China representative of UNFPA, said: "Right now, China’s biggest demographic issue is surplus labour in rural areas."
But she also sees the focus shifting on how to provide for the elderly.
"China will get old before it gets rich," Ms Tellier warned.
Urban residents, aware of the spectre of unemployment and less likely to view children as an insurance policy for their old age, say they are happy to stick with the one-child policy.
"I think it’s a good thing. Otherwise, how could China develop," said Wang Dan, a 20-year-old shop assistant. "If the population were to grow too big, the burden would be too great."
China’s one-child decree has often been criticised by citizens and outsiders alike as Draconian. But as the nation takes steps to ease its policy, with some cities encouraging certain families to have a second child, many have no intention of changing their ways.
Having only one child is now widely accepted, especially among urban residents. In Shanghai, a recent government survey of about 20,000 young people found that more than 80 per cent preferred to have just one child. Another 5 per cent said they wanted no children at all.
The findings worried officials all the more because the metropolis of 17 million was already grappling with plummeting births.
Last year, about 57,000 babies were born in Shanghai, but there were nearly twice as many deaths. Such a large gap has profound implications for the future workforce and for an ageing society.
Researchers believe that Shanghai’s demographic quandary typifies what other areas in China will confront in coming years: a society with too few children.
Keenly aware of that, Shanghai’s Population and Family Planning Commission reformed parts of the one-child law last spring, making it easier for people such as remarried couples to have more children.
But so far, the changes in Shanghai have spurred only about 100 more people a month to seek government permission for a second child. The commission’s director said her office was prepared to handle ten times that number.
At the end of 2003, the total world population stood at 6.27 billion people, according to the World Bank. China, with 1.29 billion people, had the biggest population, followed by India, with 1.06 billion.
If current trends continue, India will overtake China by 2035, according to India’s census office.
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Although these investments aren't at this stage a challenge to U.S. energy security, the mere fact that Beijing is playing an increasingly important role in what Washington considers its own back yard won't have escaped Bush administration strategists.
The latest chapter in this story comes with a visit to China on Jan. 20 by Canada's Prime Minister Paul Martin.
The Chinese and Canadian governments are expected to use the occasion to announce framework energy agreements as precursors to contracts between China's Sinopec Corp. (SNP) and China National Petroleum Corp., and several Canadian firms for stakes in Alberta oil sands.
The Canadians are well aware that China is a potentially major customer.
"Clearly, commodities are back and in demand... Given its accumulated hard currency reserves, China is likely to be an increasing source of capital as it seeks to secure the resources the Chinese people will need," Martin said in a speech during the Canada-China Business Council 2004 Gala Dinner on Dec. 6.
Taking The Long View
China is well-known for taking a long view in its political and economic strategy. And it appears to be focusing on a target in Canada that will take years, and sustained high oil prices, to become viable.
Oil sands are deposits of bitumen, a heavy black viscous oil, that must be heavily processed before being burned as heavy fuel oil like Venezuela's Orimulsion, or refined into gasoline and diesel fuels.
Alberta's huge oil sands deposits make up the vast bulk of Canada's total proven crude oil reserves of 178.9 billion barrels, the second highest in the world behind Saudi Arabia. But high production costs means the sands are economically uncompetitive, for now.
However, with crude oil futures now over US$40/bbl and likely to stay there for a while, and thanks to improved oil recovery techniques, the economics are becoming more favorable.
"Canada has been trying to find markets for its oil sands and they have been seeking investors from Asia," John Vautrain, vice president and director at U.S. energy consultancy Purvin & Gertz Inc., said in Singapore.
Canada is also hoping that Chinese companies will want to invest in a planned oil pipeline from Alberta's Fort MacMurray to a terminal on Canada's West Coast, from where oil can be shipped to China or elsewhere.
The pipeline plan is being spearheaded by Calgary-based pipeline and natural gas distribution company Enbridge Inc. (ENB).
In June 2004, the Premier of Alberta, while on a visit to Beijing, was keen to promote the attractiveness of the oil sands.
"What we're suggesting...as China searches the world to find secure and reliable supply of oil (is) they should be looking here," Klein said.
"We continue to impress upon Chinese oil companies that there are opportunities (in Alberta), that the only oil isn't in Venezuela, or Australia or Indonesia or Brazil, that there is a very safe and reliable source of oil here."
Canada is currently the largest source of oil imported into the U.S., with the bulk of its sales sent south by pipeline.
Potential For Trouble
While American oil now is moving across the Pacific to China in a thin trickle, Washington won't be enthusiastic if deals with Canada or Latin American states turns this into a heavy flow.
It's clear that Washington appreciates that ensuring access to energy supplies to fuel the economies of the world's top two oil consumers could put them on a collision course.
The U.S. and China should cooperate, and not compete in global energy issues, outgoing U.S. Energy Secretary Spencer Abraham said in Beijing in December. "There is no long term winner in that sort of competition," he said.
But China's energy shadow is falling over wider areas of the globe, as it tries to line up alternatives to the Middle East nations that supply most of its oil, and tries to ensure that tanker choke points like the Strait of Malacca become less strategic.
And with major potential supplier Russia now having spurned China by deciding to route its East Siberia crude oil export pipeline to the Pacific coast rather than to China, that search for oil seems sure to intensify.
In November, Chinese President Hu Jintao signed off on Latin American investments covering some US$100 billion.
In return for the investments, the Latin American countries have invited China to be future partners in a range of oil and gas exploration ventures and other energy and non-energy related projects as they try to lessen their trade dependence on the U.S.
Venezuela Looks To The Pacific
Take Venezuela as an example. Late in December Caracas and Beijing cemented several sizable deals to reinforce energy cooperation.
Chinese companies agreed to invest $350 million in 15 oil fields in eastern Venezuela, along with $60 million in a gas venture, and to import 120,000 barrels of Venezuelan fuel oil a month.
On his return from his end-year trip to China where those agreements were signed, President Hugo Chavez then turned his attention to Panama. He's now trying to convince Panama to accept a proposal for a pipeline to pump oil through to the Pacific, which would cut shipping costs to China.
Also, recently Argentina and China signed cooperation deals that could see up to $20 billion in investments over the next decade in railways, oil and gas exploration, and construction projects.
In Brazil, the Chinese President signed 11 bilateral agreements, including planned investment of $10 billion in energy and transportation in the next two years.
China is also a growing trading partner of Peru, Ecuador and Mexico. Mexican trade officials have said they see China as a potential growth market for, among other things, their oil and cement exports.
China's increasing involvement in the America's coincides with growing doubts in the region over U.S. unilateralism and the increasingly left-wing tilt in the political complexion of South American governments.
But the nations signing up to energy deals with China have been quick to add that cooperation with China won't come at the expense of reduced oil exports to the U.S.
Even so, China is offering nations across the Americas with new markets and new sources of funding, along with other opportunities they didn't have in the past, thanks to its booming economy and thirst for imports.
And there is another aspect to China-U.S. energy relations. In the years ahead, both are going to be competing hard to line up supplies of liquefied natural gas to feed the LNG terminals both are building along their sides of the Pacific coast. But that's another story.
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