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Is China too old to get rich?

In March, Chinese Premier Li Qiang announced an ambitious economic growth target of 5% for 2024.

In a subsequent commentary, former World Bank chief economist Justin Yifu Lin endorsed the government’s target, predicting that China’s economy will grow at an average annual rate of 5-6% over the next decade, before slowing down between 2036 and 2050 slow down to 3-4%. Lin also suggested that China could reach high-income status by 2026, if not 2025. Given China’s bleak demographic prospects, this seems highly unlikely.

Lin notes that 26 countries had less than half the gross domestic product per capita of the United States when their populations began aging. He argues that as these countries continued to improve their economies after this point, so can China. The World Health Organization defines the beginning of an economy’s aging phase as the point at which the share of people over 65 exceeds 7% – a demographic milestone that China reached in 1998. By 2023, the share of Chinese over 65 had risen to 15.4%. Historically, no country has managed to achieve 4% growth over the following twelve years, even though older people made up 15% of the population. The average growth rate for the high-income countries during this period is only 1.8%.

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