1 Introduction

The People’s Republic of China (PRC), the world’s second largest economy, is faced with high-speed population ageing and a shrinkage of its domestic labour force. This aggravating demographic trap of China’s economy is closely intertwined with regime stability and regime persistence—as the one-party state heavily relies on growth-based output legitimacy and positive economic performance. To re-stabilize the system and to secure the survival of the one-party regime, China’s political elites have hence intensified their efforts to steer the Chinese economy towards socio-ecological sustainability, reflecting the changing domestic demographic dynamics. New policies have been issued to build a modern social insurance system with a strong focus on elderly care.

This chapter assesses the past developments and prospective future trends of China’s changing population pyramid(s) and critically discusses the countermeasures and reform policies launched by the central government in Beijing. This is done by reflecting the policies and instruments used by the political elites in Beijing to secure strategic majorities for their revised development roadmap. The political elites have to deal with a widening gap between rural and urban areas as well as with severe developmental disparities between the flourishing coastal areas and the remote, less developed Western provinces. Furthermore, they have to calculate the development of the Special Administrative Regions (SAR). The chapter hence includes three case studies on population change in the PRC’s two SARs, Hong Kong and Macao, as well as in Taiwan. These three local societies and their labour markets are closely intertwined with the mainland and directly affected by Beijing’s labour market reforms and updates to the country’s general development blueprint. The chapter concludes with some reflections upon Beijing’s efforts to stabilize or even to increase China’s economic power despite demographic changes via intensified interactions with the global system. These efforts, as this chapter argues, have to be read in the light of the refined re-stabilization and re-legitimation strategies of hybrid authoritarian systems. While, for quite some time, economic crises (and the demographic trap might all too easily trigger a major one) had been seen as main drivers of regime transformation, the Chinese case evidences that the Chinese one-party state has, at least so far, successfully managed to launch and to justify major reforms in times of stability and prosperity via the active coining of ‘crisis narrations’.

2 The People’s Republic in the Post-Mao Era: Constructing a Modern Socialist Society

The PRC’s 2010 National Population Census documented a rapid ageing of China’s population (National Bureau of Statistics of the PRC, 2011) in combination with a declining population growth rate. For the years 2000 to 2010, average population growth was about 0.57%. By contrast, during the Maoist years (1950s to 1970s), China’s population rose from 450 million people in 1949, the founding year of the PRC, to 695 million in 1964 and, finally, 1.3 billion people in 2010 (Peng, 2011). The focus of the Maoist years had been on ‘great leap’ modernization and industrialization relying on China’s incessantly growing workforce—population growth was hence neither controlled nor restricted. Even the ‘failures’ of Maoist mass campaigns, such as the Great Leap Forward (triggering a devastating famine in the 1960s) and the Cultural Revolution (1966–1976), causing millions of deaths, did not result in any visible decline of China’s population growth rate. In sum, the overall mortality rate declined while life expectancy almost doubled.

Centrally coordinated family planning in China via the one-child policy was only introduced in the late 1970s, i.e. towards the end of the Mao era, to serve the building of a modern, educated Chinese ‘socialist’ society. China’s total fertility rate went down from 5 in the 1950s to 1.5 births per woman in the late 1990s. The one-child policy, infamous for forced abortions and severe financial sanctions in case of non-implementation, did, however, not apply to all groups of Chinese society. National minorities were allowed to have a second child; population growth in rural areas was partially beyond the direct control of the party-state. China’s rural society still favoured having male heirs, as only these were seen as increasing the family’s workforce and, traditionally, the worshipping of the ancestors can only be done by the family’s sons. Pre-birth sex diagnosis thus led to abortions of females and caused a severe gender imbalance. The nationwide sex ratio at birth shifted from 104.88 in 1953 to 118.06 in 2010 (National Bureau of Statistics of the PRC, 2011).

Nonetheless, China’s family planning and top-down steering of the society have brought positive effects such as a deep rise of the people’s general level of education. The illiteracy rate dropped from 33.6% in 1964 to 4% in 2010—and, documenting a noticeable increase of people’s welfare, GDP per capita rose from 528 Renminbi in 1982 to more than 64,640 Renminbi in 2010 (National Bureau of Statistics of the PRC, 2011; World Bank Data, 2018). In spite of that, the long-term negative side-effects have also become visible: as a rapidly ageing society, China will suffer from a lack of labour force to maintain its economic growth and will also have to cope with the insufficiency of the social pension systems and healthcare service that is, following the abolition of Mao’s ‘iron rice bowl’ (job security and free access to social insurance granted by the party-state) pattern, still undergoing tremendous restructurings (Hu, 2012). The dependence of the non-working retired older generation on financial support from their family members implies that one child has to sustain two parents and four grandparents (in the Chinese debate referred to as the ‘4-2-1’ dependency dilemma). This puts a lot of pressure on the shoulders of the currently working generation and also explains the additional efforts taken by parents to secure the best education for their child—as his/her career will decide about their own past-retirement lives. In the long run, the shortage of available labour force and the financial pressure on the younger generation might cause a steep interruption of China’s impressive economic performance of the past few decades (Eggleston et al., 2013). While in 1953 only 4.4% were over 65 years old (Sun, 1998: 4), in 2010 they accounted already for about 9% of China’s population (Statista, 2020). In 2017, 71.8% were aged 15–64 years and 11.4% fell into the age group of 65+ (Statista, 2020). The prospective negative effects of these demographic changes will be unevenly distributed among China’s regions and provinces. The overall dependency ratio (number of people aged 0–14 or above 65 related to the number of working people, i.e. aged between 14 and 65) for major cities and modern industrialized provinces is much lower than in the still rather underdeveloped remote Western and Central China provinces (Wang, 2006).

Projections that did not yet calculate the possibility of an abolition of China’s one-child policy predicted that China’s population would reach its peak in 2026, before rapidly declining in number from 2030 onwards (Cai, 2013). However, even calculations taking into account the revised policy that allowed couples of one-child families to have two children forecasted a decrease in China’s populace before 2050 (Liu et al., 2016). Finally, in 2016, the PRC’s one-child policy was officially substituted by a two-children policy (Zhang, 2017). However, the long-term effects are difficult to predict. In 2017, the Chinese state media even stressed that the ageing of the Chinese society should not be seen as the direct outcome of the Maoist one-child policy (Renmin Ribao, 2017). By constructing a causal relation between the population changes in China and the trends in other post-industrial societies, the Chinese Government prevents the emergence of civil society debates on the negative aspects of the late Maoist era and the early period of reform and opening after 1978, which would indirectly also question the legitimacy of the Chinese Communist Party’s (CCP) one-party rule. In fact, the ageing process in those parts of ‘China’ that were not governed by Beijing’s birth control regulations—i.e. Hong Kong, Macao and Taiwan—is similar or, in some regards, even faster and more severe than the one of the mainland Chinese societies.

2.1 Macao

According to the data published by the Statistics and Census Service of Macao, the Special Administrative Region’s local population has already entered the stage of an ageing society (Statistics and Census Service of the Government of Macao, 2018). At the same time, however, the official number of registered inhabitants is increasing. While the 2011 census reported a total number of 552,503 registered inhabitants (+26.5% compared to 2001), in 2016 the official population number amounted to 650,834 people (an increase of 17.8%) (Statistics and Census Service of the Government of Macao, 2016). As main drivers, the 2016 census survey identified the growing number of (labour) migrants as well as positive birth rates. Even if one excludes non-permanent residents and exchange students (the 2011 census listed 62,304 non-resident workers plus 4,944 foreign students, i.e. 12.2% of the total population), the number of local people witnessed a growth of around 10% from 2011 to 2016. However, in 2016, the percentage of people aged 65 or above reached 9%. According to projections, the age group of 65+ is expected to increase to almost 20% of the total local population in 2031 due to declining birth rates, which had peaked in the mid-1980s, and higher life expectancy (Statistics and Census Service of the Government of Macao, 2018).

Refugee waves during the Second World War, Chinese people returning from Southeast Asian countries, especially during times of anti-Chinese sentiments and actions, and the influx of people from Europe and the US attracted by Macao’s casino sector and related businesses also had an impact on the composition of local society. Beyond these partly international migration waves, after the partial economic liberalization triggered by the CCP’s Third Plenum’s decisions on reform and opening-up (gaige kaifang) in 1978, there was also a high inflow of people from mainland China who got granted local resident status by the local administration. While these groups caused a temporal increase of Macao’s economic performance, they will also pose a major challenge to Macao’s social insurance and healthcare system. The handover of Macao from Portuguese control back to China in 1999 caused further demographic shifts, as parts of Macao’s external administrative elites as well as their local cooperation partners decided to leave Macao due to the uncertainty of the area’s future socio-economic and political development (Leitão, 2013).

Given Macao’s history, it is no surprise that the major share of the local population is Chinese. In 2009, a new policy by the administration of Macao granted full residence rights to children of people from Macao born in mainland China, which further changed the demographic scenario. The second biggest community used to be Portuguese; however, the 2016 census depicted a new scenario, according to which 4.6% of residents born outside Macao originated from the Philippines, a rise by 98.3% compared to the 2011 census, followed by people from Vietnam (2.4%, equalling an increase by 123.4%). Portuguese people only counted for 1.8% of Macao’s locally registered society in 2016. The proportion of people born outside Macao is obviously comparatively high, amounting to roughly 60% (Statistics and Census Service of the Government of Macao, 2016).

Given Macao’s special status, the unemployment rate is comparatively low (1.9% in the fourth quarter of 2017). The total number of working people—375,900 (in late 2017)—also indicates that Macao is, at least so far, not suffering from a shortage of labour force. In 2017, a total number of 179,456 non-resident labour migrants were officially registered (given the shadow sector of the gambling industry, the real numbers might be even higher). The net outflow of labour force in 2016 got substituted by a net inflow of 3,800 people in 2017. The gender ratio is almost balanced (47% male inhabitants; 53% female inhabitants), at least compared to mainland China. 10.5% of the registered people belonged to the 65+ age group. The majority of Macao’s current population, around 77%, however, are aged 15–64. This seems to be the combined effect of high birth rates during the mid-1980s, influx of labour force from mainland China and the neighbouring Asian countries—as well as the internationalization of Macao’s economy (though the group of international entrepreneurs and employees is most likely to leave the area after a rather short stay at one of the local branches of international companies and banks based in Macao). The elderly dependency ratio is hence slightly mounting (2016: 12.7%; 2017: 13.7%). However, one should also keep in mind that the interim rise of the adult generation had caused a partial relaxation of the situation: in 2011, the median age was between 37 and 38 (not calculating non-permanent migrant workers and exchange students). The local share of the elder population displays an extreme geographic variety; it is rather high in the remote islands of Macao and relatively low around the financial and touristic centre. According to the government’s official demographic projections, the number of inhabitants is expected to rise to 793,600 by the year 2036 with the group of people aged 65+ amounting to almost 25% (2016: 10–12%, depending on the data sets analysed). The median age might rise to 46 (Statistics and Census Service of the Government of Macao, 2018).

The Government of Macao responded to these projections by revising the official migration policies and by encouraging the idea of active ageing, including the idea of a postponement of the retirement age and of opening new jobs and activities for the elder generation. In addition, the administration has reformed the insurance sector by promulgating a central provident fund system (Tang, 2017).

2.2 Hong Kong

In 2017, Hong Kong had a registered population of 7,391,700 people (Hong Kong Census and Statistics Department, 2018). From 1996 to 2016, the proportion of Hong Kong residents aged 65+ increased from 310,357 to 1,163,153 (+36.4%) (Hong Kong Census and Statistics Department, 2016). The share of the 65+ group increased from 12.4% (2006) to 15.9% (2016). The elderly dependency ratio rose from 14.2 to 21.8. Projections predict that one-third of Hong Kong’s society will belong to the group of elderly people beyond the official working age around 2040. Also, the share of people aged 80+ is growing: in 2006, 204,148 registered citizens fell into this category; in 2016, their number was reported as having reached 340,249.

The rapid ageing of Hong Kong’s society accelerated after the handover of the former British protectorate to (the People’s Republic of) China in 1997 (Chan & Philipps, 2002). From 1961 to 1991, Hong Kong’s population increased at an annual average rate of 2.5%. During the 1960s and 1970s, this was driven by rising fertility. Following the reform and opening-up process of the Chinese mainland, population growth in the late 1970s and early 1980s was mainly due to the waves of illegal Chinese migrants. In 1991, about 60% of Hong Kong residents (3 million people) were British; 34% belonged to the group of Chinese (Census and Statistics Department Hong Kong, 1991). The 1991 Census report (Census and Statistics Department Hong Kong, 1991) documented a total population of 5,674,114 people (also counting 151,833 residents temporarily away from Hong Kong). Population growth was reportedly slow (around 1%). At the same time, Hong Kong’s population was already ageing: The 1981 census calculated a median age of 26; the 1991 census already listed a median age of 32. The sex ratio also witnessed some changes: For the age group 25–44, it declined from 1,223 (1981) to 1,028 (1991). This trend, which is still continuing, seems to be due to the inflow of female service personnel (especially from the Philippines and Thailand) and the partial outflow of high-skilled male labour force (Skeldon, 1995).

According to projections (Hong Kong Census and Statistics Department, 2017), Hong Kong’s population is expected to reach its peak around the year 2046. Despite the rather high life expectancy of Hong Kong residents, the declining population rates will be due to low birth rates and natural death rates among the group of elderly people (80+). Even though the One-Way-Permit allows the reunification of families in Hong Kong by legalizing immigration of spouses and children based or born in mainland China (HKSAR Immigration Department, 2015), in the long-term perspective, the general number of this group of ‘migrants’ entering Hong Kong is expected to drop significantly (see also Table 1), which indicates a rapid ageing and shrinking of Hong Kong’s populace over the next two decades. In the next 50 years, according to projections, Hong Kong might be going to lose 14% of its labour force.

Table 1 Hong Kong: demographic projections
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Due to the lack of a universal common social insurance network, about one-third of Hong Kong’s elder inhabitants live in poverty. In addition, there is a shortage of nursing home places; the service sector for Hong Kong’s ageing society is completely underdeveloped (Flynn, 2016). In 2014, the Elderly Commission of Hong Kong hence published an Elderly Service Plan (Elderly Commission Hong Kong, 2014) stressing the idea of community-based service provision.

Hong Kong, since the handover of 1997 a SAR, officially falls under the principle of ‘one country, two systems’, which implies that Hong Kong is allowed to have its own capitalist economic system structures and a multi-party system—superseded by the one-party regime based in Beijing. In connection with the handover process, further elements of future democratic participation got written down, especially targeting the elections scheduled for 2014. The perceived interference of the central government in Beijing finally fuelled the so-called umbrella revolution that joined forces with Hong Kong’s Occupy Central initiative. The largest share of people joining the protests was aged between 18 and 29 (60.7%), while less than 1% of all demonstrators were aged 64+ (Yuen & Cheng, 2015). Surprisingly, at least at a first glance, most people did not protest driven by the fear of losing previously held rights and freedoms, but rather by the feeling of uncertainty regarding their future. Exploding housing costs, perceived lack of upward mobility chances, and the silent decline of Hong Kong’s special status as capitalist financial zone and renminbi hub are, in retrospect, identified as core drivers of mass mobilization (see also: Bush, 2014). Nonetheless, in general, the struggle for universal suffrage has become a symbol for political reform of Hong Kong, including the socio-economic sub-sectors and the labour market. Some researchers have also identified the fear of losing the specific Hong Kong identity and of being sold out to mainland Chinese companies as a main determinant of local contestation movements (inter alia Yam, 2020).

The government in Beijing seems to calculate this point. Although the comprehensive reforms passed by the Third Plenum of the Chinese Communist Party’s Central Committee in 2013 include the partial liberalization of renminbi trade outside Hong Kong and the formation of free trade pilot zones in mainland China, the 13th Five-Year Plan still acknowledges Hong Kong’s special status and its contribution to the PRC’s overall economic and financial importance. The New Silk Road (OBOR/BRI) China is constructing is hence presented not as a connectivity network bypassing and outplaying Hong Kong, but as part of China’s going global strategy that still relies on the corridor functions of its SARs and their connections with Europe (NDRC, 2016).

2.3 Taiwan

According to the official statistics, by 1993 Taiwan has reached the stage of an ageing society and is expected to turn into a hyper-aged society by 2025 (Republic of China National Statistics, 2018). In February 2017, Taiwan’s official statistics documented an ageing index of 100.18. The index relating the ratio of people aged 65 or above to the number of people under the age of 15 displays that the number of older people has started to exceed the number of Taiwanese youth. This is partly due to the uneven generational pyramid caused by the influx of mainland Chinese Guomindang officials and of members of the Republican Army after their defeat by the Chinese Communists in the late 1940s. By 2060, the Taiwanese population is expected to amount to less than 20 million inhabitants equalling a decrease of about five million people. Since 2013, the number of people in their working age has started to decline (Taiwan National Development Council, 2016).

This is also illustrated in the population pyramids (see Fig. 1), which document increased population growth due to migration waves from the mainland, but also a general stagnation and shrinking of the local population over the past 20 years. Taiwan, already classified as an ‘aged’ society, is going to become a hyper-aged society in the near future—if the current trends continue and if demographic change is not actively compensated via a formal legalization of immigration.

Fig. 1
figure 1

(Note Males are to the left [black], females to the right [grey]. Source Computations by Richard Cincotta)

Population pyramids of China, Taiwan, Hong Kong SAR, Macao SAR

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The main reason for this development is seen in the changing career paths and value orientations of Taiwanese women leading to later marriage and an overall decline of Taiwan’s fertility rate. Societal change and modernization are hence the main drivers of demographic change. To prevent an implosion of Taiwan’s pension systems, local political elites are debating the idea to lift the pension age added by models of part-time retirement. Moreover, the Taiwanese economy has discovered the platinum society as a new consumer group for which they are offering not only special elderly care services but also entertainment programmes. In general, as a counterstrategy, Taiwan focuses on ‘active ageing’ (Chen, 2010; Lin & Huang, 2016).

Labour migration is also discussed—so far, as the Sunflower Protests against the implementation of the service sector pact as agreed to by the Economic Cooperation Framework Agreement (ECFA) between the two sides of the Taiwan Strait clearly evidences, large groups of the Taiwanese society are more than afraid of seeing their country flooded by “cheap” labour forces coming from the Chinese mainland and of being dominated by Chinese firms entering the local service sector (Ho, 2015). Finally, however, the above-sketched development in the mainland Chinese economy and society might imply that the party-state’s authorities might be willing to provide novel incentives to direct labour migration to the PRC’s own industrial and urban sites rather than accepting a brain-drain and “outflow” of skilled labour forces.

3 CCP Counter-Measures: Post-2013 Top-Level Coordination

In 2013, the 60-point reform package passed by the Third Plenum of the 18th Central Committee responded to the gloomy predictions of China’s economic performance and global competitiveness by formally turning to a two-child policy. In the long run, this might lead to demographic stabilization at a much lower level than in 2013 but could definitely not counter the already started shrinking and ageing of China’s current labour force. Surveys conducted in Chinese cities even document a widespread averseness to having more than one child: the costs of raising up a child and paying for its school education are extremely high. Many couples could hence not afford having a second, if the state does not launch any initiatives to lower these costs or set financial incentives. Furthermore, housing and daily life have been designed to serve the needs of families composed of three. Future construction planning would hence also have to be adapted accordingly. Finally, however, modern societies do often display low fertility rates. And the PRC might not be an exception, especially given the fact that birth rates started to decline already before the official introduction of the one-child policy. Central family planning might have accelerated this trend, but is not its sole cause. Following these survey data showing a preference for one-child families, one might be tempted to suggest a general lifting of any birth control and family planning to stop the ageing of China’s society. However, one should not forget that central family planning was accompanied by the setting up of bureaucratic institutions supervising its implementation (Kaufman, 2003; Scharping, 2003). Abolishing these would trigger not only a rise of China’s unemployment ratio, but also fuel tensions between the central party elites and the local bureaucracy which might all too easily facilitate a cascading system crisis.

The recent legalization of China’s ‘informal’ population (Gordon, 2015), i.e. second- or third-born children whose existence has not been officially documented to evade penalties, another measure to secure the market’s supply with labour forces, will most likely not solve the demographic dilemma. Informally, these people are already contributing to China’s economic growth. To count this group into the official labour statistics would hence not change the overall picture of demographic crisis. However, the legalization of this group would at least endow them with more citizen rights. So far, they did not have any formal contracts or access to social services. As people without any ID card, they were neither allowed to rent an apartment nor to marry. Nonetheless, as most of them did not have access to higher education, they are normally only employed as unskilled workers trained on the job.

Another precarious group is China’s floating population, i.e. labour migrants that enter the industrial areas in search of work. Although this group did not only facilitate the PRC’s high-speed economic growth, but also helped to maintain the quality of life of China’s urban population at a rather stable level, these labour migrants were deprived from the modernization benefits of the cities they worked in. Officially, rural-urban migration is still restricted by the household registration system (hukou). Introduced in 1958, the hukou system was a core steering element of China’s socialist command economy, as it allowed the control and restriction of rural-urban migration. The Maoist hukou system was decisive for people’s access to grain ratios, housing and public services (Chen & Selden, 1994). Following the opening up and reform of the Chinese economy by the decisions of the Third Plenum in 1978, the state-owned, centrally managed economy was supplemented by capitalist market elements—first restricted to only select sectors and local experimental zones. Given the need for additional labour forces in the country’s booming economic centres, labour migration was silently accepted. Yet the hukou system, dividing people into rural versus urban inhabitants, remained in place and hence blocked migrants’ access to social services in areas outside their official hukou domain. Since the 1990s, the registration system has gradually been reformed by the introduction of temporary urban residence permits, added by the revision of the law(s) on custody and repatriation (as a response to widespread criticism regarding the infamous Sun Zhigang incident in 2003)Footnote 1 (Chan & Buckingham, 2008).

At the National People’s Congress in March 2013, then outgoing Chinese Prime Minister Wen Jiabao openly requested a speeding up of hukou reform. This was taken up by the Third Plenum in November 2013 and further pursued by the Xi-Li administration. One year later, on 4 December 2014, the Legal Affairs Office of the State Council published a draft for the incremental relaxation—and in the long run abolishment—of the hukou registration system via easing the regulations for small- and medium-sized cities and towns (Guan et al., 2016). In December 2015, this was followed by a reform proposal that would reduce the time a rural migrant would need to have lived and worked (and paid social insurance fees) in a city before being allowed to apply for urban residence permit down to six months. The hukou regulations of China’s megacities such as Beijing or Shanghai, by contrast, remain generally based on a point system (Zhang et al., 2016: 60)—thus allowing the recruitment of high-skilled labour force.

The 2013 reform plan came with reform policies that facilitate rural-urban migration not only with regard to the granting of urban hukou status, but also with regard to land use rights. New regulations include the right to lend or sell land use rights, so as to provide China’s rural migrants with a financial basis that enables them to start an “urban” career.

The hukou system generally enforces a socio-economic segregation of China’s rural versus urban inhabitants. In 1997, the Urban Employees’ Pension Programme was initiated to provide social insurance services for urban workers, excluding, however, government and state employees. The contribution rate to this programme varies across China; the central government recommends a general rate of 28%, of which about 8% should be paid by the employee. The final monthly rate upon retirement depends on the years an employee contributed to the pension programme and the calculated average wage upon retirement. Monthly rates can later on be adjusted depending on changing average wages and price levels. In addition, in 2009, the government launched two voluntary programmes, the National Rural Pension Scheme and the Urban Residents Pension programme, for people aged 16 or older without regular employment. Some cities have merged these two programmes and provide social insurance without differentiating between people’s formal rural or urban registration. While for provinces located in the central and western regions these programmes are financed by the central government, for the more prosperous eastern provinces, the system is co-financed by the central and the local government. For government officials, party cadres and the military, pensions were paid out of the state’s general revenues. The benefits and final monthly rates provided by this separate pension system are much higher than those from the public programmes outlined above (Pozen, 2013). The PRC’s 13th Five-Year Plan put forward the goal of setting up a unified pension system until 2020 (China Daily, 2014), seeking to overcome the divide between rural and urban social service provisions. The main driver behind these increased efforts to establish a nationwide, unified system is the perceived demographic trap in combination with rising social inequality. As China’s society is rapidly ageing, solutions for the elderly care sector are urgently needed. Especially as the perceived weakness of the social insurance systems creates an atmosphere of uncertainty and might trigger a decline of diffuse regime support. Community-based and informal elderly care structures “supplement the traditional family care and […] fill in the gaps between needs and the care that the government is unwilling and the family is unable to provide” (Xu & Chow, 2011: 380). Nonetheless, these informal patterns can only provide an interim solution—they often function as ‘self-help’ systems, especially in those regions characterized by large-scale outflow of the younger (working age) generation. Finally, as neither the partial relaxation of the hukou system and the legalization of rural-urban labour migration nor the abolition of the one-child policy will suffice to counter the approaching demographic trap, the Chinese Government is heavily investing in e-health innovation and AI-based (artificial intelligence-based) elderly care to substitute human labour force by self-learning systems and robots (Lee, 2018).

4 Narrating and Framing the Reforms

To win people’s support for the re-steering of the Chinese socio-economic system structures, the central government in Beijing is operating with strategic ‘crisis narrations’.Footnote 2 A closer look at the CCP’s governance strategy reveals that narratives of ‘crisis’ are proactively coined to facilitate policy reform and institutional adjustments. The current restructuring and reorganization of the PRC’s national pension system , which abolishes the privileges of state officials and eliminates the division into rural versus urban inhabitants, is presented as a necessary element of the final stage of China’s post-revolutionary state-building process. In line with the demands and expectations of the ‘New Left’, the government claims to re-strengthen social justice and social equality. Addressing the business sector and targeting China’s neoliberal camp, the reforms also include new liberties for private insurance companies, hence providing new opportunities for Chinese investors. Given the experimental, ‘anything goes’-approach that characterized the PRC’s early reform period, the substitution of old, inherited institutions and the establishment of a nationwide social security net are logical steps in China’s still unfinished state-building process. By combining these general restructuring tasks with the communicated reform needs caused by the identified demographic trap, the political elites manage to present the re-steering of the economy not as a correction of past errors, but as a response to a challenge that many post-industrialized systems are facing—not just those falling into the category of socialist one-party states (Noesselt, 2018).

At the same time, as China’s development is directly intertwined with the ups and downs of the world economy, the Chinese Government is working on roadmaps to diversify export markets and trading routes to be less vulnerable to turbulences and crises in other world regions. In this vein, China’s political leaders have re-activated the narration of ‘national rejuvenation’, whose origins can be traced back to the years of the infamous Opium Wars of the mid-eighteenth century. The narrative of a re-ascent to global power and status has been used by all generations of Chinese political leaders since the late Qing Dynasty. The reference to the traumatic experience of having been colonized and controlled by external powers is strategically used to win support for China’s ‘going global’ initiative and the ‘New Silk Road’—as the dream of rejuvenation is shared by almost all groups of the Chinese society despite their internal socio-economic cleavages and tensions.

Moreover, given the overcapacities of the Chinese economy, the CCP government seeks to strengthen its ‘going global’ efforts. The ‘New Silk Road’ initiative is not only an attempt to diversify the PRC’s import and export corridors, but also a strategy to stabilize the Chinese domestic economy via outsourcing and subcontracting (Summers, 2016). Chinese enterprises and companies have started to establish production sites overseas, preferably in less developed regions on the African and the Latin American continent. This might allow China to secure high-speed, stable economic growth despite demographic change. However, the construction of the ‘New Silk Road’ and the further internationalization of the Chinese economy—via the opening of free trade pilot zones and the internationalization of the Chinese renminbi—have implications for the economies of the Chinese SARs and Taiwan. As a response to growing negative reactions to Beijing’s refined development strategy in Hong Kong and in Taiwan, the political elites and their advisers are trying to co-opt local business elites and civil society by stressing the positive spill-over effects of the PRC’s growth model. However, as the anti-Beijing protests in Hong Kong (Umbrella Movement) and the Sunflower Protests in Taiwan evidence, there is a remaining and even growing fear of an economic take-over by mainland Chinese companies.

Furthermore, as China is heavily investing in AI innovation—see the strategy paper published by the State Council in July 2017 which is guided by the idea to establish the PRC as the global leader in AI by the year 2030 (State Council, 2017)—the long-term plan also includes the setting of new global standards based on Chinese AI technologies. Given that the PRC is running several large-scale experiments in AI-based social governance—including e-health, e-mobility, smart cities, e-government—these AI solutions might include features that could also be adapted by other post-industrial societies. Hence, investment in AI-based elderly care solutions and e-health might, first of all, focus on domestic needs of the Chinese ageing society. Moreover, as a general response to the anticipated ‘demographic trap’ and its impact on the Chinese national economy, the PRC has also started to encourage research and development in the fields of Industry 4.0 and robotics. Over the past few years, fully automated factories have been set up; large parts of industrial production now rely on intelligent robots (Forest, 2015).

As a second step, however, Chinese companies, supported by the central government, might offer their AI solutions on the global market and, potentially, at a much lower price than the solutions offered by US and European companies. This means that the lurking demographic crisis has an unexpected effect on the PRC’s innovation strategy: Solutions developed in China to face negative socio-economic side-effects of high-speed post-industrial development might be exported to other world regions and will increase the global competitiveness of the Chinese economy.

5 Conclusions and Outlook

The focus of the centrally controlled steering of the Chinese population during the Mao era had been on socialist modernization and development. The following introduction of the one-child policy in the late 1970s served the goal of fighting absolute poverty and setting up an educated well-off socialist society. In a relatively short amount of time, China transformed itself into the world’s second largest economy and stands out of the group of developing countries in terms of the level of education (especially regarding alphabetization) of its society. However, the operationalization and implementation of the one-child policy did not reflect the long-term effects. The top-down organized shrinking of the Chinese society causes a severe decline of domestic labour force—hence, sooner or later, reducing the PRC’s global economic competitiveness and causing trouble for China’s weak social insurance and healthcare system. While the economies of China’s SARs Hong Kong and Macao have always relied on the influx of international capital and labour force, China’s mainland economy was (and is) a rather closed system. Modest reforms are in the making, including the setting up of pilot zones for free trade and increased efforts to further internationalize China’s economy. Migration policies, however, prioritize internal urban-urban or rural-urban labour mobility.

Beijing’s ‘New Silk Road’ initiative seeks to establish a global connectivity network of transportation corridors and trade hubs. China is trying to export domestic overcapacities by securing international contracts for Chinese companies in the fields of infrastructure, telecommunication and grid architecture. In the long run, given China’s demographic development trap, the New Silk Road—if successfully realized—would also allow China to hire additional labour force along these transportation lanes and to outsource resource-intense production. First steps in this direction have been made by China’s textile and shoe manufacturing companies which have started to set up production branches in Africa and Eastern Europe (primarily in non-EU member states). This, however, does not solve the accelerating lack of labour force in the service sector, especially regarding the support of China’s aged and hyper-aged society. Due to internal labour migration, many villages and small towns are mainly inhabited by old people and ‘left-behind’ children. The elderly care and healthcare sector are often underdeveloped; given the absence of the parent generation, the family-based care system does no longer function.

To establish an all-encompassing social insurance system, China would have to increase its taxes. This, however, would mainly target the middle- and upper-income classes—and hence destabilize the fragile symbiotic relationship between the party-state and the business elites (Dickson, 2016).

The top-down steering of population growth has triggered a rapid ageing process before the PRC could even enter the stage of a stable well-off society. The modernization process in ‘Western’ societies took longer and did hence not result in a similar instantaneous overheated hyper-ageing process. While Beijing’s counter-measures mainly target the mainland Chinese socio-economic structures, including the insurance and elderly care sector, Hong Kong, Macao and also Taiwan have to calculate the impact of Beijing’s reform initiatives on their local labour markets and the composition of local inhabitants. Given the demographic transition in mainland China, new monetary incentives might be launched to steer the flows of skilled labour force in the direction of China’s mainland industrial centres to secure the maintenance of the urban living standards and to prevent a downturn of economic growth. These incentives might trigger an outflow of labour force towards the mainland, which implies that the ageing process in the two SARs and Taiwan would further accelerate. In addition to competition for talents and trained labour force, driving the waves of internal labour migration in new directions, campaigns might be launched to recruit labour force from the neighbouring countries or to further outsource parts of the production process. Finally, given that a pension system based on a contract between two generations would be bound to fail, due to the demographic imbalance, private insurance packages and state-sponsored programmes will most likely be expanded—with unpredictable implications for the configuration of the Chinese variety of capitalism and the power relationship between state-owned companies and the private business sector. Innovative approaches also include the opening of the Chinese insurance service market for (private) foreign companies, so far, however, restricted to select special pilot zones.