How the Belt and Road Initiative could support an ageing population

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Alpen Sheth, Senior Technologist, Mercy Corps Ventures

• China’s Belt and Road Initiative (BRI) could facilitate unprecedented levels of cooperation between East and West.
• Despite very different demographic histories, China and Europe currently share the challenge of an ageing population.
• The BRI could enable the two regions to empower the elderly through healthcare innovation, training and infrastructure.

Over nearly a decade, the steppe surrounding Khorgos, the border town between China and Kazakhstan, has been transformed as China builds the hub of the New Silk Road. The world’s largest dry port, part of the Belt and Road Initiative (BRI), is rapidly becoming China’s gateway to Western Europe.

There have been many criticisms of the BRI, particularly of its environmental impact. And yet hubs such as this could become gateways to unprecedented levels of exchange and fusion between the Chinese and European cultures and economies. The BRI, adopted in 2013, is not just an economic development strategy: it strives to build multilayered and multilateral partnerships with the countries along the Silk Road, hoping to achieve, according to Xi Jinping, “policy, infrastructure, trade, financial, and people-to-people connectivity”.

One urgent challenge that China and Europe share is that of an ageing population, increasing healthcare costs and a growing number of people depending on the workforce. The ageing society will significantly affect the development of social economies and healthcare systems in both regions. There are several ways in which the BRI could help to address this.

The current demographic situation

China is one of the fastest-growing major economies. However, it is also one of the fastest ageing nations. In 2017, 250 million people (almost 18% of the Chinese population) were older than 60, rising to 258 million in 2019. Due to increasing life expectancy, shifting priorities in families and the long-lasting after-effects of the One Child Policy, such as a low birth rate and a high dependency ratio (the ratio of the number of dependents to the total working-age population), the proportion of elderly in the Chinese population will continue to rise in the forseeable future.

In the EU-27, meanwhile, the number of people aged 65 years or more will increase significantly in the next three decades, rising from 91 million in 2019 to an estimated 130 million by 2050, despite a growth rate of only 0.18% in 2019.

Implications of an ageing population

The age of a population, and thus its population structure, influences everything from its consumer preferences to its risk aversion, from the labour force system to pension reimbursement pressure and real estate demand. For instance, from 1970 to 1995, social benefits in the EU accounted for almost two-thirds of its increase in total government expenditure relative to GDP.

The ageing of the population will have an impact on the labour supply ratio. In 1999, the share of the over-45s in the active labour force was 24%, up from 19% in 1990, and it will reach 37% by 2040. In the absence of careful planning and preparation, this will put a strain on healthcare systems.

Cooperation between China and Europe

Despite very different demographic histories in Europe and China, both ends of the Silk Road face similar demographic and socio-economic challenges related to their ageing populations. Their responses will have a significant impact on the future of both regions, and the BRI may be part of the solution.

An ageing population brings opportunities, as well as challenges. Older people are increasingly a target market for products and services, particularly in the area of healthcare. In fact, the proportion of a household’s income spent on healthcare annually increases with median household age, rising from 3.1 percent for the under-25s to 14.3 percent for the 75-and-older group. Healthcare innovation could be one way in which China and Europe address the problem of the growing dependency ratio. Future of Work

What is the World Economic Forum doing about including older people in the workforce?

There is a global myth that productivity declines as workers age. In fact, including older workers is an untapped source for growth.

The world has entered a new phase of demographic development where people are living longer and healthier lives. As government pension schemes are generally ill-equipped to manage this change, insurers and other private-sector stakeholders have an opportunity to step in.https://www.weforum.org/videos/promoting-an-age-inclusive-workforce-living-learning-earning-longer

The World Economic Forum, along with the Organisation for Economic Co-operation and Development (OECD) and AARP, have created a learning collaborative with over 50 global employers including AIG, Allianz, Aegon, Home Instead, Invesco and Mercer. These companies represent over two million employees and $1 trillion in annual revenue.

Learn more in our impact story.

A particularly relevant field is that of diagnostic and screening technology, essential to maintain a healthy ageing population. Focusing on prevention can minimise the use of expensive curative treatments, and therefore reduce healthcare expenditure. A focus on innovation in these sectors will benefit from a strong evidence-based social and economic policy. The BRI could facilitate international cooperation in this area.

A large and well-trained healthcare workforce is needed to support a healthy and active ageing population. Currently, 30% of EU physicians are 55 and older. Chinese and European governments should prioritise investments in healthcare training and healthcare infrastructure development. Incentivising commercial business development and investment in public-private partnerships is one way to improve the quality and scale of care and promote good health. The BRI could also provide one way to address both Europe and China’s severe shortage of healthcare professionals.