Demography is destiny: China will grow old before it gets rich

LONDON—In March, China’s 15th Five-Year Plan named two population problems: “population aging and the decline in births.”¹ Both problems are already reshaping the Chinese household. By 2036, 29% of households will have a child at home and 18% will be headed by someone over 65. Twenty years earlier, nearly half had a child at home and one in eight an older head. Those changes herald what the Plan calls the “silver economy”.¹ Behind that silver economy, China is quickly facing the same demographic threat that has plagued Japan since 1996, when people over 65 passed 15% of Japan’s population, the share China reaches this year. World Data Lab projects that by 2050 China will have the shape of Japan today, with about 31% of Chinese over 65, roughly Japan’s share. In 2026 that threat has taken the form of a fear that China’s workforce will shrink. Reuters wrote in January of “hundreds of millions of people set to leave the workforce”, the Financial Times of factories turning to robots ahead of labor shortages, and Nikkei Asia of rules to keep older people working past retirement age.² The same Reuters report added that China’s shrinking, aging population has complicated Beijing’s plan to lift domestic consumption. China will experience aging far worse than Japan has, because Chinese consumers are not rich enough. One Japanese in five was over 65 by 2005, a mark China will reach in 2032. At that point, Chinese consumers will spend per person about three-fifths of what Japanese consumers spent in 2005, at purchasing power parity. China will also have fewer people of working age, with the number of Chinese aged 15 to 64 falling by a quarter by 2050, from 990 million today to about 745 million, a 245 million person decrease. On the contrary, those 65+ will rise from 214 million to 390 million. This fall in the working-age population means that an increasing share of spending will be done by consumers who are not in the workforce. Today, one in seven yuan spent is by someone above the age of 65. By 2050, that will be one in every three yuan. Most of those older Chinese will live on modest budgets. How large will China’s older market grow, and where? Added together, those modest budgets will still make older Chinese a larger consumer market than almost any country. As a country of their own, older Chinese would by 2035 rank fifth among the consumer markets outside China, behind only America, India, Britain and Germany. There will be 313 million of them, spending $3.2 trillion a year, about $10,300 per person. In China’s big cities, those older customers are just beginning to form a large share of residents. Today, there are 212 cities in China with more than half a million residents. In only 7 of them do the 65+ individuals account for more than a fifth of the city’s population, a mark that Shenzhen (4%), Beijing (15%) and Shanghai (17%) all fall below. By 2040, 187 of those cities will reach that mark, including Beijing (26%) and Shanghai (30%). Twenty-five will stay younger, chief among them Shenzhen (7%), a city of young workers drawn from across China.³ Older Chinese will thus make up a large share of customers in almost every big city, Shanghai and Beijing included. Yet the big cities hold only part of China’s older market. Today, those 212 cities are home to a quarter of the country’s older adult population and under a third of what older Chinese spend. The rest of that spending lies in smaller cities, in towns and in the countryside. Half of the growth in spending by older Chinese to 2040 will come from the towns and countryside outside any city of 50,000 people or more. What will older Chinese have to spend? Whether in the big cities or beyond them, older Chinese spend from household incomes far below the rich world’s. By 2033, China will have 24% of its adults over 65, as large a share as America has today. At purchasing power parity, households in China will then have about $20,000 of income per person, against the $60,000 that Americans have now. Even by 2050, when China will be much older than America is today, Chinese households will have only about 55% of the income per person that Americans have now. So for at least the next quarter-century, older Chinese will shop on incomes well short of America’s today. On incomes so far below America’s, most older Chinese sit toward the lower end of the market. Five in six older Chinese today have a budget of less than $1,400 per month, classifying them as poor or the lower middle class. State pensions move few older Chinese out of those groups, because most of China’s pensioners draw the residents’ pension, the scheme for people in the countryside and for city dwellers without a pension from work. That pension pays on average about a fourteenth of what retired urban employees receive.⁴ The IMF finds that pensions so small leave retirees less able to keep their spending steady.⁵ For the next decade, then, the pension will do little to lift older Chinese from the lower end of the market. Over the decades that follow, more of what older Chinese spend will come from the top of the market. The number of older Chinese with upper-middle-class or rich budgets will rise from about 7m today to some 72m by 2050. About half of everything older Chinese add to their spending by 2050 will come from that group. The top of the market will grow chiefly by gaining customers, as older Chinese move up into those two groups. Even so, the typical older Chinese will still spend only about $15,900 a year in 2050, measured in purchasing power parity. As households shrink and fewer Chinese have children, the population problems named in the Five-Year Plan will give China a silver economy long before a premium one. China’s older market will grow through hundreds of millions of older Chinese, more of whom live outside the big cities than within them. For a company that sells to older people, China will thus be the largest source of new spending by older consumers outside America in the coming decade, but one where products and prices must be built for more modest budgets. World Data Lab tracks consumer spending across 196 countries, 9,400 cities and 200+ categories, with forecasts to 2050. Notes ¹ Outline of the 15th Five-Year Plan for National Economic and Social Development of the People’s Republic of China (2026-2030), adopted by the National People’s Congress, 12 Mar 2026; full text, Xinhua, 13 Mar 2026, Part 11 (“以应对人口老龄化、少子化为重点”, population aging and the decline in births) and Chapter 40 (“大力发展银发经济”, vigorously develop the silver economy), also Chapter 37, https://www.news.cn/politics/20260313/085af5de5a4b4268aa7d87d90817df2f/c.html. Translations are World Data Lab’s. ² Reuters (Farah Master), “China’s population drops for fourth year as fewer babies born”, 18 Jan 2026, as carried by Yahoo News, https://www.yahoo.com/news/articles/chinas-population-falls-fourth-straight-033254464.html (“hundreds of millions of people set to leave the workforce at a time when pension budgets are already stretched”, complicating “Beijing’s plan to boost domestic consumption”); Financial Times, “Robot nation: China’s bid to beat its demographic decline”, 25 Jun 2026, https://www.ft.com/content/c8731833-10ca-4a12-bfe4-8ebb2584ec68 (“As China’s working-age population shrinks, consensus is growing that China must embed embodied AI robots into as many tasks as possible”); Nikkei Asia, “China bolsters protections for older workers to boost labor force”, 9 Jul 2026, https://asia.nikkei.com/economy/china-bolsters-protections-for-older-workers-to-boost-labor-force (rules to keep people working past retirement age “as the working-age population shrinks and birth rates fall.”) ³ Shenzhen Municipal Bureau of Statistics, Seventh National Population Census, Bulletins No. 1, 4 and 6 (reference date 1 Nov 2020, released 17 May 2021): 17,560,061 permanent residents, 79.5% aged 15 to 59 and 3.2% aged 65 and over, and 12,438,738 (71%) living away from the place where their hukou is registered, https://www.sz.gov.cn/cn/xxgk/zfxxgj/tjsj/tjgb/content/post_8772095.html, https://www.sz.gov.cn/cn/xxgk/zfxxgj/tjsj/tjgb/content/post_8772098.html and https://www.sz.gov.cn/cn/xxgk/zfxxgj/tjsj/tjgb/content/post_8772100.html; average age 32.5 at the census, Shenzhen Municipal Government, “Shenzhen Profile” (updated 10 Dec 2025), https://www.sz.gov.cn/en_szgov/aboutsz/profile/content/post_12542766.html. ⁴ Average monthly pension payouts in 2025 (about 3,962 yuan for retired urban employees against about 281 yuan on the residents’ scheme), derived by World Data Lab from 2025 fund outlays in the Ministry of Human Resources and Social Security’s 2025 Statistical Bulletin, as summarized by 163.com, “2026年，现有多少领取养老金人员？人均养老金水平多少？” [How many people draw pensions in 2026, and what is the average pension?] (3 Aug 2026), https://c.m.163.com/news/a/L3CSCOFU05446M2K.html; and from pension beneficiaries at end-2025 (152.2m urban-employee retirees, 188.2m on the residents’ scheme) in Ministry of Civil Affairs and National Working Commission on Ageing, 2025 National Ageing Development Bulletin (31 Jul 2026), https://www.cncaprc.gov.cn/u/cms/www/202608/01013057jmzq.pdf. Outlays include funeral and survivor benefits; published estimates of the gap range from 12 to 16 times. ⁵ International Monetary Fund, Bonthuis, Cao and Freudenberg, Population Aging and Pension Reforms in China, IMF Working Paper WP/26/27 (Feb 2026), https://www.imf.org/-/media/files/publications/wp/2026/english/wpiea2026027-source-pdf.pdf. Residents’ benefits “average only about 3 percent of per-capita GDP” and “the low replacement rate limits the ability of retirees to smooth consumption.” Anthony Fox is a data scientist and insights analyst at World Data Lab. He has studied at Columbia University in the United States and the Paris Institute of Political Studies (Sciences Po.)