Implications: rapid population aging. 1-child policy means that cost of pensions, health care, and social services will thus rise. 1 in 6 now above 60 1 in 4 above 2030 1 in 3 by 2050 “get old before getting rich” demography 1980-2010 low dependency ratios high household savings rate large lavor supply “age of abundance” decline rapidly aging population rapidly rising dependency ratios ageing population / rising health / retirement costs shrikning labor force, rising wages declining of deposits in bank system less capital resulting dynamics labor force shrinking by 2 million workers per year manufacturing wages rising faster labor cost advantage almost gone wages keep going up health improved health => living longer china’s life expectancy is around 80ish yo people are living longer… Savings Rate People have decreasing savings rate; so when people can’t feed their parent, government can’t really step in correctly because the social safety net is not completely setup. projections of consumption vs savings level increased aging household surplus devoted to savings will disappear by 2035 China’s preparation growth model focused on investment in physical infrastructure, and insufficient in education / health consumption unusually low as contirbutor to GDP limited investment in social programs and social expenditures (e.g., education, health, retirement) implications households cannot transfer income from young to old government must take up slack, but they don’t have ability; pressure for change in growth model pressure to change tax system to raise ventures constrained spending on geopolitical ambitions education Well-educated population is essential for economic development. STEM field innovation (economics and finance) literacy and numeracy is essential for shift from low-wage to high-wage to move into innovative, productivity driven growth that moves economies form middle income to high income Korea Taiwan Israel Ireland Spain Singapore moved up across middle income trap; but other fall. China does very well in Elite education, but poorly for broader population. Education quality Chinese students scores very very well metrics are only BSJZ (i.e. no rural provinces)