Morningstar Magazine - June/July 2017 - 61

the next 10 years. By 2026, China's population of
20- to 29-year-old women will fall by more
than one third. That's significant because birth
rates among 20- to 29-year-olds are roughly
five times that of 30- to 39-year-olds and 50 times
that of 40- to 49-year-olds.
Applying
ourCost
forecast
for age-specific fertility to
Levelized
of Electricity
the
projected
population
of childbearingFertility rate, total (births per
woman)
age women, we estimate 20 million fewer babies
7
will be born over the next 10 years than in
the past 10 years (145 million versus 165 million),
6
a decline of 12%. We forecast births will have
fallen to 12.4 million by 2026, down 30% from the
5 births in 2016.
17.9 million

Seniors will be, by far, the fastest-growing
age group. By 2026, China will have 207 million
people aged 65 and older, up 50% from
138 million in 2016. A few years after that, China
will have more seniors than the United States,
the European Union, and Japan combined.
And by 2036, there will be nearly as many Chinese
65 and older than there will be Americans
of any age. China's working-age population, those
aged 15 to 64, will contract by more than
20 million over the next 10 years. While not an
especially large drop for a country of China's size,
this will mark a significant trend reversal.
Since 1980, China's working-age population has
expanded by more than 400 million (from 582
million to over 1 billion).

4
Graying population will unwind many longstanding
3 economic trends.

Age

A shrinking workforce will have a modest negative
impact on GDP growth. We estimate
reductions to China's labor supply will subtract,
on average, about 0.1% from GDP annually
Decades
2 of falling fertility set in motion a longterm demographic transformation that
over the next 10 years. By comparison, labor supply
will continue to unfold in the next 10 years.
growth had added about 0.4% annually to
1
GDP in the 1990s and 2000s. However, increased
Population growth, already slowing, will nearly
human capital per worker should at least
grind to0 a halt by 2026 amid falling births
0
5,000
10,000
15,000
20,000
and a steady rise in mortality. The age composition
partially offset the falling
number of workers.
per capita,
(constant
2011 internationalThe
$) population entering the workforce will
of China's GDP
population
will PPP
change
dramatically.

be far better educated than the population that
will retire.
Labor supply contraction is unlikely to dramatically
alter the trajectory of China's GDP growth, but it
will have profound implications for the country's
GDP mix. To begin with, China's shrinking
working-age population portends upward pressure
on wages. Although we do not expect wage
growth to accelerate in the next 10 years, we do
expect it will outstrip GDP growth. As a result,
the household income share of GDP, which had
been falling for most of the 2000s, is likely to climb
in the next 10 years.
China's extremely high household savings rate
is likely to fall as the population ages.
A big reason China's households save a lot is
because, compared to the typical country,
China has a lot more working-age adults
("net savers") than it does children and seniors
("net spenders"). This demographic support ratio
will fall considerably over the next 10 years
( EXHIB IT 2 ). Just as China's household savings
rate increased in near-lockstep with a
25,000
rising support
ratio, it is likely30,000
to decline as the
support ratio falls.

EXHIBIT 1

Low Fertility China's currently low fertility rate is typical for regional peers.
China

Japan

Korea

Thailand

Vietnam

Taiwan

Fertility Rate, Total (Births Per Woman)
7
6
5

China's current fertility rate is similar to the historical experience of Japan,
Korea, Thailand, and Taiwan-none of which enforced compulsory birth control.

4
3
2

China had unusually low fertility as a poor country-similar to
Vietnam, which also maintained strict family planning laws.
0
5,000
10,000
GDP Per Capita, PPP (Constant 2011 International, $)

15,000

1
0
20,000

25,000

30,000

Sources: World Bank, UN Population Division, Morningstar.

global.morningstar.com/Morningstarmagazine

61


http://global.morningstar.com/Morningstarmagazine

Table of Contents for the Digital Edition of Morningstar Magazine - June/July 2017

Contents
Morningstar Magazine - June/July 2017 - Cover1
Morningstar Magazine - June/July 2017 - Cover2
Morningstar Magazine - June/July 2017 - 1
Morningstar Magazine - June/July 2017 - 2
Morningstar Magazine - June/July 2017 - Contents
Morningstar Magazine - June/July 2017 - 4
Morningstar Magazine - June/July 2017 - 5
Morningstar Magazine - June/July 2017 - 6
Morningstar Magazine - June/July 2017 - 7
Morningstar Magazine - June/July 2017 - 8
Morningstar Magazine - June/July 2017 - 9
Morningstar Magazine - June/July 2017 - 10
Morningstar Magazine - June/July 2017 - 11
Morningstar Magazine - June/July 2017 - 12
Morningstar Magazine - June/July 2017 - 13
Morningstar Magazine - June/July 2017 - 14
Morningstar Magazine - June/July 2017 - 15
Morningstar Magazine - June/July 2017 - 16
Morningstar Magazine - June/July 2017 - 17
Morningstar Magazine - June/July 2017 - 18
Morningstar Magazine - June/July 2017 - 19
Morningstar Magazine - June/July 2017 - 20
Morningstar Magazine - June/July 2017 - 21
Morningstar Magazine - June/July 2017 - 22
Morningstar Magazine - June/July 2017 - 23
Morningstar Magazine - June/July 2017 - 24
Morningstar Magazine - June/July 2017 - 25
Morningstar Magazine - June/July 2017 - 26
Morningstar Magazine - June/July 2017 - 27
Morningstar Magazine - June/July 2017 - 28
Morningstar Magazine - June/July 2017 - 29
Morningstar Magazine - June/July 2017 - 30
Morningstar Magazine - June/July 2017 - 31
Morningstar Magazine - June/July 2017 - 32
Morningstar Magazine - June/July 2017 - 33
Morningstar Magazine - June/July 2017 - 34
Morningstar Magazine - June/July 2017 - 35
Morningstar Magazine - June/July 2017 - 36
Morningstar Magazine - June/July 2017 - 37
Morningstar Magazine - June/July 2017 - 38
Morningstar Magazine - June/July 2017 - 39
Morningstar Magazine - June/July 2017 - 40
Morningstar Magazine - June/July 2017 - 41
Morningstar Magazine - June/July 2017 - 42
Morningstar Magazine - June/July 2017 - 43
Morningstar Magazine - June/July 2017 - 44
Morningstar Magazine - June/July 2017 - 45
Morningstar Magazine - June/July 2017 - 46
Morningstar Magazine - June/July 2017 - 47
Morningstar Magazine - June/July 2017 - 48
Morningstar Magazine - June/July 2017 - 49
Morningstar Magazine - June/July 2017 - 50
Morningstar Magazine - June/July 2017 - 51
Morningstar Magazine - June/July 2017 - 52
Morningstar Magazine - June/July 2017 - 53
Morningstar Magazine - June/July 2017 - 54
Morningstar Magazine - June/July 2017 - 55
Morningstar Magazine - June/July 2017 - 56
Morningstar Magazine - June/July 2017 - 57
Morningstar Magazine - June/July 2017 - 58
Morningstar Magazine - June/July 2017 - 59
Morningstar Magazine - June/July 2017 - 60
Morningstar Magazine - June/July 2017 - 61
Morningstar Magazine - June/July 2017 - 62
Morningstar Magazine - June/July 2017 - 63
Morningstar Magazine - June/July 2017 - 64
Morningstar Magazine - June/July 2017 - 65
Morningstar Magazine - June/July 2017 - 66
Morningstar Magazine - June/July 2017 - 67
Morningstar Magazine - June/July 2017 - 68
Morningstar Magazine - June/July 2017 - 69
Morningstar Magazine - June/July 2017 - 70
Morningstar Magazine - June/July 2017 - 71
Morningstar Magazine - June/July 2017 - 72
Morningstar Magazine - June/July 2017 - 73
Morningstar Magazine - June/July 2017 - 74
Morningstar Magazine - June/July 2017 - 75
Morningstar Magazine - June/July 2017 - 76
Morningstar Magazine - June/July 2017 - 77
Morningstar Magazine - June/July 2017 - 78
Morningstar Magazine - June/July 2017 - 79
Morningstar Magazine - June/July 2017 - 80
Morningstar Magazine - June/July 2017 - 81
Morningstar Magazine - June/July 2017 - 82
Morningstar Magazine - June/July 2017 - 83
Morningstar Magazine - June/July 2017 - 84
Morningstar Magazine - June/July 2017 - 85
Morningstar Magazine - June/July 2017 - 86
Morningstar Magazine - June/July 2017 - 87
Morningstar Magazine - June/July 2017 - 88
Morningstar Magazine - June/July 2017 - 89
Morningstar Magazine - June/July 2017 - 90
Morningstar Magazine - June/July 2017 - 91
Morningstar Magazine - June/July 2017 - 92
Morningstar Magazine - June/July 2017 - 93
Morningstar Magazine - June/July 2017 - 94
Morningstar Magazine - June/July 2017 - 95
Morningstar Magazine - June/July 2017 - 96
Morningstar Magazine - June/July 2017 - 97
Morningstar Magazine - June/July 2017 - 98
Morningstar Magazine - June/July 2017 - 99
Morningstar Magazine - June/July 2017 - 100
Morningstar Magazine - June/July 2017 - 101
Morningstar Magazine - June/July 2017 - 102
Morningstar Magazine - June/July 2017 - 103
Morningstar Magazine - June/July 2017 - 104
Morningstar Magazine - June/July 2017 - 105
Morningstar Magazine - June/July 2017 - 106
Morningstar Magazine - June/July 2017 - 107
Morningstar Magazine - June/July 2017 - 108
Morningstar Magazine - June/July 2017 - 109
Morningstar Magazine - June/July 2017 - 110
Morningstar Magazine - June/July 2017 - 111
Morningstar Magazine - June/July 2017 - 112
Morningstar Magazine - June/July 2017 - Cover3
Morningstar Magazine - June/July 2017 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com