What Global Demographic Trends Mean for China and the Global Economy

Clint R. Laurent

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Many years ago, I heard the term “cocktail nugget” used to describe fascinating facts and figures that make for great conversation starters at cocktail parties. You know the kind of thing I’m talking about: little “nuggets” of information that get people talking, gasping, or exclaiming, “Wow!” As it turns out, Clint R. Laurent’s talk, “Tomorrow’s World: What Today’s Global Demographic Trends Mean for Asia and the Global Economy,” was like striking conversational gold at the 67th CFA Institute Annual Conference.

Here is one statistic that I found staggering (and scary): India churns out 25 million babies a year and will do so for the next 20 years because the number of women of child-bearing age is going up at the same rate as the propensity to have children is going down. That’s roughly the equivalent of one more Australia every year. (In fact, it’s slightly more, as Australia’s population is currently around 23.5 million.) Sticking with the Antipodes, you could also think about it as about five more New Zealands per year.

Here are a few more nuggets:

  • The majority of the Chinese population is over 40, and right now, there are more than 100 million diagnosed diabetes cases in China. In 10 years’ time, that figure will rise to 240 million.
  • Japan has the fastest-growing female participation rate in the labor force in the world.
  • In China, in 20 years’ time, there will be 40 million men aged 25–34 who will not be able to get married because of a shortage of women.
  • North America, Western Europe, and “affluent Asia” (Japan, South Korea, Taiwan, Australia, and New Zealand) make up 8% of the world’s population and account for 65% of all current global consumer expenditure. Two-thirds of every dollar that is spent in the world is spent in those three regions.

These were just a few facts that jumped out over the course of a fascinating presentation in which Laurent, chief executive and founder of Global Demographics and author of Tomorrow’s World: A Look at the Demographic and Socio-economic Structure of the World in 2032, shared with delegates. He also discussed how demographics will change what people want, how the labor forces of the world are going to change over the next 10 years, and how the income and age changes will come together and create unique opportunities in the marketplace in the next 10 years.



Given our fascination with China — the world’s most populous country, with a staggering 1.35 billion people — here is what Laurent had to say about the Middle Kingdom in the coming decade.

Implications of the Change in the One-Child Policy

China changed its one-child policy regulations, but it’s only good news for someone who works for Nestle, Fonterra, or a diaper manufacturer. The change in the regulation is such that it only allows 2.5 million extra births a year on a present base of 15 million births a year, so it’s about a 17% lift. The change is so low because the new regulations only apply to women who have an urban hukou (household registration).

A hukou is given to you when you’re born, and you have either a rural hukou or an urban one, depending on where you live. The hukou determines how many children you can have. What people don’t realize is that only one-third of women in urban areas have an urban hukou, and the other two-thirds are rural migrants who have moved to the urban areas and retained their rural hukou.

Working-Age Empty Nesters




There has been huge rural-to-urban migration over the last 20 years, and most people who have migrated are in the 20–34 age group. So right now, young families are overrepresented in urban areas. That means in the next 10 years they are going to become working-age empty nesters (aged 40–64) — so in the urban area, the working-age empty nester, which is a very attractive consumer group in China, goes from 276 million to 395 million, a 41% lift in that market segment.

Urban households account for about 86% of all household expenditure in China, even though they are only about 55% of households. The average urban household has a washing machine, fridge, TV, etc. This is the first wave of Chinese citizens who benefited from the education reforms, so they can read and write very well, they understand media and use media heavily, and they are changing their lifestyles — and it’s creating a whole new consumption pattern in China.

Health is also a major issue in China: On average, a 50-year-old male in urban China will die at age 68, so he can’t work much beyond 64. China has no spare age capacity.

Wage Inflation and What That Means

China will have 4.3 million fewer workers every year from now until 2024. That is why a lot of companies are saying China’s already getting too expensive. Last year in the eastern provinces, wage inflation in real terms was 14%. It caught a lot of companies by surprise.  They thought the shift in wages would be gradual and that they could adjust to it, but it’s really hit companies quite hard.

Throughout China over the next 10 years, we will see real wage inflation of about 7%. This sounds like bad news, but it may actually be good news: As wages go up, household incomes go up, as does the purchasing power of consumers. China is probably going to be the fastest-growing consumer market in the world.

For a summary of the key points from Laurent’s overall session, see Bob Seawright’s blog post.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: W. Scott Mitchell

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