In 2022, China’s population fell for the first time in six decades, dropping from 1.4126 billion to 1.4118 billion, a decline of 850,000. This trend has accelerated, with losses of 2.08 million in 2023 and 1.39 million in 2024, according to China’s National Bureau of Statistics. The United Nations projects a further decline of 204 million by 2054, and by 2100, China could lose over half its current population, falling by 786 million. This shift, driven by low birth rates and an ageing population, is reshaping labour markets, consumer demand, and business prospects. For UK firms, understanding these changes is key to thriving in China’s evolving market.

The decline stems from the One-Child Policy (1979–2015), which limited most families to one child, reducing the number of women of childbearing age and skewing gender ratios. Coupled with high living costs, shifting attitudes towards marriage, and the economic impact of COVID-19, China’s birth rate in 2024 was just 6.77 live births per 1,000 people, slightly up from 6.39 in 2023. Meanwhile, the population over 60 reached 310.3 million in 2024, up from 297 million, while the working-age population (16–59 years) dropped from 61.3% to 60.9%, totalling 858 million. By 2050, those over 65 are expected to double, straining social systems.

To counter this, China has rolled out policies to boost births and manage an ageing society. Since 2016, couples can have two children, expanded to three in 2021. Subsidies, like Shenzhen’s RMB 19,000 (£2,050) for families with one to three children, aim to encourage childbirth, alongside tax deductions and childcare support. However, these measures have yet to reverse the decline. Starting January 2025, China will raise retirement ages, men from 60 to 63, women from 50 to 55 (blue-collar) or 55 to 58 (white-collar) over 15 years, to address a shrinking workforce. The government is also investing in the “silver economy,” with policies like rent exemptions and tax breaks for eldercare providers, as outlined in the 2022 National Development and Reform Commission measures and the 2024 State Council’s Opinions on Developing a Silver Economy. A private pension scheme, launched in 2022 and expanded nationwide in 2024, offers tax incentives to ease pressure on public pensions. Additionally, China is pushing automation and “New Quality Productive Forces” (NQPFs), focusing on AI, robotics, and biotechnology to offset labour shortages.

This demographic shift challenges China’s economic model, once fuelled by a large, young workforce. With 734.4 million workers in 2024, labour shortages are not immediate, but industries like manufacturing and construction may face higher wages and shortages as younger workers shun manual labour. A smaller population could shrink consumer markets, with older citizens spending less. Yet, rising per capita income – RMB 41,314 (£3,550) in 2024 – and policies like the Special Action Plan to Boost Consumption and the dual circulation strategy are strengthening domestic demand. British brands like Burberry succeeded by tailoring products to local tastes, highlighting the need for adaptability.

Despite challenges, China’s ageing population creates opportunities for British businesses. The eldercare market, projected to reach £2.6 trillion by 2030, demands healthcare services, pharmaceuticals, and medical devices. Healthcare Opportunities in China, allow UK firms like AstraZeneca to grow in China through local partnerships to meet these needs. Education is another growth area, with smaller families spending more on premium services and a shortage of skilled workers in technology, healthcare, and engineering. UK institutions are also helping to uskilling China’s workforce by expanding vocational training. China’s push for automation aligns with UK strengths in AI and robotics, as seen at the 2024 China International Import Expo, where British tech firms showcased innovative solutions.

To succeed, British businesses should invest in automation, partnering with Chinese firms to develop AI and robotics. Offering vocational training, diversifying products for an ageing, affluent market, and building local partnerships are critical. Flexible work arrangements can also attract talent in a competitive market. While China’s population decline poses risks like labour shortages and reduced consumer demand, it also opens doors in healthcare, education and technology. By staying agile and leveraging UK expertise, British firms can seize these opportunities in China’s changing landscape.

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The Standing Committee of the National People’s Congress, China’s top legislative body, announced on 13 September 2024 that the country would gradually increase the retirement age for men from 60 to 63, for women in white-collar jobs from 55 to 58, and for women in blue-collar jobs from 50 to 55. The adjustments will be gradually implemented over a 15-year period starting from January 2025​.

The primary driver behind this policy shift is China’s rapidly ageing population. The country faces a shrinking workforce and a growing number of retirees, putting pressure on its pension system, as well as the elderly care system.

The results of China’s latest census in 2020 showed significant population ageing, with people over the age of 65 accounting for 13.5% of the Chinese population, an increase of 4.6% from the 2010 census. Birth rates are also falling, putting further strain on the population.

By raising the retirement age, China hopes to alleviate some of the financial strain on its pension system by bolstering the working-age population​. In 2020, China’s Social Security Administration predicted that its pension fund could be depleted by as early as 2035 unless remedial measures were taken. Indeed, in addition to raising the retirement age, China also announced that the minimum number of years needed to pay into a pension will increase from 15 to 20 years (which will come into effect in 2030).

This move will also align China with international norms. Neighbouring countries with similar demographic challenges, such as Japan and South Korea, have already adjusted their retirement ages.

Although the reform aims to secure long-term economic stability, it has sparked some criticism, with both young and old complaining of the longer working years. Others are worried about the implications for youth unemployment, which had already reached record highs in summer 2023. However, Chinese officials argue that the gradual implementation of the changes will prevent sudden impacts on job opportunities for younger workers​.

China’s ageing population prompts a number of considerations for British companies looking at the China market.

British consumer brands, for example, may want to consider how their products may benefit or appeal to an ageing population that, on the one hand, will remain wage-earning consumers for longer and, on the other hand, may find itself without the kind of family and community-based support system that previous generations had access to.

Indeed, in January 2024, the Chinese government unveiled a series of 26 guidelines to encourage the development of a “silver economy” catering to older people. Health-related consumption is likely to account for the biggest share of spending in this “silver economy”, presenting opportunities for British companies in the pharmaceutical and biotech industries, as well as robotics and AI. Sales of home healthcare devices for older adults have already shown an increase in recent years, as have sales of dietary supplements and cosmetics with ‘anti-ageing’ properties.

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The results of China’s 2020 census showed that the population is ageing rapidly. There are now 264 million people over the age of 65 in China, accounting for 13.5% of the 1.4 billion population, an increase of 4.6% from the 2010 census. While the share of older people in the population is still lower than in neighbouring countries like Japan and South Korea, the pace of ageing in China is likely to continue to accelerate over the next two to three decades.

This problem is not unique to China, and it creates a growing challenge for governments, both in terms of how to maintain a sustainable working-age population and how to care for the growing number of older adults. In 2020, China’s Social Security Administration predicted that its pension fund could be depleted by as early as 2035 unless remedial measures were taken, and there is also a lack of nursing home provision, especially at the more affordable end of the spectrum. According to a 2019 China Daily article, only 3% of Shanghai’s elderly population lives in a nursing home, with 90% living at home. However, as the post-one child policy generations mature, there are fewer family members available to look after older people at home.

Douyin, the Chinese version of TikTok, recently announced that it is recruiting a group of people over the age of 60 to advise on how to make its app more accessible and appealing to older people

Companies from a wide range of sectors are coming up with hardware and software solutions to address these problems. The Healthy Ageing Challenge, one of UK Research and Innovation organisation’s projects, is investing up to £98 million in healthy ageing, and has identified seven themes that offer the greatest potential to stimulate innovation in the pursuit of longer, healthier lives:

• Sustaining physical activity
• Maintaining health at work
• Designing for age-friendly homes
• Managing the common complaints of ageing
• Living well with cognitive impairment
• Supporting social connections
• Creating healthy and active places.

In many cases, the best innovations start much earlier than retirement age. For Helen Crampin, the Investment and Technology Innovation Lead at Healthy Ageing, the key is trying to create a long-term sea change rather than short term fixes. “At the centre of what we’re trying to do is help people age better, so not even have to go to hospital or into social care… We don’t just aim our products at the elderly, we’re aiming our products at [people in their] 40s and 50s, making people think about the way they’re living,” she said.

As a country that has only started to combat its ageing population more recently, China has a leg up in terms of designing products for older users from the ground up. Another area where UK businesses can learn from China is digital inclusion. The proportion of internet users in China aged 50 or above increased from 17% in March 2020 to 27% by the end of 2020, and many older people are using smartphones for everything from mobile payment to entertainment, particularly in urban areas. Douyin, the Chinese version of TikTok, recently announced that it is recruiting a group of people over the age of 60 to advise on how to make its app more accessible and appealing to older people.

As a judge in this year’s Design Intelligence Awards (DIA), Crampin believes that design plays an indispensable role in creating products and services that older people can and will actually use. “Design should come at the stage of ideation… you should be thinking about your end-user when the idea is sparked,” she says. In actuality, many software platforms that have a use elsewhere are being retroactively applied to ageing, “but the design for ageing hasn’t happened until that product is nearly fully formed.”

Offering advice to this year’s DIA applicants,  Crampin draws on her experience working on investor partnerships as part of the Healthy Ageing Challenge. Many social enterprises find it hard to access early-stage funding because commercial investors want to see a two to three-year exit strategy, which is not always possible for solutions that are targeting long-term change. She suggests that companies applying to the DIA that face this issue consider both the short and long-term strategies for their products, as well as how to highlight other attractive aspects of their company, such as their founder and leadership team.   

Visit this link to apply for the Design Intelligence Awards — the entry deadline for UK applicants is 9 July

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