Senior Care in China - Demographics and Policy Creating the Perfect Opportunity
In our most recent article, we introduced True North Impact Fund I and our geo-lens investing focus based on the UN’s Sustainable Development Goals. This week, we dive into aging populations and the potential for impactful investing in this sector.
The world’s population is aging as never before seen. By 2030, for the first time in history, people over 65 will outnumber children under 10 [1]. This shift in demographics has implications for many aspects of our society, from family structures to labour force, housing, health care and more. Western countries are already experiencing the economic and social shifts associated with aging populations; as more and more baby boomers reach retirement age, governments are facing increased pressure to provide adequate housing and long-term care. However, nowhere is the pace of aging more extraordinary than in Asia, where by 2050, 1.2 billion people will be aged 60 or older— making up over 60% of the world’s seniors [1]. China’s population is aging faster than any other. This has significant implications in China, where societal and cultural norms have historically placed an obligation on adult children to care for their elderly parents. With the rise of the working and middle class in mostly single-child families, China’s impending older-age population boom will certainly challenge the country’s preparedness for their aging society.
One major cause of the rapidly aging population is the global increase in average life expectancy. Due to advances in public health and modern medicine, global average life expectancy at birth has increased from 45 years in 1950, to 74 years on average today [1].
Another direct contributor is declining fertility rates, leading to smaller family sizes and a higher proportion of older people in the population [1]. This is artificially compounded in China due to the enactment of its, “one-child policy”, in 1980, where until 2016, family sizes were restricted by law to one child. Over the past two decades, China has also experienced a booming economy, growing middle class, and rapid urbanization. As quality and access to education has increased, more millennials, particularly women, are prioritizing careers over starting families or taking care of their elderly parents. All of these factors combined ultimately contribute to a higher share of seniors in China’s population [2].
Much of China’s rapid growth over the last few decades has been attributed to a large productive population—that which works and contributes to its economic development. With the country's rapidly aging population however, a significant proportion of China's labour force will become dependents, relying on their children or the government to provide necessary care. As China’s economy has grown, it has become increasingly common for working children to leave home and live in single apartments in China’s rapidly developing city centers, fueled by urbanization. In addition, the one-child policy and rising life expectancies have led to the, “1-2-4 family” phenomenon, where 1 child is expected to care for 2 parents and 4 grandparents in small living spaces, and while balancing full-time work [3]. This presents an extraordinary challenge for the government to solve, leaving seniors vulnerable without sufficient investment from other sources. The Chinese government has recognized this gap and is starting to explore a range of opportunities in the space.
Until the late nineties, China’s institutional senior care was reserved for people with no children, relatives, and no income, leading to its stigmatization [4]. Recently, China’s government committed to providing subsidies to seniors, and modified existing foreign investment regulations to allow private actors in the operation and delivery of services to the country’s affluent and urban seniors [4]. While retirement communities are traditionally a Western product, the increasing demand for higher quality care and the government’s recently enacted regulations drive demand for a spectrum of senior care, from strictly care facilities to community-based retirement living. China’s senior care market will be valued at $2.5 trillion by 2030 [3], and True North recognizes the opportunity for retirement communities that offer qualified staff to address the current gaps in this market. Given our track record of developing communities in Nova Scotia (read more here), and our existing network in China, we are well positioned to meet China’s high-and-growing demand for high-quality senior care, communities, and services.
To learn more about our True North Impact Fund I and how we connect investor capital based on the UN SDGs with impactful ventures around the world, please contact Fund Manager, Kai Chen (kai@truenorthimpact.com).