e number of people under the age of 15 will drop significantly, by almost 10 percent.
Furthermore, the Chinese are living longer (with an average life expectancy of 72 years in 2002, up from 68 in 1980), getting married later (at age 25 in Shanghai, on average), and having children later. When they do start a family, it tends to be small. Although there are many exceptions to the one-child-per-couple policy China adopted in 1979, urban women still average only 1.4 births, below even European levels. Certain service sectors are already feeling the impact of these trends: school closures and consolidations in the cities, for example, reflect the declining number of children.
True, the aging of the wealthiest segment of China's urban population may offer opportunities for business. These households already expect to provide for their own long-term financial needs, and personal savings are critical. Life insurance, the most readily available savings product, is booming: by 2008 the industry's annual premiums will exceed $100 billion — larger than those of the German insurance industry. Health care insurance could also take off. In addition, as a growing middle class develops a stronger appreciation for the value of time, a huge opportunity beckons for a host of service providers offering convenience. Most home buyers, for instance, now purchase an empty shell and spend months supervising the design and installation of everything from floors to light fixtures to furniture. Companies that take on these time-consuming tasks on behalf of home owners could profit handsomely.
On the less favorable side of the demographic equation, businesses will face uncertainty about the growth of domestic consumer spending in general and the level of disposable income among the affluent in particular. These factors will eventually affect basic marketing decisions (such as what product categories to enter) and operating decisions (how much manufacturing capacity to build, for instance). For existing manufacturers in or near China's cities, the supply of young, low-cost labor will come under pressure in the years to come.
Some economists argue that these demographic trends will be rendered less harmful by the rapid migration of rural workers into the cities. Perhaps, but there are no guarantees, and rural migration carries its own costs. As government constraints on the movement of people have diminished, migration from rural to urban areas has increased massively; it now stands at 15 million to 20 million a year. But the education and skill level of the newcomers is far below the present urban average, limiting both the work they can do and their ability to move into higher-paying roles. Moreover, as a result of this influx, cities are approaching the point at which they won't be able or willing to integrate additional unskilled migrants into their economies. In a number of cities, recent arrivals — predominantly unskilled men in their twenties — account for a quarter of the population. Until now, they have been consigned to labor-intensive, tightly organized work, such as construction. But although the building boom has readily accommodated them during the past few years, that is changing. The current government-directed slowdown, for example, is leaving many searching for employment.
In the future, local governments will need to beef up the skills and capabilities of migrant workers in order to integrate them into the econom
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