China converts kindergartens to elderly facilities as population crisis worsens

Suffering from falling birth rates and a rapidly aging population, tens of thousands of Chinese kindergartens are scaling back operations, closing entirely or changing industries to survive.

A kindergarten in eastern Zhejiang province still operates as a daycare center, but now provides services for the elderly rather than children.

Last year, Zhuang Yanfang, 56, repurposed a kindergarten in Jinhua, Zhejiang province, into a geriatric care center. She told local media she came up with the idea after having trouble attracting enough infants and toddlers to fill classrooms.

Photos of the renovated rectangular building showed little trace of the kindergarten. The once colorful walls have been repainted a milky white, and the blackboards have been replaced with bulletin boards filled with information about health care and nutrition for the elderly.

Since the government implemented a strict nationwide one-child policy in 1980, the number of births in China has been on a sharp decline. Despite easing policies in 2016, birth rates continue to plummet.

From 2021 to 2023, the number of children enrolled in pre-school education decreased by around 15% to just under 41 million.

It’s no wonder that kindergartens, both public and private, have closed over the past two years, reducing the number of schools nationwide by 20,000, according to a CNBC analysis of data from China’s Ministry of Education. This coincided with the government’s efforts to close private kindergartens while opening more state-supported kindergartens to reduce costs for families.

Conversely, while kindergartens are suffering, the senior care industry is thriving amid China’s aging population crisis. According to the Communist Party of China, the number of elderly care service agencies and facilities has doubled since 2019, reaching more than 410,000 this month.

In response to an aging society, the Chinese government is stepping up policy measures to strengthen the “silver economy,” which provides goods and services to people over 50. In its guidelines, the General Office of the State Council calls for promoting the “improvement of elderly care facilities” and stimulating “consumption by the elderly.”

“China’s aging population will become even more severe,” said Harry Murphy Crews, an economist at Moody’s Analytics. He predicted that by 2040, about 30% of the total population will be over the age of 65, and the number of people under 15 will fall from 15% today to just over 10%, from 17% today.

“This aging population will increase the potential market size for products and services aimed at older adults,” Cruz added.

Tiancheng Xu, an economist at the Economist Intelligence Unit, told CNBC that the elderly population is “the next big market opportunity with a lot of certainty.” Xu pointed out that older people have accumulated wealth with the rise of China’s economy and tend to be financially healthy.

Lin Song, chief China economist at ING, said retirees and retirees have “spendable money” and are looking for a “quality retirement life.”

Some Chinese dairy companies that produce dairy products for infants and young children have begun launching new products aimed at middle-aged and older adults, touting special benefits such as improving sleep quality, bone density and immunity. .

Maki Dairy, a specialty sheep milk producer based in China’s major sheep-farming province, Shanxi, promotes its products by holding events at elderly care centers, during which management Top executives give lectures and hand out free samples. According to the company.

In Shanghai, more gyms are trying to attract fitness enthusiasts with equipment tailored to the needs of older people, including installing real-time health monitoring equipment and offering physical therapy sessions for chronic conditions.

Xu said China has the manufacturing capacity to become a major producer of products for the elderly: “Think robot caregivers, smart home products for the elderly, and AI-powered pillboxes.” .

Despite the growth of the “silver economy,” the Chinese government is still seeking to mitigate the dire effects of the aging population crisis on the long-term health of the economy.

In September, the country’s highest legislative body passed an official plan to begin gradually raising the legal retirement age in an attempt to tap into the growing number of older workers to alleviate the overall decline in the workforce.

The move was controversial and unpopular among young people on Chinese social media, but economists say it was a “necessary” move.

China’s retirement age was relatively low compared to the world average. The EIU’s Xu said that coupled with the rapid aging of the population, an “underutilized workforce” is increasing, and he referred to this group as “young older people.”

By 2040, China aims to raise the retirement age for all men to 63 from the current 60 and for female white-collar workers to 58 from 55. Female blue-collar workers who previously retired at age 50 will now have to wait until age 55 to retire.

Still, these ages are still significantly lower than in the United States, where the legal retirement age is 67 for all workers born after 1960, and in Japan, where it is 65 for both men and women.

Mr. Cruz of Moody’s Analytics said China hopes to “keep older people in the workforce longer” not only to ease the financial burden of pension payments, but also to increase tax revenue.

Last month, China’s Ministry of Civil Affairs released guidelines on “Silver Age Action,” which encourages older people who have worked in education, science, agriculture and other skilled fields to volunteer in programs aimed at boosting growth in developing regions. announced. .

—CNBC’s Sonia Heng contributed to this article.