The economic impact of ageing populations is expected to deepen in the coming decades, particularly in countries with high government debt burdens such as China, according to a recent report.
Why Debt Matters
High government debt raises interest costs and leaves less fiscal room to respond to shocks just as aging populations push up pension and health outlays.
The Chinese and U.S. governments are among the most indebted in the world. The U.S. government’s gross debt at 123 percent is equal to the country’s GDP according to International Monetary Fund data.
China’s stands at 84 percent, buoyed by debt-driven growth in the 2010s and a housing market crunch that heavily indebted local governments. London-based global advisory firm Oxford Economics estimates the Chinese economy’s potential growth could be cut roughly in half by the 2050s.
Newsweek reached out to the Chinese Embassy in Washington, D.C., and the U.S. Treasury Department via email for comment.
Demographic Headwinds
“Soaring pension and healthcare expenses are the biggest policy challenge of the 2020s in all advanced economies and most emerging ones,” Vincent Deluard, director of global macro strategy at StoneX Group, told Newsweek.
This will be particularly true in China, whose median age, currently around 40 and well above the global average, is projected to reach 52 by mid century—well above the global average—while in the U.S. it is expected to stay near 41, according to United Nations projections.
A man walks past the front of the Bank of China headquarters in Beijing on June 11, 2025.
A man walks past the front of the Bank of China headquarters in Beijing on June 11, 2025.
Adek Berry/AFP via Getty Images
China’s old-age dependency ratio, or the share of people aged 65 and older, is projected to rise by more than 50 percentage points by 2026 compared to 2010, versus roughly 8-10 points in the United States. This will strain China’s modest safety net. And unless the country is able to reverse its flagging birth rate, this will shift the burden onto a smaller pool of workers.
Jed Cartledge, an economist and one of the authors of the Oxford Economics report, said this better positions the U.S. demographically.
China’s fertility rate of 1.2 births expected per woman is among the world’s lowest.
While higher, the U.S.’s rate of 1.6 births remains well below the rate of 2.1 necessary to sustain a population naturally. Cartledge pointed out, however, that historically, immigration has largely offset declining births and averted demographic problems in the U.S.
“Admittedly, U.S. immigration is taking a hit under the second Trump presidency, but we’re expecting the reduction in net immigration to only last through the remainder of his second term before reverting to a 1.1 million per annum, which was the typical pace prior to the pandemic,” Cartledge told Newsweek.
China differences
Deluard named several structural differences setting China apart: accelerated aging after the one-child policy and rapid urbanization; low statutory retirement ages; two delayed baby booms that occurred in the late 1960s and 1980s; a high savings rate of 44 percent; and very little foreign debt.
“All that means that China’s long-term problem is worse due to demography, but it has more levers to manage it in the short term,” he said.
China’s toolkit
The analyst pointed to two near-term levers.
“First and foremost, the retirement [age] can be raised to keep the 1970s and 1980s large cohort in the labor force,” he said, observing that this year Beijing began phasing in new statutory retirement ages—for the first time in decades.
“Second, China can mobilize its large pool of domestic savings, which the U.S. does not have.”
By contrast, he said, “the U.S. primarily relies on higher asset prices (401(k)s, homes) to finance the transition, which worsens generational inequalities.”
He predicted only high levels of nominal growth, or expansion unadjusted for inflation, will improve the U.S.’ outlook.
Update 8/15/2025, 8:11 a.m. ET: This article has been updated with comment from Jed Cartledge and additional information.