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Asia's Falling Fertility Poses Economic, Social Problems

Asia's population is aging rapidly and its fertility rate has fallen to historic lows. Experts say the trend could pose severe economic and social challenges to the region. Governments are racing to defuse this demographic time bomb.

Hong Kong has one of the lowest fertility rates in the world. People aged 65 and above account for about 11 percent of the city's population and their numbers are increasing. In roughly 25 years, elderly people will account for a quarter of Hong Kong's population.

The United Nations estimates the number of elderly people in Asia will more than triple by 2050. By then, the average age in Asia will be 40 years.

Professor Andrew Mason, head of the University of Hawaii's population studies program, says the trend is unprecedented.

"We have never anywhere in the world experienced such rapid aging, such large numbers of the population at retirement ages," prof. Mason said.

Asia's fertility rates have been falling for several decades. Following the post-World War II baby boom, governments promoted the use of contraceptives to control population growth. In addition, as Asia industrialized from the 1960s and 1980s, more women joined the work force. As a result, many delayed marriage and childbirth - and others never considered them. And busy working couples choose to have smaller families.

By the 1990s, women in Taiwan, South Korea, Thailand, and Hong Kong were averaging two or fewer births. South Korea, Taiwan and Thailand's population growth stood at about one percent annually.

The problem is most acute in Japan, where the elderly make up 17 percent of the population - a figure that is expected to rise to 29 percent in 20 years. Its overall population is actually expected to start falling in about eight years.

In China, where couples are generally limited to having one child, fertility rates have dropped more than half from 1990 to 2001. Experts say the elderly could make up as much as 14 percent of the population in two decades. Many economists fear that an aged population will be a particularly tough problem for China, which is still a developing economy.

Economists and population experts say unless the trend is reversed, it could result in serious economic and social problems. A recent study by the Australian government says the country's economic growth could fall to as low as one and a quarter percent a year in the 2020s because of its aged work force.

Analysts say an older work force could lead to labor shortages, and with fewer younger workers, pension system contributions may not be able to cover rising costs for health and elderly care. This may force governments to raise taxes and families to tap savings, further pinching growth.

Governments are trying to head off those problems. In Singapore, where fertility levels have been below the replacement rate since 1977, the government hands out cash to couples for every new baby and arranges social events so single citizens can meet potential spouses. Hong Kong offers tax breaks to those with young dependents, while the Japanese government has programs to provide childcare and give extra benefits to working mothers.

Some countries are encouraging the immigration of skilled workers to compensate for falling birth rates. Experts are urging China to end its one-child policy - imposed in the 1970's when the country's population was growing rapidly.

Australia's National Treasurer Peter Costello says quick solutions are hard to find.

"Demography is destiny. What's going to happen over the next 40 years was set over the last 30 years. It can't be turned around now," he said.

Slowing population growth made good economic sense 40 or 50 years ago, as much of Asia was racing to modernize.

Professor Mason in Hawaii estimates that a quarter to a third of the growth in Asia's per capita income from the 1970s to the 1990s can be attributed to the drop in fertility rates.

"Asia benefited a lot from rapid fertility decline during the '70s, '80s and '90s because the numbers in the work force has grown much more rapidly than the population as a whole and that's because there's fewer children. And so that led to more rapid economic growth," he said.

But population analysts say, despite being richer, couples are reluctant to have babies, in part because of concerns over the quality of life parents can provide for children. In dense cities such as Hong Kong and Tokyo, extra living space is at a premium and people work long hours, hardly conducive for child rearing.

Odalia Wong, a sociology professor at Hong Kong Baptist University, says worries go beyond financial security.

"When people give birth, it is a life long investment on the child," she said. "From day one, providing shelter, food, clothing and education. Parents nowadays want to give love and a lot of attention. It's the intangible thing which is really a big barrier."

Many women are faced with the dilemma of working to provide for the material needs of their children or staying at home to care for them. Some experts say financial incentives can only do so much to change women's minds about pregnancy. They say governments should address qualitative issues such as education, health care and child care to entice women to have babies.

Analysts say because of the unprecedented nature of the problem, it will be decades before it is known if current policies have any effect at all. But one thing they agree on is that the dangers of not doing anything could be economically devastating.