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The economic impact of aging populations is expected to deepen in coming decades, particularly in countries like China with high government debt burdens. According to a recent report, this trend will exacerbate challenges due to soaring pension and healthcare expenses.
### Why Debt Matters
High government debt raises interest costs and reduces fiscal flexibility at a time when aging populations increase spending on pensions and healthcare. The Chinese and U.S. governments are among the most indebted in the world. The U.S.’s gross debt, at 123 percent of GDP, is equivalent to its national output, as reported by the International Monetary Fund. China’s debt stands at 84 percent, buoyed by debt-driven growth in the 2010s and a housing market downturn that left heavily indebted local governments.
Oxford Economics estimates that China’s potential economic growth could be cut roughly in half by the mid-2050s due to demographic challenges. The Chinese Embassy in Washington, D.C., and the U.S. Treasury Department did not provide comments.
### Demographic Headwinds
Vincent Deluard, director of global macro strategy at StoneX Group, told Newsweek that soaring pension and healthcare expenses are the biggest policy challenge for all advanced economies and most emerging ones. In China, whose median age is currently around 40—well above the global average—and projected to reach 52 by mid-century, the demographic pressures will be particularly severe. By contrast, the U.S.’s median age is expected to remain near 41.
#### Visual Aid
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 increase by more than 50 percentage points from 2010 levels by 2026. This will strain China’s modest safety net. Moreover, unless birth rates improve, the burden will shift onto a smaller pool of workers.
Jed Cartledge, an economist and one of the authors of the Oxford Economics report, noted that this better positions the U.S. demographically. China’s fertility rate is 1.2 births per woman, among the world’s lowest. While higher than in other countries, the U.S.’s rate of 1.6 remains below the necessary 2.1 to sustain a population naturally.
Cartledge pointed out that historically, immigration has offset declining birth rates and demographic problems in the U.S., although it faces challenges under the second Trump presidency. “We’re expecting the reduction in net immigration to last through the remainder of his term before reverting to a typical pace prior to the pandemic,” he said.
### China’s Structural Differences
Deluard highlighted several structural differences setting China apart: accelerated aging after the one-child policy and rapid urbanization; low statutory retirement ages; two delayed baby booms occurring in the late 1960s and 1980s; a high savings rate of 44 percent; and very little foreign debt. “All this 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.
#### Near-Term Levers
The analyst pointed to two near-term solutions:
1. Raising the retirement age to keep large cohorts of workers in the labor force.
2. Mobilizing its large pool of domestic savings.
By contrast, “the U.S. primarily relies on higher asset prices (401(k)s, homes) to finance the transition, which worsens generational inequalities,” Deluard noted. He predicted that only high levels of nominal growth will improve the U.S.’s outlook.
