Analysis: The Trillion-Dollar Opportunity in China’s Aging Demographics

China's “silver economy”—comprising industries and services catering to seniors—has been rapidly expanding in tandem with the country's demographic shifts. As of 2023, the sector’s value was about 7 trillion yuan ($965 billion), or 6% of GDP, and is projected to rise to 19 trillion yuan (10% of GDP) by 2035. This growth is driven by the increasing elderly population, which stood at 220 million people (15.6% of the population) in 2023, and is expected to surpass 380 million (over 30% of the population) by 2050. Improved medical conditions and nutrition are enabling a higher quality of life for seniors, further spurring the sector’s expansion [para. 1][para. 2].

The rising proportion of seniors has also led to a higher dependency ratio, with the elderly dependency ratio climbing to about 20% in 2023 and projected to continue increasing [para. 3]. International experiences, notably from Japan and South Korea, illustrate how aging populations boost growth in sectors such as healthcare, pharmaceuticals, and home services, while reducing demand in education, entertainment, apparel, and durable goods. In Japan (1990–2005), healthcare, housing, and transportation consumption grew faster than GDP, while demand for clothing, furniture, and non-essential goods stagnated or fell [para. 4][para. 5][para. 6][para. 7][para. 8][para. 9]. Similarly, in South Korea (2015–2024), food and pharmaceuticals outpaced overall retail growth, while categories like apparel and books grew more slowly, reflecting a shift in consumption patterns among an older population [para. 10][para. 11][para. 12][para. 13].

In China, provincial data confirms a positive correlation between aging and healthcare spending: provinces with higher aging rates allocate a greater share of expenditure to healthcare services, though comprehensive insurance systems in major cities can moderate this effect [para. 14].

The financial power of China’s elderly is robust, bolstered by high property ownership, appreciation in real estate values, and low debt levels. The “post-60s” and “post-70s” generations purchased homes before the property boom, benefiting from substantial value increases. Between 2000 and 2020, average commercial housing prices rose 8% annually, with first-tier cities like Beijing experiencing over 10% annual realized gains. As a result, people aged 45 and above hold a greater share of real estate wealth [para. 15][para. 16][para. 17][para. 18]. Family sizes are also shrinking, with the average household size dropping from 3.1 to 2.6 people between 2010 and 2020, increasing financial independence and boosting seniors’ personal consumption. Fifty-six percent of seniors now live with just a spouse or alone, with the proportion reliant on family support declining [para. 19]. Senior household expenditure has risen—average spending by people aged 46+ grew 2% in 2024, and even faster in smaller cities—driven by increased wealth and changing consumption attitudes [para. 20].

In 2024, China issued its first national-level “silver economy” policy, followed by a wave of supportive regional and ministry measures. These encompass age-friendly home renovations, consumer subsidies for seniors, smart care product development, and enhanced elderly care networks. Key regional initiatives include Beijing’s “white list” of age-friendly businesses and digital emergency services, Shanghai’s “respite service” subsidies, Jiangsu’s boosted renovation grants, and Yunnan’s focus on collaborative care. Despite progress, significant gaps remain in healthcare and senior services infrastructure—China’s hospital and elderly care facility density, as well as staffing levels, lag behind developed countries [para. 21][para. 22][para. 23][para. 24][para. 25]. Policy measures are targeting these areas, including financial support for elderly care, long-term care insurance pilots, and fiscal subsidies for the adoption of smart technologies [para. 26].

Drawing on Japan’s experience, experts recommend China build a unified, locally co-funded long-term care insurance system and expand public funding for preventive services. Supporting technological innovation—such as smart home devices and nursing robots—will be crucial to easing caregiver burdens and supporting seniors’ autonomy [para. 27][para. 28].

Author: Yi Huan, Chief Macroeconomist, Huatai Securities. [para. 29][para. 30][para. 31]