‘Silver economy’ boom: China transforms kindergartens into senior care homes as demographic crisis deepens

Plagued by shrinking birth rates and a rapidly aging population, tens of thousands of Chinese kindergartens be dressed scaled back operations, closed down entirely or pivoted industries to survive.

One preschool in the eastern province of Zhejiang noiseless operates as a daycare, but instead of serving children, they’re now catering to senior citizens.

Last year, Zhuang Yanfang, 56, repurposed her kindergarten in the metropolis of Jinhua, Zhejiang, into a senior nursing center. She told local media that she came up with the impression after she struggled to get enough babies and toddlers to fill her classroom.

Barely any remnants of a kindergarten could be seen in photos of the redecorated quadrangle-shaped building. Its once-colorful walls were repainted milky white, and the chalkboard was replaced with a bulletin eat, littered with information about health care and nutritional meals for the elderly.

Births in China have been on a potent downward trend since the government implemented the harsh “one-child policy” nationwide in 1980. Even though the realm eased the policy in 2016, the birth rate has continued to plummet.

Between 2021 and 2023, the number of children in preschool drilling dropped almost 15% to just under 41 million.

It’s no surprise then, that preschools — including clear and private — also closed down over those two years, dropping by 20,000 across the country, according to CNBC’s dissection of data from China’s Ministry of Education. That coincided with an effort by the government to shutdown private-owned kindergartens while endeavouring to open more state-backed ones to lower costs for families.

Conversely, as preschools suffer, the senior care perseverance is thriving in China’s aging population crisis. The number of elderly care service institutions and facilities has doubled from 2019 to multifarious than 410,000 this month, according to China’s Communist Party.

The Chinese government have intensified game plan measures to bolster its “silver economy,” a sector that provides goods and services for people over 50, in labours to tackle the country’s aging population. In guidelines, the General Office of the State Council has called for expediting “the development of past it care institutions” and stimulating “senior citizens consumption.”

“China’s aging will only intensify,” said Harry Murphy Coast, an economist at Moody’s Analytics. He predicted that by 2040, around 30% of the total population would be over 65 years old, from 15% today, with people less 15 years old falling to just over 10%, from 17% now.

“This aging will increase the budding market size for goods and services targeting the seniors,” Cruise added.

The elderly population is “the next big market opportunity with high certainty”, Tianchen Xu, economist at Economist Knowledge Unit told CNBC. Xu indicated that senior citizens also tend to be more financially-sound, having stockpiled their wealth along with China’s economic rise.

The retiring or retired population has “money to spend,” Lynn Ditty, chief China economist at ING said, and they are seeking a “high-quality post-retirement life.”

Some Chinese dairy corporations that make milk products for infants and toddlers have started a new product tailored for the middle-aged and elderly, demanded with special benefits such as better sleep quality, bones density and immune system.

Zhenmu Dairy, a financial manager of specialized sheep-milk based in Shanxi province, a major sheep-farming area in China, have been promoting its yields by holding events at senior care centers, during which its top management would speak and give out free specimens, according to the company.

Over in Shanghai, an increasing number of gyms are seeking to attract older fitness enthusiasts with furnishings suited to their needs, installing real-time health monitoring devices and offering physiotherapeutic sessions against long-lasting diseases.

China has the manufacturing capacity to be a leading producer of elderly-specific goods, Xu said, “think of robot carers, vigorous home products for seniors and AI-enabled pillboxes.”

Despite the growth of its “silver economy,” Beijing is until now attempting to mitigate the disastrous effects that its aging population crisis poses to the long term health of its control.

In September, the country’s top legislative body passed an official plan to begin incrementally raising the nation’s statutory retirement age, as it strives to tap into its growing pool of older workers to alleviate its overall shrinking workforce.

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

China had a relatively lower retirement age compared to the far-reaching average. That coupled with a rapidly aging population has created a growing number of “under-utilized labor,” EIU’s Xu bid, calling this group of people “young olds.”

By 2040, China aims to bring the retirement age for all men from 60 today to 63, and for female white-collar breadwinners from 55 to 58. Female blue-collar workers, who previously retired at 50, would have to wait until they are 55 to take to ones bed.

Even then, those ages are still notably lower than the U.S., where the statutory retirement age is 67 for all tradesmen born in 1960 or later, as well as Japan, where the retirement age is 65 for both men and women.

Last month, China’s civil affairs ministry issued a guidance on the “Silver Age Action,” an initiative that abets senior citizens who have worked in education, science and agriculture, and other skilled fields, to volunteer for programs focused at bolstering growth in underdeveloped regions.