All about risk
Link: https://www.avivainvestors.com/en-gb/views/aiq-investment-thinking/little-book-of-data/
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The sixth edition of The Little Book of Data presents original and curated visuals, charts and graphics to offer a fresh perspective on topics shaping our world, including climate change, artificial intelligence, inflation, economics and geopolitics.
Author(s): Aviva Investors
Publication Date: October 2023
Publication Site: Aviva
Link:https://www.nextbigfuture.com/2023/07/tracking-the-population-crisis.html
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South Korea only had 18,988 births in May, 2023 which is the lowest births since the agency started compiling the data in 1981. This was a drop of over 5% from May 2022. The number of deaths in the country moved up 0.2 percent over the period to 28,958, resulting in a natural decrease in population by 9,970. South Korea is losing about 120,000 people per year and the total birth is about 230,000 per year which is down from 705,000 from 1990 to 1994 and 669,000 from 1995 to 1999. However, after the 1997-98 Asian Economic Crisis, the number plummeted to an average of 500,000 in the early 2000s.
Korea’s fertility rate dropped to a new low of 0.78, the lowest among countries in the Organization for Economic Cooperation and Development, and possibly the world.
Korea would need to triple its annual births to 700,000 per year to maintain and stabilize its population.
Statistics Korea expected people aged 65 and above will take up 20 percent of the population in 2025, marking a sharp rise from 18.4 percent estimated for this year.
The Korean government sees the next five years as critical to increasing fertility and salvaging the country.
Korea’s government is considering easing the burden of gift taxes exclusively for newlywed couples, by raising the minimum amount of cash they can receive from parents without being taxed to either 100 million won ($76,000) or 150 million won.
Several municipalities have also introduced similar programs. Seongnam, Gyeonggi Province, held two couple matchmaking events in July for unmarried men and women who either live or work in the region. As a result, 39 couples found a match.
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Japan is the world’s first “hyper-aged” country, where at least 21 percent of the population is older than 65, with projections predicting 40 percent of the population will be over retirement age by 2050.
Author(s): Brian Wang
Publication Date: 26 July 2023
Publication Site: Next Big Future
Link: https://www.wsj.com/articles/china-is-facing-a-moment-of-truth-about-its-low-retirement-age-5ed9b57f
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China has one of the lowest retirement ages among major economies. Under a policy unchanged since the 1950s, it allows women to retire as early as at age 50 and men at 60. Now, local governments are running out of money just as a wave of retirees hits. That is leaving Beijing with little choice but to ask people to work longer—a move economists say is long overdue but one still likely to meet with resistance.
China’s version of “baby boomers”—those born after China emerged from devastating starvation in the early 1960s—are retiring in droves. Even with government subsidies, by 2035 China’s state-led urban pension fund will run out of money accumulated over the previous two decades, leaving it to rely entirely on new workers’ contributions, according to projections made in 2019 by the Chinese Academy of Social Sciences, a government think tank.
Former central bank Gov. Zhou Xiaochuan warned in a February speech that China must address its pension shortfall and communicate that many Chinese may need to rely on private pension savings
Author(s): Livan Qi
Publication Date: 11 April 2023
Publication Site: Wall Street Journal
Link: https://finance.yahoo.com/news/blackrock-t-compete-free-advil-000000028.html
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China launched private pension plans for the first time last year and Beijing has ensured that domestic banks and fund managers win the vast majority of the new business in a market that may eventually grow to $1.7 trillion. Global companies including BlackRock and Fidelity International Ltd have been off to a slow start.
Given their tiny asset bases in China, most foreign money managers have so far been excluded from pilot trials in 36 cities, allowing banks like Industrial & Commercial Bank of China Ltd. and China Merchants Bank Co. to grab all the inflows. To cement their lead, the banks are offering everything from cash incentives to free ibuprofen for each new account.
“The first bite at the cake here won’t be easy” for foreign companies, said Zhou Yiqin, president of GuanShao Information Consulting Center, a financial regulations specialist.
While it’s still early days for the new pension scheme, the head start for domestic companies illustrates the daunting challenges for global firms eyeing a piece of China’s $60 trillion financial services sector. From mergers advice to stock sales and trading, Wall Street is struggling in a market that combines endless potential with stiff local competition and regulatory roadblocks.
China’s fledging private pension system is loaded with promise, as Beijing desperately tries to entice retirement savings to support an aging population. The number of people over 60 is expected to jump more than 50% by 2040, according to the World Health Organization. China’s population shrank last year for the first time in six decades.
To address the problem, China has launched three pension pillars. The first two — a compulsory state-backed plan and a voluntary corporate matching option — don’t come close to meeting the future needs of most pensioners. Savings in the government-led program covering urban employees may run out by 2032 and face a shortfall of more than 7 trillion yuan by 2035, according to Citic Securities Co. estimates.
Author(s): Bloomberg News
Publication Date: 28 Mar 2023
Publication Site: Yahoo Finance
Link: https://www.bbc.com/news/world-asia-china-64300190
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China’s population has fallen for the first time in 60 years, with the national birth rate hitting a record low – 6.77 births per 1,000 people.
The population in 2022 – 1.4118 billion – fell by 850,000 from 2021.
China’s birth rate has been declining for years, prompting a slew of policies to try to slow the trend.
But seven years after scrapping the one-child policy, it has entered what one official described as an “era of negative population growth”.
The birth rate in 2022 was also down from 7.52 in 2021, according to China’s National Bureau of Statistics, which released the figures on Tuesday.
In comparison, in 2021, the United States recorded 11.06 births per 1,000 people, and the United Kingdom, 10.08 births. The birth rate for the same year in India, which is poised to overtake China as the world’s most populous country, was 16.42.
Deaths also outnumbered births for the first time last year in China. The country logged its highest death rate since 1976 – 7.37 deaths per 1,000 people, up from 7.18 the previous year.
Author(s): Kelly Ng
Publication Date: 17 Jan 2023
Publication Site: BBC
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A new report by Hong Kong Watch have found that a number of pension funds may be passively invested in at least 13 China based companies where there is credible evidence of involvement in Uyghur forced labour programs and construction of internment camps in Xinjiang.
As part of the report, Hong Kong Watch found that major asset managers are exposed passively to these companies as a result of their inclusion on Morgan Stanley Capital International’s Emerging Markets Index, China Index and All World Index ex-USA.
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Commenting on the release of the report, Johnny Patterson, co-founder and a research fellow at Hong Kong Watch, said:
“13 companies on MSCI’s emerging markets index are either known to have directly used forced labour through China’s forcible transfer of Uyghurs, or been involved in the construction of camps. Given this Index is the most widely tracked Emerging Markets index in the world, it raises serious questions about how seriously international financial institutions take their international human rights obligations or the ‘S’ in ESG.
Our view is that firms known to use modern slavery or known to be complicit in crimes against humanity should be classed alongside tobacco as ‘sin stocks’, or stocks which investors do not touch. Governments have a duty to signal which firms are unacceptable, but international financial institutions must also be doing their full due diligence. It is unacceptable that enormous amounts of the money of ordinary pensioners and retail investors is being passively channelled into firms that are known to use forced labour.”
Publication Date: 5 Dec 2022
Publication Site: Hong Kong Watch
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On Tuesday, Hong Kong Watch’s co-founder and trustee, Aileen Calverley, and Director of Policy and Advocacy, Sam Goodman, gave evidence to the Special Committee on the Canada–People’s Republic of China Relationship on the exposure of Canadian pension funds to Chinese stocks and bonds.
Hong Kong Watch has previously written extensively on the question of ESG, business, human rights, and Canadian pension funds exposure to Chinese companies linked to gross human rights violations, including the internment camps in Xinjiang.
In his remarks, Sam Goodman, discussed why China should be considered an ESG investment risk, recommending that:
In her remarks, Aileen Calverley discussed the risk of pension fund investments in China in the event of sanctions, recommending that the Government:
The full committee hearing can be watched here.
Publication Date: 1 Dec 2022
Publication Site: Hong Kong Watch
Link: https://www.spectator.co.uk/article/baby-bust-chinas-looming-demographic-disaster
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According to a new UN report, China’s population growth has collapsed by 94 per cent, from eight million a decade ago to just 480,000 last year. What’s particularly worrying for Chinese leaders is that this means a rapid reduction in the working population. The previous set of projected figures suggested that by the year 2100, China’s 15- to 64-year-old population would be 579 million. This has now been revised down to 378 million, a 35 per cent fall. If this prediction plays out, the implications for China – and the rest of the world – could be brutal.
Today, every 100 working-age Chinese need to support 20 retirees. If trends continue, by the turn of the next century, every 100 workers will have to support 120 retirees. This means China will have the largest drop in working-age population among any of the G20 economies by 2030, with more than 23 million fewer Chinese. In percentage terms, Japan and South Korea will shrink even faster – but they became rich before birth rates began plummeting.
Author(s): Rana Mitter
Publication Date: 6 Aug 2022
Publication Site: The Spectator UK
Link: https://www.visualcapitalist.com/shifting-global-economic-power/
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China is expected to surpass the U.S. by the year 2030. A faster than expected recovery in the U.S. in 2021, and China’s struggles under the “Zero-COVID” policies have delayed the country taking the top spot by about two years.
China has maintained its positive GDP growth due to the stability provided by domestic demand. This has proven crucial in sustaining the country’s economic growth. China’s fiscal and economic policy had focused on this prior to the pandemic over fears of growing Western trade restrictions.
Author(s): Raul Amoros
Publication Date: 13 Jun 2022
Publication Site: Visual Capitalist
Link: https://www.visualcapitalist.com/cp/chinas-aging-population-problem-1950-2100/
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The one-child policy defined China’s demographic transition for over three decades.
But to combat an aging population and declining birthrates, the government scrapped the policy for a new two-child policy in 2016. Despite this massive change, China still faces a growing demographic crisis.
The above animated population pyramid from James Eagle looks at the distribution of China’s population by age group since 1950, with projections up to the year 2100.
Author(s): James Eagle
Publication Date: 27 Dec 2021
Publication Site: Visual Capitalist
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COVID has disrupted supply chains in two major ways: surging demand for imported consumer goods in the West due to pandemic work from home trends and other home improvement spending, and a decline in workers required to maintain and operate these supply chains. The surge in US import demand has led to a sharp rise in eastbound freight rates (see charts for Shanghai->LA and Shanghai->Rotterdam). However, westbound freight rates have not risen nearly as much, leading to an odd and problematic phenomenon: incentives for container owners to move them back to China empty to accelerate receipt of eastbound freight rates, instead of waiting for containers to be refilled to earn westbound freight rates as well. This is illustrated in the fourth chart which shows departing containers from LA/LB: a lot of them started leaving empty once eastbound freight rates surged. This further exacerbates supply chain issues, since US goods (i.e., grains) that were supposed to depart US railcars and warehouses for export remain in place, occupying space that US imported goods were destined for.
Author(s): Michael Cembalest, Chairman of Market and Investment Strategy
Publication Date: 27 Sept 2021
Publication Site: JP Morgan
Link: https://finance.yahoo.com/news/british-pension-funds-plough-more-155119851.html
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British pension funds are ramping up their investment in Chinese companies despite growing tensions between the West and the Communist state.
According to a new report by Hong Kong Watch, a pro-democracy advocacy group, the amount of cash invested by Western pension funds and other institutional investors in China has hit a record high in recent months.
It comes amid rising criticism in the West about China’s human rights record, including its brutal treatment of Uighur Muslims and its suppression of democracy campaigners in Hong Kong.
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The report cites the Universities Superannuation Scheme (USS), one of the UK’s largest private pension schemes, and Legal & General, Britain’s biggest pensions manager, as two British firms with “problematic” investments in China.
It found that L&G’s China fund was previously investing UK pensions in Zhejiang Dahua Technology, which is alleged to produce facial recognition software for the Communist Party that detects the race of individuals and alerts the police when it identifies Uighur Muslims.
L&G has since divested from Zhejiang Dahua Technology.
Author(s): Simon Foy
Publication Date: 22 Sept 2021
Publication Site: Yahoo Finance