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Aging China, Capitalist China: Why Beijing Sees Business Opportunity In Getting Old

By 2034, there will be 400 million people in China over age 60. And now, it seems, the state has finally decided to open up the business of caring for the elderly. What that means.

Old man in Guangzhou
Old man in Guangzhou
Zhou Tian

BEIJING — Thirteen years after China crossed the demographic threshold to become an “aging society,” the shortage of elderly services has become increasingly acute.

Chinese authorities have recently begun to react. Earlier this month, while chairing the State Council’s executive meeting, Premier Li Keqiang said that the Chinese government will change the current “single-handed” approach and promote a “retirement services industry” by setting up specialized pension institutes and encouraging foreign capital investment in these services.

“This is significant, and shows strong signs of openness,” says Wang Zhenyao, dean of the China Philanthropy Research Institute at Beijing Normal University. “There have been many barriers to foreign capital entering China’s pension services in the past. The participation of foreign investment will not only improve technology and standards, but also promote competition. China should open up as quickly as possible.”

Zhan Chengfu, director of the Social Welfare and Philanthropy Department of China’s Ministry of Civil Affairs, says that the State Council had agreed on an outline of China’s new policy, which will be unveiled to the public soon.

The Ministry of Civil Affairs concedes that numerous problems in China’s elder care system linger, such as the imbalance between the urban and rural areas, a shortage of beds for the elderly, insufficient service availability, as well as inadequate specialized services of medical rehabilitation and mental care. More generally, there are too few incentives for private sector participation in the sector.

According to data from China’s Ministry of Civil Affairs, at the end of 2012 China’s over-60 population of 194 million people accounted for 14.3% of the total population. This figure is expected to rise beyond 200 million by the end of 2013, and to 400 million by 2034. But as of 2012, the country has only 21.5 beds per thousand for the elderly, a situation that affects both urban and rural areas.

Five guarantees

The State Council proposed that the government play the role of “guarantor of last resort,” ensuring a minimum basic level of care and services. In the cities, public-run care homes will provide mainly free or low-cost services to the seniors who need help. These will include seniors with little or no income, those unable to work, those with no supporting dependents, and the disabled or semi-disabled.

In the countryside, the government’s focus will be around the existing so-called Five Guarantees agencies, where villagers with neither income nor legal guardians are provided food, clothing, shelter, medical care and burial. The aim is to combine these separate agencies into regional elderly pensioner centers and tilt more funding to these rural care services.

To speed up the development of the retirement services industry, the meeting stressed that from now on private sector participation and foreign investment in the industry are to be encouraged through a simplification of procedures and a reduction of administrative fees.

“Previously China’s pension services only considered food and clothing,” notes Wang Zhenyao. “A more modern vision of services stresses integrated care. It is impossible for the government to manage this single-handedly.”

But giving private services more responsibility for nursing home care doesn’t mean the government is just passing the buck, Wang stresses. The government is to bear the management responsibility by developing and defining service standards.

Currently, a number of obstacles stand in the way of investment in China’s nursing industry for the elderly. For instance, the upfront investment is significant, as is the demand for specialized staff. Meanwhile, the return cycle is long, and right now Chinese seniors’ consumption power is still limited. "Private capital is still unwilling to get involved in this sector, so the services market is developing very slowly,” says an official at China’s National Development and Reform Commission.

In response, the Chinese government says public agencies will be able to “buy retirement services” in the future, and industry access standards will be less stringent.

As Wang Zhenyao says, apart from the generally inadequate supply, China’s elderly services are also backward with regard to both technology and standards. In many advanced countries, the pension system has been gradually “de-governmentalized.” They are relying more and more on not only charitable organizations but also on religious bodies because the government is not able to satisfy the seniors’ religious and other needs.

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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