China's fast population aging will likely work to reduce price competitiveness of South Korean firms and lead to a buildup in inflationary pressure here, a report said Tuesday.
According to the report by the Samsung Economic Research Institute (SERI), people aged 65 years or older accounted for over 7 percent of China's total population in 2001, and life expectancy in China was estimated at 75 years in 2010, up from 62 years in 1970.
A nation is labeled as an aging society when the ratio of those aged 65 years or older against its total population exceeds 7 percent.
"China's aging population will lead to a declining workforce, which will push up labor costs and export prices," the report said.
"That will also work to jack up import prices in South Korea," it said.
According to the research institute, a 1 percent rise in consumer prices in China is estimated to have an impact of raising South Korea's consumer prices by 0.04 percentage point.
The institute also said the rising ratio of older people in China will cut the nation's savings rate, which will in turn reduce its economic growth.
China accounts for roughly 31 percent of South Korean firms' exports, it said, adding that China's aging population will reduce demand for imported goods, including South Korean goods.
"Rising labor costs and an increase in welfare and medical costs, in particular, will put increased pressure on South Korean firms' financial burdens," the report said.
Meanwhile, the research institute said the rising portion of elderly people in China will provide another business opportunity for South Korean firms.
The industry for catering to the elderly will have a good chance in China as demand for medical care for elderly people is expected to rise sharply, it said.