Inexorable demographic trends provide a springboard for Southeast Asia and China to make giant strides in competitiveness in coming years, a global authority on population forecasting said. Declining fertility rates will gradually become a big headache for all of Asia, as they already are for Europe and Japan, where the burden of a greying population falls on the shoulders of a shrinking pool of workers, according to Professor Wolfgang Lutz, director of the Institute for Demography in Vienna.

But right now, the demographic transition bodes well for the region's competitiveness, especially in countries such as China that have invested heavily in education, Lutz told a conference.

"Southeast Asia and China are likely to gain in global competitiveness at the expense of Europe and Japan where the old age dependency burden is already significant," Lutz said.

"There's a very high probability that this region will significantly gain in economic standing, and I assume that this will also translate into improved political standing," he told a seminar organised by Singapore's Institute of Policy Studies.

Lutz splices projections of educational attainment with demographic trends to shed light on the deep-seated forces that will determine which economies rise and fall in the decades to come.

As with many aspects of the Asian economy, China stands out: within the next 10 or 15 years, he said, China will have more people of working age with a secondary or tertiary education than Europe and North America combined.

"It's just going to be a bigger, more important force in the world economy, and I assume at some point this will also translate into more political influence. It's the rising giant," Lutz told Reuters.

Lutz fears India, by contrast, is destined to fall farther and farther behind China because it is following quite different educational and demographic courses.

Whereas China has invested heavily and attained almost universal primary schooling, half of India's population has no formal education.

Lutz's projections show it would be impossible for India to overcome this legacy by 2030 even if it somehow managed to reach North American school enrolment levels.

And while China's population will stop growing in around 2020 because of its one-child policy, India's fertility rates remain high, leaving it on course to pull rapidly away from China as the world's most populous country.

"Today the prospects for China are many times better than for India," Lutz said.

Once Asia's window of demographic opportunity closes, the challenges of an aging society will crowd in fast.

"The demographic bonus will be available only for another 15-20 years followed by a period of demographic turbulence," Kannan Navaneetham of the Centre for Development Studies in Trivandrum, India, wrote in a paper for the National University of Singapore.

Lutz, who sees a 50 per cent chance that Asia's population will have peaked by 2060, reckons that by the end of the century as many as one in four people could be aged 80 or over compared with just one in 100 now.

The figure for Japan, where life expectancy is already the highest in the world, could be as high as 40 per cent depending on medical advances, Lutz said.

Among the myriad consequences of this rapid greying could be the fraying of ancient Asian traditions, such as the family's responsibility for caring for the elderly, said Shapan Adnan, an associate professor at the National University of Singapore.

To care for the elderly and replenish their labour forces, Asia's developed countries will find it is in their self-interest to rethink their hostility to immigration, Adnan said.

"The later a country changes its policies towards migrant labour, the more it is likely to fall behind in having a competitive edge in world markets," he said.

Because the consequences of changing age structures play out over decades, it is tempting for politicians operating on much shorter time horizons to leave tough reforms to their successors.

This, research suggests, is a big mistake because changes in areas such as education and pension funding take decades to pay off.

"We may well have to orient all of our activities - from governance to business, social security, healthy systems, everything - towards a rapidly ageing population," Lutz said.