torsdag 13. mai 2021

Time is running out for China to prepare its economy for a 'great demographic unknown'

China is growing fast — but the workforce powering its economic rise is shrinking. Census data released Tuesday showed that China's total population rose by 5.8% over the past decade — the slowest pace of growth since at least the 1960s. It also showed the country's labor force is getting smaller. The number of people aged between 15 and 59 dropped below 900 million to about 63% of the population — down some 7 percentage points from a decade earlier.

That could spell bad news for the world's second-largest economy, as it draws ever closer to overtaking the United States. Lin Yifu, a government adviser and former World Bank chief economist, predicted at a government forum in March that could happen as early as 2030 — if it maintains an annual growth rate of between 5% and 6% over the next decade. An accelerated drop in the labor force could make that tough.
China's labor force could shrink by about 5% over the next decade, according to calculations by Yue Su, an economist at the Economist Intelligence Unit in London. "The likely consequent drop in the labor force, which has been falling since 2017, will place a cap on China's potential economic growth," Yue said Tuesday. "The demographic dividend that propelled the country's economic rise over recent decades is set to dissipate quickly."