On Monday (March 25), Su Jian, director of National Economic Research Center of Peking University, told Sohu Think Tank that China’s demographic dividend has disappeared, and in the next five years, China is expected to reduce its labor force by 10 million a year, and labor shortage will become the norm.
Su Jian said that a reduction of 10 million per year is 100 million in 10 years. Japan, the world’s third largest economy, has a total population of a few hundred million and a working population of less than 100 million. This means that in 10 years, China will lose a Japanese labor force, “a very serious problem.”
Su Jian said that China has had a shortage of civilian workers since 2003, and it has been 17 or 18 years now.
Since 1962, China has entered the peak of childbirth, while the legal retirement age is 60, Su Jian said. This means that starting from 2022, China will have a retirement peak. Meanwhile, the socio-economic demand for labor continues to expand and the cost of wages will become increasingly high.
According to Su Jian, China’s macroeconomic situation has entered a new stage, and from the perspective of population and labor force situation, there is a situation of double shrinkage of supply and demand.
Su Jian said that China’s demographic dividend is gone, and after 2022, China’s labor force will decrease sharply, which will inhibit China’s economic growth from the supply side. Meanwhile, China’s total population has been decreasing since 2018, which means the demand side is also shrinking.
Earlier on March 5, Dr. Fu-Hsien Yi, a senior scientist and demographer at the University of Wisconsin-Madison, was interviewed by Voice of America, arguing that the main body of the social economy is the population, with which there is a series of economic activities such as production, consumption and innovation.
The rise of China’s economy relies heavily on the demographic dividend. In ’79 and ’80, the median age of China’s population was only 22 years old, and with a little obedience to the law, the economy could have achieved great success, said Fuxian Yi. However, China’s labor force started to decline around 2014, with a median age of 42. If China stabilizes its fertility rate of 1.2 (an average of 1.2 children per woman of childbearing age over her lifetime), the median age in China will be 49 years old by 2035.
Yi Fuxian once predicted that 2012 would be an inflection point for China’s population and also for the economy, that is, economic growth would start to slow down. As it turns out, China’s economy started to fall back in 2012 from 9.6% in 2011 and slid all the way to 6.1% in 2019.
According to F.H. Yee, aging is a gray rhino for China, and it will be an inescapable, long-term challenge for the country. An aging population, declining consumption, a declining economy, declining innovation, a declining workforce, and a declining manufacturing sector are the general direction of China’s future.
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