China losing its 'population dividend', experts warn

PUBLISHED : Friday, 20 January, 2012, 12:00am
UPDATED : Friday, 20 January, 2012, 12:00am


Demographers and economists are advising Beijing to keep a close watch on population figures, with the proportion of people of working age having shrunk last year for the first time in a decade.

Although they insist there is no cause for alarm, they say the data provides further evidence that the country has lost its 'population dividend' - the notion that nations with younger populations fare better economically.

Economists cite this factor as being crucial to China's three decades of phenomenal growth that has established it as the world's second biggest economy.

The population aged between 15 and 64 - the internationally accepted range for labour forces - dropped to 74.4 per cent of the total population last year, a drop of 0.1 percentage points from 2010, the National Bureau of Statistics said.

The number of people over 60 reached 185 million, accounting for 13.7 per cent of the total and rising 0.47 percentage points. And the population above 65 hit 123 million, 9.1 per cent of the population - up 0.25 percentage points.

'Although it is still possible to see some minor fluctuations in the next few years, it is worth paying much more attention to the impact [of a decreasing] labour supply,' the statistics bureau said.

But analysts also noted that because the population had risen so quickly, the number of workers had not dropped, despite many baby boomers born six decades ago dropping out of the work force and the birth rate falling dramatically under the nation's one-child policy.

Professor Chen Wei, a demographer with Renmin University's Institute of Population Research, said there was no cause for alarm at the latest figures.

Chen noted that the labour force was still growing, and that its growth rate had outpaced that of the ageing population - those above 65 who are not considered part of the labour market.

He also pointed out that the statistics bureau said it was the first time in 10 years that the workforce, relative to the population, had declined. This was evidence that the change did not represent a 'turning point' in the job market.

Rather, he said, it resulted from a combination of baby boomers born in the 1950s, when Mao Zedong promoted a higher birthrate, as well as from the increasing life expectancy and the sharp drop in fertility rates in recent decades as a result of modernisation.

But some economists said the decreased proportion of the labour force provided further evidence of widespread fears in recent years that the mainland was witnessing a labour shortage and ushering in an ageing society.

Zhuang Jian, a senior economist with the Asian Development Bank's China resident mission, said the latest data had at least provided further evidence of a decade-long trend towards a growing ageing population and an increasing labour shortage.

'The current labour shortage plaguing many of China's regions, especially the developed coastal regions, highlights the urgent need for the government to work out new strategies and policies for [social and economic] development,' Zhuang said. He said the demographic trend called for a transformation of the development model, as the previous model, which capitalised on the ample supply of cheap labour, was no longer viable.

Demographic studies suggest that the elderly will account for more than 30 per cent of the population by 2040, and that China will face the biggest ageing-society problem of any country in the world, exacerbated largely by its one-child policy.