Are China’s ‘talent dividends’ enough to sustain the country’s rise?
- Some are questioning whether the nation can still reap demographic dividends given its rapidly greying population
- Improving the quality of the workforce is a move in the right direction, but China should also embrace technology
The shift has prompted many analysts to ask whether China can still reap the demographic dividends that enabled the country to become the world’s largest manufacturing base – propelling its breakneck economic growth in the last three decades.
Demographic dividends refer to a window of opportunity when the labour force of a country is large while both ends of the demographic curve – that determines the country’s dependency ratio – are much smaller.
China’s economic miracle was made possible by good timing since its large workforce was available as the country began to allow the market economy and international trade to boom.
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Beijing only began to relax its controversial one-child policy – in place since the 1980s to control population growth – in the past eight years, as China’s population was ageing much faster than expected. The rules were eased in 2015, with couples allowed to have two children, and since 2021 couples have been allowed to have up to three children.
The government has rolled out many incentives in recent months to encourage young couples to have more children, but it remains to be seen if they will be effective in offsetting the pressure and financial burdens that are discouraging people from having kids.
Meanwhile, the burden of the greying population is already tipping the balance.
According to the Seventh National Chinese Population Census, the age dependency ratio in China increased to 46.3 per cent in 2021. It means that for every 100 people of working age, more than 46 elderly people and children had to be supported.
The UN has forecast that the total dependency ratio could exceed 75 per cent by 2055 – much higher than the estimated global average.
The crisis could be closer than thought since the “second baby boomers” – born between 1962 and 1975, when Mao Zedong encouraged couples to have as many children as possible – started to retire in 2022.
Beijing is putting on a brave face. In his first press conference as premier in March, Li Qiang denied that China’s demographic dividends were waning, instead emphasising the quality of the working population, saying the country was enjoying “talent dividends” even if its workforce was dwindling.
His predecessor Li Keqiang first referred to “talent dividends” in 2018.
While improving the quality of the workforce is definitely a move in the right direction to mitigate the demographic shift, China should also harness another new strength to ease the crisis: technology.
Talk of digitalisation, smart cities and artificial intelligence to improve aged care is nothing new, but none of these are seen as priorities for technology development in China.
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Beijing’s response to the Covid-19 pandemic, while controversial, showed that if the government prioritises a goal, it can mobilise all the country’s resources to accelerate technological development and mass production – for example producing vaccines, medicines and test kits.
That same degree of eagerness and urgency should be applied to innovation drives that could help China mitigate its rapidly ageing population.
But using innovation to improve aged care and facilitate healthy ageing is no less important. Not only would it help the elderly, any technological breakthrough that results in affordable equipment and technology would also benefit other countries since ageing populations are a global problem.
At the same time, Beijing should resist the temptation to make use of its strengths in innovation for excessive social control if it wants to reap “talent dividends” – a restrictive society is not the way to nurture young talent.
