China's people pull
Well-functioning labor market and tremendous consumer market will promote economic growth in China and other Asian and African countries
China is seeing a declining absolute population. Its traditional advantage compared to India and the United States, the current second and third most populous countries in the world, is weakening. China had a total population of 1.41 billion as of 2022, declining for the first time over the past six decades. In 2023, the total population of India is expected to outnumber that of China for the first time. While India has a relatively young population and the population in the US is aging slowly, the Chinese population is expected to age rapidly. From now to 2050, the median age of China's population will rise from 38.5 to 50.7, and that of India and the US from 27.9 to 38.1 and from 37.9 to 43.1, respectively. In 2017, the expected years of schooling was 16.5 years in the US.However, in China and India it was 13.8 years and 12.3 years, respectively, with only a minority in the two countries receiving higher education. The US receives about 900,000 foreign students a year, while the outflow of students from China and India to other countries stands at around 820,000 and 330,000 respectively. About a quarter of science and technology talents in the US are from other countries, mainly China and India.
However, China's population advantage remains irreplaceable on the world stage. Compared with the US and India, China's population advantage mainly exists in two areas: a tremendous number of newly added working-age population and a well-functioning labor market. From 2023 to 2050, China will see 386 million people of working age entering the labor market; the corresponding figure for the US being 109 million. While that inflow of the working-age population in India is 672 million, a sluggish labor market and poor match between economic structure and the number and work ability of young people will remain. The labor force participation rate in India only reached 46 percent in 2021 and high unemployment was observed everywhere. The too rapid expansion of the young labor force will reduce per capita capital accumulation, restrict the long-term potential of social growth, and further accelerate the unemployment of young people, affecting social stability and environmental sustainability. Comparatively, China's labor market is more regulated, with well-developed laws and regulations on employment and the protection of workers' rights. The widespread use of the internet and social media has provided flexible and diverse channels for job postings. Internet finance has significantly facilitated entrepreneurial activities through financial empowerment. The digital economy has brought about new forms of employment, providing flexible job opportunities. Targeting performance and dynamic response ability of the social security system has improved. All of these factors can play a buffering and diverting role in the reconfiguration of employment during the process of economic development and industrial upgrading, weakening the economic and social costs of frictional unemployment.
It should be noted that, from a long-term perspective, the role of the population in the future world economic development will undergo significant changes, and the role of simple labor supply in economic growth will be significantly weakened. Population growth in developing countries such as the Democratic Republic of the Congo, Egypt, Ethiopia, India, Indonesia, Nigeria, Pakistan and Tanzania will account for half of the global population growth over the next 30 years. However, scientific and technological progress has reduced the importance of unskilled labor in production, and jobs in traditional manufacturing industries have been largely replaced by automation. The advantage of having a large and young population will no longer be translated equally into the potential of economic growth. As population advantages weaken, the developing countries easily face massive unemployment, the risks of premature de-industrialization, and technological barriers to catch up with the developed economies. The countries will fail to register an economic takeoff as the developed countries did in the early phase of industrialization, which will affect their "development rights" and risk falling permanently into the trap of middle- or even low-income economies. The gap between countries will further solidify and widen. China is a developing country with a huge stock of labor and still expects new entrants to the working age population on a large scale. Improving the service capacity of higher education and vocational education for future industrial development and getting prepared for technological progress are of crucial value. The policy priorities should include attaching importance to the linkage between curriculum systems and industry demand with full emphasis on the value of forward-looking, subsidized training and establishing the common sense of lifelong education. These are the key ways to continuously improve the adaptability of the huge stock of labor to future industrial demand.
In the meantime, China's population will remain large for a long period of time, and the purchasing power of its people will improve steadily, making China the world's largest consumer market that drives regional economic development. By 2050, China's population will still be over 1.3 billion, 94 percent of the current number. Its per capita GDP will reach $41,585, more than 2.5 times the current level, according to the United Nations. China's share in global consumption will continue to rise. Comparatively, India's population is projected to be 1.2 times its current number in 2050, and its per capita GDP will reach $7,448, 3.3 times of its current value. China has a large labor market and sound investment environment, allowing cross-border investment to radiate into the growing markets in Eastern and Southeastern Asia and Central and Southern Asia. According to a UN projection, the population in Eastern and Southeastern Asia will remain the world's largest in the next 15 years, and Central and Southern Asia will become the world's population centers for the following 30 years after 2037. Asia has long been a major consumer market in the world. McKinsey projected in 2019 that Asia's share in global consumption will rise from 28 percent in 2017 to 34 percent in 2030 and could further grow. Driven by cooperation initiatives and agreements such as the Belt and Road Initiative and the Regional Comprehensive Economic Partnership, regional economic integration in Asia is expected to further improve and opportunities for international trade cooperation will increase.
The world's population pattern is undergoing profound changes, and opportunities in the era represented by technological development and the digital economy are also posing unprecedented challenges to humanity. China's demographic advantage remains irreplaceable on the world stage. It can not only promote China's economic development through large-scale new entrants to the labor force and a well-functioning and inclusive job market but also drive the economic growth of many emerging populous countries in Asia and Africa through regional trade and international cooperation, safeguarding the development rights of developing countries and transforming their population growth into population advantage rather than disadvantage.
The author is a senior research fellow and director of the Development Research Center of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily.