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How country is overcoming demographic challenges

By Andrew K P Leung | China Daily Global | Updated: 2023-02-01 08:59

A senior plays Chinese chess with her grandson at a park in Beijing in May 2021. [Photo by KEVIN FRAYER/FOR CHINA DAILY]

China's population had fallen by 850,000 at the end of 2022, the first such contraction in six decades, according to data released on Jan 17 by the National Bureau of Statistics.

The national birthrate fell to 6.77 births per 1,000 people against a death rate of 7.37 per 1,000. Meanwhile, the country had 280.04 million people aged over 60 at the end of last year.

The so-called "4-2-1 phenomena "is not uncommon, where one single working person has two retired parents and four grandparents. As a result, China will face a shrinking workforce, decreased spending power, a strained pension system and declining productivity, according to demographers and economists, including Nobel laureate Paul Krugman.

The growing proportion of elderly people is a worldwide trend, including in many developed countries. According to the World Health Organization, between 2015 and 2050, the proportion of the world's population over 60 will nearly double from 12 to 22 percent.

Some nations are aging much faster than others. An acute example is Japan, where, for the first time, people over 75 make up 15 percent of its population and those 65 or over, 29.1 percent. Unsurprisingly, by 2030 Japan is expected to lose its status as the world's third largest economy to a much more populous, and younger India.

Meeting China's current demographic challenge, a number of game-changers come to mind.

China is now seeking qualitative instead of quantitative growth. As evident from small but rich advanced nations like Switzerland, "total factor productivity", a measure of productive efficiency, is far more important than sheer labor input.

According to the McKinsey Global Institute, 800 million current jobs will be lost to robotics around the world by 2030. The notion of a "head count" is becoming obsolete.

China is embracing the fourth industrial revolution. Artificial intelligence, robotics, the internet of things, 3D printing, genetic engineering, quantum computing and other technologies are becoming part of daily life. Staffless supermarkets, stores, hotels and restaurants are beginning to emerge in various urban centers. With digitization, far fewer hands are needed to boost productivity.

China has developed the world's largest higher education manpower pool, with 240 million people having received higher education, a solid foundation for quality development.

China is set to produce nearly twice as many PhD graduates in science, technology, engineering and mathematics as the United States by 2025, with more than three times as many doctorates in those fields as the US — excluding foreign students — according to Georgetown University's Center for Security and Emerging Technology. This should help propel China's long-term economic productivity.

China has made huge strides in becoming a norm-setter for international patents and standards, where there is far more money than sheer production. According to a report in the South China Morning Post, China's patent filings quadrupled in a decade to over 1.3 million in 2019, overtaking the US as the top applicant for international patents under the Patent Cooperation Treaty.

Meanwhile, the number of trademarks filed by Chinese entities grew almost eightfold in the same period, according to the World Intellectual Property Organization. In 2020, China was the top trademark applicant at the European Union Intellectual Property Office, followed by Germany, the US, Italy and the United Kingdom.

As reported in the MIT Technical Review on Smart Cities on April 28,2021, 70 percent of China's population will become massively urbanized by 2035, characterized by five regions of "megacity clusters", each with a population of around 100 million, and all linked by the country's high-speed rail network. Already totaling 40,000 kilometers, two-thirds of the world's combined equivalent, China's high-speed rail system is to double to 70,000 km by 2035, enhancing the nation's overall productivity.

China remains firmly entrenched as a central hub in the global supply and value chain. International trade and foreign direct investment in the country both increased last year, despite COVID-19 disruptions, trade tariffs and other obstacles. This centrality is being consolidated by the Regional and Comprehensive Economic Partnership, the world's largest trading bloc representing a third of the world GDP and a third of the global population.

Many of China's 280 million elderly people are enjoying their role in the "silver-hair workforce", paid or voluntary, for various activities including community work, child care, business mentoring, poverty relief and environmental protection, adding to the nation's economic functioning, social cohesion and common prosperity.

In the face of worsening demographics, provisions and measures are being put in place, such as a deferred retirement age, a one-off bonus for new births, subsidized child care and workplace nurseries, with reduced university education costs also a distinct possibility.

A World Bank study shows that over the past 40 years, the number of people in China with incomes below $1.90 per day has fallen by close to 800 million, three-quarters of the global total. This underpins the national imperative of common prosperity, along with doubling the middle-income group from 400 million to 800 million by 2035.

A smaller population size will further boost China's per capita GDP, well past the so-called "middle-income trap", on a trajectory to becoming a well-off, modern and harmonious socialist country by midcentury.

The author is an international and independent China strategist based in Hong Kong. The views do not necessarily reflect those of China Daily.

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