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Home >> Opinion
UPDATED: 17:27, August 23, 2006
Who will support China's development in 50 years?
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A report on population and labor published by the Chinese Academy of Social Sciences (CASS), has pointed out that China faces a serious problem in the future. China will inherit an enormous aging population who lack the financial means to support themselves. Who will support China's roaring economy in 50 years time and how can the country care for up to a billion old people?

In most rural villages in China, this slogan is common: "It is good to have one child. If you want to be rich, have fewer children, but build a bigger road."

Almost 30 years after the family planning policy was implemented, most families have just one child and have gradually accepted the fact that China could not support a larger population.

China has been bound for 30 years by a policy that brings its population growth into line with developed nations. The birth rate has decreased drastically from an average 5.4 children per couple in 1971 to less than 2 children per couple. Since 1998, the annual birth rate has been lower than ten children for every thousand people, and in 2004 this fell to just six children per thousand people. China has indeed prevented an overpopulation crisis. However, now another serious issue has come to the attention of policy-makers.

The United Nations defines an aging country as one whose senior citizens account for 7 percent or more of the total population. According to China's fifth census in 2000, the country has already entered the 'global seniority club'.

By the time developed nations became, their GDP per capita had reached between US$5,000 and $10,000. However China's GDP per capita has only just passed US$1000, a sum that is insufficient to support an aging population. By artificially controlling the birth rate, a unique situation has developed in China. People are old but not wealthy enough to support themselves in retirement. The aging population is set to increase dramatically, and the size of the labor force will drop accordingly. The size of the aging population will be the main characteristic of the population as a whole in the future.

Researchers Cai Chuang and Wang Meiyan from CASS found that between 2000 and 2030, the average age of the labor force would also increase. It's predicted that in 2013, the number of workers as a percentage of the population will peak at 72.1 percent. But the actual size of the working population will peak at 997 million in 2016. According to UN estimates, the number of Chinese people of working age will gradually fall below the world average. These estimates indicate that China's outlook is not optimistic. China will lose its economic advantage of cheap labor in the near future.

Unfortunately, China's demand for labor will continue to grow for some time. It is the labor-intensive manufacturing and processing industries that have given China such an advantage in the world economy. Without labor, these industries will collapse. China needs a long time if it is to change its mode of production mode and as yet there haven't been any signs of readjustment.

In fact CASS's report says that there is no need to wait for the problem to actually develop, as it has already been anticipated. Since 2004, China's most vital development area, the Pearl River Delta, has experienced a shortage of labor. The Yangtze River Delta has also had this problem. Recently, in Beijing, Tianjin and Tangshan areas, the old Northeastern industrial base and even Jiangxi and Hunan provinces in eastern and central China, authorities have become aware of the shortage of labor. This is an unprecedented phenomenon in China, where there has always been an ample supply of labor and there is a great gap between rural and urban areas.

Cai Chuang believes that a change in relations between labor supply and demand is underway. China has shifted from a country with an unlimited supply of labor to a country that cannot meet its demand for labor. The problem will only be exacerbated by the demands of economic development.

The fact is that China faces a situation where the demand for cheap labor is greater than the supply. If this situation becomes a reality China's cheap labor advantage may disappear.

Source: China Youth Daily, translated by People's Daily Online

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