China’s demographic transition owing particularly to its stricter birth policies has grappled it with the problem of ageing population and dwindling work-force. A report released by the People’s Bank of China (PBOC), China’s central bank, said that China should immediately liberalise its birth policies to tackle the problems of an ageing population and plan to compete economically with a demographically young India and an immigration-friendly US.
In a detailed section on India, the report said the gap between the two countries is narrowing. As two big countries in Asia, China’s economic growth has been faster than India’s for a long time but in recent years, China’s demographic dividend fading, India’s economic growth has tended to approach China’s, the report said. In a rare frank assessment, it added that China’s ageing population and the declining birth rate will become more serious in 10 years while India’s demographic structure will be further optimised.
The report pointed out that India’s labour force will exceed China’s by hundreds of millions in the years ahead. “By 2050, this advantage will continue to grow. Not only will India have a much narrower elderly population at the top and a much wider workforce in the middle, but it will also have a wider workforce at the bottom, indicating a more abundant workforce and greater growth potential beyond 2050,” the report added.
The report continued saying that since India’s demographic advantage is expected to grow for at least the next three decades, the gap between China and India will narrow, provided that appropriate political and economic measures are taken. About the US, the report noted how the US benefits from immigration even as China’s population ages. Advocating to reverse the trend, the report said, China should realise that education and technological progress cannot compensate for the decline in population.
Meanwhile, Chinese media reports quoting a well-known Chinese economist have cautioned, China will experience a negative growth after 2025, which will result in shortage of consumer demand. Cai Fang, a member of the monetary policy committee of the People’s Bank of China said the number of Chinese of working age had been in decline since 2010, which had mainly affected the supply side of the economy. He said that would be bad news for the economy as the government has sought in recent years to drive growth through domestic consumption.