CAI MENG/CHINA DAILY
As of the end of last year, China's elderly population aged 60 and above had reached 297 million, accounting for 21.1 percent of the nation's total population, while those aged 65 and above stood at 217 million, accounting for 15.4 percent of the total. By international standards, China is now considered a moderately aging society.
Population is one of the key variables affecting economic growth. Among the doubts and concerns — both at home and abroad — over the country's ability to maintain its economic growth momentum, a major discussion is whether China's economy has peaked due to its shrinking demographic dividend, and how the country will cope with the challenges brought by a graying populace.
Such doubts and concerns are reasonable. From the perspective of supply, as population aging accelerates, it will lead to a decrease in labor supply, a falling labor participation rate and an increase in labor costs. This will in turn affect the profits and competitiveness of manufacturers. From the perspective of demand, the increase in the elderly demographic will change the structure of consumer demand. With the expansion of seniors, whose income levels see slow growth, a decrease in consumption is inevitable, which is not conducive to economic growth.
However, what should be noted in this regard is that China has a huge population base that can be translated into the formation of human capital advantages and market potential, which will ultimately inject impetus into both the supply side and the demand side. Therefore, what China needs to focus on now is how to solve the problems brought about by an aging population and continue to promote economic growth based on the nation's inherent advantages.
The following points can be used as policy guidance.
From the supply side, China needs to rely on technological progress to promote the improvement of labor productivity and total factor productivity.
This is also why China embarks on its own way of transformation, with new quality productive forces as a new driving force for economic development. A good example to this end involves enterprises seeking to replace labor with capital — and technology with labor-saving technological progress — while the production and reproduction of products are increasingly handled with the help of intelligent robots.
As one of the typical technical representatives of new quality productive forces, new-generation industrial robots integrating artificial intelligence in China are becoming increasingly commonplace. According to a recent industry report, application of industrial robots in China covers 60 main sectors and 168 sub-categories, making the nation the world's largest industrial robot market for 10 consecutive years. Such a trend has improved labor productivity at the production end, effectively alleviating operating pressure brought by a graying citizenry and a rapid rise in labor costs.
In addition, China is investing heavily in high-tech research and development and accelerating cultivation of new drivers of productivity, including AI, the internet of things, cloud computing, 5G networks and specialized advanced manufacturing. The country has made important achievements in major cutting-edge fields such as biotechnology, new materials and new energy, which not only stimulates the economy, but also builds itself as a pioneer in digital evolution globally. According to a World Intellectual Property Organization report, China's innovation ranking has jumped from 43rd in 2010 to 11th this year, making it the only middle-income economy in the top 30.
To maintain such an uptrend, the nation should ramp up its investment in human capital, as more technological progress and innovation-driven economic growth will create higher lifestyle requirements among the populace. According to the World Bank's Human Capital Index, China's human capital reserves have a good foundation compared to many other middle and high-income countries. However, compared with Western economies, there is still a gap in the quality of education in China, which is the main culprit weighing on China's human capital index. It is also an important direction for Chinese human capital investment in the future.
Additionally, more investment in human capital will increase demand for services. The nation in August issued a document promoting the high-quality development of services consumption, highlighting future efforts to optimize and expand services supply — including improving the availability of education consumption by opening up more high-quality learning resources for consumers and encouraging international cooperation in education and training — so as to meet the diversified and personalized learning needs of the public.
By improving the quality of education, China will see higher quality human capital, while by enhancing education, skill levels among workers will further improve, which can boost overall labor productivity. Workers themselves will also enjoy higher incomes, which will lift household spending, helping the country facilitate its positive cycle of supply and demand. In addition, as the advent of an aging society stimulates further consumer demand for medical care and eldercare, market potential in this area will also be huge.
It's good to see the government at different levels has introduced subsidies for new parents to encourage childbirth, and gradually introduced policies to reduce the cost of having and raising children, parenting and education from the perspective of the whole life cycle of the population. In October, the State Council — the nation's Cabinet — issued measures to strengthen education, housing, employment and other support, develop inclusive childcare services and reduce the burden of family childbirth and parenting education, to make the society more childbirth-friendly for parents.
The writer is an associate researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences.
The views don't necessarily reflect those of China Daily.
