A new demographic dividend is taking shape in China.

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It is often said that China’s demographic dividend is disappearing, which will impact economic growth.

This position is supported by two indicators: the proportion of the working-age population, defined as those aged between 20 and 65, and the dependency ratio, which is the ratio of youth and the elderly to the working-age population.

The two indicators are most frequently used to measure a country’s demographic dividend, which is directly correlated with the former and inversely proportional to the latter. According to the National Bureau of Statistics, China’s working-age population has continued to decline in the past few years while the dependency ratio has risen since 2011.

However, it is a one-sided view if we judge demographic dividend only by numbers and ratios. Under the economic new normal, we should take a brand new viewpoint. In fact, from a long-term perspective, we can justifiably say that a new demographic dividend is taking shape in the country.

There are two potential sources of a new demographic dividend. China has a large working-age population while a large portion of them have great potential to improve quality and capacity. Statistics from the bureau show that in 2015, there were 277 million migrant workers nationwide, accounting for 35.8 percent of the total workforce, but only 25.2 percent of them have finished high school or pursued higher education.

And though the trend of population aging is continuing, the average life expectancy is rising. Currently, the country’s average life expectancy is 75 years old, but most people still maintain the ability to work past the age of 60, the current mandatory retirement age for men, and for women, it is 50 or 55. China set the retirement policy in the 1950s and has not changed it since then. If the retirement age is pushed back, which is expected to take place this year, the country will retain more of its workforce.

To create a new demographic dividend, we should focus on the following three aspects. The first is to optimize the population policy. We should emphasize improving population quality rather than increasing the total number.

Also, while the country’s medicine and health care system have made great progress in extending people’s lifespans, the retirement age policy has remained unchanged since it was enacted. Developed countries have addressed the problem of population aging by postponing the retirement age, so China should also consider this method based on our practical needs.

The second is to improve population quality, especially that of migrant workers. By building a learning society, we can enhance the comprehensive quality and skills of the workforce. Migrant workers are restricted by the housing system in urban areas as well as their low manpower capital, so they usually cannot settle down in cities, and they withdraw from the urban labor market. Hence, we should try to improve their quality and also create conditions for them to live in cities to increase labor supply.

The third measure is to accelerate the transformation and upgrading of the industrial structure, to increase demand for highly competent people. The upgrading of the industrial structure means transforming low-level industries with low technological content to higher level ones. The transformation process can create more opportunities for competent people, which will in turn increase the country’s demographic dividend.

If the quality of the workforce is improved but there are not sufficient industries to accommodate these people, there will be no dividend, which will in turn discourage workers from improving themselves. Therefore, we should forge a virtuous circle in this regard.

 

Song Shujie is from the School of Economics and Management at Northwest University in Xi’an, Shaanxi Province.