China’s Economic Growth Prospects

China’s Economic Growth Prospects

From Demographic Dividend To Reform Dividend

Cai Fang

In this book Cai Fang explores the contribution of demographic transition to economic growth in China’s reform period, depicts the population factors causing the economic slowdown since the second decade of the twenty-first century, analyses the challenges facing its long-term sustainability when the demographic dividend is disappearing, and proposes important policy remedies. He suggests that in order to avoid the middle-income trap, China's economic growth has to transform from an inputs-driven pattern to a productivity-driven pattern, which requires eliminating several institutional obstacles.

Chapter 4: The demographic dividend

Cai Fang

Subjects: asian studies, asian economics, economics and finance, asian economics, labour economics

Extract

Let the producers be many and the consumers few. Let there be activity in the production, and economy in the expenditure. Then the wealth will always be sufficient. (The Book of Rites [The Li Ki]) Since the formation of a dual economy is closely related to one specific phase of demographic transition—that is, a phase characterized by high birth rates, a low death rate, and consequently a high growth rate—the phase of population development that is characterized by low birth rates, a low death rate, and a low growth rate has inevitably drawn China out of the dual economy. The crux of the debate regarding at which stage the development of the Chinese economy lies is in the lack of unanimous judgment on China’s demographic transition and different understandings of the impact of population factors on economic growth. There are no officially published systematic data or up-to-date information on the status of China’s demographic changes or population dynamics. While various rounds of national population censuses have provided information about population changes, a lack of consensus on some important parameters governing China’s demographics—such as the actual total fertility rate (TFR)—has ensured that no authoritative projections of population change, including predictions of the magnitude and age structure of the population, have been regularly publicized.

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