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News - Editor, 30 January 2013

Decline in China’s Workforce May Impact Economy



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Recent official data has revealed that China's working age population (people between the ages of 15 and 59 years) fell by 3.45 million in 2012, with analysts noting that, in a nation of 1.35 billion the immediate effect is likely to be small, but the cumulative effects in the coming decades may have a devastating impact on the country's economy.

A researcher at the Chinese Academy of Social Sciences (CASS), Wang Guangzhou, notes that statistics reveal the number of people in the working age population will drop by approximately 40 million between 2014 and 2030. The one-child policy imposed in China in the late 1970s has been cited as one of the reasons behind the declining numbers of working age people. There are not enough workers to replace those who retire, particularly among those with in-demand skills. At the same time, the aging population of China is growing fast and as people age, their spending patterns change. More is spent on healthcare, leaving less disposable income for buying consumer goods, which will impact on the country’s economy.

While the abundant supply of cheap labor over the past thirty-five years has allowed China to be exceptionally competitive in the global markets, which in turn has boosted the country’s economy, industrial disputes are becoming more common as workers demand better working conditions and higher pay. It has been reported that some multinational companies are turning their attention to other so-called 'developing economies' such as Vietnam and Indonesia as sources of cheap labor for their production facilities.

Although China has risen to become the second-largest economy in the world, after the United States, when analyzed on a per capita basis, the country lags far behind the US and other developed nations. In an interview with AFP, economist with the Societe Generale in Hong Kong, Yao Wei, noted that "The golden period of the manufacturing industry, particularly those depending on exports, has gone." While some may agree with this opinion, China continues to be a leading exporter and form trading partnerships around the world.

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