China faces challenges from falling working age population
21 Jan 2014
The fall in China's working age population is depriving Chinese president Xi Jinping of an engine of three decades of growth.
Xi and premier Li Keqiang, who in November unveiled the broadest policy shifts since the 1990s, are faced with a decline in labour force, that, according to UN estimates would total almost 30 million in the decade through 2025. China's working-age population, or people aged 16 to 59, was down to 2.44 million in 2013, the National Bureau of Statistics revealed yesterday.
The demographic shift adds pressure on Xi and Li to find sources of growth beyond plans that might have a limited impact, including an easing of the one-child policy, even as they tried to absorb about 7 million college graduates a year.
They are also faced with the challenges from reining in a record credit boom, as the central bank pumped funds into the financial system after money-market rates yesterday increased by the most in seven months.
Bloomberg quoted Freya Beamish, a Hong Kong based economist with Lombard Street Research, as saying, the decline of the labor force just made everything more difficult in terms of generating growth.
Meanwhile, China's economic growth, last year outpaced the government's official target, even as Beijing sought to implement painful economic reforms, CNN Money reported.
Gross domestic product was up by 7.7 per cent in 2013 over the previous year, according to China's National Bureau of Statistics. Full-year expansion was supported by 7.7 per cent growth in the final quarter of the year, narrowly beating the survey forecast of 7.6 per cent.
While the growth last year topped the government's official target of 7.5 per cent, China's economy was stagnating after recording revised 7.7 per cent GDP growth in 2012 and 9.3 per cent in 2011. Looking ahead for 2014, expansion would be forecast to fall to 7.4 per cent.
"The data reinforce our view that growth is on a downtrend and we continue to expect GDP growth to slow (in 2014)," Nomura economists said in a research note.
