Question

What is the demographic dividend?

Is there a demographic dividend in China today, and why?

Answer 1

The demographic dividend is the accelerated economic growth that may result from a decline in a country’s birth and death rates and the subsequent change in the age structure of the population.With fewer births each year, a country’s young dependent population declines in relation to the working-age population. With fewer people to support, a country has a window of opportunity for rapid economic growth if the right social and economic policies are developed and investments made.

China has entered the time period of the first demographic dividend since 1964 which will end in 2013. It can be inferred that the first demographic dividend is coming to almost an end. Consequently, it is a big challenge to deal with the rapidly expanding population of old people. Young people are a symbol of opportunity and reform, new beginnings and faster economic growth. If few young cohorts enter the economy it will definitely affect the economic growth. This will undermine country’s low cost labour supply. Also the Chinese government will have to use its savings to take care of its aging population. If an older population is a cause of concern for the future of Chinese economy; it would be prudent to identify, as soon as possible, measures that could serve to counteract any negative economic effects of the aging population. The alarming crisis will largely define China in the twenty-first century. The ramifications of these changes are massive and also long lasting. As a word of caution, today’s demographic changes mark only the beginning of a crisis that will be increasingly difficult to mitigate if it is not taken care of soon. China needs to shift the focus on boosting employment for long term economic growth. Government should focus on a range of new policies including education, labour market, reforming the hukou (household registration) system, strengthening the social safety net and focusing more on the service sector. Undoubtedly, there are numerous economic challenges to tackle. China is famed for its research and development activities. It pays great attention to its challenges and potential crisis. There may be some strategic adjustments of the economic structure in order to accelerate the development plan. Relaxation in one-child policy might be initiated to maintain a moderate fertility ratio. Thus it remains to be seen how the changes in social and economic policy will turn a period of old age dependency into . Hence demographic dividend in China still exists .