Published : Jan. 21, 2014 - 19:43
Workers take a break outside a construction site in Shanghai. (Bloomberg)
China’s second straight annual drop in its working-age population is robbing President Xi Jinping of an engine of three decades of growth, underscoring the need to close the gap between his achievements and ambitions.
Xi and Premier Li Keqiang, who in November unveiled the broadest policy shifts since the 1990s, are facing a labor force decline that the United Nations estimates will total almost 30 million in the decade through 2025. China’s working-age population, or people age 16 to 59, fell by 2.44 million in 2013, the National Bureau of Statistics said Monday.
The demographic bind adds pressure on Xi and Li to find sources of growth beyond plans that may have a limited impact, including an easing of the one-child policy, while they try to absorb about 7 million college graduates a year. Leaders also face headwinds from reining in a record credit boom and dealing with the possibility of the nation’s first default on a high-yield trust investment product.
“The decline of the labor force just makes everything more difficult in terms of generating growth,” said Freya Beamish, a Hong Kong-based economist with Lombard Street Research. “You have less people to take part in production and that reinforces the need to be more productive. It makes more urgent the need for China to find ways to shift capital to areas of the economy that can boost productivity.”
While government data Monday showed China’s $9.4 trillion economy expanded 7.7 percent in the fourth quarter from a year earlier, exceeding the median estimate of analysts in a Bloomberg News survey, gains in factory output and investment spending moderated last month. Growth was 7.8 percent in the third quarter.
China’s benchmark stock index Monday fell to the lowest in almost six months on concern economic growth is slowing and share sales will divert funds from the market. The yuan weakened after last week touching the strongest since the government unified the official and market exchange rates at the end of 1993.
Increases in industrial production and manufacturing investment eased from 2012 while the government’s measure of services in the economy surpassed that of manufacturing and construction for the first time since China opened its economy in 1978, data Monday showed. At the same time, growth in household consumption probably trailed investment gains last year, according to Royal Bank of Scotland Group Plc.
Income gains are slowing. Urban per capita disposable income last year rose 7 percent in real terms to 26,955 yuan ($4,453), the NBS said Monday. That’s the slowest pace since 2000.
China’s working-age population fell 3.45 million in 2012, the agency said last year, a figure that covered people age 15 to 59. NBS head Ma Jiantang said Monday the age range was changed to reflect China’s labor law. (Bloomberg)