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NFI Seminar on China’s Demographic Landscape and Economic Growth

On July 13, Northern Finance Institute (NFI), an affiliate of CF40 in Tianjin, held a closed-door seminar themed “China’s Demographic Landscape and Economic Growth”.

The top demographic economist in China, Cai Fang, who is a member of CF40 Academic Committee and the Chief Expert of National Think Tank at the Chinese Academy of Social Sciences (CASS), delivered a keynote speech on the implications of population aging on China’s economic growth and coping strategies, drawing forth heated discussions among the participants.

According to Cai, China’s 7th population census reveals the past decade has witnessed both sluggish growth and rapid aging of the population, with people aged 65 and above reaching a staggering190 million in 2020, accounting for 13.5% of the total population. He particularly noted the extremely low fertility rate which stood at 1.3 in 2020.

Cai warned that China now faces the challenge of “getting old before getting rich”, with economic growth starting to slow down before the economy could reach the high-income threshold (per capita GDP of 12,535 USD). He recalled that the first turning point in China’s population growth came in 2010, when the working-age population began to shrink, and this turn was of great significance as it brought shocks to the supply side of the economy. Going forward, Cai predicted the second turning point to arrive in 2025 when the total population would peak, which will bring impact on the demand side and hinder the growth potential of the Chinese economy.

In response, Cai suggested that China take measures on both the demand and the supply sides. On one hand, it’s critical to boost productivity, especially to stabilize the proportion of manufacturing in the national economy, while expanding employment and improving social welfare. He emphasized that policy efforts should aim at protecting the workers and not the zombie firms. On the other hand, he called on the government to narrow the income gap via redistribution which will help stimulate consumer demand.

CF40 Secretary-General Wang Haiming moderated the seminar.