China Growing, yet Greying - Policy Innovations Vital in Sustaining Economic Development

Melbourne, Australia, — The phenomenal growth in China’s economic development over the past decade is a fact widely acknowledged and rarely disputed among economists. With her rapidly growing affluence now an undisputed fact, the issue preoccupying economists is this: will China manage to continue sustaining this rate of growth in the international commodity market twenty years on; and how she will do so to ensure that competitive edge is not lost?

A study published by Blackwell Publishing in the China & World Economy – for the Institute of World Economics and Politics, Chinese Academy of Social Sciences – provides suggested policy amendments that may point the way towards a viable solution. Researchers from the Institute of Population and Labour Economics have put forward a list of recommendations that may potentially have a positive effect on the world’s largest economy.

With demographic transition in China largely due to a mixed result of socioeconomic development and the implementation of a rigid family-planning program, the Government now faces the challenge of alleviating the strain placed on the economy. Its economic success over the next twenty years hinges in the ability to balance the need to support the nation’s greying population whilst sustaining its economic development and competitive edge. With the demographic transition occurring more rapidly in China than in most developed countries, the corresponding availability of manpower has been on the descent – with the growth rate of the working age population already starting its decline

Lead author Professor Cai Fang says, “The sustainability of China’s economic growth requires a fundamental transformation of the growth pattern – transforming the economic growth from an inputs-based economy to one that is productivity-improvement driven. Under circumstances where comparative advantage is still embodied in its labour-intensive commodities, timely and sufficient supply of a skilled labour force is vital for China to sustain fast economic growth.”

With a forthcoming reverse in labour dynamics and diminishing demographic dividend coming to play, China must ensure full utilization of her labour force by creating as many employment opportunities nationally as possible. Strategic investment in education and health will go far in accumulating more human capital, and institutional innovation is vital in ensuring effective resource allocation beyond the 2020s.

Professor Cai added, “Correctly choosing a development strategy that best leverages on existing comparative advantage, coupled with timely transformation in growth patterns are the best approaches in combating the challenges of an aging population.”


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This study is published in China & World Economy (23 – 31, Vol. 14, Issue. 5). Media wishing to receive a PDF or to schedule an interview with the author, please contact alina.boey@asia.blackwellpublishing.com


About China & World Economy
China & World Economy was launched in 1993 by the Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS). Originally self-published, the journal begins its official publishing partnership with Blackwell Publishing in 2006.
Published six times a year, this journal combines original academic research works with policy review articles – many of its authors are distinguished Chinese economists from both academic and governmental circles. As the only English language journal in China devoted to the topic of Chinese economics, readers can expect objective, analytical and up-to-date quality content. With distinguished contributors such as economists from both the government and academic circles, the journal will provide an informed and balanced window on China, and will undoubtedly become essential reading for all those interested in China’s development.

Blackwell Publishing in China
Since beginning its publishing program in China in November 2000, Blackwell Publishing has been involved in several partnerships with leading academic institutions, including the Chinese Academy of Sciences, the Shanghai Institute of Biological Sciences, the Institute of Zoology, the Institute of Botany and the Chinese Society of Gastroenterology, and the Chinese Medical Association Shanghai Branch.

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About Blackwell Publishing

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The views expressed in this article as published in China & World Economy are those of the author, and do not in any way reflect the official views of the Chinese Academy of Social Sciences.


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