In less than a decade from now, those above the age of 60 will be the majority segment in China's capital Beijing. One in every three people will be over the age of 60, the Beijing Daily said in a report over the weekend.
But that may not be a bad thing says a report in the South China Morning Post, citing the findings of four economists Daren Acemoglu, David Autor, Keelan Beirne and Andrew Scott, found that countries where birth rates fell earlier and further did not grow more slowly. Rather, they grew faster per head, and total output did not decline .
'We find lower birth rates are associated with higher growth in GDP per working-age adult across countries and higher wage growth across US commuting zones, with no negative impact on aggregate GDP or earnings,' they wrote.
When young workers become scarce and expensive, employers buy machines. Economies with falling birth rates register faster productivity growth, heavier investment in equipment, a shift of employment from labour-intensive industries towards research-intensive ones, and more patenting in automation. The productivity gains are large enough to offset the lost labour entirely.
China as yet does not have labour shortage. the report notes. Youth unemployment in nearly 18% given more than 12 million graduates entered the market in July this year. But China is also readying for the time when the workforce will shrink.
This is where automation is expected to deliver. China's factories installed 295,000 industrial robots in 2024 - 54 per cent of the global total - bringing the operational stock past two million units, the largest anywhere.
'Robot density rose 17 per cent in a single year,' the SCMP report noted, underscoring that Chinese manufacturers outsold foreign suppliers at home for the first time. That's 166 robots per 10,000 employees, according to China's statistics bureau. Robotics, artificial intelligence and advanced manufacturing sit at the centre of the 15th five-year plan.'
The argument is that if output continues to grow and wealth continues to be generated even as the pension fund falls into deficit, China's resource strength remains. In other words, rather than spending money on trying to encourage the young to marry and have children, focus on advancing technology across all fronts.