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Home > Publications > Expert Opinion
Du Yang
Aug 20, 2017

I am very grateful for this opportunity. My main field of research is China's labor market. I have worked at the Institute of Population and Labor Economics for nearly 20 years and have always had the opportunity to learn about demography. I will share what I have learned with you here.

The main content includes the following aspects: First, from the perspective of China's situation, China's population change has its uniqueness, which also determines many of our development directions, paths, and characteristics. The second question about China's population is that many basic facts have not been agreed upon. This is mainly reflected in the fact that there is still a lot of controversy in academic circles about how high the fertility rate is and what the determinants are. Finally, I will introduce the trend of population change, economic development, and the connection with low carbon.

China once implemented a relatively strict population control policy for a period of time and, at the same time, experienced rapid economic development in just 30 to 40 years. These two factors are a driving force leading to drastic changes in population transition. China's demographic transition is happening faster than most economies, as fertility policies and rapid economic development have been the forces behind the demographic transition. As a developing country, China can achieve a population structure that can meet the conditions for rapid economic growth in a very short period of time, that is the demographic dividend. However, the price to be paid for such a rapid demographic transition is that the demographic dividend period is shorter than that of most countries, and new changes will occur in the population structure, mainly reflected in the structure that is not conducive to economic growth brought about by aging.

Currently, China has become a country with an ultra-low birth rate in the middle-income stage, and it needs to deal with the aging problem. There are a few precedents. Aging is a worldwide trend. Other countries with relatively high aging rates in the world are developed countries with relatively high-income levels. China is a developing country, and a middle-income country has many cases to learn from in order to solve the aging problem: first, when facing aging, there is no perfect social security system to support the aging society; second, as a middle-income country, there are not enough resources to support aging. This is a relatively unique basic national condition in our country. The rapid demographic transition has led to a labor shortage, which may have an impact on social development. This also poses a new challenge for us to overcome the middle-income trap.

Last year, the OECD published a report looking at the population from a global perspective. Looking back at history, most demographers’ predictions on population were wrong, and this situation has more or less occurred in China. The reason is that denying low-income levels has led to lower-than-expected demographic development. At the same time, we have underestimated the magnitude of the aging population so rapidly, and the transition in the labor market has been faster than expected. For example, we said more than ten years ago that China's labor market had entered a turning point and faced a shortage of labor. It also caused a lot of controversy at the time, but when people frequently saw labor shortages and rapid wage increases, objective facts forced everyone to discuss why this happened, and only then did they discover that population structure played a very important role in it.

We want to understand the level of fertility in China and the determinants of fertility. I just mentioned two types of factors: one is policy, and the other is economic development. This is a result of what we did more than ten years ago. In 2005, we made a national population development strategy. At that time, we did some analysis of the determinants of China's fertility rate, including fertility policy, economic development, and humanistic development. From 1970 to 1980, the birth policy played a very important role in the decline of the birth rate, but rapid economic development was also an important factor. After the 1990s, the marginal effect of the fertility policy was so weak that it was no longer statistically significant, but socio-economic development was still driving the decline in the fertility rate. There have been very obvious changes in the fertility policy in the past few years. It is expected that this change will lead to a rebound in the fertility rate, but the actual result may not be certain because we have long discovered that the marginal effect of the policy itself on the decline in the fertility rate is very weak, the real reason is that economic development has led to a decline in the fertility rate. Our economy has been developing, and it is difficult to predict that the fertility rate will rebound further in the future.

If you want to achieve the goal of raising the fertility rate through the adjustment of the population policy, the effect may not be great. According to research done by a colleague of mine, before the birth policy was adjusted, some areas allowed two children. The survey they conducted found that many people answered that the ideal average fertility level is 1.7, but the actual level is 1.9. In addition to the actual and expected, there are only 1.3 planned in the future. Even if the policy has already satisfied the fertility level of 2, it is only 1.3. This is a research just done by Mr. Guo Zhigang of Peking University. In 2013, there was a separate two-child policy. Everyone expected that this would have a significant impact on the fertility rate. However, he found that if the population samples in 2005, 2010, and 2015 were used According to the survey data, it found that the main reason for the decline in the fertility rate is that the fertility level of the first child has dropped significantly. Therefore, although the birth policy allows two children alone, the birth rate of the second child has slightly increased, it is not enough to offset the downward trend of the first child. Overall, from 2005 to 2010 and then to 2015, the comprehensive fertility rate dropped from 1.34 to 1.2, and then to only about 1.05 in 2015, which is a very low level of fertility. This is a research done by another scholar. According to the policy comprehensive fertility rate calculated by our complex population policy in history and the actual comprehensive fertility rate, it will be around 1.4 by 2010.

If we talk about low-carbon research, economic development, the most basic national conditions and population, and the budget for 2050, we need to have an accurate forecast so that after 2050, our future generations will not say that the population forecast will be total. is wrong. If the United Nations data are used, they are more sensitive to changes in fertility rates and policy adjustments. China's population will reach a peak of about 1.44 billion in 2030 and then begin to decline. By 2050, the total population will be about 1.36 billion. But we know that this estimate of the fertility rate is too optimistic, and the impact of the policy on the fertility rate is also too optimistic because you believe that the policy causes the decline in the fertility rate, so if the policy is adjusted, the fertility rate will rise, but if We feel that the decline in the fertility rate is due to social and economic development, and we cannot believe that policy adjustments will have such a big effect. At the same time, the current fertility level is also overestimated. If we use the 1.5 fertility level as a forecast, the results obtained are different from the previous forecast results. The total population will probably reach its peak after 2024, at about 1.4 billion, and then begin to decline. , its peak value is earlier. After 2050, the total population will drop to 1.28 billion. This is the result of different prediction schemes.

At the same time, the demographic structure will continue to change. For example, aging is still an irreversible trend. If 1.5 is used as the predicted value, by 2024, the elderly over 60 years old will account for about 21%, those over 65 years old will account for nearly 15%, and by 2050 they will account for nearly 40% and 30%, respectively. The aging population is very scary. At the same time, the fertility level is still very low. The population aged 0 to 5 accounts for about 5.56% of the total population and will only be 4.3% by 2050. The labor force population will continue to decrease and drop to 978 million by 2024, and there will be nearly 70% by 2050. Only less than 60% of the year. This demographic trend is almost irreversible.

What impact does demographic change have on economic development and even the low-carbon development we are discussing? I think it may have something to do with economic growth, specifically:
 
First, changes in the dependency ratio. As aging causes more economic resources to be used for the elderly, this population structure will be unfavorable to growth if other conditions remain unchanged.
 
Second, the impact of labor supply. Since 2012, according to the data released by the National Bureau of Statistics, the labor force population has begun to decline, with an absolute decrease of 3.87 million and a decrease of 3.49 million in 2016. When it keeps increasing, we continue to increase investment without being restricted by capital decline, and our labor factors are also increasing accordingly, but once the size of the working population starts to decrease, it will seriously restrict economic development, which means still relying on production factors Accumulation, including capital and labor input, to promote economic development has become unsustainable, which means that the mode of factor-driven development is unsustainable.
 
Third, aging will reduce the savings rate, which is not conducive to capital formation. Under the condition that the consumption pattern changes and the overall consumption level remain unchanged, aging brings about a consumption structure that is not conducive to growth. If we compare China with other economies in East Asia, our economic development model, including the role played by the government, and the interconnected markets among us, are very similar. But there is a big difference. When we cross the same income, our population structure is different. Compared with other East Asian economies, we are more pessimistic. China may face greater challenges when East Asian economies face the same amount of data because the population structure differs. Because our demographic transition process is faster, the demographic dividend period is short, which is a big challenge. We have calculated some relevant support coefficients and roughly see that our demographic dividend period has passed
 
Fourth, the labor force population is also beginning to decline. From the perspective of microdata, aging has reduced the savings rate, and according to micro surveys, aging has also changed consumption patterns. You will find a big difference: as the degree of aging increases, a family or individual's work-related consumption, such as transportation, clothing, etc., will have a clear downward trend, and housing consumption will also decline. , but spending on health will increase significantly. Why do we say this consumption model? To consider the low-carbon economy, we must consider the result of the population because if it is an economy with a labor force dominated by the population, it may be more inclined to use a more extensive economic development method, then it will lead to more carbon emissions. If it is a population structure in which work-related consumption and residential consumption are gradually declining, the demand for energy and carbon emissions may not be so great.
 
Therefore, from the empirical evidence I just showed you, we must first grasp the overall population change trend, start from the mechanism of fertility determination, and clearly understand the reality of China’s ultra-low fertility rate and its irreversible characteristics. In this way, our judgment about the future may be reasonable. Changes in the growth pattern of population change may provide the possibility for low-carbon development because the labor force reduction makes the development model of factor accumulation unsustainable. Because the law of conservative diminishment governs it, and changes in the relative prices of factors trigger positive shifts. Based on the recent microdata, we have conducted some enterprise surveys and found that the technological progress of enterprises has played a role in this aspect, and the technological changes brought about by more and more expensive labor are becoming increasingly obvious. From the perspective of consumption level, mode, and demand, aging has had a profound impact on the consumption level mode, reducing the consumption level, and the consumption mode is also a more low-carbon mode.
 
Thank you all.