National Bureau of Statistics Showed Third Staight Decline in Labor Force
China is paying the price for its 36 year old one child policy as it enters its third straight yearly decline in the labor force which was weighed down by growth prospects. The working age population aged 16 to 59 has fallen to 3.71 million last year, this according to the National Bureau of Statistics.
This is a much steeper decline of 2.44 million in 2013, and the first drop was seen in 2012 when the number drop by 3.45 million. Unlike Japan experience in the late 1990s, China’s downturn in working age population corresponded with the deceleration of the economic growth. While shrinking labor pool helped prevented the rise in unemployment and it was also the driving force in the increase in labor costs and eroded manufacturing and export competitiveness that fueled China’s 30 year expansion.
This clearly means that in the next ten years labor will be contributing lesser to the growth than it has done in the past twenty years. plus declining contribution from labor is one of the reasons why there is a trend in growth decline plus a much slower capital accumulation paired with less room to catch up with the global practices.