From demographic dividend to talent dividend

Population aging is a distinct demographic phenomenon in the 21st century, with declining fertility and increasing life expectancy combining to raise the share of elderly people in the total population of many countries.

But unlike in Western developed countries, China's total fertility rate has declined drastically within a short period of time — from more than 6.0 in the late 1960s to 2.1 in 1991 and 1.6-1.7 since 1994 to 1.07 in 2022. In comparison, the total fertility rate is 1.6 in the United States and the United Kingdom, and 1.3 in Japan, which is considered a "super-aged" society.

China's current total fertility rate of 1.07 is well below replacement fertility of 2.1. Replacement fertility refers to the total fertility rate at which women give birth to enough babies to sustain population levels.

As China's total population is nearing its peak, low fertility and aging together will change the population's age structure. While the number of people aged 60 or above will grow rapidly to exceed 300 million by the end of 2025 and 400 million by 2033, the share of working-age people and children (aged 0-14 years) in the total population will continue to shrink.

As a long-term effect of the low fertility rate, the working-age population which peaked in 2011 at more than 900 million is expected to decline by nearly a quarter, to about 700 million, by the middle of this century. As a result, every 100 working-age people will have to support 106 elderly people and/or children.

The changing demographic structure will affect the population size and age structure, reflecting the complex features and structure of society.

First, the low total fertility rate together with population aging will have a huge impact on families, affecting intrafamily relations and weakening family care, leading to more dysfunctional families. And the transformation of the traditional family structure will prompt people to find other ways to connect with each other, reflecting diversified communication.

Second, the elderly population's requirements will grow, as many face increasing risks due to higher life expectancy, poverty, illness and/or disability. Hence, eldercare services and the public health system need to be improved to meet their requirements.

To promote the long-term, balanced development of the population, it is necessary to foster a fertility-friendly society, mesh childbirth policies with related economic and social policies, and offer incentives to encourage couples to have two to three children.

Third, the shrinking numbers of children and working-age people will result in a shortage of workforce and rising cost of labor, weakening the competitiveness of labor-intensive enterprises. To adapt to the new population age structure and major changes in production factors, efforts should be made to alter the existing production methods, development models, growth drivers, income distribution patterns, supply and demand systems, and the industrial structure.

Fourth, the changing demographics have also impacted China's filial piety culture and the institution of marriage. They will bring about changes in the education sector as well. In the short term, the previously limited basic educational resources could become surplus due to the continuous decline in the school-age children's population, affecting resource allocation and creating structural imbalance in education resources. In the long run, the negative population growth could weaken the demand for higher education, affecting the education layout.

So efforts should be made to fix the new education objectives and syllabus, in order to turn demographic dividend into talent dividend by building a strong pool of talents.

The declining fertility rate will first affect preschool education. According to Ministry of Education data, the number of kindergarten and preschool enrollments in 2022 was nearly 46.3 million, down 1.7 million year-on-year. There were a total of 289,200 kindergartens nationwide in 2022, and the number of kindergartens in China has dropped for the first time in 15 years, falling by more than 5,000 than last year. Many kindergartens, especially those privately-owned, are facing financial problems, with some even being forced to shut down due to fewer students enrolled.

The falling birth rate will not only reduce the demand for kindergartens but also shrink the market for children's products, including toys. But while schools in towns, counties and smaller cities are likely to see a decline in new admissions, those in big cities may not be affected much due to the continued migration from rural areas to cities.

Enrollments in high schools, vocational schools and private universities, too, may fall in the future, because the number of students taking the college entrance exam is expected to fall from 11.93 million in 2022 to about 7.13 million in 2040, according to the Pangoal Institution. And although reputable public universities may not face tough challenges, some universities might be forced to shut down.

The changing population age structure also means corresponding changes in the elderly people's lifestyle in terms of living space, family relations, consumption pattern, physical and psychological health, social networking, and ways of socializing. The low fertility rate and population aging will not only bring socio-political and strategic changes in different countries, but also impact international relations and geopolitics, which could affect global cooperation given the complex political and legal systems followed by countries around the world.

The author is deputy head of the Aging Society Research Center at the Pangoal Institution.

The views don't necessarily represent those of China Daily.

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