Lanterna Rally

Author: U. S. Military

Publisher:

Published: 2016-12-15

Total Pages: 107

ISBN-13: 9781520148595

This excellent report has been professionally converted for accurate flowing-text e-book format reproduction. The favorable demographics that have contributed to China's rapid economic growth are changing. China's working-age population is currently peaking and within two decades its overall population will begin to shrink. In addition to a shrinking working-age population, China will see an increase in the elderly population and a rising dependency ratio. This demographic change may have an economically significant impact. If China's enormous stock of labor and low dependency ratio were key elements in its rapid economic growth, then some economists conclude that the reversal of these elements will have detrimental effects on the Chinese economy.This study examines this argument by examining how Germany, Japan, and Russia have already faced and attempted to mitigate similar demographic changes, and assesses China's potential mitigation strategies in this light. For each country, the study examines two economically significant demographic changes--decreasing working-age population and rising dependency ratio--and then examines how strategies to maximize labor force participation, increase productivity, and control old age benefits can potentially mitigate their effects. The comparison of China with Germany, Japan, and Russia leads to the conclusion that China is poorly prepared to mitigate the economic effects of its coming demographic change.This study examines this argument through five chapters.The second chapter focuses on understanding China's demographic trajectory. This is accomplished by examining population transition theory in general and assessing how China's recent demographic history fits this model. This history is broken down into two time periods: the Mao Zedong-influenced era from the founding of the People's Republic of China until the death of Mao; and the Post-Mao era, from Mao's death to the present. This review pays specific attention to the role that government policy has had in shaping China's demography. Finally, this chapter includes several of the potential economic impacts of China's demographic trajectory.The third chapter establishes the comparison case studies used to determine how well China is poised to mitigate the economic effects of demographic change. This begins by briefly reviewing the demographic and economic situation of the comparison countries: Germany, Japan, and Russia. Next, three specific economic aspects that may provide mitigation are reviewed; in maximization of potential labor, productive use of labor, and controlling the cost of elderly care.The fourth chapter compares China with the comparison case studies, seeking to understand to what extent is it likely that China will be able to emulate and benefit from similar mitigation strategies. This chapter begins with a historical look at China's economy in two periods: the economy under Mao Zedong, and the growth and reform that has occurred since his death. Then China is assessed against the comparison case studies to understand if China will be likely to benefit from similar mitigation strategies.The fifth chapter is the conclusion. This chapter reviews the findings of the three previous chapters--that China is destined for demographic change, that the economic effects of demographic change can be mitigated, and that China is currently poorly suited to mitigate its demographic change--and evaluates how China's mitigation potential might change in the future. This chapter also outlines areas where additional research could be conducted to further advance the understanding of the interaction between demographics and economics. The chapter concludes with the author's thoughts on broader implications of demographic decline.