China’s rapidly aging population has been exerting pressure on the second-largest economy in the world, prompting the U.S. Federal Reserve to warn that China’s growth could decline sharply by 2030. As its population ages, China’s labor productivity has fallen driving a slowdown in economic growth. Furthermore, the growth rate of China’s working age population is worryingly forecasted to become negative by 2020. Instead, China is slated to become the world’s most aged population by 2030. By 2050, over 30% of its population will be comprised of senior citizens, aged 60 or older.

With the overwhelming majority of China’s current working age population already employed (~80%), economists believe that productivity growth, rather than employment growth holds the key to sustaining Chinese economic activity and health in the future. In response to these looming concerns about long-term economic growth, Chinese officials opted to overturn its longstanding one-child policy last year in order to alleviate China’s demographic woes.

“It’s a little too late, but it’s better now than later,” said Yanzhong Huang, senior fellow for global health at Council on Foreign Relations to the International Business Times. “If the policy is put in place immediately, it will only take effect 20 years from now, in terms of relieving the high-level of aging.”

Other possible measures to bolster aging labor forces are proposed in a 2010 working paper composed by Harvard’s Program on the Global Demography of Aging. Suggestions include raising the retirement age, encouraging higher savings, employing primary care providers for children, increasing employment of women, liberalizing immigration, and expanding education.

The Harvard researchers posit that the China’s best avenue for mitigating the effects of an aging labor force is to mobilize and leverage underutilized segments of its population, namely, the undereducated, underemployed, and women. The study’s authors argue that creating a large reserve labor force can “can lay to rest concerns that China will not have enough workers in the future to preserve the country’s impressive growth in GDP and in GDP per capita.”

References:

http://www.reuters.com/article/us-usa-fed-china-idUSBRE92P14T20130326

https://www.hsph.harvard.edu/program-on-the-global-demography-of-aging/WorkingPapers/2010/PGDA_WP_53.pdf

http://www.ibtimes.com/chinas-one-child-policy-change-will-take-decades-relieve-economic-pressures-aging-2161789

http://en.people.cn/90001/90776/90882/7137446.html