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Global Times

$10,000 per capita GDP despite population slowdown secures strong Chinese market

Global Times

By Zhang Hui and Ma Jingjing Source:Global Times Published: 2020/1/18 18:03:19 Last Updated: 2020/1/18 20:10:24

India's demographics to overtake China's

China's per capita gross domestic product (GDP) exceeded $10,000 for the first time in 2019. Experts say this cements the country's position as the world's second-largest economy, and that its population of 1.4 billion provides important business opportunities for other countries.

China maintained medium-high economic growth in 2019 despite encountering headwinds, with its GDP growing 6.1 percent year-on-year to reach 99.09 trillion yuan ($14.4 trillion), according to official data released by the National Bureau of Statistics (NBS) on Friday.

The country's per capita GDP was recorded at $10,276 for 2019.

The upper-middle income level revealed domestic consumption will gradually upgrade, allowing China to become the most attractive market for multinationals and high-quality exports, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times.

Official data showed that China continues to drive global economic growth, contributing about 30 percent of overall global economic growth in 2019. However, it is suspected that China's GDP growth may lose momentum over the next decade or two as its demographic dividend declines.

In 2019, China's birth rate fell to its lowest level in nearly seven decades. The number of births dropped by 580,000 to 14.65 million compared with 2018, with the birth rate standing at 10.48 per 1,000, the lowest recorded rate since 1952, Ning Jizhe, head of the NBS, said at a press conference on Friday.

That was down from 10.94 per 1,000 in 2018 and 12.43 per 1,000 in 2017, according to the NBS.,

According to Ning, second children accounted for 57 percent of all births in 2019 due to the implementation of the second-child policy.

Huang Wenzheng, a demographics expert, said the initial effects of the second-child policy will wear off in another five or six years, and the number of newborns will continue to decline in the following years.

China's population will enter a fast-shrinking phase in five or six years, Huang told the Global Times.

In the meantime, India, a densely populated country in Asia with an annual number of births almost twice that of China, will soon replace China as the world's most populous country.

In recent years, India has seen 25 million births annually. According to a UN report in 2017, India's population will surpass China's by 2024.

Although India has a high death rate for newborns, among many other issues including an unreasonable labor system, its growing number of births will provide strong support for its economy in time, Huang said.

In the long run, the growth rate of India's economy may exceed that of China, but India has a long way to go before it surpasses China's wealth. The Chinese economy is over four times bigger, Huang said, adding that it will be very difficult for India to catch up with China in terms of its contribution to the global economy.

Innovation-driven development

"Although China's population growth is slowing, the country's investment in education and training is increasing," Cong said, noting that such investment is the source of high-quality development.

Unlike the labor-force-driven economic growth seen in past decades, China is shifting to talent and innovation-supported development, he said. "It's urgent that we encourage companies to make technological innovations, while gradually improving the proportion of high-end industries and value-added products with technological content."

In the process, the country should deepen reform to boost the flow of elements such as land, talent and capital between urban and rural regions, and energize micro-entities including corporations and individuals, Cong added.

Huang predicted the Chinese economy will maintain relatively fast growth over the next two or three decades, alongside its continued development of technology and education.

But some 40 years from now, when technological development is unable to compensate for a shrinking workforce, China will have to adopt strong incentives to encourage couples to have more children. Incentives might include cash rewards, subsidized infant care and education for children.

"China should lift its family-planning policy further to remove all birth limitations, although it might have little effect on the improvement of the current birth rate," Zhai Zhenwu, president of the School of Sociology and Population Studies at the Renmin University of China, told the Global Times.

However, Zhao Gancheng, a research fellow at the Shanghai Institute for International Studies, told the Global Times that as China's development has already reached a relatively high level, the country's huge population will continue to lead contributions to global economic growth over the next decade - exceeding even the US.

India's demographic dividend potential may mean it will eventually be able to contribute more to the world than China, Zhao said, as the country has advantages in language, a young population, and cheap land and labor. "There is possibility that India can replicate China's miraculous development over the past 20 years, and the South Asian country is stepping up its integration into the global economy by expanding its opening-up."



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