China Center Special Briefing Paper: Growth Impacts of China’s Premature Demographic Transition

When China instituted the One China policy in 1980, it thought it had found way to hasten the arrival of the “demographic dividend”—the enlargement of the working-age population relative to the overall population. In essence, China “engineered” the advancement and amplification of its demographic transition through its birth control policy, presumably to enable “catch up” growth rates by exploiting a heightened demographic dividend period. However, it did not sufficiently exploit this dividend period because of state sector inefficiencies and distortions. It now bears a significant demographic cost that can only be rectified through structural reforms.

This transition to a “demographic cost” period signals imminent consumption shifts as well as new fiscal pressures and policy imperatives that MNCs must identify and manage.

In this China Center Special Briefing Paper, Senior Advisor Professor Harry Wu examines the cause and consequences of this approaching demographic dilemma—“getting old before getting rich.”