65 years and over: 9.1%

Life expectancy at birth: 74.8 years

Population in 2050: 1.30bn

Zhengzhou railway station is one of the main transport hubs in central China. For its chief operator, the third week after the Chinese New Year is the peak period as more than 100 million migrant workers return after the holiday to their workplaces, which are mainly in the coastal areas. It has been like this for the past 20 years.

This year the stationmaster received a surprise. He had prepared more than 100 extra trains to cope with the expected rise in passengers, as he did every year. However, this time only a tenth of the expected number of tickets were sold. The inland provinces claim that they themselves are short of labour and have none to meet the demand of coastal factories.

At the same time, Foxconn, the giant supplier of Apple products, having already tripled its employees' salary over the past six years, has announced new welfare package for its production line workers. But this seems still not enough to attract the young employees needed to man the company's assembly lines.

A sharp decrease in the supply of cheap labour is now a matter of fact in China. The national census shows that its working-age population reached a peak in 2010 at 70 per cent of the total population. Last year, for the first time, China's total working-age population decreased by 3 million. The peak moment of enjoying the Chinese demographic dividend -- when the ratio of working-age people to dependents is highest -- has passed. However, even if the current one-child policy remains in force, it will take at least another 10 to 15 years for China's demographic window of opportunity to close, when the working-age population will account for less than 55 per cent of total. By then, China's labour supply position may not be so gloomy. Another window of opportunity is going to open.

It is well known that the Chinese are investing enormously in education. Between 2011-2015, China's annual public expenditure in education will account for four per cent of GDP, not including the millions of 'tiger mothers' who are planning to spend generously for out-of-school classes and overseas education. China's working-age population in 2000 had on average less than eight years of schooling. By 2015, those entering the job market will have an average of 13.3 years of schooling.

At the higher end of labour supply, in 2010 only eight per cent of China's working-age population had tertiary education. However, according to China's long-term strategy on education, a learning society is to be built by 2020. By then up to 20 per cent of the working-age population will have tertiary education, which is 140 million people, equivalent to the population of Britain and Germany combined. Scholars have already named this qualitative change in the education of the labour force a new demographic dividend. However, things may not be quite so simple.

Earlier this year, while blue-collar workers were experiencing rising demand for their services, college graduates were also looking for jobs. Each year 6 million to 7 million graduates enter the job market, but more than 30 per cent of them do not find jobs in the first year after leaving campus. China's Ministry of Education has set a 70 per cent graduate employment rate as one of the key indicators in evaluating universities' performance. So the story of the Chinese labour market is not so simple.

The labour problem in China is an issue, but not such an urgent one that people have to seriously discuss the possibility that the Chinese may get old before they get rich. The real difficulty is rather the mismatch in the younger generation between expectation and qualification.

Nowadays, the 1980s and 1990s generations have higher expectations for their career path as well as their salary. The lowpaid blue-collar positions where their parents have worked over the past three decades are far less attractive to the second generation of migrant workers. But better paid jobs require higher qualifications and suitable training, which even current college graduates may not be able to meet.

What about the future? According to the long-term vision set up by the Communist Party, China will achieve its 'Great Rejuvenation' and become a moderately developed country by 2049, the 100th anniversary of the founding of the People's Republic.

According to UN Population Division's prediction, China's population growth will finally stop at 1.39 billion at around 2030. By then the 'qualitative' demographic dividend will also have reached its limit. So here is the ultimate question. Can China fulfil its dream even when the two demographic windows of opportunity -- quantitive and qualitative -- have closed? As the old Chinese saying goes, you lose some, you win some. Maybe more windows will open -- or maybe not.

Qiyu Tu is Deputy Director of the Institute of Urban and Demographic Studies at the Shanghai Academy of Social Sciences


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