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The Coming Demographic Impact on China's Growth: The Age Factor in the Middle-Income Trap

  • Fang Cai

    ()

    (Institute of Population and Labor Economics, Chinese Academy of Social Sciences)

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    Thanks to successful economic growth, social development, and strict implementation of family planning policies, the demographic transition in China has been accomplished at a much earlier stage of development than in other countries. I call this outcome “aging before affluence.” As a result of this demographic transition, China has already passed through its Lewis turning point, and its demographic dividend from the decline in the population dependence ratio is about to end. I identify a potential nexus between “aging before affluence” and the “middle-income trap.” China is losing comparative advantage in labor-intensive industries, but China is not ready to gain comparative advantage in technology-intensive and capital-intensive industries. For China to avoid the middle-income trap, it must (1) transform economic growth to a consumption-driven pattern; (2) shift the labor-intensive industries to the central and western regions; and (3) speed up technological catching up. © 2012 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

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    Article provided by MIT Press in its journal Asian Economic Papers.

    Volume (Year): 11 (2012)
    Issue (Month): 1 (February)
    Pages: 95-111

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    Handle: RePEc:tpr:asiaec:v:11:y:2012:i:1:p:95-111
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