1 Changing Population of China and its impact on future economy and society of China- A Demographic comparison with India Ved Prakash, M.Sc. Mathematics, Indian Institute of Technology, Kanpur Abstract: China had a population of just 694,581,759 in the year 1964 and a GDP measure of216462 Million US Dollar in 1978.But today China has a population of 1.34 Billion and a GDP of 7321508 Million US dollar. Population explosion in China was an outcome of high economic growth as well as a reason of heavy profits and surpluses of manufacturing industries in China. Through this paper I Intend to compare the similar relation among other countries like Japan and Sweden. Aging population brings the availability of cheap labor down and hence impacts the economic performance of countries. I will examine fertility and mortality and age structure pattern of population in China and conclude that Aging population is one of the reason of China’s declining economic growth. Department of Humanities and Social Sciences, IIT Kanpur
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Changing Population of China and its impact
on future economy and society of China- A
Demographic comparison with India
Ved Prakash,
M.Sc. Mathematics,
Indian Institute of Technology, Kanpur
Abstract: China had a population of just 694,581,759 in the year 1964 and a GDP measure
of216462 Million US Dollar in 1978.But today China has a population of 1.34 Billion and a GDP
of 7321508 Million US dollar. Population explosion in China was an outcome of high economic
growth as well as a reason of heavy profits and surpluses of manufacturing industries in China.
Through this paper I Intend to compare the similar relation among other countries like Japan
and Sweden. Aging population brings the availability of cheap labor down and hence impacts
the economic performance of countries. I will examine fertility and mortality and age structure
pattern of population in China and conclude that Aging population is one of the reason of
China’s declining economic growth.
Department of Humanities and Social Sciences,
IIT Kanpur
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Introduction
China today is the most populated country in the world and the second strongest economy.
China had a small population of 694,581,759 in 1964. After the economic reforms of 1979,
Chinese economy was rising and families were prospering which led to high fertility rate in
China and China’s population started growing at striking rate (TFR = 5.512 in 1970). The high
number of Children in China who became young and entered labor force in the years starting
from 1990 provided availability of cheap labor for industries, especially manufacturing
industries. China’s export encouraging economic policies led to cheap exports for the world
created heavy surpluses for the government and led China to become the second largest
economy in 2009.
I try to answer question through my research, which are as follow:
Question 1: How changes in fertility and mortality in China changing China’s age structure?
Question 2: What effect China’s aging population will have in China’s social and economic
conditions?
Question 3: What can be done now to tackle the problems that are being created by changing
age structure in China?
Question 4: What needs to be done in India to bring down the rate of population growth and
improve other demographic indicators?
The reason this study is important is because a high population is like a hidden power, it has
both positive effects as well as negative. If used correctly, then it can lead to development like
in case of China and if mishandled can lead to economic and political instability. Most of the
population of the world is concentrated in developing nations. If mixed with proper policies of
human development, then these populations could find a way to high economic growth and
better lives through their changing age structures.
The outcomes of this study might help other nations in managing human development policies
and also help Chinese Government to make batter policies and support for its own economy
and for those who are getting old in China.
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Literature Review
The Demographic Dividend: A New Perspective on the Economic Consequences of Population
Change by David E. Bloom, David Canning and Jaypee Sevilla.
This paper discusses various theories related to connection between population and economic
growth in detail.
• The “Pessimistic” Theory: Population Growth Restricts Economic Growth
The “pessimistic” theory traces its lineage to Thomas Malthus. Writing in the 1790s, Malthus
asked whether “the future improvement of society” was possible in the face of ever larger
populations. He reached his famously dismal conclusion:
“Taking the population of the world at any number, a thousand millions, for instance … the
human species would increase in the ratio of 1, 2, 4, 8, 16, 32, 64, 128, 256, 516, etc. and
subsistence as 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, etc. In two centuries and a quarter the population
would be to the means of subsistence as 512 to 10; in three centuries as 4096 to 13, and in two
thousand years the difference would be incalculable”(Malthus, 1798).
He was not the only one who wrote about pessimistic view of population expansion. In year
1968, Paul Ehrlich came with is book, “Population Bomb”, where he declared that “In the 1970s
hundreds of millions of people are going to starve to death” (Ehrlich, 1968). This view has
always remained with the world and resulted in introduction of family planning policies thinking
that reduced growth of population will result in increased growth of economy. One more
pessimistic view is that even if world witness’s period of intensive economic growth, it will be
consumed to sustain the increased population growth. So the living standards would never
improve.
• The “Optimistic” Theory: Population Growth Can Fuel Economic Growth
There are a different set of people who believe in the great power that population brings along.
The population of the world has doubled in last 40 years but along with that average incomes
have also increases by two- third. As Paul Ehrlich declared, “millions of people” didn’t die. In
fact, most of the technical and social innovations have come in last 30 years, which is faster
than any other period of time. As pressure on natural resources increased, innovative
technologies to obtain more from fewer resources came up. Green revolution is one such
example where agriculture produce increased by 4 times with just 1% extra land utilization.
• The “Neutralist” Theory: Population Growth Has No Significant Effect on Economic Growth
More recently the neutral view towards population growth and economy has come up saying
that population has very insignificant effect on economic growth. Adam Smith, in his book
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analyzed that growth is decided by distribution of labor and other factors. Countries where
skills of worker were directed towards special division of work developed faster than other.
Other factors like investment in human capital, openness to trade, economic policies played
much more important role in economic growth. On carrying out regression between economic
growth rate and population growth rate, very small dependency was found (National Research
Council, 1986).
Population Aging and Economic Growth in China by Judith Banister, David E. Bloom, and Larry
Rosenberg
This paper discusses the possible effect of China’s aging problem on economic growth and
social structure. With reducing fertility rate and increasing life expectancy, the population of
the world is aging on an average. More than 2 billion people will be aged (age 60 or more) by
2050. For China, this is a serious issue since by 2050, 30% of its population will be aged. Its
dependency ratio (number of working age group population/ number of young and old
population) is at its peak but will decline sharply in coming years. Decrease in labor force will
make it hard for China to sustain the level of GDP growth that it maintains right now. Also,
because of China’s one child policy, that single child finds it tough to take care of two parents
and two grandparents. There is suddenly an increase in number of abandoned parents and
grandparents. Government of China and other such countries will soon have to make changes
in the employment policies and social arrangements so as to accommodate the changing age
structure. Several piece of information from this paper are later used in this paper.
The Demographic Transition: Causes and Consequences by Oded Galor
This paper discusses the cause and consequence of demographic transition. First, the decline in
population growth reduced the dilution of the growing stocks of capital and infrastructure,
increasing the amount of resources per capita. Second, the reduction in fertility rates permitted
the reallocation of resources from the quantity of children toward their quality, enhancing
human capital formation and labor productivity. Third, the decline in fertility rates affected the
age distribution of the population, temporarily increasing the fraction of the labor force in the
population and thus mechanically increasing productivity per capita.
Declining fertility rates and mortality rate have caused an increase in population but at the
same time have increased the labor force which was directed towards development programs.
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Sources of Data and Quality
• Most of the data has been downloaded from World Bank Website
(http://databank.worldbank.org) which is one of the most reliable sources of data on World
Development Indicators (WDI) and Economic Indicators.
Some other websites that were used are
• http://www.indexmundi.com
• data.un.org
• www.chinatoday.com/data/china.population.htm
• censusindia.gov.in
• www.demographie.net/demographicdata
Some more information has been used from Wikipedia pages which is again very reliable.
Some other information was available on Government websites of concerned countries.
http://www.india.gov.in/ (Indian Government Website)
http://english.gov.cn/ (Chinese Government Website)
http://www.stats.gov.cn/english/index.htm (Statistic about China)
http://www.india.gov.in/citizen.php (Statistics about India)
Most of the data is derived from census and surveys conducted by National governments and
UN agencies. All these results are exposed to the error of census and surveys. Although in
developed countries these errors are smaller than countries like China and India where a large
part of population is not reported and data are often adjusted and changed for political
purposes. In China, data for Tibetan people is not accounted and in India people from Eastern
India are often underreported. Other reason as to why census data are not 100% correct is:
There are many reasons why people might not get counted in the Census, including: privacy
concerns, homelessness, low literacy levels and not enough time to fill out the forms.
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Analysis
A brief introduction to China
It is the world's most populous country, with a population of over 1.3 billion. Covering
approximately 9.6 million square kilometers, the country is the world's second-largest country
by land area, and the third- or fourth-largest by total area, depending on the definition of total
area. Since the introduction of economic reforms in 1978, China has become the world's
fastest-growing major economy. As of 2012, it is the world's second-largest economy, after the
United States, by both nominal GDP and purchasing power parity (PPP), and is also the world's
largest exporter and second-largest importer of goods.
Population and Projections
Population Trends in India and China
China and India have followed similar trends in almost all demographic indicators, they only
differ in magnitude. China has been the most populous country in the world from old days. But
according to UN estimates India will overtake China as the most populous country by year 2030.
China’s population is subjected to grow till year 2020 and then due to reduced fertility rate and
increased mortality rate the net population growth rate will become negative and the
population will begin to decrease. In India, although fertility rate has come down but still the
net population growth rate is positive and will be so for many decades.
The reason of such population explosion are very well explained by Population Demographic
Theory, which takes in account changing patterns of fertility, mortality and life expectancy.