GT Voice: China will further improve labor force to remain world’s factory
Published: Mar 13, 2023 11:01 PM
Job-seekers attend a large-scale job fair in Guangzhou, South China's Guangdong Province on February 13, 2023.?Photo: VCG

Job-seekers attend a large-scale job fair in Guangzhou, South China's Guangdong Province on February 13, 2023. Photo: VCG

When addressing questions on China's demographic dividend and employment outlook at a press conference following the closing of the first session of the 14th National People's Congress on Monday, new Chinese Premier Li Qiang said that China has a working-age population of nearly 900 million with 15 million people joining the workforce each year, meaning a large and vibrant pool of talent remains one of China's notable strength.

More importantly, more than 240 million people have received higher education in China, and the average number of years of education for the newly added workforce each year has reached 14 years, Li noted.

Over the past four decades, China has become a global manufacturing hub with its large working-age population and low labor costs, which has led to rapid economic development. But since China's population experienced a negative growth for the first time in 2022, there has been growing concerns that as China's demographic dividend recedes, India, which is estimated to become the world's most populous country in 2023, will replace China as the world's next factory.

But does a large population represent a demographic dividend? Not necessarily. Both the number of working-age people and the education level of the population are important measures of a country's demographic dividend. Just take a look at the education level of China's new workforce every year, one will see that China's demographic dividend hasn't disappeared, and instead is changing from an emphasis on quantity to quality. 

According to China's 7th National Population Census released in 2021, there were more than 218 million people with a college education or above, accounting for 24.9 percent of the working-age population, up 10.3 percentage points from the 2012 level.  The country's illiteracy rate dropped from 4.08 percent in 2010 to 2.67 percent in 2020. Of the 15 million people joining the workforce every year, China will have nearly 11.58 million fresh college graduates this year, a new record. 

By comparison, India's literacy rate among people aged 15 and above was 74.37 percent in 2018, with even lower literacy rate among females. Because of the low level of education, a large number of people are restricted to working in agriculture. 

Meanwhile, an estimated 6.5 million graduates were awarded an undergraduate degree in India in 2019. The figure is not low, but due to the lack of enough suitable jobs in key industries, one in five college graduates in India is unemployed.

This is why China must continue to develop its manufacturing sector and move up the value chain. Only in this way can the Chinese economy transition to high-quality growth and make good use of its talent dividend. As long as the benefits of a quality demographic dividend can be fully leveraged, China's growth momentum will remain strong. Therefore, the key question all lies on how to provide better employment opportunities for the young educated population.

Indeed, the increased proportion of high-end and medium-end products in the country's manufacturing structure is already evident enough to indicate that the Chinese manufacturing has the potential to absorb its large number of highly educated young workers. 

Take the shipbuilding industry. China's shipbuilding industry has seen a surge in orders for high value-added vessels, with new orders accounting for 49 percent of the world's total in 2022. Moreover, China's auto exports reached 3.4 million, becoming the second largest automobile export country in the world.

China's demographic advantage has facilitated the development of its manufacturing sector, while the development of the manufacturing sector has brought the talent advantage into full play. Compared with other manufacturing powers around the world, such as the US and Germany, and those which are trying to replace China, like India, China's combined advantage in terms of both talent and manufacturing is still incomparable. 

As long as China continues to develop its manufacturing sector, population will remain a strength for China.