Not long ago, there were predictions that China would become the world’s strongest economy by mid-century. But according to a new analysis by Capital Economics, a London-based consultancy, the former one-child policy is beginning to turn against China.
The biggest drag on China’s economy will be shrinking labor force. This is to start to decrease by more than half a percent per year by 2030. By contrast, the labor force in the United States will continue to grow. Both because of higher aggregate fertility compared to China and because of immigration, which is still a major source of employees in the US labor market.
While labor productivity in China will continue to grow, the pace of growth will decline, according to capital economics, a consultancy. Thus, it will not be enough to transport the effect of declining labor force, so China’s economy will not have the engine to become the strongest in the world. At least until the middle of this century. Capital Economics does not rule out that China could come first in any of the coming years, but it would be more of a short-term blip.
