ACCEPT Report: China Will Shift from a Population Power to a Human Resource Power
Originally published in Chinese on June 7, 2021 on the ACCEPT official website. Translated by ACCEPT. For the Chinese version of this article, click here. For the full Chinese version of the report, click here.
On June 6, 2021, the Tsinghua University Academic Center for Chinese Economic Practice and Thinking (ACCEPT) held the 41st Tsinghua University Forum on China and the World Economy.
Forum participants included David Daokui Li, Director of ACCEPT; Ni Feng, Director of the Institute of American Studies at the Chinese Academy of Social Sciences (CASS); Li Xinchuang, Secretary of the Party Committee of the Metallurgical Industry Planning and Research Institute; Pan Qingzhong, Executive Dean of Schwarzman College at Tsinghua University; Wang Can, Professor of the School of Environment at Tsinghua University; Chen Xingdong, Chief Economist of BNP Paribas China; Feng Xuming, Deputy Director of the Research Office at the National Academy of Economic Strategy, CASS; Yuan Gangming, Researcher of ACCEPT, and Li Ke’aobo, Executive Deputy Director of ACCEPT. At the forum, ACCEPT released the China Macroeconomic Analysis and Forecast Report (2021), which expects the annual real GDP growth rate to be about 8.2% in 2021.
The report points out that if major risks are concentrated, the annual real GDP growth rate is likely to drop to about 7%. If the overall international economic situation improves and consumption steadily resumes, the annual real GDP growth rate is expected to exceed 8.5%.
China's economy will remain in a post-pandemic recovery period in 2021
The report points out that China's economy will remain in a post-pandemic recovery period in 2021, so relevant reforms and anti-pandemic policies must continue to be promoted.
In terms of investment, real estate investment is a standout at present, showing strong resilience and vitality, and is currently the main driving force behind investment growth. Looking ahead to the second half of the year, fixed-asset investment will maintain a stable recovery, but growth momentum may still weaken, and policy reinforcement cannot be delayed. ACCEPT expects an annual fixed-asset investment growth rate of 8.5-9.5%.
In terms of consumption, the report points out that growth momentum is being dragged down by the income growth rate and needs to be further released. Against the backdrop of a general recovery in economic growth, a U-shaped rebound in China's residential consumption is expected in the third to fourth quarter of this year.
Regarding the recent rapid rise in international commodity prices, the report believes that the sharp rise in commodity prices has clearly pushed the domestic PPI upward. Furthermore, the year-on-year domestic PPI growth rate has also shown a synchronously accelerating upward trend.
However, commodity prices will fall back down at the end of the second quarter and drive the domestic PPI year-on-year growth rate back down to an expected rate of about 5% in 2021. The transmission of rising bulk prices from PPI to CPI is weak, so the CPI growth rate has been maintained at a relatively moderate level since 2021.
The report expects that year-on-year CPI growth will expand in the second half of 2021, but the year-on-year CPI growth rate will be around 1.5% for the whole year, with no inflationary pressure in the consumer sector.
China will shift from a population power to a human resource power
We must shift from focusing on total population to focusing on total human resources, which is the basis for long-term economic development. The government and the market should work in the same direction to promote an economic development model that is compatible with the structure of human resources, said ACCEPT’s director David Daokui Li at the forum.
The report noted that China's total human resources have been generally rising over the last 20 years, with the total human resources in 2019 increasing by 14% compared to 2000. According to the forecast, as education and health levels continue to improve, China's total human resources will keep rising slowly and steadily through 2050, which will provide a solid foundation for the great rejuvenation of the Chinese nation in the new century.
Changes in China's total human resources: historical trends and projections
The report argues that on top of raising total human resources, an equally important issue is how to improve the utilization rate of human resources. China has further room for development in this area.
According to OECD (2018), China's average retirement age is significantly lower than that of other countries, which leads to a considerable underutilization of human resources in China despite the country’s relative abundance of human resources.
Therefore if the retirement system can be appropriately flexible or even encourage delayed retirement on the basis of fully respecting people's willingness to participate in economic activities and protecting their labor motivation, while increasing delayed retirement benefits for members of the labor force who voluntarily defer retirement and eliminating age discrimination, this will significantly improve the utilization rate of China's human resources, effectively hedge against the adverse effects of the declining size and proportion of the labor force, and alleviate the problem of China's aging population, the Tsinghua report states.
In terms of protecting and enhancing human resources, the report recommends that both education and health should be continuously optimized. We should improve the quality of education while increasing the number of years of compulsory education, emphasize the reasonable optimization of higher education and vocational education, and focus on allowing educated people to acquire more skills and develop higher labor quality. When it comes to health, while enjoying the health dividends brought about by environmental management, we should work to explore a high-level health service system that can widely serve the majority of the people, as well as an active science and technology R&D and innovation system.
The report makes three recommendations on how to make better use of the institutions and mechanisms of human resources: First, maintain flexibility in issues of retirement and respect the wishes of workers. Second, eliminate age discrimination in the employment system. Third, provide better support and more choice for women's participation in the labor force.
