Exactly four years ago we began to discuss the idea that China is fast approaching its so-called “Lewis Turning Point,” which is defined simply as the moment in time when surplus rural labor is fully absorbed into the urbanizing economy leading to rising wages and falling productivity. At the time, SocGen suggested that “China [was] still some time away from reaching the type of urbanisation rates that characterised Lewis turning points in Japan and South Korea during their most rapid periods of industrialisation and wage growth.”
We revisited the issue in 2013, and began to discuss the idea that although urbanization had indeed contributed to productivity gains, the country faced offsetting demographic headwinds in the form of a shrinking working-age population. Additionally, we pointed to research from SocGen which suggested that from 2015 forward, the labor force in China is expected to contract.
Here we are in 2015 and sure enough, demographics in China are once again set to become a talking point, as the two trends mentioned above (urbanization and a decline in the working age population) play out against — and feed into — slumping economic growth. Here’s FT with more:
No comments:
Post a Comment