"Supply side factors are also important. China's working age population has started to shrink and the number of new labor force joiners is declining. The UNPD forecasts China's working age population to decline by about eight million during the next five years, compared to flat in the past five years. Of course, China's labor supply to the non-farming sector will continue to rise as surplus labor from the agricultural sector continues to be transferred out. However, the decline in working age population does provide more room for such transfers in the next few years even with growth slowing.I came across the above quote whilst doing some research recently. It is a section for a review of China's economic prospects for next year. This was the positive part where they try to suggest with low growth in labour supply, China will more easily be able to maintain political stability.
Changes in both labor demand and supply mean China faces less employment pressure than a decade or even a few years ago, and needs less growth to maintain labor market stability. Assuming continued modest gains in labor productivity, and taking into account the structural upturn of labor intensive service sector, we estimate that 6-7% growth in non- farming GDP and 6-6.8% growth in overall GDP in 2015-16 would be sufficient to generate more than 11 million new non- farming jobs each year, a level we think is associated with a general stability in the labor market. Over the longer time horizon, and as labor transfer progresses further and if services growth speeds up, sub-6% growth would be sufficient for labor market stability."
It is always entertaining reading an economists view on political impacts, as they can never get it right.
However, more interesting is the reversed nature of the argument deployed as compared to the one we see the Government and media outlets push in the UK. Here, we are told, immigration is good and adds to the economy and so social stability. This report on China suggests the opposite, a reduction in labour market supply will help wages and promote social stability and even allow China to cope with a lower GDP growth rate than in the past.
Basically a nice example that economists and others can theorise on whatever they like and take differing views accordingly. Somehow I don't think we would ever see this reasoning applied to the UK situation on the BBC though!