Demographic shift underway

China is undergoing some significant demographic changes at the same time as the digital economy is taking shape

Demographic data from China’s seventh national census, released in May, has drawn widespread attention as a barometer of the country’s socioeconomic development. The census offers several notable findings: the urbanization and the aging of the population is happening faster than expected, the concentration of the population in developed areas and urban clusters is continuing, and the proportion of working-age people is declining, indicating a shrinking labor force. So how will these demographic trends affect the development of the booming digital economy?

Demographic shifts could push the development of the digital economy to some extent. Whenever new knowledge emerges, the wider it is used and more people it serves, the more value it creates. The development of the digital economy is therefore closely linked with the size of the population using information technology.

The latest census data suggests that China’s population remains vast, with the working-age population — those aged 16 to 59 — being 880 million. This translates into a huge market and abundant resources for the digital economy, and could propel its development because the digital economy has the characteristics of a scale economy.

China’s high-quality human resources are a boost for technological innovation. Since 1998, China’s higher education institutions have been increasing their enrollment of students, resulting in an increasing number of students graduating since 2003, ushering in a transition from elite education to mass education.

In the 13th Five-Year Plan period (201620), the newly-added labor force received 13.7 years of education on average, with those that finished higher education reaching 50.9 percent. More high-tech enterprises have emerged in China thanks to this ever-growing quality of human resources.

The higher concentration of people in urban areas is also an important driving force for the digital economy. The concentration of more people in metropolises and urban clusters is facilitating the improvement of human resources. By migrating from rural areas to urban areas, or from small towns to big cities, workers can get access to more information and training opportunities, or gain new knowledge through work, thus enhancing their capabilities.

The growth of the digital economy could to a large extent help overcome the problems arising from demographic changes at present and in the future.

The digital economy calls for high-quality personnel. Compared with 20 years ago, China now faces the challenges of a lowbirth rate and an aging society, with a smaller labor force available. As industries upgrade, the traditional competitive edge of low-cost labor is giving way to that of capital and technology, with the latter requiring more high-quality personnel.

The application of information technology, particularly the wide use of the internet, enables remote working and diminishes the constraints of human resources on local development.

The development of the digital economy could, therefore, relieve the shortage of labor. The use of internet and artificial intelligence has already facilitated the wide application of remote technologies and robots, making replacement of human labor possible. The wide use of industrial robots can greatly ease the shortage of human labor. The development of drone delivery further reduces the demand for couriers. The internet, robots, artificial intelligence, and blockchain can emancipate humans from simple and repetitive jobs.

The digital economy’s advancement could also help give full play to collective wisdom. Fast-developing technology makes higher requirements of human workers, while digital training makes lifelong study possible because we can get access to various learning and media platforms. The wide use of digital technology makes the users access public cultural and educational resources, such as libraries and museums, without leaving home.

Nevertheless, there still exist many mismatches between population development and the growth of the digital economy. The uneven distribution of the population makes the digital economy’s promotion in less inhabited areas, especially remote and underdeveloped regions, more difficult. Compared to developed nations, China still has a long way to go in training competent professionals.

Senior high school education is a key factor that determines whether a country can avoid falling into the middle-income trap. China still has a large number of workers who have never gone to senior high school, which is a pressing issue to deal with.

Last but not least, while the wide use of the internet and smartphones brings many conveniences to our life and work, it also leads to a yawning digital gap. Many senior citizens, particularly those living in rural areas, don’t know how to use the internet and digital applications such as mobile payment. With the digital economy spreading across the world and society aging fast, it is imperative to combine the digital economy’s development with the “silver economy”.

The author is a professor at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

MA XUEJING / CHINA DAILY