China steers demographic shift by supporting birth, innovation

BEIJING -- From childcare subsidies to young innovators propelling artificial intelligence (AI) advances like DeepSeek, the key topics at China's annual "two sessions" reveal how the country is reshaping its demographic dividend by encouraging births and accelerating talent-driven innovation.

As China's population continues to decline and age, a raft of measures unveiled in this year's government work report is expected to help sustain demographic resilience in one of the world's most populous countries and unlock its future growth opportunities.

According to the report, submitted to the national legislature's annual session for deliberation on Wednesday, China will formulate policies on boosting birth rates, provide childcare subsidies and promote free preschool education in a phased way, among others.

The combined measures are expected to ease family financial burdens and help shore up birth rates, said Gong Weijuan, a national political advisor and vice-president of Yangzhou University.

Its population changes notwithstanding, China continues to draw strength from its large labor force, with 858 million working-age people in the country at the end of 2024, accounting for 60.9 percent of the total population.

A 1.4-billion-strong population, enriched by rising incomes and education, delivers enduring consumption potential and drives consumption upgrades, said Huang Qunhui, a national political advisor from the Institute of Economics of the Chinese Academy of Social Sciences.

While its demographic dividend continues to sustain robust domestic demand and productivity, China is actively fostering a talent dividend, with education and innovation playing an increasingly significant role in driving economic progress.

China will continue to upgrade basic education and develop sound mechanisms for improved educational resource allocation in response to demographic changes, and redouble efforts to nurture top-tier innovators, urgently needed personnel in key areas and highly skilled workers, the report said.

The fast-evolving AI landscape, epitomized by DeepSeek's progress, demonstrates how talent-driven innovation is fueling China's economic development.

At a press conference on Tuesday, Lou Qinjian, spokesperson for the third session of the 14th National People's Congress, hailed DeepSeek's success as a part of China's AI rise, crediting the company's young talent as a driving force behind the country's technological advancement.

China's skilled workforce continues to expand and now exceeds 200 million, including a highly skilled talent pool of more than 60 million. The country also has the world's largest R&D workforce.

Fueled by an expanding and upgrading talent base, China's innovation-driven economy is seeing rapid advancements. In 2024, the value-added output of new growth drivers, including new industries, business forms and models, rose to over 18 percent of GDP, while the value-added output of high-tech manufacturing grew 8.9 percent year on year, outpacing overall industrial growth by 3.1 percentage points.

Population decline and aging are challenges faced by many countries. While China's rapid industrialization has brought these challenges earlier than many other countries, it is proactively addressing them with targeted policies.

China has phased out its decades-long one-child policy and announced support for couples who wish to have a third child. Local governments have since put in place a series of stimulus measures for childbirth, including subsidies, expanded insurance coverage, extended maternity leave, and more public child-care facilities.

At the same time, policies aimed at enhancing elderly care services enable China to better offset the impacts of its aging society. The government work report pledges to advance community-supported at-home elderly care services and strengthen elderly care services in rural areas, among other measures.

"China is at the crossroads where population and talent dividends converge," said Du Peng, dean of the School of Population and Health at Renmin University of China, adding that the national workforce remains abundant and the country's talent pool is expanding, laying a foundation for China's transition to a talent-driven economy.

Many also see the silver linings of the aging population. China's silver economy is emerging as a major growth driver, currently valued at 7 trillion yuan (about $976 billion). According to a survey from data analysis provider iiMedia Research, the silver economy is expected to reach a scale of 30 trillion yuan by 2035.

"The demand of China's elderly population is upgrading and fueling new growth in the service sector, covering areas such as education, medical services, finance and technology," said Jin Li, a national political advisor and vice-president of Southern University of Science and Technology.