Demographic lessons to boost development

China faces significant challenges in sustaining its economic growth, prominent among which is the demographic issue, particularly a declining population and population aging. What's more, China's population is projected to decline further, leading to an increase in the average age of the population. This demographic shift will reduce the proportion of the working-age population, undermining China's potential GDP growth rate.

Japan has already experienced the severe consequences of an aging society, and thus can offer some valuable lessons. Japanese enterprises have addressed labor shortage by investing in automation and robotics, turning demographic challenges into innovation opportunities. The Japanese government, on its part, has implemented policies aimed at bridging the urban-rural gap.

One of China's most pressing economic challenges is the rapid decline in its working-age population. Since total fertility rates remain low despite the adjustments in the family planning policy, China faces a demographic headwind that threatens economic growth. A shrinking workforce leads to lower overall productivity, increasing dependency ratios, and mounting pressure on the social security and healthcare systems.

Japan's is a cautionary tale of the economic consequences of an aging population. For decades, Japan has struggled with labor shortage, slow economic growth and rising costs of eldercare.

However, rather than succumbing to these challenges, Japanese enterprises have used technological advancement to offset the negative impacts of a declining population and an aging society. Japanese enterprises have extensively adopted automation, artificial intelligence and robotics in sectors ranging from manufacturing to healthcare.

In fact, companies such as Toyota and Fanuc have set global benchmarks in industrial automation. These innovative measures have enabled Japanese enterprises to maintain their competitiveness despite demographic constraints, helping Japan pioneer the development of eldercare robots to assist with care-giving, reducing the strain on human workers.

Investing in automation and AI could help Chinese enterprises maintain their productivity despite a shrinking workforce. China is already a global leader in high-tech and manufacturing, with strong capabilities in AI, automation and robotics. So, by fostering innovation in eldercare technology, the country could create new industries that cater to the needs of its aging population, turning a demographic challenge into an economic opportunity.

However, further investments in these areas are needed to offset the effects of a declining workforce. Policies that promote research and development in automation technologies, encourage industry-academia collaboration, and provide incentives for businesses to adopt labor-saving technologies could prove beneficial.

China could also consider integrating robotics into eldercare, especially because its rapidly aging population will increase the demand for eldercare services in the coming decades. Developing smart eldercare solutions, such as robotic assistants, AI-driven healthcare monitoring systems and telemedicine platforms, could improve the quality of elderly people's lives as well as create new economic growth channels.

Another significant challenge China faces is the development gap between urban and rural areas. To improve eldercare, China requires robust infrastructure, especially in rural areas, including channels which would give elderly people easy access to healthcare, assisted-living facilities and digital connectivity.

Japan has addressed similar problems through initiatives such as the "Digital Garden City Nation" policy, which focuses on vitalizing rural areas through digital transformation, ensuring that people in even remote areas have access to high-quality medical and eldercare services.

China could adopt a similar approach by leveraging its high-tech capability to improve eldercare and healthcare services in rural areas. Expanding telemedicine services, integrating AI-based diagnostic tools, and improving digital infrastructure could help ensure equitable healthcare distribution across the country.

Effective policy measures are crucial for addressing China's demographic challenges. Japan's policy measures are examples of how to better manage an aging population and mitigate its economic impacts.

Furthermore, Japan adopted a very cautious approach in the past when it came to its immigration policy. But in recent years, it has been gradually opening its doors to foreign workers, even in some critical sectors.

At this moment, due to the rapid structural changes and the lingering effects of the COVID-19 pandemic, the job market for young people may not be so rosy. But in the future, the demographic changes will cause a labor shortage in China. A relatively open immigration policy is key to addressing that shortage and developing an innovation-driven economy.

By investing in automation, AI, and robotics, China can boost its labor productivity and mitigate the effects of a shrinking workforce. The development of innovative eldercare solutions could help China transform its demographic challenges into economic opportunities. And by taking policy measures including those encouraging the elderly people to remain in the workforce, fostering skilled immigration, and intensifying R&D in automation, China can address the issues arising out of the demographic changes.

The author is a professor at the Graduate School of Engineering, the University of Tokyo.

The views don't necessarily reflect those of China Daily.

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