The 2014 World Economic Forum (WEF) annual meeting was held in the resort town of Davos, Switzerland, from January 22 to 25. Almost ten of the Forum’s seminars and sub-forums were on the topic of China. The word “China” was often heard throughout the forum, and it was one of the words which appeared most often on the live TV screen in the news center.

From the demographic dividend to the reform dividend

Ogilvy Public Relations global CEO Christopher Graves told this reporter he often emphasizes to the over 5,000 Ogilvy employees all over the world who are under his direct supervision that when providing investment advice for clients, especially ones from the Asia-Pacific, the opportunities provided by China’s demographic dividend, which pushes forward rapid economic development, should never be missed.

The survey from Ogilvy Company shows that the advantage provided by the Chinese demographic dividend will last until 2025, with the Chinese born in the seventies and eighties being the main force behind it. Almost all of the world’s top 500 enterprises and top multinational companies in all industries conduct business in China, and for some of them the Chinese market accounts for more than 50% of the global market. In the 10 years before 2025, China’s demographic dividend will make a difference all over the world.

Cai Fang, Cass Member and director of the Institute of Population and Labor Economics, says that China is going from a demographic dividend to a reform dividend, and the low birth rate of the population in the medium and long term is causing a potential slowdown of the growth rate, adding that the loss of the demographic dividend is determined by the developmental stage. He also points out that there remains a lot more to be done to reform China’s various systems. Taking the reform of the household registration system as an example, Prof. Cai says that such a reform would provide a sufficient labor force for the country. He also notes that there is still a difference between state-owned enterprises and private companies in resource allocation, and he states that if these systems can break out of these difficulties, they will liberate a great potential. In addition, he adds, great changes will take place in the population structure in the next 20 to 30 years if the policy of birth control continues to be adjusted. He concluded that if the systemic obstacles can be cleared, China’s potential growth rate can still rise.

According to Cai Fang , turning China’s large population into a resource mainly depends on education and training. He points out that China’s average education spending accounts for 4% of GDP, but this proportion is not very high and resource allocation is unequal. He adds that nowadays a lifelong education is a requirement in order to cultivate good human resources, and allowing human resources to move freely is also a precondition for guaranteeing a better allocation of these reources.

Optimism about China’s reform prospects

The theme of the annual meeting is "The Reshaping of the World: Consequences for Society, Politics and Business." Peter Lacy, managing director of the Asia-Pacific region of Accenture Sustainable Services, says that great changes are taking place throughout the world, and that he is confident about China’s reforms within this wave of global reshaping. He notes that China’s new round of reforms will further promote market opening and allow the market to play a more important role, which will bring about more foreign direct investment, stimulating the Chinese economy to produce more creativity, and meanwhile it will create more favorable conditions for Chinese enterprises to expand abroad.

The slowdown of China’s economy and the introduction of a series of reform measures for future development embody the Chinese leadership’s clear understanding and firm determination that the mode of economic development has to be shifted.

Cai Fang told this reporter that during the discussions at the forum, someone suggested that there is an inverse relationship between China’s reform and economic growth, that is to say, pushing forward reforms is bound to slow growth down. Cai Fang says that this is actually untrue, adding that reform should be conducted just before the demographic dividend disappears, so as to create new resources in a bid to maintain a sustainable growth, which is crucially important for the world economy. He notes that the growth of other countries either depends on China’s increased imports due to the improvement of people’s living standard, or is driven by China’s resource demand, including the huge demand for green technology. Therefore Cai concludes that China shifting from enjoying the demographic dividend to the reform dividend is bound to be beneficial for the healthy development of the world economy.

As the World Economic Forum chairman Klaus Schwab said, China has brought many surprises to the Davos forum. He told the reporter that this year is the 35th year that Chinese delegates attend the Davos forum annual meeting, and that the 2014 Davos summer forum will be held in Tianjin in a few months.

　　Translated by Yu Hui

　　Revised by Gabriele Corsetti