China’s economy will face stagnation in the short term because of the ongoing shortage of labor, tells CASS-professor Zhang Juwei state news agency Xinhua in a dispatchabout the effect of aging, based on the latest results from the National Bureau of Statistics.
“The potential emergence of a labor shortage is likely to contribute to slower economic growth in the short term,” said Zhang Juwei, professor and director of the Labor and Social Security Research Center at the Chinese Academy of Social Sciences.
China has already reaped the benefits of a demographic dividend, which is believed to have played a role in the country’s economic breakthrough, having enjoyed the advantage of abundant cheap labor for decades.
“Wage increases are the most direct response to labor shortages. That will definitely squeeze the profit margin for some low value-added manufacturers,” Zhang said.