Chapter 16 Chapter 3 Looking for a Big Bull Market: Demographic Thinking and Demand Potential Exploitation

Historically, China has always been a populous country.At the beginning of the founding of New China, China's total population was 540 million.Under the guidance of the idea of ​​"many people make things easier", China's population grew rapidly, and by 1969, the population had exceeded 800 million.After entering the 1970s, China began to put family planning on the agenda.However, the family planning policy at this time has not been well implemented. In 1982, China officially designated family planning as a "basic national policy".Some experts estimate that since the implementation of the one-child policy in the 1980s, China has lost at least 300 million births.However, the reality of today's population of more than 1.3 billion formed by the population policy that was implemented cannot be denied.

From the perspective of population fluctuations, since the founding of New China in 1949, China has roughly experienced three population transitions: the first baby boom occurred in 1950-1957.The average fertility rate during this period was as high as 35.56%. About 94% of the women gave birth to three children, and nearly half of the women gave birth to six children.The population base at this stage was smaller than it is now, but the average number of births per year was still as high as 20.885 million; the second baby boom occurred from 1962 to 1971 and lasted for 10 years.The average birth rate during this period was still at a relatively high level, as high as 32.32%, and the annual birth rate reached more than 30%. The average number of births per year was as high as 27.952 million, which was more than 7 million higher than the average number of the first baby boom period. people; the third baby boom occurred in 1981-1990.Although strict family planning policies were implemented during this period, the birth rate was still relatively higher than the birth rate since the late 1970s and 1990s.The average birth rate during this period was 21.34%, which was about 34% lower than the average of the second baby boom period.After the end of the third baby boom, China's population scale reached a new level, reaching 1.14 billion people.

For a country, both the economic growth target and the mode of economic growth must conform to the laws and characteristics of population development.Consumption and investment are the main drivers of economic growth, and demographic factors have a direct impact on both. First, population plays a leading and decisive role in consumption.Population size and income level determine consumption scale and consumption capacity.Compared with the early days of the founding of the People's Republic, China's population size and income level have both increased greatly. The current population size is almost three times that of that time, and the per capita income level has increased by more than 100 times. In 1949, China's per capita GDP was only about 100 yuan, in 1980 it was about 460 yuan, and by 2009 it had reached 23,000 yuan.Correspondingly, the consumption scale and consumption capacity have also been greatly improved.

Not only that, Chinese people's consumption habits and consumption patterns have also undergone tremendous changes.In the early days of the founding of the People's Republic of China, China's Engel coefficient reached 80%, and it was as high as 90% in rural areas.In other words, people's income in that period was mainly spent on filling their stomachs.By 2009, the Engel coefficient in rural China had dropped to 45.5%, and the Engel coefficient in urban areas was only about 36.7%.At the same time, residents' consumption expenditure on other goods and services increased significantly.

Second, the birth cycle of the population forms a periodic impact on the consumption structure and investment structure.As we mentioned earlier, the population born during China's second and third baby booms is currently in the age group of 21 to 49. People in this age group, in their life cycle, no matter Whether it is income level or spending power, both are the strongest.This is also an important demographic base that leads to the current real estate boom, automobile boom, education boom, tourism boom, and health care boom. Thirdly, national savings behavior will also affect investment behavior.From an economic perspective, saving and investing are two sides of the same coin.Due to the deep-rooted traditional savings concept of the Chinese people and the absence of a social security system, the savings rate has remained high, and there is always a gap in using savings for investment.This means that in China, which is short of funds, a considerable part of savings has not been effectively utilized, and a large amount of savings funds are dormant in financial institutions, making the use of China's funds very inefficient.Large-scale saving has become a major incentive for potential "investment impulse".

Then, how does the demographic transition affect economic growth through its effect on the change of the consumption system?First, the demographic transition has brought potential demographic dividends to economic growth.Demographic dividend is a relatively popular term, which refers to the phenomenon that labor is abundant and cheap labor and employment are cheap.It is precisely because China's high birth rate in the 1950s and 1960s resulted in sufficient labor resources in the following decades, which enabled China to provide a large amount of cheap labor.Because of the large population, the price of labor and wages will drop, making Chinese labor and Chinese products relatively cheap in the entire international market. Since the 1960s, in the rapid economic growth of East Asia as a whole, China's demographic dividend has contributed 25% to 34% to GDP, and during the "East Asian Miracle" period (1974-1996), it was as high as 34% to 50%.

Economic historians analyzed the economic growth rate and population structure data of 17 countries in Europe and North America from 1870 to 1913 and concluded that the per capita GDP growth rate of the American New World was 0.47 percentage points higher than that of the Old World. More than % can be attributed to the advantages of the population structure of the New World, that is, the productivity of the population structure has been relatively improved through large-scale population migration with the characteristics of age selection. The demographic transition enabled China to enjoy the demographic dividend from the mid-1960s through high savings rate, sufficient labor supply and low dependency ratio. Since the reform and opening up in 1978, the decline in China's total dependency ratio has contributed about 5% to the increase in China's savings rate and more than 25% to China's economic growth.

Second, demographic transition affects economic scale, final consumption and labor productivity through population growth and changes in population age structure, which in turn affects consumption rates.Generally speaking, a large population, high consumption level, and fast growth rate will increase the consumption rate of a country or region. We predict that the next 10 to 15 years, before the arrival of an aging society, will be the best period for the Chinese economy to fully enjoy the demographic dividend, because the demand for labor is expected to be large during this period.Because of the large labor force in China, the annual increase in population is as high as 12 million or more. The National Population Development Strategy Research Report released in 2009 pointed out that large-scale labor mobility will continue to exist in the next 20 years.Based on an average annual increase of 1 percentage point in the level of population urbanization, 300 million rural population will gradually turn into urban population in the next 20 years.This shows that the situation of oversupply of urban and rural labor force will exist for a long time.

Judging from the characteristics of population structure, China has a large working population and sufficient labor resources. People aged 16 to 64 will reach a peak of 990 million in 2016 and 870 million in 2050, which is 28 million more than in 2000 and higher than the total working population of developed countries.From the perspective of market capacity, China has a large population, per capita income is still in a stage of rapid growth, and domestic demand has huge potential, which will surely become a powerful driving force for the steady and rapid growth of China's economy in a long period of time.

Whether it is new labor force, rural labor force converted to urban population or working population, they all need food, clothing, transportation, marriage, housing, and pension.In this historical period, China, as a developing country with huge development potential, will have a rather long process of industrialization.In addition to the hardware facilities necessary for industrialization (including roads, transportation, public facilities, housing, etc.), China will also undergo an intensive development process based on an extensive development model, and then slowly become a mature industrialized country.This process of industrialization is the process in which China continues to enjoy the demographic dividend, and the labor force will also find a place to use in this process.Therefore, in terms of macro policy, it is also the most favorable time to upgrade consumption, optimize industrial structure, and transform the mode of economic growth.I predict that from 2015 to 2020, the contribution rate of demographic transition to economic growth will reach a peak of about 34%.After that, until 2030, China's demographic dividend is still considerable, but this demographic dividend is progressive before 2015, and the contribution rate from 2015 to 2030 will gradually decrease.