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SJ Salomon International Warns China’s Aging Population Could Limit Growth

SJ Salomon International analysts say China’s demographic timebomb may hinder economic growth even after the economy has recovered despite strong trade figures.

Tokyo, Japan, May 13, 2021 --( In the first quarter of this year, China’s GDP expanded by a record 18.3 percent year on year. This was the strongest quarterly growth seen since the world’s second largest economy began keeping records 30 years ago.

Analysts at SJ Salomon International say the continuation of China’s strong economic recovery from the global pandemic was fueled by an uptick in retail sales, investment in fixed assets and industrial activity.

The year-on-year figure reflects the massive economic slump experienced by China at the same time last year when its economy was in lockdown due to efforts to contain the spread of its coronavirus outbreak.

China’s exports expanded by 32.3 percent in April from the same time a year ago. Imports also grew, by 43.1 percent. China’s trade was boosted by a strong US recovery, which has increased global demand for goods.

The renewed coronavirus crisis in India also contributed to China’s strong trade in April. The scale of India’s current outbreak has caused significant delays in supply chains prompting some companies to turn to China to fulfill their orders for goods.

Some economists say that China, whose current GDP growth target for 2021 is 6 percent or above, could well reach 8-9 percent economic growth this year. This prediction is in line with the recently revised forecast issued by the International Monetary Fund, who believes China’s economy will expand by 8.4 percent this year.

But analysts at SJ Salomon International say China’s economic outlook for the remainder of this year may not be that rosy. Given that the current data is distorted by a very low base, it is more accurate to look at quarterly growth. During the first quarter of this year, China’s economy grew by only 0.6 percent compared with the last quarter of 2020. That was the weakest growth since China’s economy began to recover from the pandemic, which could indicate that China’s economy has already normalized.

Analysts at SJ Salomon International have also warned that China faces a much bigger problem. It’s aging population could seriously damage economic growth potential in the near future. The population of potential workers was 75 percent of the total just a decade ago. By 2050, this number will fall to just above 50 percent. SJ Salomon analysts say this steady and significant decline will like limit China’s economic growth potential in the coming years.
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SJ Salomon International
Riku Ikeda
+813 4578 9570

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