MNI: China Growth May Slow To 6% By '20; CASS Researcher

--Declining Labour Supply Could Impact Future Growth: CASS's Cai

     BEIJING (MNI) - China's economic growth may slow to 6% by 2020 as the size

of the labour force continues a decline started in 2010, a senior official at a

leading research institution said in Beijing late Tuesday.

     China's potential growth rate could decline by 2020, although it is

expected to average around 6.2% between 2016 and 2020, said Cai Fang, deputy

director of Chinese Academy of Social Sciences.

     "So even if growth dropped to 6% in a few years, it is still a decent level

and we won't have to worry about unemployment," Cai said without further

explanation.

     As China's so-called "demographic dividend" disappears, Cai believes it is

reasonable for growth to decelerate from the current high levels. 

     The "demographic dividend" -- the rising share of labour in the overall

population from 1980 to 2010 -- along with a declining non-working-age

population, gave China a window to realize capital accumulation with high

deposit rates, and thus pursue high growth.

     Without that dividend, China must push further reform to maintain medium-

or high-speed growth, Cai said.

     --HUKUO REFORM

     Cai believes reform of the household registration system, or "hukou" will

promote the reallocation of resources and improve overall productivity, which is

the key to sustaining economic growth as the labour force declines.

     The hukou system currently designates a resident's status as being either

rural or urban based. This means a migrant worker from the countryside is not

entitled to public services in cities, despite working and living in the city.

     Cai expects hukou reform will help keep part of the labour force in the

cities and, with increased training and education, help boost productivity, Cai

added.

     Additionally, consumer demand from these 280 million villagers will pick

up, helping realize China's goal of building a highly urbanized and

consumer-driven economy.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

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