Over the past 40 years the Chinese economy has achieved what many believe to be almost miraculous growth. Economists have attributed a big part of this growth to the fact that the working age population grew far faster than the young and old non-working dependents, a factor often described as the "demographic dividend". Currently this supposed dividend is disappearing, and it is often suggested that as a consequence, China's population will now age, before the extraordinary growth seen previously can deliver a standard of life comparable to that seen in Europe and the USA. Often summed up as "China is growing old before it can grow rich".

New research from Xin Meng of the Australian National University provides evidence that this is a myth. The research shows that between 1982 and 2015 the increase in the working age population was largely offset by a decline in the labour force participation rate, resulting in a very limited increase in the labour supply.

The reasons for the decline in labour force participation include mandatory retirement ages (55 for women), compulsory education and increasing university enrolment keeping under 25's out of the workforce, and the increasing cost of childcare keeping female labour force participation relatively low.

The research concludes that there is little support for the view that China benefited from a demographic dividend. Consequently, there are ways the Government can act to counter the shrinking labour force, ranging from increasing the retirement age, to encouraging further movement into urban areas, and making childcare more affordable.

Finally, the table below shows China remains some way from an extreme case of age dependency in Asia. Chinese demographics are not likely to halt (in the medium term at least) the country's advance into the ranks of richer nations.