India's lessons from Chinese demography

China is within sight of a milestone that caps decades of statutory family planning: the number of deaths last year almost caught up with the number of births. Although official statisticians maintain the point at which China's population will start to decline is some way off, an ageing workforce could find it hard to sustain the pace of economic growth the country has become accustomed to. Looking back, the one-child policy paid off in part - the Chinese are yet to become rich before they grow old. But encouraging people to have more children is a deucedly more complex endeavour than birth control by fiat.

Beijing now allows families to have three children, it offers child-bearing incentives, and it has imposed curbs on elective abortion. Yet, China's population may have peaked in 2021. Demographic transitions in Japan and South Korea would suggest that given its historic aversion to immigration, China may accelerate export of capital as its labour pool stagnates. Regional disparities in the middle-income category country should, however, delay this process through internal migration.

India, too, has reached a milestone in that its population is growing at a rate at which it will not replenish itself. But it has a much younger workforce whose participation in the labour market is far lower than the level in China. India's efforts to collect its demographic dividend will play out as China reconfigures its engagement with the world. A great leap awaits India's investment in its human capital for it to rely on services-led growth in a neighbourhood that is plugging itself into Chinese manufacturing value chains. The lesson to be drawn from across the wall would be whether population social engineering was too much, or too little.