China must prioritise investing in human development rather than infrastructure to ensure high-quality economic growth under Beijing’s agenda to promote “new productive forces”, according to an expert in Chinese demographics.
“In the stage of high-quality economic development, investing in people yields higher returns than investing in material production,” said He Dan, director of the China Population and Development Research Centre, a think tank affiliated with the National Health Commission.
“Therefore, it is crucial to prioritise investment in people, to support the optimisation of new productive forces resources by a robust social security system.”
The country also faces a prolonged demographic crisis marked by plummeting birth rates and a rapidly ageing population – major obstacles to the already shaky expansion of the world’s second-largest economy, according to economists.
In the article published in the July issue of the commission’s Population and Health magazine, He wrote that the return on infrastructure investment has declined rapidly in recent years, with the investment return rate for local government financing vehicles dropping from 3.1 per cent in 2011 to 1.3 per cent in 2020.
Therefore, public spending should be prioritised in areas with higher social returns, such as actively investing in human development, to create new economic growth poles, He added.
Some key areas include improving social security, adjusting income-distribution mechanisms, increasing household income, and enhancing public services.
Even with demographers expecting a brief rebound in newborns over the next couple of years as the impact of the coronavirus pandemic eases, a raft of pronatalist policies are implemented, and it being the auspicious Year of the Dragon in China’s zodiac, the longer-term outlook foresees births continuing to decline.
To strengthen its social security network, China should improve its support for childbirth and child-rearing systems and provide better and more equal public services, He said.