Senior fellow of the john l. China center at brookings. Its my pleasure to welcome you to this important event on chinas longterm Economic Outlook and its global implications. This event is unusual in present day washington for at least three reasons. First, as it has been widely perceived, people here have been preoccupied with Current Issues and the immediate challenges. As the year 2020 has barely begun, there are already several pressing geopolitical dilemmas on which our policymakers must focus. As we cross into the new decade, it will be important to look ahead toward chinas economic progress and the challenges it will present, both for china and for the world. Chinas Rapid Economic Development has arguably been and will continue to be the most consequential global story of the 21st century, and its ramificatio ramifications surely go far beyond the economic domain. It is important to note that traditionally and perhaps even today, china tends to take a longterm perspective and to outline its objectives. As the famous chinese saying goes, i quote, those who do not plan for the distant future will find trouble at their doorstep. Second, in recent years, washingtons course regarding china tends to look at the country in a monolithic way, and therefore often overlook the internal debate and the multidimensional assessments within the chinese community. Of course the same observation mays also be valid when it comes to the other side of the pacific. It is truly invaluable as we are going to hear from our chinese colleagues on beijing, to have a comprehensive understanding of how they perceive the demographic, economic, and administrative challenges that china confronts in its drive for a fully developed country by 2049. A discussion of these challenges, like chinas aging population, growing economic disparity, potential middleincome trap, social dislocation due to rapid urbanization, and environment the list is quite long. This discussion will help us grasp the policy choices and social political restraints in beijing in the years and decades to come. The third and final reason that this is an unusual event is the fact that this this Conference Today and soon to be released book reflect an impressive example of a u. S. china scholarly collaboration. The book project which began in 2018 is an in Depth Research and intellectual partnership. It presents outcomes of two workshops at peking university in december 2018 and may 2019. I would like to extend my congratulations to the editors of the book, david, yau and wan and the other contributors from both sides for their excellent scholarly work and the spirit of teamwork, especially at a time when some believe that the United States and china should decouple, even in the area of scholarly and educational exchanges. We are fortunate to have so many distinguished economists and experts in other academic fields to speak to us this morning, especially our colleagues from the National School of development at peking university, one of chinas most influential think tanks affiliated with one of chinas most prestigious universities. From the school, they will first present the Main Findings of this study and followed by two panels, moderated by my esteemed brookings colleagues, david and maria. Please welcome in joining me to the stage and giving our participant a warm round of applause. Thank you very much. Thank you, dr. Lee, for the introduction. My name is yau young. Im the dean of the school of development in peking university. As dr. Lee just introduced, we have done a joint project, a book project, with brookings and then finally at this stage, we are happy to present the results of the book project. This is actually before we have done this while in china. So before my colleagues and also friends in brookings to prevese the main results, let me take a few moments to say a few words about the National School of development. National school of development was the first created in 1994 with the name of china center for economic research. We were quite unique at that time because all of us were trained abroad, but, you know, now its more than 25 years ago. By 2008 with, we changed our name to the National School of development. We did that because the center was so expanded and it covered a much wider range of issues in china. Now the National School of development, of course, we do teaching, we do research, but as dr. Lee said, we are also a major think tank in china. We do policy for the government. This book project is a result of policy advising. So with that, i also say a few words about our intention to work with brookings on this book project. China has an ambitious plan to make the country one of the rich countries in 2049, socalled second goal, so my take on becoming a rich country is that a countrys gdp is going to be at least 45 of american level in real terms. Today, chinas income is about 27 of american level in real terms, right. This is going to mean that china will have to almost double that ratio in the next 30 years. Thats a greater challenge because, you know, china is already a huge economy. The size of the economy is 14 trillion u. S. Dollars, so in order to grow say even by 3 thats going to be real hard because that means almost immediate in country. This book project we looked at two sets of challenges facing china. One is domestic and the other one is international. Domestically, of course, the headwind for china is further growth, is going to be aging, so aging is a major subject in our book project. My colleagues are going to present to me i think the encouraging results because most of the problems of aging will be overcome by forces in the future. On the international front, china probably faces more challenges because the International Environment has dramatically challenged in the last decade. Of course in the center is the u. S. china relations. It could be we may not want to take it, but in the end, we have to look at both competition and cooperation, to the two largest economies, and in this book project we deal with that, particularly like technological competition between the two countries, but we also deal with issues in which the two countries cooperate together. I mean, in the next several decades on the world stage, the big step must be u. S. china relations and managing this relationship is going to be not just good for both countries, but also good for the whole world. So for that, i feel really thankful for Brookings Institute to work with us and to lead the brookings team to work with us. As dr. Lee just said, the two sides can still Work Together, show the world that the two countries still have a strong will to come together. Competition is inevitable, but we still have a lot of room for collaboration and cooperation and for that i wish todays workshop will be a successful one. Thank you. Can i get my first panel up here, please. Good morning. Im david from the china center here in brookings and im going to moderate this panel. We called it domestic challenges that chinas facing as it aspires for these goals out to 2049. Now, of course, thats a huge topic, the domestic challenges. Ill just warn you right now there are a number of important issues were not going to cover on this panel. Well get into Financial Sector reform in the next panel and issues of state enterprise reform might come up there, but what weve chosen to do here is focus on four issues that generally fall in the category of social and environment challenges. As my colleague suggested, we have a lot of discussions in washington about different topics concerning china. I dont think weve really covered that much, some of these important domestic issues. So im very happy that were going to start with the professor who is going to talk about the critical issue of demographics. I wanted to start with that because i think thats really a defining issue for china, and then wang, who is a research fellow, all of the colleagues from the National School of development at peking university, and wang is going to talk about the phenomenal of convergence and what are different convergence paths and some of the policies that will affect that and then wong will talk about consumption, a bit of an odd topic, but thinking about the different aspirations, part of which is about per capita income, in recent years china has most of chinas growth on the demand side has come from consumption. Investment has slowed down dramatically. There are fewer and fewer good investment opportunities. Theres not much po term for net exports to contribute to chinas growth in the near future for a variety of reasons, so china has been growing based on consumption. As it develops and ages its natural to ask whats going to happen to consumption. In all of these we want to think about some of the policies that will direct outcomes in a better direction. Last but not least, professor tau is going to talk about the environmental issues, including Climate Change. Ive asked to each of them to stick to about seven minutes to start so we should have time to interact and open up to the audience and well start with the professor on demographics. Thank you. So for the demographics, in this chapter we actually find five main trends of the population aging. So number one is population aging will deepen in the next 30 years. By 2049, the chinese population over age 65 will be close to 400 million, which accounts for more than a quarter of the population. At the working age population, it is starting to shrink already and it will further shrink, from 990 million to about 800 million, which is about 200 million reduction in this 30 years. Number two, not only the total population trend of the aging, but also the composition of the elderly will shrink, will shift from the young old to the oldest old. For young old we mean 65 to 80. For oldest old, we mean age 80 and above. By 2049, the aging population will be about 35 . Right now its about 20 . So that is a very big increase. Number three, the composition of the working age population will also change. By 2049, the population of the Older Work Force will increase sharply from about 17 to 27 . For older work workforce, we me 55 to 64. So the workers themselves will also become older. Number four, the total dependents ratio will increase to about 72 by 2049. An amount that total dependents ratio, the major part of that will be the elderly dependence ratio. So the elderly dependence ratio will reach about 50. And the burden of care for the elderly will be much larger than the burden for childcare. Number five, the family size will decrease from about 2. 9 currently to about 2. 5. That means we will have greater proportion of the elderly living alone. So the elderly People Living alone will reach about 53 million. That will be about 10 of all the households. So thats the main trend. So we will have challenges according to that. There are three major challenges we will face. Number one, that is a challenge for Economic Growth. So the reduction in the workingage population and the increased population aging will lead to increase in labor cost. And contraction of profit margin. And also, it may lower the rates of savings and investment. And, of course, my colleague will address the importance of consumption later. Number two challenge is the financial pressure on the pension system. We we will have the risk of a funding gap between it will become more dominant with acceleration of population aging. Especially, currently, we talk about the individual counts and also the burden on the and with the sharp increasing of the number of pension recipients and the decreasing in the contributors, we will have more burden on pension system. Number three challenge is the rising burden of elderly care. So according to the research, there will be there will be about 30 of the elderly people, the oldest old, will have some sort of difficulty in activity of daily living. That means they will they will need elderly care. Very intensive elderly care. But with composition change, we will have more oldest old. And also, there will be more elderly People Living alone with migrating of their children and the shrinking of the number of children. That will became a big challenge in the future. So that basically the three major challenges we face. Yeah. Okay. So i think id actually like to follow up immediately with a policy question. Okay. So in your chapter, among all those statistics, the one that really grabbed me is this rising share of the older workers. Uhhuh. You know, the 55 to 64yearold cohort. So the labor force is going to decline pretty dramatically. But the number of 55 to 64yearolds is actually going to increase significantly. And as you say, their share is going to go up. So what are the policy implications of that . I mean, what can you do to keep that group productive and in the labor force . Yeah. I think there are at least two policy suggestions for this part shrinking of the workingage population. Number one is the retirement system. I think we need to reform the retirement system. Currently, for the for men, chinese men, we have retirement mandatory retirement age of 60. But for chinese women, we have a retirement age of 50 for bluecollar workers and 55 for whitecollar workers. That is actually very young, depending on the current Life Expectancy. So we we need to consider extend the retirement age. Thats the first one. And the second one, i think we should consider the education and the Training Program. So we are talking about the shrinking of demographic d dividend. But now, we may actually consider how to improve the demographic bonus to that. So Human Capital may be one way we we think about that. As you just mentioned, the we have the larger fraction of the elderly workers. The education of those elderly workers is quite low. So we may have to improve the education of them. Not the regular education level but through the Training Program. So not only the regular education of the relatively young. But also, the Training Program for the relatively older older workers. Also, i think health is quite important. According to the china health and the retirement study i am involved in, the although we have longer Life Expectancy now, but the Health Status is not so good. So we have to invest more in health in order to improve the Human Capital and Health Capital i think. Thank you very much, professor. All of the topics on this panel are interrelated. So later, well get to some of the air pollution issues. And, you know, how thats affecting Peoples Health and so all of our issues are interrelated. So thank you. So now, im going to turn to wong shun, talk about convergence. As dean mentioned, one way to think about this aspiration of the chinese is to reach about 45 of u. S. Real per capita income by 2049. I think china started out at about 4 of u. S. Per capita gdp. And now, the dean said its up to 27. And the aspiration is 45. So lets talk about the convergence framework. Okay. Morning, everyone. I like glad to be here. I like to talk about two issues. One is the Growth Growth growth prospects. And the other thing is the determinants of successful convergence. The first one is the growth prospects. Our gross projections is based on the series of convergence of per capita gdp in open economies. That is, according to the growth theory and empirical evidence, the lower the per capita gdp was at its initial period of open up the first, it grew in the following decades. Actually, i will not go detail about the techniques and i will go directly to human resource. And on the basics on the basic assumption of successful convergence, we have found the following main results. The number one is the potential gdp growth of china in the next three decades, decline gradually from around 7 in 2015 to around 3 in 2049. And number two is that the per capita gdp of china relative to that of the United States will rise gradually from 24 in 2015 to around 65 in 2049. According to the medicine database. Actually, the database actually takes into account the pbp adjustment. Number three is that the chinas share in the World Economy will approach 24 in the year of 2049. And number four is that china is expected to surpass u. S. In terms of gdp in the year around 2030. And the second thing is the determinants of a successful convergence. Following things that are important. Number one is, as suggested by professor trade is the prerequisite for Development Countries to narrow the gap with leading economies. Because provides opportunities for Development Countries to Access Technology spill over from the leading economy. Access actually is wider for the poor economy to take of. And also, in the process of opening up, it is also important for Development Countries to enhance the protection of intellectual Property Rights, which will help create the sort of institutional environment conducive to innovation and technology transfer. Number two is that as professor lei said, aging population actually is increasingly becoming chinas Economic Growth in the following three decades. And number three is that we find urbanization and Human Capitals are quite important for china to to catch up in in following decades. And we find that these two these two cannot be achieved separately because, you know, in the process of organization, cities will become the centers of intellectual exchange and the recipients of technol