Labor Market in China

I recently read an article about the coming demise of the labor market in China. The article pointed towards demographic trends and showed that the labor market peaked in 2010, and will be cut down by as much as 18% by 2032. The author also made it very clear that this spells disaster for China. I am here to convince you otherwise; or at least, to convince you that it doesn't have to spell disaster for China. What we need to look for as far as growth in China is the expansion of productivity per worker, and an increasing number of knowledge workers. In the past, our only clue as to how well China was doing was the expansion of their already massive labor force. That is now in decline. It is now the job of china to get past state run institutions and begin to value free market principles. Couple that better education (not to mention incentive to innovate through free markets) and China could very well become quite the economic engine. Step number one towards China's rise will be breaking up big government run institutions and putting them in the private sector, that is, in the hands of investors who can better manage chunks of them. China's largest tobacco company is state run, break that up. Oil, break that up. China can be great, we don't have to accept their loss of workforce as inevitable decline.