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May 27, 2013
Flash: The Chinese migration dividend is weakening - Nomura
FXstreet.com (Barcelona) - Nomura economists Zhiwei Zhang and Wendy Chen believe that the weakening Chinese migration dividend suggests slower potential growth and higher inflation ahead.
They begin by noting that a key driver of China‟s economic growth over the past decade has been the migration of the rural labour force into urban areas and understanding the trend of this migration is critical to estimating China‟s potential growth rate. Today, they see that Chinese authorities released the 2012 migrant worker survey, which confirms our view that the “migration dividend” has weakened.
The growth of migrant workers dropped to 3.9% in 2012 from 4.4% in 2011 and 5.4% in 2010. There were 262 million migrant workers in 2012, which was 28% of the total working age population. They write, “We expect this trend to continue as the size of migrant workers aged 30 or below dropped by 2% in 2012 after falling by 4% in 2011.” They feel that this implies the productivity growth from migrant workers should diminish over the next few years, and result in slower potential growth and higher inflation.
They begin by noting that a key driver of China‟s economic growth over the past decade has been the migration of the rural labour force into urban areas and understanding the trend of this migration is critical to estimating China‟s potential growth rate. Today, they see that Chinese authorities released the 2012 migrant worker survey, which confirms our view that the “migration dividend” has weakened.
The growth of migrant workers dropped to 3.9% in 2012 from 4.4% in 2011 and 5.4% in 2010. There were 262 million migrant workers in 2012, which was 28% of the total working age population. They write, “We expect this trend to continue as the size of migrant workers aged 30 or below dropped by 2% in 2012 after falling by 4% in 2011.” They feel that this implies the productivity growth from migrant workers should diminish over the next few years, and result in slower potential growth and higher inflation.