China's status as the world's most populous country gives it plenty of reasons to closely monitor demographic shifts that could significantly impact its course of development.

So, policymakers should not turn deaf ears to the possibility that the country's seemingly inextinguishable surplus of cheap labor could soon dramatically diminish.

The Chinese Academy of Social Sciences released on Thursday a report pointing out that the country's surplus of rural laborers is not as plentiful as presumed.

Contrary to the popular belief that there is an excess of rural laborers between 100 million and 150 million in China, the report suggests that the absolute number of rural laborers under the age of 40 is only about 50 million.

For a developing country such as China that has so far relied heavily on its comparative advantage in labor cost to boost economic growth, an abundant supply of cheap labor remains crucial to the sustained growth of the economy in the foreseeable future.

So, the sharp drop of the estimated labor supply the report indicated should be of great concern to authorities. If true, the government should respond swiftly with all necessary policy adjustments to prepare for the demographic changes.

If the growth of the labor supply begins to lag behind that of demand as early as 2009 and boosts salaries, as the report predicted, the country may need to speed up reforms of labor-intensive manufacturing sectors.

Since 2004, cries of labor shortages have been heard not only in coastal manufacturing bases but also in some inland cities. The phenomenon apparently lends some credibility to the report.

But in absence of credible statistics on the actual amount of rural labors, policymakers should not rush to any conclusions.

Since the first national agricultural census a decade ago, the mix of the rural population has changed significantly, as more rural labors leave the countryside seeking jobs in urban areas.

It is difficult to ascertain the actual mix and amount of the rural labor force before the ongoing second national agriculture census' results come in later this year.

But the warning of a possible labor shortage could never come too early. The aging of the Chinese population makes it more than likely that the country would bid farewell to cheap labor, sooner or later.

(China Daily 05/12/2007 page4)