From 'demographic dividend' to 'AI dividend'

China has entered a phase of population decline. A shrinking working-age population, rising labor costs and growing pressure on pensions and social security have become structural challenges.

The critical question now is whether China can shift from a development model that relies heavily on population size toward one that emphasizes productivity, technological innovation, human capital and per capita well-being. The country needs to change its perspective from the "demographic dividend" to the "artificial intelligence dividend".

In this era of population decline, the question is not "How many workers will we lose?" but rather "How much productive capacity can one person generate when working alongside AI?" This shift is crucial for rethinking demographic issues in the AI age.

The "AI dividend" refers to the economic and social gains generated by AI, robotics, automation and digital technologies. These technologies can ease labor supply constraints while raising productivity, capital efficiency, resource use and innovation capacity.

The AI dividend is not about "machines replacing people". It involves labor substitution, labor augmentation, productivity gains, more efficient resource use and expanded innovation capacity. Of these, labor augmentation deserves special attention.

In the AI era, the traditional relationship where "one person equals one unit of labor" is changing fundamentally.

A country's competitiveness will increasingly depend on the effective productive capacity created by "people +AI". If AI and robots can continuously enhance labor productivity even as the population declines, a smaller population does not necessarily mean a proportionate decline in productive capacity. This is the core difference between the AI dividend and the traditional demographic dividend.

People are not only workers but also consumers, family members and participants in society. AI can replace some forms of labor, but it cannot replace population reproduction, family formation or human society itself.

China must, therefore, pursue two approaches simultaneously. First, mitigate an excessive decline in the birth rate. If young people delay or forgo parenthood due to housing, education, childcare and healthcare costs, or difficulties in balancing work and family life, public policy should aim to remove these barriers.

The focus should be on creating a social environment where young people are willing and able to have children while balancing family life with their careers.

Second, accept the reality of population decline and redesign economic and social institutions accordingly.

These two approaches are not contradictory. The goal should be to ensure that "even with a declining population, economic vitality and social well-being can be maintained".

In an era of population decline, investing in every individual becomes more important. During the demographic-dividend era, the sheer size of the labor force was an advantage. In the AI age, development advantages will depend on the quality of human capital. Education should cultivate people who can work alongside AI while possessing creativity, sound judgment, cross-disciplinary thinking and communication skills. AI should not be viewed merely as a "competitor".

The society of the future should be designed around "people + AI". Investment in AI must go hand in hand with investment in people. Only in this way can the AI dividend become a development dividend shared across society.

The same thinking applies to population aging. If we look only at pensions and healthcare costs, an increase in the elderly population may look like a growing social burden. But many people over 60 remain in good health, possess extensive knowledge and experience, and want to continue participating in social and economic life.

In the AI era, digital technologies can compensate for age-related decline in capabilities. Policies for an aging society should ask: "To what extent can AI help people overcome age-related limitations and create more opportunities for older people who wish to remain active?"

If AI can extend people's "effective working lives", the implications of population aging could change accordingly.

Over the longer term, population decline may generate another potential dividend: per capita access to land, water, housing, energy, educational resources and environmental capacity could all increase. A smaller population could also ease pressure on total food demand. The key question is how to effectively reallocate the resources released by the population decline.

Cities, housing, schools and public facilities built during periods of population growth need to be reconfigured in response to changes in population size, age structure and regional distribution.

This could lead China toward a new three-stage development logic: the demographic dividend, the AI dividend and the resource reallocation dividend.

These stages represent a gradual shift and accumulation of different sources of development momentum.

The real challenge is how to use the next 10 to 20 years as a window of opportunity to complete a structural transformation in the drivers of development. Addressing low fertility and population aging requires coordinated efforts across childbirth support, human capital investment, AI application, employment-system reform, pension reform and regional adjustments.

The ultimate goal is to ensure that, regardless of demographic changes, every individual enjoys higher productivity and a better quality of life while the country maintains economic vitality, food security, social stability and sustainable development.

The weakening of the demographic dividend signifies a shift in the era of development, but it does not mark the end of China's development dividends.

If AI can be turned into social infrastructure that enhances human capabilities, and if the resources released by population decline can be reallocated toward education, healthcare, elderly care and technological innovation, demographic change could become an opportunity to drive a new development model.

China's future development model could shift from relying primarily on population size to one driven by "human capital + AI", with greater emphasis on per capita prosperity, social sustainability and national resilience.

The transition from the demographic dividend to the AI dividend raises a fundamental question: can China transform from a "large-population country" into a "human-capital powerhouse", an "AI-enabled society" and a "high-productivity economy"? If this transformation succeeds, low fertility and population aging could shift China's development model from quantitative expansion toward quality-driven growth.

The author is a foreign academician at the Engineering Academy of Japan (EAJ) and an honorary professor at Ritsumeikan University in Japan.

The views don't necessarily reflect those of China Daily.

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