Demographics and China's economy

This chart from The Economist demostates a crucial point about China's demographics, which ought to disabuse you of the notion (often taken as conventional wisdom in the US) that China is a bottomless pot of cheap labor.

This explanatory caption accompanied the chart: "SINCE the 1970s China’s birth rate has plummeted while the number of elderly people has risen only gradually. As a result its “dependency ratio”—the proportion of dependents to people at work—is low. This has helped to fuel China’s prodigious growth. But this “demographic dividend” will peak in 2010. China’s one-child policy will keep birth rates low, but as life expectancy continues to increase, so will the dependency ratio, reducing the country’s potential for growth. The government could yet salvage the situation by loosening its one-child policy. More children would increase the dependency ratio until they were old enough to join the workforce, but reduce labour shortages in the long term."

If you're particularly interested in this topic in general, I heard an interview with the author of this book, The Age of Aging, and it deals with the demographic shifts in Asia in much more depth. Tell me what you think if you read it!