Lewis Turning Point, Demographic Dividend And China’s Economic Transformation Research

The most high frequency word is “the new normal” which can describe China’s economy. Review on the development of china’s economy, under the dual economy form, urban‐rural development has always been the main emphasis of the reform. Due to the adequate population resources, the development during the past three decades of reform can’t get away from the contribution of labor element. Low‐cost labor force makes Chinese labor‐intensive enterprises occupy the dominant position in the national and international competition. In the "new normal", faced with the severe economic situation, economic development shows up new characteristics of the stages. Economic growth momentum, industrial structure and resource allocation have entered a period of adjustment, especially the comparative advantage of low‐cost elements is changing, surplus labor is reducing gradually. Dealing with an aging population has been put on the agenda. China’s economic structure is the dual economy described in the theory of Lewis. In his study, the economies of developing countries are divided into two sectors. At the beginning of the economic development of traditional agricultural sector, it’s marginal productivity of labor is zero but with an unlimited supply of labor advantages. Along with the economic development, modern sector needs traditional agriculture sector to provide surplus labor factor, the development of modern department causes a decline in the traditional agricultural sector labor force, output per capita has increased; The advantages of modern department attract transfer of labor force constantly, when the surplus labor is absorbed and exhausted, while labor productivity in traditional sectors also increased gradually, ultimately drive the two departments of labor productivity to a certain level, the laborer salary rises and all surplus labor transfer. At this point there is no difference between the two departments which become integrated, and reached the Lewis tuning point in such state. In recent years, it makes us think about the Lewis tuning point issue when talking about the "labor shortage" and decreasing number of working‐age population. Does China’s economic development come to the state that described by Lewis? Whether China’s economy is facing the arrival of the next round of labor resource depletion and aging society? Under the situation of efforts to restore adjustment in the global economy, the world’s developed countries are promoting the re‐industrialization strategy actively, that will lead to further threats to China’s labor cost advantage. Competition of knowledge technology and innovation has become the mainstream. How to develop effective demographic dividend and realize the economy sustainable development in the future is the focus of the present. Researching Lewis dual economy theory helps us determine the current and future economic situation correctly, face China’s current economic and social issues, and for continuing to achieve economic transformation and social reforms of great reference value.The content of this article is to carding Lewis dual economy theory, to examine the current stage of China’s development based on the theoretical study, to determine whether to enter the Lewis turning point, to think about how to tap demographic dividend in the future and achieve sustainable economic development. Specifically, the article has been divided into five chapters, the first part is introduction, including research background, significance, research methodology and thinking framework of this article. The second chapter introduces the Lewis model and the Lewis theory expansion, including Ranis-Fei model, Minami standards and other relevant theoretical models, which are based on the theory of Lewis made for the theoretical studies of different development situations in individual countries, these theoretical models will help to carry out the subsequent empirical research. Due to the different circumstances of each country’s development, the special national conditions do not fully conform with the strict theoretical assumptions, so we select internationally recognized standards to judge the Lewis turning point of our country only. In the third chapter, it first confirmed the general applicability of the Lewis turning point in China. Secondly, respectively from the quantity and price standards to it verifies whether China is entering the Lewis turning point. It comes to the conclusion that China’s surplus labor is decreasing rapidly, structural shortage situation is grim, but there is still a considerable number of surplus Labor due to the differences between the region. In addition, based on the theory of Lewis, we can’t completely peeled off the traditional agricultural sector and the modern sector, We used to distinguish between farmer farming or working way, choose the agricultural sector as Lewis theory in the sense of traditional department, other than in agriculture industry as a modern sector. Through analysis of the agricultural production function, in order to verify the correlation between marginal productivity of agriculture and agricultural sector wages, ultimately come to the conclusion that there was no significant relevant relationships between the two around the year of 2007, it can’t be served as the evidence of the arrival of the Lewis turning point; After the study of the structure of per capita net income of farmers, salary gaps of unskilled labor force between various industry sectors, supply and demand situation of the labor market, the paper considers that at least the turning point of urban-rural integration described by Lewis has not appeared yet, but the Lewis turning point will come sooner or later driven by the demographic change and economic development trend. Therefore, main research of the fourth chapter of this article is about how to actively respond to the situation changes, put forward ideas and suggestions to explore the endless demographic dividend in the future, and realize the dynamic transformation of economic growth. The fifth chapter is the conclusion of this article and main ideas.