With its decreasing birth rate since the 1970s, China is gradually approaching a point where its population will peak in the next 10 to 15 years. Around 2025, the workforce of 25- to 35-year-olds will decline by 7-8 percent from the 2010 level. While China's rural areas are still generating a large number of migrant workers, the overall growth rate of people entering the labor force is slowing. The limited migrant labor supply means two things for the Chinese economy: rising labor cost and labor shortages — whereas cheap and plentiful labor have been critical pillars for China's export-driven economy. By contrast, the Philippines is not expected to reach its demographic peak for another 30 years. Indonesia is also not expected to have its population peak for many years. While these countries lack much of China's manufacturing infrastructure, their population growth makes them a highly attractive investment location for aging, labor-poor but capital-rich countries like Japan.
