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Recently, the Chinese Academy of Fiscal Sciences (CAFS) and the Social Sciences Academic Press (SSAP) jointly published the Blue Book of China’s Fiscal Policy: Annual Report on Fiscal Policy of China (2023).

This report provides an insightful analysis of China’s current demographic and social structures, highlighting significant challenges such as declining birth rates and an increasing aging population within smaller cohorts. These trends are contributing to a prolonged reduction in the growth of the labor force and are compounded by the persistent urban-rural divide, creating mismatches and potential unsustainability in human capital. The Blue Book underscores the need for fiscal policy to focus on human development in the mid to long run, particularly by expanding public spending and elevating human capital. It outlines key strategies for achieving this objective: we can refine and implement policies that prioritize employment, enhance the social security and social assistance systems, increase the capacity of medical and health services, and develop a high-quality education system. These measures are essential for mitigating risks associated with human capital allocation, improving societal expectations, fostering employment, safeguarding the foundational aspects of livelihood, boosting public welfare, and providing a sense of stability and certainty in societal development.

1. We should prioritize employment, especially among key demographic groups, to tackle structural employment contradictions

2. We should enhance social security and assistance

3. We should expand the availability of quality medical resources and ensure they are better distributed among regions

4. We should build a high-quality educational system