China has a shrinking labor force
"With China's working-age population set to decline steadily from 2012 onward due to retirement, the notion that a minimum of 8 percent GDP growth is necessary to sustain full employment and preserve social stability is now outdated"
http://www.reuters.com/article/2012/03/11/us-china-economy-inflation-idUSBRE82A02S20120311
China sacrifices growth to satiate inflation dragon
By Nick Edwards
BEIJING | Sun Mar 11, 2012 3:31am EDT
(Reuters) - If inflation is a dragon that must be slain, China's Premier Wen Jiabao has shown he is willing to sacrifice a part of the country's most vital asset to do so -- growth.
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China has a shrinking labor force, mandated double digit wage hikes, an export sector losing its competitive cost advantage and an insatiable thirst for raw material imports.
"With China's working-age population set to decline steadily from 2012 onward due to retirement, the notion that a minimum of 8 percent GDP growth is necessary to sustain full employment and preserve social stability is now outdated," analysts at Nomura said in a note to clients.
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The government is already raising the energy prices it controls, using the leeway of slackening demand created by the economic slowdown it partly engineered, and analysts expect further reforms in electricity, natural gas, water and more.
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