Negative population growth will not change the expectation that China will become the world's largest economy, said Cai Fang, chief expert of National Think Tank under the Chinese Academy of Social Sciences, during an exclusive interview by the Global Times.

"But we need to grasp the changing population data and the trend it revealed timely and accurately," Cai added.

He made the remarks after the United Nations Population Fund (UNFPA) released the State of World Population Report, saying that India will overtake China as the world's most populous nation by mid-year, with India's population at an estimated 1.4286 billion, against 1.4257 billion for China.

"Being the world's most populous country doesn't matter that much anymore, nor is India the reference for looking at China's development prospects," said Cai, adding that the key is to maintain economic growth and join the ranks of high-income countries as scheduled.

He further pointed out that a country's demographic dividend will help spur economic growth only if demographics can be used to advance economic development.

Even if the population structure becomes less favorable, further reform and opening up can still establish the conditions for a demographic dividend, Cai added.

Why China encountered a negative population growth earlier than expected?

Economic and social development affects the fertility rate directly. Over the past 40-50 years, China's fertility rate declined – even faster than that of other countries and regions – with its significant economic growth, according to Cai.

There is, of course, influence of China's one-child policy, he added.

Faced with the challenges of an aging population and negative population growth, Cai suggested that the country should adhere to supply-side structural reform and further raise labor productivity.

Demand-side reform should also be advanced, he said, adding that the government should help further boost people's incomes, thus enhancing their purchasing power.

Aging population can become new opportunity

According to Cai, an aging population can contribute to consumption, housing and other aspects.

The elderly can also become a unique consumer group, he added. Giving the experience of Japan, Europe and the United States, the needs of the elderly, such as goods and services they require, will offer new industrial opportunities, said Cai.

As to housing, China's urbanization rate of registered population is only 47 percent, which is far from the 80 percent that of a high-income country. This means there exists a huge potential in housing, according to Cai.

In addition, as China's population shrinks, it must be supplemented by quality. The Chinese government has been extending the period of compulsory education to get more people educated, said Cai.

According to Hungarian demographer Katona Tamas, the educational level and the literacy of the workforce provide solid support for China's sustained economic growth.

Tamas said that while the demographic dividend is important, it is the improvement of the population quality that is the main driver to ensure long-term economic and social development.