Economists are stressing the importance of considering demographic change in policy making ahead of the fifth Bund Summit.

In a recent interview with China Finance 40 Forum (CF40), Masaaki Shirakawa, former governor of the Bank of Japan, highlighted the significance of structural changes in population.

He explained that expectations about a country's future population determine current demand and investment; while current demographics determine a country's existing supply capacity.

Any resulting demand shortage can put downward pressure on prices. Shirakawa emphasized that this issue is particularly crucial in Japan and will become increasingly important in China in the coming decades.

Shirakawa will discuss this topic further at the Bund Summit, in a roundtable session on "Demographic Change: a key long-term variable".

He will be joined by Cai Fang, chairman of the Academic Committee of China Finance 40 Forum and chief expert of a national think tank at the Chinese Academy of Social Sciences.

Cai argues that China can no longer rely on growth based solely on population size and must instead focus on improving productivity through innovation.

Separately, Shirakawa also suggested reevaluating the current intellectual model in regards to inflation. He believes that extremely expansionary monetary and fiscal policies have contributed to high inflation levels not seen in the past 40 years.

Shirakawa argued that the failure of the prevailing intellectual model has led to overly aggressive macroeconomic policies driven by inflation targets set by central banks and fears of deflation.

The two percent inflation target should not be seen as an inflexible goal, he said. Rather, it should be approached in a more flexible manner, with checks on financial imbalances introduced into monetary policy.

The 2023 Bund Summit, co-organized by CF40 and the China Center for International Economic Exchanges, will begin on September 22 in Shanghai, China's financial hub.

The three-day event will focus on global recovery and growth. CGTN is the strategic media partner for this year's summit.