Yes and the debate was never settled. In my mind China should maintain its position as the world's most populous country as it has occupied throughout the centuries. China's population has long been its strength and a source of resilience, and it is the reason why China today can be an independent power separate from the US whereas countries like Japan and Korea are weaklings which cannot be independent by themselves. On a per capita basis, Japan and South Korea are actually richer than China by a lot. It's due to their lower population that they are weak.
Actually, it is population that enables technology and not vice versa. Today's technology requires scale to develop. For example, companies like Google and Amazon take advantage of the data they get from being so large and having a large customer base to provide a better service. They also take advantage of the fact that they have so many customers and therefore have high revenues. This revenue is then ploughed back into investment and R&D. With larger scale they are also better able to negotiate prices and take advantage of lower costs due to economies of scale. With this cycle of advantages they take a commanding lead over competitors and prevent smaller competitors from having a chance to catch up. Further, AI requires data to develop. The more people you have whose behavior is feeding into AI, the better your data is. 1 billion is better than 500 million and 2 billion is better than 1 billion. A country like Japan can build the best AI programs in the world but they won't be successful if the market is limited only to a country of 120 million people like Japan.
The US will seek to build an anti-China alliance composing of itself (330 million), the Five Eyes (130 million), the EU (550 million), Japan (120 million), and India (1,400 million), by population size, economic size, technological advancement, and military spending, the anti-China alliance dwarfs China by all metrics. And let's be honest, to some extent they will be successful. Of this grouping, only the EU is hesitant and even the EU will impose sanctions on China. Even the EU will listen to the US when it comes to key decisions like exporting EUV equipment or Huawei. Even the EU will send ships to 'patrol' the South China Sea. So you cannot trust the EU to stay neutral. China needs every advantage it can get.
As far as the "job of unskilled workers", this is not a true problem. It is actually a good problem, since robotics means that this work does not have to be done. Who wants to do this kind of job? No one. The West will move to various forms of UBI and a shorter workweek. This will improve people's quality of life. An all-around win-win. If you have good demographics and people working 20-30 hours a week, that is ideal. If you have a 4-2-1 situation with 1 person supporting 4 people and working like a dog, that's not good.
The PBOC is right here. China cannot take on all those countries with a heavy burden old age population, plummeting labor force and shrinking young population. Basically I am happy that at least someone in China recognizes this problem.
