This is a summary of the original article by Carl Mizner that may be found here
The world’s most populous country has hit a historic turning point.
China’s population is now declining for the first time in six decades. The country’s birth rate also hit a record low last year marking a new milestone in its deepening demographic crisis.
This long-expected event is the result of decades-long declines in Chinese fertility rates. Over the course of the 21st century, this will result in a steadily decreasing population. Current United Nations estimates show China’s total population falling by up to 100 or 200 million by 2050.
China’s demographic trajectory is far from unusual. Most modern nations where women are educated and have smaller families do see that. Japan’s population peaked in 2008 and has been steadily declining since, with total population now falling by roughly half a million per year. Taiwan tipped over into negative growth in 2020, South Korea in 2021.
The unusual thing about China is that this transition has occurred at a much-accelerated speed. What has taken most developed nations maybe 50 years to arrive at this point, China has arrived in one generation.
What is also unique is that an overwhelmingly large portion of the population is male. And that’s because of the previous one-child policy. The challenge for China to overcome this population decline is that a huge, male, elderly population will make it much, much harder.
This new data came alongside the announcement of China’s worst economic performance in nearly half a century. So, what are the implications for China’s economy?
Simply speaking, one in four Chinese people will be a retiree by 2050. The worker-to-retiree ratio is going to be huge, and some of the results of that will definitely impede economic growth due to hefty pension outlays, huge public health implications and big economic consequences for the growth markets. The kind of markets where we see innovation, where we see creativity, are typically younger work-force markets, not elderly populations.
Bottom of Form
Neither a shrinking nor a growing population represents a crisis in itself. Rather, the far more important question is whether state authorities can respond effectively to the challenges such trends pose. There are serious questions as to whether Beijing is up to this task.
First, Beijing has been slow to adjust existing policies to respond to China’s rapid aging.
Consider pensions. For well over a decade, Chinese officials have regularly made noises about the need to raise the official retirement age from unsustainably low levels – 55 for women and 60 for men – in light of impending financial pressures. But faced with public opposition from urban elites who benefit most from existing policies, Beijing has repeatedly failed to take meaningful reform.
Second, it is unclear whether Beijing will be able – or willing – to create new frameworks to respond to emerging needs.
Labor and migration are key examples. Elsewhere in East Asia, inbound flows of foreign labor have been a crucial component of responses by states and societies alike to rapidly aging populations. Over the past thirty years, Japan, South Korea, and Taiwan have seen their percentages of foreign residents steadily rise to 2-4% of total population. Much of this consists of flows of migrant workers – often on short-term contracts without the potential for citizenship – to fill economic niches left vacant (or created) by demographic change. Taiwan, for example, now has some 800,000 migrant workers – primarily from Southeast Asia – filling crucial roles in construction, industry, and eldercare.
In China, the vast flows of rural migrant workers to urban cities that powered decades of rapid economic growth over the reform era are not only plateauing in number, but also swiftly aging. Yet with virtually no labor flows into China, it remains unclear who, if anyone, will emerge to fill the void. Robots and technology? Those have not allowed far wealthier countries elsewhere to avoid reliance on international labor flows. Why should China be different?
Last, Beijing’s leaders themselves could very well further harm China’s demographic prospects through their short-sighted policies.
Beijing is steadily moving towards a full-throated embrace of pro-natalist policies to mitigate the challenges of a declining population. But as party policy under President Xi Jinping increasingly pivots in the direction of harsh, authoritarian rule, there are serious risks that Beijing’s new-found interest in ramping up births and marriages will result in repressive and poorly designed state policies that severely harm the rights of Chinese women, undermine gender relations, and drive fertility rates even lower.
How Beijing responds to these challenges – or fails to – will go a long way to determining the future course of this economic giant, with far-reaching ramifications for the rest of the world.
The views expressed herein may not necessarily reflect the views of JI FAD and/or any of its affiliates
