Population Decline Could Sink More Than China’s Economy

Population Decline Could Sink More Than China’s Economy
Elderly people wait for their free vegetarian lunch at a charity for older people who live alone, in Dingxing, southwest of Beijing, May 13, 2021 (AP photo by Andy Wong).

To the surprise of no one, China’s recently released demographic data for 2023 showed a continued decline in total population, this time of 2 million people, more than double the drop in 2022. The fertility rate was the lowest ever, at about 1 child per woman, and there was also a slight increase in the mortality rate, most likely caused by the rapid lifting of strict COVID-19 containment policies in late 2022, which led to a sharp increase in infections and deaths.

China’s population decline and its ultra-low fertility rate is part of a trend in East Asia, with Japan, Taiwan and South Korea also notching some of the lowest birth rates in the world. Economic development as well as increased career and life opportunities for women, alongside oppressive family cultures, have driven many Asian women to “just say no” to having kids. Demographers warn that such low fertility rates could lead to a low-fertility trap, in which social norms and expectations favoring a smaller family size harden and become incredibly difficult to change. Countries around the world faced with low fertility have indeed found little success in policies that exhort women to have children, especially when the costs of doing so are high, spousal help is rare and employment discrimination and gender pay gaps remain prevalent. China faces all of these problems, but at a lower level of economic development. So, unlike many of its neighbors that have become old countries after having become rich countries, China faces these difficulties as a middle-income country.

There are many negative consequences of China’s accelerated population decline. An aging population does not bode well for consumption and consumer spending. Productivity could continue to fall unless there are strong investments in human capital and education. And the social welfare system will be unsustainable as the retirement population surges and the working population rapidly declines. Even though China’s policymakers long worried about having too many people, the rapid success in controlling population growth, accelerated by the one-child policy in place from 1980 to 2016, has now brought about the opposite crisis: China is aging too rapidly, and its population is declining too swiftly.

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