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Aging factory: On China’s population decline

The decline in China’s population will affect the rest of the world too

January 21, 2023 12:10 am | Updated January 26, 2023 10:05 am IST

The last time China’s population saw a decline was in 1961, in the midst of a devastating four-year famine following Mao’s failed “Great Leap Forward” campaign. The latest decline in population, however, is no blip. The shrinking of the world’s most populous country by as much as 8,50,000 in 2022 marks a watershed moment with lasting consequences for China and the world. Beijing announced on January 17 that births in China last year dropped by more than 10% to 9.56 million, with 10.41 million deaths. The 1.411 billion population will certainly be overtaken by India’s this year. China’s population story holds lessons for countries that have tried robust interventions in social engineering. China has spent the greater part of two decades trying — and failing — to get families to boost birth rates that have been declining since the government introduced a harsh “one-child policy” in 1980. The belated introduction in 2016 of a “two-child policy” to course correct was not met with the enthusiasm that planners had expected for a relaxation announced with fanfare. A government survey found that 70% would not have more children citing financial reasons.

China’s economy is already feeling the impact of demographic change. The 16-59 working age population (2022), was 875 million, a decline of around 75 million since 2010. Wages are rising, and labour-intensive jobs are moving out, predominantly to Southeast Asia. The above-60 population, meanwhile, had increased by 30 million to 280 million. The number of elderly will peak at 487 million by 2050 (35% of the population). China’s National Working Commission on Ageing estimates spending on health care for the elderly will take up 26% of the GDP by 2050. Signs are China is already on track to follow Japan’s example of a prolonged period of a shrinking workforce with declining growth. As a paper from Japan’s Research Institute of Economy, Trade and Industry pointed out, the proportion of child and elderly populations in China as of 2020 was similar to Japan’s in 1990. Moreover, China reached this inflection point faster, with its fertility rate falling from 2.74 to 1.28 in the preceding four-decade period, while Japan’s fell from 1.75 to 1.29. The paper pointed out that India’s proportion of child and elderly population in 2020 was similar to China’s in 1980, just when its economic boom took off. That was made possible only by making the most of its demographic dividend by investing heavily in health care and education to fashion a workforce capable of powering what would become the world’s factory.

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