China’s leaders have recently been alerted to the fact that the country may be facing its first year of population decline in five decades. This has important implications on the perception of the nation’s prosperity, both within and outside the border.
This recent warning comes after the 2020 census was pushed back from early April as a result of the need for greater preparation to assess the implications of this sensitive figure. It is expected that the report will total the population at less than 1.4bn, a level it exceeded in 2019 (FT, 2020). This data has the potential to paint a different picture of China’s strength, which has seen to be very robust amidst the Corona-virus pandemic.
China’s birth rate has been falling despite the revision of the family planning policy in 2015, which allowed all couples to have two children rather than one. China’s central bank recently published the fertility rate to be less than 1.5, which is comparable to Japan’s 1.42 (World Bank, 2019). Many contributing factors are at play, but some officials blame the deficit of young women. There is a considerable surplus of males in the country up until the age of 30, yet this surplus extends somewhat across all child-bearing ages (Figure 1). Other reasons include cultural shifts and the rising costs of child-rearing. This is unsurprising given the vast rate of development and urbanisation in China over previous decades. However, it may be the case that the one-child policy, originally aimed at slowing population growth, is having far-reaching unintended consequences even now.
So, why can a shrinking population be so troublesome? Well, a likely associated challenge is a
contraction in investment. Firstly, the size of the population dictates the number of resources
provinces receive (FT, 2021) and thus declining demographics means fewer funds. Similarly, given that China has established itself as the heart of global production as a result of its low-cost labour, a declining population obstructs this. Instead, FDI may turn towards the other BRIC and African countries for these goods and services. Yet, this may be beneficial for China as it confirms its move away from manufacturing and into leading global innovation in technology and healthcare.
Another worrying scenario is that a declining birth rate and an increasing life expectancy will mean there are too few workers to support the vast numbers of the elderly. In fact, data from the World Bank (2019) shows the labour participation rate to have been steadily declining from 84.2% in 1990 to 75.6% in 2019. Additionally, life expectancy over this same period has increased from 69 to 77 years (World Bank, 2018). This is daunting given that roughly 160m Chinese citizens are 65 years or older (World Bank, 2019).
But there is the benefit of improved sustainability. China is currently the largest polluter,
contributing 28% of the CO2 production annually (Statista, 2019). However, a declining population and reduced industry output would help lower this, offering a realistic way for the nation to meet its 2030 Agenda for Sustainability Development.
Nonetheless, this report is yet to be confirmed. The official publication, released in the coming
weeks and the subsequent consequences will be much anticipated, not just in China but by the rest of the world.