Bangladesh population

What China’s declining population means for the world

The largest nation in the world is about to shrink.

China represents more than a sixth of the world’s population.

Yet after four extraordinary decades in which China’s population swelled from 660 million to 1.4 billion, its population is on course to decline this year, for the first time since the great famine from 1959-1961.

According to the latest figures from China National Bureau of StatisticsChina’s population has grown from 1.41212 billion to just 1.41260 billion in 2021 – a record low increase of just 480,000, a mere fraction of the annual growth of around eight million a decade ago.

While a reluctance to have children in the face of strict anti-COVID measures may have contributed to the slow birth rate, it has been happening for years.

China’s total fertility rate (births per woman) was 2.6 in the late 1980s – well above the 2.1 needed to replace deaths. It was between 1.6 and 1.7 since 1994, and has slipped to 1.3 in 2020 and just 1.15 in 2021.

By way of comparison, in Australia and the United States, the total fertility rate is 1.6 births per woman. In aging Japan, it is 1.3.

This happened despite China’s abandonment of its one child policy in 2016 and the introduction of a three child policysupported by tax and other incentives last year.

Theories diverge on why Chinese women remain reluctant to have children in the face of state incentives. One is to get used to small families, another to the rising cost of living, another to the rising age of marriage, which delays births and curbs the desire to have children. .

Moreover, China has fewer women of childbearing age than one might expect. Restricted to having just one child since 1980, many couples opted for a boy, dropping the sex ratio at birth from 106 boys to 100 girls (the ratio in most other parts of the world) to 120and in some provinces to 130.

Decrease, on reasonable assumptions

China’s total population saw post-famine growth of just 0.34 per 1,000 last year.

Projections prepared by a team from Shanghai Academy of Social Sciences that it will fall this year – for the first time after the famine – by 0.49 per thousand.

The turning point came a decade earlier than expected.

As late as 2019, the Chinese Academy of Social Sciences expected the population 2029to 1.44 billion.

The 2019 United Nations Population Prospects report predicted the peak even later, in 2031-32to 1.46 billion.

The Shanghai Academy of Social Sciences team predicts an average annual decline of 1.1% after 2021, dropping China’s population to 587 million in 2100, less than half of what it is today .

The reasonable assumptions behind this prediction are that China’s total fertility rate will slide from 1.15 to 1.1 by 2030, and stay there until 2100.

The rapid decline will have a profound impact on the Chinese economy.

China’s working-age population peaked in 2014 and is expected to decline to less than a third of that peak by 2100.

China’s elderly population (65+) is expected to continue growing for most of this period, overtaking China’s working-age population around 2080.

Older and much younger

This means that if there are currently 100 working-age people available to support 20 elderly people, by 2100, 100 working-age Chinese people will have to support 120 elderly Chinese people.

The 1.73% annual average decline in China’s working-age population sets the stage for much weaker economic growth unless productivity picks up quickly.

Higher labor costs, driven by rapidly shrinking labor, are expected to push low-margin, labor-intensive manufacturing out of China to labor-rich countries -countries such as Vietnam, Bangladesh and India.

Already, manufacturing labor costs in China are twice as high as in Vietnam.

More care, less manufacturing

At the same time, China will need to devote more of its productive resources to providing health, medical and elderly care services to meet the demands of an increasingly elderly population.

Modeling by the Center for Policy Studies at the University of Victoria suggests that without changes to China’s pension system, its pension payments will increase fivefold, from 4% of GDP in 2020 to 20% of GDP in 2100.

For resource-exporting countries like Australia, these changes will likely require a shift in exports to manufacturers outside of China.

For importers of goods, including the United States, the source of goods is expected to gradually shift to new emerging manufacturing hubs.

Despite predictions that it will be “the chinese century“, these population projections suggest that influence could shift elsewhere – including to neighboring India, whose population is expected to overtake China in the next decade.

This article originally appeared in The Conversation.

Xiujian Peng is a senior researcher at the University of Victoria.