China has had the world’s largest population for the majority of recorded human history – and until recently, by a substantial margin.
Even though it has been projected for some time, the news that China’s population is currently declining and that India’s population will overtake China’s later this year is significant.
As a scholar of Chinese demography, I am aware that the Chinese government’s announcement on January 17, 2023, that for the first time in sixty years, the number of deaths exceeded the number of births in the preceding year, is no fluke. In contrast to the preceding year of decline, 1961, which occurred during the Great Leap Forward economic collapse, in which an estimated 30 million people perished from famine, 2022 represents a turning point. This is likely the beginning of a long-term collapse. According to the United Nations, China’s population is anticipated to decrease by 45 percent by the end of the century. And that is if China maintains its present fertility rate of approximately 1.3 children per couple, which may not be the case.
This reduction in population will accelerate a trend that demographers in China are already concerned about: a fast-aging society. By 2040, over one-fourth of the Chinese population is projected to be aged 65 or older.
In brief, this represents a seismic shift. It will have enormous symbolic and material effects on China in three primary areas.
In the span of forty years, China has substantially completed a historic transition from an agrarian to a manufacturing- and service-based economy. This has been complemented by improvements in living conditions and income levels. Nonetheless, the Chinese leadership has long acknowledged that the nation can no longer rely on the labor-intensive economic growth model of the past. This outdated paradigm has been rendered entirely obsolete by technological advancements and competition from nations with cheaper labor forces, such as Vietnam and India.
This historical turning point in China’s population trend serves as a wake-up call to accelerate the country’s transition to a post-manufacturing, post-industrial economy; an aging, diminishing population is incompatible with a labor-intensive economic model.
In terms of the implications for China’s and the global economy, population reduction and an aging society will provide Beijing with both short- and long-term issues. On one side of the ledger, fewer employees will be able to feed the economy and spur additional economic expansion; on the other side, a larger post-work population will require potentially expensive support.
According to data released on January 17, 2022 was one of China’s worst economic years since 1976, which is maybe not coincidental given that it was also a key year for China in terms of its demographics.
The rising proportion of old individuals in China’s population is not just an economic issue; it will also transform Chinese society. Due to the three-and-a-half-decade-long one-child policy, which was lifted in 2016, the majority of these elderly individuals have only one child.
The enormous number of aging parents with only one kid to support them will undoubtedly impose serious limits, not least for the elderly parents who will require financial assistance. As a result of increased life expectancy, they will require emotional and social assistance for a longer duration.
It will also place limits on the children, who will be required to meet employment duties, provide for their own children, and support their old parents simultaneously.
The Chinese government will be responsible for providing proper health care and pensions. In contrast to Western democracies, which have had decades to create social safety nets, Beijing has struggled to keep up with the rapid demographic and economic transformation in China.
As China’s economy grew rapidly around the year 2000, the Chinese government responded by investing heavily in education and health care facilities and expanding pension coverage. However, the demographic shift was so rapid that political reforms to strengthen the safety net were always playing catch-up. Despite the massive increase of coverage, the nation’s health care system is highly inefficient, unequally distributed, and insufficient in light of the expanding demand.
Likewise, social pension systems are extensively divided and dispersed unequally.
It will be crucial how the Chinese government responds to the issues posed by this dramatic demographic transformation. The legitimacy of the Chinese Communist Party, which is strongly related to economic growth, might be jeopardized if it fails to live up to the public’s expectations in its reaction. Any economic downturn might have devastating effects on the Chinese Communist Party. It will also be evaluated based on the state’s capacity to repair its social assistance system.
In fact, it is already possible to make a solid case that the Chinese government has moved too slowly. The one-child policy, which contributed significantly to the population’s sluggish growth and subsequent fall, was a government policy lasting more than three decades. Since the 1990s, it has been understood that the Chinese fertility rate is insufficient to sustain current population levels. However, Beijing did not act to allow more couples to have a second child until 2016, followed by a third child in 2021.
This move to stimulate population growth, or at least delay its decline, came too late to prevent China from losing its title as the largest nation in the world. Loss of reputation is one thing, but the political repercussions of any economic decline caused by a declining population are quite another.
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