China’s inhabitants is shrinking. The results will probably be felt all over the world

Hong Kong

China may be one step closer to losing its place as the world’s most populous country to India after its population shrank for the first time since the 1960s.

The country’s population fell to 1.411 billion in 2022, down about 850,000 people from a year earlier, China’s National Bureau of Statistics (NBS) said during a Tuesday annual data briefing.

The last time China’s population declined was in 1961, during a famine that killed tens of millions across the country.

This time, a combination of factors are responsible for the decline: the far-reaching consequences of the one-child policy that China introduced (but has since abandoned) in the 1980s; changing attitudes towards marriage and family among Chinese youth; entrenched gender inequality and the challenges of raising children in China’s expensive cities.

Experts warn that if the trend continues, it could pose a problem for the rest of the world as well, with China as the second largest economy playing a key role in global growth.

A population decline is likely to exacerbate China’s problems with an aging workforce and slow growth, adding to its woes as it struggles to recover from the pandemic.

The population decline is partly due to China’s one-child policy, which has restricted couples to having just one child for more than 35 years. Women caught breaking the policy were often sentenced to forced abortions, heavy fines and evictions.

Alarmed by the declining birth rate in recent years, the government abolished the regulation. In 2015, it allowed couples to have two children, and in 2021 that number was increased to three. But the government’s policy change and other efforts, such as offering financial stimulus, have had little effect — for various reasons.

High living and education costs and skyrocketing real estate prices are important factors. Many people — particularly in cities — face stagnant wages, fewer job opportunities, and grueling work hours that make raising a child, let alone three, both difficult and expensive.

These problems are exacerbated by entrenched gender roles, which often shift the bulk of housework and childcare to women – who, more educated and financially independent than ever, are increasingly unwilling to shoulder this unequal burden. Women have also reported being discriminated against in the workplace because of their marital or parental status, with employers often reluctant to pay maternity leave.

Some cities and provinces have started to introduce policies such as paternity leave and expanded childcare options. But many activists and women say it’s far from enough.

And frustration only grew during the pandemic with a disaffected younger generation whose livelihoods and well-being have been derailed by China’s hard-hitting zero-Covid policy.

Hear how parents in China are reacting to the new three-child policy

A declining population is likely to add to the demographic problems China is already facing. The country’s population is already aging and the labor force is shrinking, putting enormous pressure on the younger generation.

China’s elderly now make up nearly a fifth of the population, officials said on Tuesday. Some experts warn that the country could follow a path similar to Japan, which entered three decades of economic stagnation in the early 1990s that coincided with its demographic aging.

“The Chinese economy is entering a critical period of transition, unable to rely on an abundant, cost-competitive labor force to spur industrialization and growth,” said Frederic Neumann, HSBC’s chief Asian economist.

“As the labor supply begins to shrink, productivity growth needs to pick up to sustain the economy’s rapid pace of expansion.”

China’s economy is already struggling, growing just 3% in 2022 — one of its worst performances in nearly half a century, thanks to months of Covid lockdowns and a historic downturn in the property market.

The shrinking workforce could make the recovery even harder as China resumes international travel and lifts many of the tight restrictions it has maintained in recent years.

There are also social implications. China’s social security system is likely to come under pressure as there will be fewer workers to fund things like pensions and healthcare – as demand for these services soars due to an aging population.

There will also be fewer people caring for the elderly as many young people are already working to support their parents and two sets of grandparents.

Elderly people in China

China’s seniors are at risk of being left behind

Given its role as the engine of the global economy, China’s challenges could have repercussions for the rest of the world.

The pandemic has shown how China’s domestic problems can affect the flow of trade and investment as its lockdowns and border controls disrupt supply chains.

A slowdown in China’s economy would not only slow global growth, but also jeopardize China’s ambitions to overtake the United States as the world’s largest economy.

“China’s limited ability to respond to these demographic shifts is likely to result in slower growth outcomes over the next twenty to thirty years and affect its ability to compete with the United States on the world stage,” according to the US-based Center for Strategic and International Studies said in an article on its website last August.

China is expected to lose its place as the world’s most populous nation this year to India, whose population and economy are both booming.

“India is the biggest winner,” tweeted Yi Fuxian, who studies Chinese demography at the University of Wisconsin-Madison.

Although Yi said India’s economy could one day surpass the US, she still has a long way to go. India is the world’s fifth largest economy and overtook the United Kingdom last year, and some experts have expressed concern that the country is not creating enough job opportunities to keep up with its growing workforce.

Still, some researchers say the news out of China may have a silver lining.

“For both climate change and the environment, a smaller population is a benefit, not a curse,” tweeted Mary Gallagher, director of the International Institute at the University of Michigan.

Peter Kalmus, a climate scientist at NASA, argued that population decline shouldn’t be viewed “as a terrible thing,” instead pointing to “the exponentially accelerating global warming and biodiversity loss.”

Chinese officials have stepped up efforts to encourage larger families, including through an interagency plan released last year to boost maternity leave and offer families tax deductions and other perks.

Chinese President Xi Jinping said so in October to “improve population development strategy” and ease economic pressure on families.

“[We will] establish a political system to increase birth rates and reduce the cost of pregnancy and childbirth, child rearing and schooling,” Xi said. “We will pursue a proactive national strategy in response to the aging population, developing programs and services for elderly care and providing better services for elderly people living alone.”

Some places even offer cash incentives to encourage more births. A village in southern Guangdong province announced in 2021 that it would pay permanent residents with babies under the age of two and a half as much as $510 a month — which could total more than $15,000 per child. Other places have offered housing subsidies for couples with multiple children.

But those efforts have yet to show results, as many experts and residents say broader national reforms are needed. After Tuesday’s news broke, a hashtag went viral on Weibo, China’s Twitter-like platform: “To encourage births, you must first solve young people’s concerns.”

“Our salaries are so low, the rents so high and the financial pressure so great. My future husband will be working overtime until 3am every day through the end of the year,” wrote one Weibo user. “My survival and health are already issues, let alone having children.”

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