Qin (Maya) Mei, Scott Kennedy and Ilaria Mazzocco authored an analysis of China's emerging population decline and its relationship with economic growth. The report was published in Big Data China on September 21.
According to the report published on Big Data China, in 2022, China experienced its first population decline in decades after years of falling birth rates. Projections by the United Nations indicate that China's population, which was 1.426 billion in 2022, is expected to drop to 1.313 billion by 2050 and possibly go below 800 million by 2100.
"The problem for China, though, isn’t simply a falling population but rather the worsening ratio of retirees to individuals of working age, which will increase the burden on income earners to support the rest of the population," the authors wrote in their report.
The report said China's demographic challenges are generating concerns about the country's future. The absence of a robust social safety net, especially in rural areas where healthcare and pensions are lacking, compounds these worries. The declining population may also intensify problems in the housing market, potentially leading to an oversupply of homes. Observers like James Liang speculate that an aging, smaller population could hinder China's innovation capacity. These demographic trends warrant close attention given China's pivotal role in the global economy and their potential to affect long-term growth.
While some believe effective policy reforms could avert a crisis, others highlight structural issues like low education levels and economic structure as more pressing concerns. China's attempts to boost fertility rates face hurdles such as socioeconomic challenges and gender inequality, making comprehensive welfare provisions and parental leave reforms crucial.
According to the report, economic reforms are needed to boost productivity and consumption. Key policy goals include improving the financial system, supporting the private sector, and addressing labor mobility issues. Additionally, the shift of lower-skilled workers to the service sector, marked by job insecurity and limited regulation, poses a challenge for China's future economic trajectory. The authors also suggest China should develop a better-educated labor force, raise the retirement age, support automation, strengthen the social safety net, and open inward immigration
The authors wrote in their report, "Although some efforts are underway, including attempts at hukou reform and investment in education, the government will need to take more comprehensive action to address the challenges ahead. If Beijing fails to plan accordingly, the consequences attached to a declining population may well have large-scale negative implications for its economy."
