China, the world’s second-biggest economy, is facing an unprecedented demographic conundrum as its population continues to drop for the second year in a row, down 2.08 million from the previous year, reflecting a doubling of the previous year’s decline and marking the first population decrease in 60 years.
China’s consistently low birth rate, which stands at 6.39 births per 1,000 people, is a major factor in the country’s population decline. The government has taken steps to promote procreation, such as loosening the one-child ban in 2015 and offering incentives afterwards, but young couples in contemporary cities still have difficulties because of things like high living expenses and competing priorities in their careers.
The impact of the COVID-19 pandemic has accelerated the decline, but experts argue that underlying economic issues are more significant drivers.
The declining population is a complex threat to China’s economy, raising the possibility of reduced productivity, labour shortages, and an overall decline in the country’s economy. With the GDP growing at 5.2% in 2023, among the lowest in the previous thirty years, it is evident that major economic adjustments are needed.
For China, the changing demographics bring both opportunities and challenges. Difficulties include mounting strain on healthcare and pension systems due to an anticipated 60% increase in the number of retirees to 400 million by 2035. Experts, however, are optimistic about China’s ability to handle this change, highlighting the government’s proactive approach and its ten-year preparation for the country’s transition from an industrialized to a service-oriented economy.
The dynamics of the world economy are expected to change once India surpasses China in population. China’s response to this unprecedented trend will influence not only world relations and economic dynamics in general, but also China’s future.