China battles birthrate drop amid economic woes
China is struggling with a declining number of births despite attempts to introduce incentives. Beijing has relaxed rules on the number of children allowed and is supporting families, but the demographic trend continues. The economic slump does not help this situation in the country.
10:46 AM EST, November 11, 2024
China has been trying for years to increase the number of births, but these efforts have not been successful. Despite the easing of the one-child policy, the number of newborns in 2023 reached a record low of 9.02 million. According to CNBC, the number of new marriage registrations fell by 25% in the third quarter, marking the lowest level since 1979.
According to Lauren Johnston from the University of Sydney, Chinese policy focuses on supporting families rather than significantly increasing the number of births. Recent actions include extending maternity leave to 158 days and providing tax breaks for families with children.
Youths concerned about China's economic slowdown
As quoted by CNBC, Harry Murphy Cruise from Moody's Analytics notes that young Chinese are postponing family formation decisions due to slower economic growth. In August, youth unemployment reached a record high of 18.8%, impacting confidence in financial futures.
Urbanization and the stress associated with living in large cities discourage starting families. Darren Tay from BMI emphasizes that the intense pace of city life undermines the effectiveness of pro-family incentives.
Tianchen Xu from the Economic Intelligence Unit points to the need for strong financial incentives, such as subsidies and housing benefits, to reverse the declining birth trend. Current policies are insufficient and inconsistent, making effective implementation difficult.
Not just demographics
Consumption, the economy's main driver, has weakened this year following a rebound associated with reopening after the COVID-19 pandemic. Amid widespread job and salary cuts and falling property prices, Chinese consumers have become more cautious with their spending, leading to intense price wars in sectors like automotive.
Retail sales increased by just over 3% in the first seven months of 2024, a significantly lower result than the over 8% growth recorded before the pandemic. According to a survey conducted by the central bank in the second quarter, confidence in future incomes fell to its lowest level since the end of 2022, one of the most intense lockdown periods associated with COVID-19.
