China’s population decline: A pressing issue for the world’s second-largest economy
China's population experienced a significant decline for the second consecutive year in 2023, raising concerns about the long-term economic implications for the world's second-largest economy. According to the National Statistics Office, the total population fell by approximately 2.08 million to 1.409 billion, a steeper decline than the 850,000 decrease recorded in 2022, the first drop since the Great Famine in 1961. This trend presents a challenging scenario for China's future, potentially impacting its workforce and economic growth.
6:16 AM EST, January 17, 2024
Economic ramifications
The population decrease comes amid a period of sluggish economic recovery. China’s GDP growth in 2023 was 5.2 percent, achieving the government's target, yet the economy faces a complex external environment and insufficient demand. The aftereffects of the zero-COVID era, a protracted property crisis, and a decline in global growth contribute to the uncertainty surrounding China's economic momentum. Geopolitical tensions and efforts by Western nations to reduce dependence on Chinese supply chains further complicate the situation. These factors, combined with the falling population, create a multifaceted challenge for China's economic prospects (Al Jazeera).
A deep dive into demographic changes
The birth rate in China hit a record low in 2023, at 6.39 births per 1,000 people, down from 6.77 in 2022. Concurrently, the death rate increased to 7.87 per 1,000 following the lifting of COVID-19 restrictions in late 2022. There are concerns about the accuracy of official data in fully capturing COVID-19-related deaths. The decrease in population and the aging demographic profile indicate a significant shift in China’s long-standing demographic trends. This change is further underscored by the fact that India overtook China as the most populous country in late 2023 (DailyNews).
The road ahead
Efforts by the Chinese government to mitigate these demographic trends, including easing residential registration procedures and encouraging larger families, have yet to yield significant results. The government faces the dual challenge of managing immediate economic concerns while planning long-term demographic shifts. This includes addressing the implications of a shrinking workforce and the increasing healthcare and social spending burden. President Xi Jinping has emphasized the need for policies encouraging childbirth and supporting the aging population, but these efforts face significant cultural and economic hurdles (DailyNews).
China's population decline is not just a demographic issue but a complex challenge intertwining economic, social, and policy aspects. The country's response to these challenges will have far-reaching implications, not only for its future but for the global economy.
