Mint Explainer: What China’s shrinking population means for its global might

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In a historic demographic shift, China’s population has declined for the first time in 60 years. According to the latest population data released by China’s government, the world’s most populous nation saw its population shrink by 850,000 people. Mint breaks down the implications of this change:

China’s National Bureau of Statistics revealed that China’s population shrank by close to a million people in 2022. Last year, China saw 9.56 million births, a sharp decline from the 10.62 million births in 2021. Concurrently, the country saw 10.41 million deaths.

Experts believe that China is now on an irreversible path to rapid ageing and population decline. By 2035, a third of the population will be above the age of 60. With the population and working age labour force set to decline, there are serious consequences for China’s growth prospects.

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China’s demographic problem has its roots in the Chinese government’s 1980 decision to institute the One Child policy. While it was aimed at reducing the country’s population burden, it also ensured birth rates fell below 2.1 births per woman, which is the fertility rate needed to ensure that population levels remain stable.

China’s massive pool of young, cheap labour proved a key asset during the country’s economic boom over the last three decades. However, as this generation of workers began to age, there were fewer young people to replace them in the workforce.

China’s population is expected to shrink by 109 million by 2050. Fewer young workers and an increase in older retirees will reduce the productive potential of the economy and will place substantial strains on social infrastructure as retirees will need pensions and healthcare.

Beijing, well aware of the scale of the crisis, reversed the One Child policy in 2016. However, a rising cost of living and increasing female participation in the workforce among other factors limit most young couples to having just one child.

This demographic crisis will have serious consequences for the world given China’s centrality in global supply chains, particularly as a manufacturing power. A decline in the country’s productive workforce will send ripples throughout the global economy.

China’s foreign policy may also see changes. A country that must spend staggering sums on old-age care and health even as tax revenues decline will find it difficult to also spend vast sums on its military ambitions globally.

The decline in China’s population will also contribute to India overtaking China to become the world’s most populous nation this year, according to the UN’s estimates.

Elsewhere in Mint

In Opinion, Madan Sabnavis says the upcoming budget may not spring any big surprise. Pramit Bhattacharya reveals what data says about the great Indian middle class. Rajat Dhawan writes about five priorities for India Inc. Long Story delves deep into India’s ongoing pension battle.

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