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March 3, 2024

China’s Population Declines for Second Consecutive Year Amid Record Low Birthrate

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Jan 17, 2024

China’s population declined for the second year in a row in 2023, falling by 2.08 million to 1.4097 billion as births plunged to a record low, putting pressure on Beijing to further relax family planning restrictions.

Plummeting Birthrate Drives Population Drop

The National Bureau of Statistics (NBS) announced on January 17th that China’s population dropped for the second consecutive year, declining by 2.08 million to 1.4097 billion in 2023. This follows a drop of 850,000 in 2022 which ended decades of continuous population growth [1].

The decline was driven by China’s plunging birthrate hitting a record low of 6.77 births per 1,000 people in 2023, down from last year’s record low of 7.52 births per 1,000 [2]. About 9.56 million babies were born in 2023, nearly 10% lower than 10.62 million births in 2022.

“The demographic challenge is well known but the speed of population decline is clearly faster than expected,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management [3].

| Year | Births (millions) | Birth Rate (per 1,000) |
|------|-------------------|------------------------|  
| 2022 | 10.62             | 7.52                   |
| 2023 | 9.56              | 6.77                   |

Meanwhile, deaths jumped nearly 80% to 12.06 million in 2023 from 10.41 million in 2022 after China abruptly dismantled its strict zero-COVID policy in December 2022 [4]. This spike in deaths outpaced the declining number of births, driving the overall population drop.

Economic Impacts and Policy Responses

The decline in working-age population puts further pressure on China’s ability to pay pensions and will require an overhaul of the social safety net. It also risks crimping consumer spending.

Analysts have warned China’s declining population could result in severe economic consequences. “China will struggle to achieve reasonable economic growth in the coming years,” said Gary Ng, senior economist at Natixis [5].

Beijing has introduced measures aimed at encouraging couples to have more children, including tax deductions, longer maternity leave and housing subsidies. However, the high costs of raising children in Chinese cities have deterred many couples from having more kids.

To boost birth rates, China needs “to come up with more effective policies to reduce family costs, such as expanding tax deductions for education and housing,” said Stuart Gietel-Basten, professor of social science at Khalifa University in Abu Dhabi [6].

China May Relax Family Planning Policy Further

Experts say the latest population drop will increase pressure on Beijing to further ease family planning restrictions to encourage people to have more children.

China imposed a controversial one-child policy from 1980 to 2015 to slow rapid population growth and conserve resources in the world’s most populous country. This was relaxed in 2016 to allow married couples to have two children amid fears over the economic impact of a rapidly aging population. In 2021, the policy was further relaxed to three children.

However, after a brief increase in 2016-2019, birth rates have plunged to new lows. Many young Chinese continue putting off or avoiding having children due to the high costs.

Demographers warn China’s population will likely keep falling and some predict it could halve by 2100.

“China has entered an era of negative population growth much earlier than had been expected,” said a research note from investment bank Macquarie Group. “We think China needs to urgently relax birth restrictions further.” [7]

Yue Su, principal economist at the Economist Intelligence Unit, said “the government may soon begin to implement more aggressive pro-natalist policies.” Potential steps include payments or subsidies for couples having their first or second child, and further extending maternity or paternity leave periods while maintaining salaries [8].

However, analysts say such measures may have a limited effect if broader economic concerns are not addressed.

Long-Term Economic and Geopolitical Impacts

A sustained decline in China’s population could curb economic growth by shrinking the labor force and increasing the burdens of supporting an aging population.

It could also hamper the Communist Party’s geopolitical ambitions. “The demographic challenge is compounded by China’s ambition to compete strategically with the West,” said Capital Economics economists.

A smaller population and labor force “will necessitate productivity gains if incomes are not to stall,” said Louis Kuijs, Asia Pacific chief economist at S&P Global Ratings. “For China’s standing in the world, a lot depends on achieving such productivity gains.” [9]

Experts say Beijing will also have to increase immigration to help fill jobs. While China has long resisted large-scale immigration, the severity of its demographic crisis may force a rethink.

“With still nearly 300 million migrant workers, there’s plenty of slack in rural areas but authorities will need to tap into international migration,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. [10]

Conclusion

China’s population decline for a second straight year amid record low births presents economic and social challenges that will compel policymakers to take aggressive steps to encourage larger families. Further relaxation of family planning restrictions will likely occur this year, but broader economic pressures discouraging couples from having children need to be addressed as well.

A sustained population drop risks hampering China’s long-term growth prospects and could curb its geopolitical ambitions. But economic overhauls emphasizing productivity gains and increased openness to immigration could help China adapt to the demographic shifts underway. How well Beijing manages these population headwinds will determine whether China can sustain robust economic expansion and realize its goal of becoming the dominant global power by mid-century.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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