China’s demographic crisis threatens its economic supremacy

The biggest challenge facing China currently is not the Trump administration and its campaign to separate the two largest economies in the world, but rather stems from within, as China is witnessing a population decline on a scale and speed that the world has never seen before.

This will create ripples that will ripple throughout China and the world, for decades to come. The impact on China’s long-term growth rate – Beijing’s mission to become a global power to rival or replace the United States – could be jeopardized. The massive labor shortage is likely to impact supply chains for products, including mobile phones and electric cars.

“It is almost impossible to reverse the demographic decline,” said Louise Lu, head of Asia economics at the research firm Oxford Economics. It estimated that the shrinking workforce in China could reduce annual GDP growth by 0.5% over the next decade.

In 1990, the average lifespan in China was 23.7 years, according to United Nations data, and the average Chinese woman had 2.51 children, far above the replacement rate of 2.1 needed to keep the population stable.

But by 2023, the demographic picture had changed dramatically, the average age was 39.1, and women were having an average of one child. In 2022, according to Chinese census data, China’s population peaked at 1.4 billion people, but now it is declining.

China is now on an alarming path. The United Nations expects that in 2050, China’s population will decline to 1.26 billion people, and the age distribution will get worse. About 10% of them will be under the age of 15, but about 40% will be over the age of 60.

By 2100, China’s population will more than halve to 633 million, according to UN projections. Only 49 million people, or 7.8%, will be under the age of 15. On the other hand, about half of them, or 52%, will be over the age of 60.

Reproductive restrictions

The population control measures that China implemented in the 1970s are among the fundamental causes of China’s current problems. A government campaign to delay marriage, have fewer children, and increase birth gaps led to a sharp decline in the birth rate in the early 1970s.

But amid concerns that the “late marriage” policy was not enough, the Chinese government officially restricted most parents to one child in 1979. Authorities often resorted to forced sterilizations and abortions to enforce the one-child policy, and imposed heavy fines for extra-births.

This harsh approach led to the success of the one-child policy. Birth rates fell sharply, forcing the authorities to relax the policy in 2015, allowing parents to have two children in 2016, then three children in 2021, but birth rates did not recover, and saw a slight decline after the pandemic in 2024. In fact, with the lifting of birth control measures, the birth rate fell even further, from 1.77 children per woman in 2016, to 1.12 In a year 2021. China’s fertility rate has declined sharply in recent years.

This decrease in statistics may be a reflection of the high cost of raising a child in China, which averages about $74,963, including food, health insurance, and tuition fees from birth to college graduation, according to a report issued by the Beijing-based Yuwa Population Research Institute. The cost is even higher in major cities, as the cost of raising a child in Shanghai is more than $140,000. dollar.

The Chinese government is now spending a lot of money on the problem, but it may be too little, too late. Last month, Beijing unveiled new support worth approximately US$500 annually for the first three years of a child’s life. Some commentators on social media indicated that they would consider having more children if the support was 10 times greater than what is provided.

Change course

In an attempt to change the trajectory of the birth rate, the Chinese government is seeking to persuade the new generation – which is increasingly skeptical – to marry. In 2024, only 6.1 million Chinese have registered to marry, less than half the 13.5 million who married in 2013, according to China’s Ministry of Civil Affairs. Marriage rates are a good indicator of future birth rates, since almost all Chinese children are born to formally married parents.

The young Chinese man, Yan, said: “Marriage, having children, and continuing the family line are not responsibilities or obligations that everyone must fulfill. We only live for a few decades in this world, and we should spend more time enjoying it,” he said, adding that he would use some of his free time to care for his elderly parents.

Not only are the number of newborns declining, but older Chinese people are staying longer.

Life expectancy in China is rising significantly, and the number of elderly people is expected to double over the next 30 years. China’s aging population will put unprecedented pressure on the country’s pension system, which is largely funded by taxpayer revenues. By 2100, according to the United Nations, there will be more people outside the labor force than in it. About the Washington Post

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Sharp decline

For decades, China has enjoyed the role of “the world’s factory,” leveraging its vast workforce to manufacture goods cheaply and quickly. With the number of working-age people in China declining sharply, that era may now be coming to an end.

Louise Lu, head of the Asia Economics Department at the research firm Oxford Economics, said: “China’s manufacturing capacity currently represents 30% of the global total, but this percentage will have to decrease, because China will not enjoy sufficient labor productivity.” She added: “The collapse of China’s manufacturing capacity is inevitable.”

It is not just a matter of numbers, but also a matter of attitudes. Lu added: “It became possible for China to be the world’s factory in the first place, through the generation that was born between 1960 and 1980,” continuing: “These people were completely willing to work in factories and manufacturing, but now the younger generations – simply – do not want to work in factories.”

• Population control measures implemented by China in the 1970s are among the fundamental causes of China’s current problems.

• China is witnessing population decline on a scale and speed that the world has never seen before.

• China is now on an alarming path, and the United Nations predicts that in 2050, China’s population will decline to 1.26 billion people.