China’s population is declining

Change in a nation’s demographical profile frequently seems to catch their government by surprise. I suspect this is, in part, because these changes are usually gradual rather than sudden and cataclysmic. But, when governments decide to respond to perceived demographic trends, the outcomes can be unexpected and even destabilizing.

Consider the case of China. Long the nation with the world’s largest population, in 2022, China experienced a decline in population – the first since 1961 when Mao’s Great Leap Forward resulted in 61 million deaths by starvation.

China now no longer has the benefit of a growing supply of cheap labour able to increase its rate of economic growth. Moreover, it has a rapidly expanding older population and the Chinese Communist Party has failed to invest in expanded medical services and other forms of care that all these old folks will require.

The reason for the recent decline is clear. Young Chinese couples have a plummeting desire to reproduce so the next generation is shrinking before the startled eyes of aging Politburo members. Since increased immigration is not an option for China, this has now become a major policy challenge for the CCP, leading to a number of initiatives.

First, in 2016, the CCP abolished its decades-long policy of limiting families to only one child. In 2021, it increased the limit to three and chose not to punish any family that exceeded that limit.

The government also implemented a number of incentives, from cash handouts to tax breaks and longer maternity leaves, to encourage families to have more children. But there has been little response to date.

In 2022, births in China were 10 per cent lower than in 2020, the lowest since the Communists assumed power in 1949. In 2020, the fertility rate (the number of children a woman is expected to have at the current birth rate) was 1.7. In 2021 it was 1.2. For a population to remain stable, the UN estimates the rate should be about 2.1, assuming no net migration and mortality rates remain constant.

The decline in births is a function of several different factors. First, and foremost, is the cost of raising children. One Chinese think tank reported that such expenses, as a percentage of GDP per capita, was higher than in many advanced economies including the U.S.

Second, property prices – even given a recent slump – remain high and couples appear to be putting off marriage until they can buy a home. The number of marriages has been falling since 2013.

A third factor is the cost of looking after the elderly. Currently there are about 35 million Chinese over the age of 80. That number is forecast to more than quadruple by 2050. If the government does not step in to provide care, families will be stuck with the costs.

Finally, it appears that traditional values are changing as evidenced in postings on the internet objecting to women being viewed as “baby-making machines.” Some young Asian women now contend that getting married and having children can “only harm” their personal development and “quality of life.”

There is one other factor that might merit the attention of the Chinese leadership. In April, India will become the world’s most populous nation. That might well mean that India will enjoy a growing supply of cheap labour and will catch up in economic growth to a slowing China and eventually rival China’s influence.

In Canada, Quebec put forth a number of similar incentives and also experienced similar dismal results. While the federal government has instituted policies and programs (such as subsidized child care and tax credits) to assume some of the cost burdens of raising children, these have yet to result in a significant increase in births. No wonder the Canadian target for annual rates of immigration has been set at

450,000, up from last year’s 300,000.

There is an upside. As poverty becomes less prevalent, family size shrinks because the need for children to help care for older relatives and to supplement family income declines. We have seen this in Europe, North America and parts of Asia. It is a social change that requires more attention from governments.