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In an effort to reverse the nation’s first population decline in six decades, China is providing a plethora of financial incentives and expanding paid marital leaves for its citizens. According to China’s National Bureau of Statistics, the country’s population was 1.41175 billion in 2022, down by 850,000 from 2021. A drop in China population was last witnessed in 1961 when the Great Chinese Famine claimed tens of millions of lives.
Efforts to boost China population
The Chinese city of Hangzhou, a digital hub and home to e-commerce giant Alibaba has decided to provide parents with a one-time reward of 5,000 yuan (~$720) for a second child and 20,000 yuan (~$2,800) for a third child. The decision came after the city, which has a population of 12 million people, saw the rate of couples having a second child drop dramatically from 52% in 2017 to 36% in 2022.
Childcare subsidies are also available in China’s eastern city of Jinan, the southern technology hub Changsha, and Shenzhen, the southern metropolis. While the provinces of Sichuan in the southwest and Guangdong in the south continue to provide three days of leave for newlyweds, northwestern Gansu province and coal-producing Shanxi in the north are now granting a month’s leave.
Yet, the effectiveness of these financial incentives is being called into doubt. A study published last year by Beijing’s Yuwa Population Research Institute revealed that the average cost of raising a child to the age of 18 was 485,000 yuan (~$70,600) in 2019. This figure is greater than in developed countries like the United States and Germany and about seven times the per capita GDP of China, and certainly far greater than the monetary incentives on offer.
Previously, to halt the China population decline, the government enacted a ‘three-child policy’ in 2021, replacing a previous ‘two-child policy’ that had been in place since 2016. Beijing had replaced the contentious ‘one-child policy’ that had previously been in effect to curb population increase.
What caused the decline?
In 2022, 9.56 million infants were born in China, while 10.41 million individuals died. It was the first time that deaths outweighed births in China since the 1960s. Last year, the national birth rate decreased to a historic low of 6.77 births per 1,000 people, down from 7.52 in 2021. This is the lowest rate since records began in 1949. Meanwhile, China’s death rate in 2022 was 7.37 deaths per 1,000 people, the highest in decades and an increase from 7.18 fatalities in 2021.
Due to this, China’s neighbour India is on course to overtake it as the world’s most populous country this year, as per United Nations’ projections.
Looking back, the Chinese government’s ‘one-child policy’ had an adverse effect on the country’s fertility and birth rates since 1980. Due to a long-standing social preference for boys, the policy resulted in sex-selective abortions or infanticides that targeted female babies. affecting the fertility rate of the country. By the time this policy was abolished in 2016, there were 33.59 million more males than women.
Additionally, evolving views on marriage and family along with the costly nature of raising children in China’s expensive cities have not helped the situation either. The United Nations projects that the China population will decline by 109 million by 2050, more than triple its previous prediction in 2019.
“There are multiple reasons for this (population) decline and what demographers now believe will form a long-term trend. The one-child policy ended in 2016 is one of the culprits…but mostly the decline is a global phenomenon that shows the relationship between growing income levels and a commensurate reduction in live births,” said analyst provider Howard J Klein of Casino Business Review LLC who publishes on Smartkarma.
China population ageing fast
With life expectancy growing and birth rates falling to historic lows, China population is not only shrinking but also ageing rapidly. Since 2012, the number of persons aged between 16 to 59 in the country has been steadily falling. Over the last three years, the number of people in that age group fell by 38 million to 857.6 million.
Also, there were 280.04 million Chinese citizens over the age of 60 in 2022, up from 267.36 million people or 18.9% of the population in 2021. Those aged 65 and more climbed from 200 million in 2021 to 209.78 million in 2022, accounting for 14.85% of the population.
Consequently, China’s workforce population has witnessed a sharp decline in the last three years, as it shrunk by 41 million workers. A total of 733.5 million Chinese citizens were part of the workforce in 2022 as compared to 774.7 million in 2019. According to the World Bank, this reduction in employment is nearly equal to Germany’s whole workforce, which was around 44 million in 2021.
This has sparked concerns that a declining labour force will harm the economy and increase government debt as China struggles to cover the costs of healthcare and welfare for an ageing population.
“The loss in the working-age population is the key factor that causes a slowdown in economic growth in the long run. This would result in a decrease in total output, a severe drop in potential productivity, and an increase in labour expenses,” Yao Meixiong, a demographics expert and adjunct professor at Huaqiao University’s school of economics and finance told a local Chinese media outlet. “If consumption capacity is diminished, it leads to market shrinkage and sluggish domestic demand throughout the economy.”
