According to a report released by the United Nations on Wednesday, India is expected to surpass China as the world’s most populous country by the end of June, with a population of 1.4286 billion compared to China’s 1.4257 billion. While this event was not anticipated to occur so soon, China’s population has indeed slowed down, leading to several inquiries. Reports suggest that China’s progress may be hindered as its population ages and becomes exhausted. As a result, what implications will China’s declining population have on the global economy?
Official numbers released by the National Bureau of Statistics earlier this year stated that China’s population declined by 850,000 between the end of 2021 and 2022. Even for a country as big as China, the number is slightly concerning – for it suggests that there is a slow but steady demographic shift happening.
A Pew Research report has stated that China has 14 per cent population above the age of 65. By 2035, a third of China’s population (400 million people) is expected to be above the age of 60. With an ageing population, it will become increasingly difficult for the ‘world’s factory’ to keep churning out goods at the same rate.
China is the world’s third-largest economy and the global supply chains are heavily dependent on it. The Covid pandemic exemplified what happens when the global supply chains are impeded. The businesses are still reeling from the effects and it may take another year or two to restore the status quo.
Additionally, if China’s population continues to decline, there will be an incredible shortage of labour force, currently engaged in the manufacturing business. Loss of labour means the price of manufacturing will go up in China and eventually prices across the globe will shoot up, leading to sky-high inflation and turmoil in the global economy.
The US and the European Union will be directly affected and so will numerous countries that are heavily dependent on Chinese exports.
While China ages, rival India and its population under 65 will remain less than 30 per cent till the year 2100, according to UN’s medium variant projections. Such difference in number may push the companies to shift their business from Beijing to New Delhi. The trend has already started with the likes of tech behemoth Apple pondering shifting its base to India.
Beijing already appears rattled at the prophecies being made by the Western world regarding its population decline. A day after the release of the UN report, state media CCTV released a feature-length article where it claimed that China had achieved ‘miracles’ despite the continuous slander.
“The United States is stepping up efforts to contain China’s development and advocate further decoupling and found new hype points from the United Nations report,” read the report.
“Such hype lacks a basic understanding of the law of population development. With the development of human society today, the decrease in birth rate and decline in willingness to bear children are common problems faced by the whole world,” CCTV said, adding that Western developed countries generally faced problems such as labour shortages.
While China shrugs off concerns about the population decline, the government has been incentivising young people to get married early and have children – a stark departure from the one-child policy that contributed to the mess Beijing finds itself in currently.