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Implications of China's Demographic Retreat
China’s national Bureau of Statistics announced on January 17, 2023 that the country’s population had fallen by 8,50,000 in the year 2022. This marked the first decline since 1961, when the country was in the midst of a four-year famine following the failed “Great Leap Forward” policy.
China’s demographic retreat is attributed mainly to its much criticized “one-child policy” which subscribed among others, forced abortion and high financial penalties. The Chinese efforts to defend this policy by giving a highly exaggerated efficacy of the policy to prevent an additional 400 million births fades in front of the human rights violations that this policy entailed.
One natural explanation for China’s demographic retreat is the time tested historical evidence that as socio-economic development takes place, both death and birth rates decline and stabilize at a reasonable low level while maintaining a tolerable net replacement rate.
But if the demographic retreat of China is decoded further as done by Barclay Bram of the Asia Society Policy Institute there is a marked behavioural shift among the Chinese young population in fertile age group. “Young Chinese are marrying later, having fewer children, or foregoing having children altogether”, with the number of couples who married in China dropping from 13.46 million to 8.46 million in the period from 2013 to 2020. The average age of first-time parents in the three decade-period from 1990-2020 rose from 24.1 to 27.5. The Chinese youths are not only marrying late but also choosing to have lesser number of children due to career preferences as well as rising cost of living and rearing children.
China is already facing a decline in its working population impinging on labour supply often distorting the labour market by causing labour shortages and pushing up the wage rate. China’s population of 16-59 age groups was 875 million, or 62% of the total population. It was around 75 million less what it was in 2010.
This demographic retreat of working age population is a matter of concern for China while the proportion of ageing population of above 60 age group what is described in demography as “dependence ratio” has been increasing. The increase in dependent ratio is an indicator of increase in life expectancy due to improved nutrition and healthcare. But as a repercussion social security obligations of a country increases.
The above-60 population was 280 million, or 20% of the total population of China, an increase of around 30 million during 1990 to 2020. It is also estimated by the Chinese government that by 2050, the above-60 population will account for as much as 35% of the total population. China’s National Working Commission on
Ageing Healthcare spending estimated that it would rise to 26% of China’s GDP by 2050, up from 7% in 2015. This would put huge pressure on government budget and put pressure on capital formation and investment.
However, the biggest problem which China would face in future is declining work force, which is likely to drop to 700 million by 2050 from a peak of 925 million in 2011. A glut of labour force is already visible in the country both in the rural and urban areas. The fall in supply of labour force from rural areas has been pushing up the wages in the country which may eventually erode competitiveness of the Chinese products. Further, the shortage of labour, rising wages and Chinese government’s policy of forced technology transfer may accelerate the already visible trend of exit of foreign companies from the country. Already some of them have shifted to south-east Asian countries and some of them are visualizing India as a preferred destination to set up their business.
One of the disturbing demographic trends in China is imbalance in sex ratio. In 2022, the sex ratio of China was approximately 105 males to 100 females. An ideal sex ratio is one to one, but due to factors like selective abortions and different life expectancy between men and women, sex-ratio varies in different age groups. China has an imbalanced sex ratio due to a combination of factors, but it is attributed primarily to cultural influence (valuing male children more than female ones) and government policy (one-child policy). Female disadvantages in child survival throughout China reflect a long pattern of sex-based discrimination. The phenomenon known as missing girls has been causing a social problem in China.
A widening gender imbalance in rural China is driving men to pay arbitrary “bride prices”, a practice that has grown so widespread that the Chinese government last week pledged to intervene. The imbalance in Chinese population between male and female sexes has now figured in the Communist Party’s policy document for 2023 released on February 13. “Document No. 1” pledged to launch a campaign to curb “exorbitant bride price.”
To arrest the slide in population, Beijing finally abandoned the one-child policy in 2016. The “two-child policy” introduced that year, however, failed to elicit the desired response. A government survey conducted that year found 70% attributed high costs of healthcare and education as a factor.
Whilst China wrestles with the implications in its changing demography and considers strategies to halt its population's decline, India may have already overtaken China as the most populous nation in the World. Shifting demographics naturally have political and geopolitical consequences and with Asian powers vying for economic and political power, the West should carefully consider its relations with both countries. With many European countries already wary of Chinese influence and economic clout, could demograhic change be a further prompt for a shift towards India and other Asian coutries?