China's population is declining for the third year in a row

[WORLD] In a concerning trend that has significant implications for the world's second-largest economy, China's population has fallen for the third consecutive year. The National Bureau of Statistics (NBS) reported that the total population of mainland China, excluding Taiwan, Hong Kong, and Macao, stood at 1.408 billion by the end of 2024, marking a decrease of 1.39 million from the previous year.

Demographic Challenges

Declining Birth Rates

Despite government efforts to encourage childbirth, China's birth rate has remained stubbornly low. In 2024, there were 9.54 million newborns, a slight increase from 9.02 million in 20232. However, this modest rise was not enough to offset the number of deaths, which reached 10.93 million in the same year.

The birthrate recovered to 6.77 per 1,000 people in 2024, up from 6.39 in 2023, which had been the lowest level since the founding of the People's Republic of China in 1949. This slight uptick can be partially attributed to the auspicious Year of the Dragon in the Chinese zodiac, which is traditionally associated with a minor baby boom.

Aging Population

China's demographic crisis is further exacerbated by its rapidly aging population. The proportion of people aged 65 or older increased to 15.6% in 2024, up 0.2 percentage points from the previous year. This trend is putting immense pressure on the country's healthcare and pension systems.

Economic Implications

The ongoing population decline poses significant challenges for China's economy and society. A shrinking workforce and an expanding elderly population are straining the country's underfunded pension system and healthcare infrastructure.

Labor Shortages

As the working-age population decreases, China faces the prospect of labor shortages in various sectors. This could potentially hamper economic growth and innovation in the coming years. The government is grappling with the challenge of supporting a larger elderly population with a declining workforce.

Pension System Pressure

China's pension system is critically underfunded, and the situation is becoming increasingly urgent. Over the next decade, more than 400 million people will be aged 60 or older, putting enormous strain on the country's social security system.

Government Responses

Policy Changes

In response to these demographic challenges, the Chinese government has implemented several policy changes:

Relaxation of Family Planning Policies: China officially ended its "one-child policy" in 2016 and now allows couples to have up to three children.

Financial Incentives: The government has introduced tax breaks, child care subsidies, and other incentives to encourage childbirth.

Retirement Age Adjustment: China has enacted a 15-year plan to gradually raise the official retirement age to 63 for men, 58 for women in office roles, and 55 for women in factory jobs, effective from January 2025.

Local Initiatives

Local governments and businesses are also taking steps to address the population decline:

Some cities are offering to cover in vitro fertilization costs and removing penalties for single mothers.

Companies like Trip.com are offering financial incentives to employees who have children.

XPeng, an electric vehicle manufacturer, announced a bonus of around $4,100 for employees who have a third child.

Global Context

China's population decline is part of a broader trend observed in several countries, particularly in East Asia. Japan has experienced population decline for 15 years, while South Korea's growth turned negative in 2021.

According to the United Nations, 63 countries and territories have already reached their population peak, with about half of these located in Europe. An additional 48 nations are projected to reach their peak populations within the next three decades.

Expert Opinions

Experts in demography and economics have weighed in on China's population decline:

Yuan Xin, a professor at Nankai University's Institute of Population Studies, stated, "In the medium to long term, the annual number of births in my country will continue to decline".

Wang Feng, a sociology professor at the University of California, Irvine, commented on the slight increase in births in 2024: "For a nation of 1.4 billion, an increase of half a million births is hardly a substantial recovery".

Future Projections

The demographic challenges facing China are expected to intensify in the coming years. By 2035, the proportion of the population aged 60 or over is forecast to exceed 30%. This rapid aging of the population has led to concerns that China may "grow old before it grows rich".

Societal Impact

The population decline and aging demographic are not just economic issues but also have profound societal implications:

Education Sector Changes

The declining birth rate has led to the closure of thousands of kindergartens and the loss of over 170,000 preschool teaching jobs in 2023 alone. This trend is likely to continue, affecting the education sector significantly.

Healthcare Challenges

An aging population puts increased pressure on the healthcare system. The government faces the challenge of providing adequate healthcare services to a growing number of elderly citizens while managing the costs associated with this demographic shift.

Cultural Shifts

The demographic changes are also influencing cultural norms and expectations. Young people in China are increasingly reluctant to marry or start families, citing factors such as high living costs, career pressures, and changing social values.

International Comparisons

China's situation, while concerning, is not unique. Other countries facing similar demographic challenges have implemented various strategies:

Japan: Has been dealing with population decline for over a decade and has implemented policies to support working parents and encourage immigration.

South Korea: Faces ultra-low birth rates and has introduced extensive support for families with children.

European Countries: Many have raised retirement ages and implemented pro-natalist policies to address aging populations and low birth rates.

China's third consecutive year of population decline marks a significant turning point in the country's demographic history. The challenges posed by this trend are multifaceted, affecting economic growth, social structures, and government policies.

As China navigates this demographic transition, the effectiveness of its policy responses will be crucial. The country's ability to adapt to an aging population while maintaining economic dynamism will likely shape its role on the global stage in the coming decades.

The ongoing population decline in China serves as a case study for other nations facing similar demographic challenges. How China addresses these issues may provide valuable lessons for countries worldwide grappling with aging populations and declining birth rates.

As the world watches China's demographic evolution, the coming years will be critical in determining whether the country can successfully reverse its population decline or adapt to a new demographic reality. The implications of China's population trends extend far beyond its borders, potentially reshaping global economic and geopolitical dynamics in the 21st century.