"China's Working-Age Population to Decline from 900 Million to 300 Million by 2100"... Cooling Growth Engine

[Image source=Reuters Yonhap News]

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[Asia Economy Reporter Hyunwoo Lee] Amid China's steep trends of low birthrate and aging population, it is projected that the working-age population will sharply decline by more than 60% to the 300 million range by 2100. Concerns are also rising that China’s status as the "world’s factory" will shift to India starting in the 2030s, as China’s working-age population has already decreased by over 10 million in the past eight years.

On the 20th, Hong Kong's South China Morning Post (SCMP) cited recent population forecasts released by the United Nations (UN), reporting that "China’s working-age population aged 15 to 64, which was about 986 million last year, will rapidly decrease from the 2030s and drop to 378 million by 2100, a decline of over 60%," adding that "China’s working-age population peaked at 997 million in 2014 and has since decreased by more than 11 million."

As the working-age population itself sharply declines, there are concerns that China’s economic contraction could occur at an unprecedented pace. SCMP stated, "The recent production disruptions at Foxconn caused by COVID-19 lockdowns are just one aspect of China’s shrinking working-age population," and "economists predict that this phenomenon will continue for decades or longer, permanently changing the global economic order."

George Magnus, former chief economist at UBS and a researcher at the University of Oxford’s China Centre, told SCMP in an interview, "Changes in the working-age population and economic growth are directly proportional," warning that "if contributions from immigrants, women, the elderly, and productivity improvements do not keep pace in China, the annual GDP growth rate will decline."

S&P Global Ratings also recently forecasted that China’s annual growth rate will slow from the current average of 6% to 4.4% by 2030, and further to 3.1% from 2031 to 2040.

The biggest problem is the continuously declining birthrate. China’s birthrate has dropped significantly from 2.6 in the late 1980s to 1.15 last year. This is below the replacement level of 2.1 and even lower than the United States (1.6) and Japan (1.3). Although the Chinese government abolished the previous population control policy, the "one-child policy," in 2016 and introduced the "three-child policy" last year with accompanying tax benefits, the birthrate has not risen significantly.

If the rapidly progressing low birthrate and aging trend in China does not change globally, China’s productivity, once called the "world’s factory," could weaken, and its status may be overtaken by India.

Shu Zhenfeng of Victoria University in Australia warned, "Since India’s population is expected to surpass China’s within the next decade, global economic influence may shift to India and other countries," adding, "As demographic changes reduce private savings and increase public spending on the elderly in China, the era of China’s trade surplus will soon end, and its role as the world’s top export hub will diminish."

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