Demography, it’s said, is destiny. Now that China has published its first national census in a decade, what’s its destiny to be? It’s a bit awkward, actually, for President Xi Jinping’s vaunted “China Dream”. Because he has promised “the great rejuvenation of the Chinese nation” when the official statistics show it is on the way to becoming one of the fastest ageing countries on earth.
We already knew that China was heading for a population collapse. That’s why Xi dumped the One Child Policy in 2015. The advent of the Two Child Policy did have the desired effect. The number of births surged. But only for one year.
The number of babies born in China then went into steep decline. Last year, there were only 12 million newborns. That’s the fewest recorded in any year since the shocking famine of the so-called Great Leap Forward of 1958-1962.
It’s now down by 33 per cent compared with the number born in 2016. Abandoning the One Child Policy evidently was too little, too late. “Too many people” ran the popular saying in support of the government’s One Child Policy. Remarkably, the country is now gripped by the opposite problem: “Too few people.” Time elapsed between the two – just 36 years.
The census, released last week, shows China’s population grew over the decade to 2020 but at a slowing rate. It was announced as having barely grown to reach 1.41 billion last year. The annual average growth rate over the decade to 2020 was 0.53 per cent compared with the previous decade’s average of 0.57 per cent. “Zero and even negative population growth is coming closer and closer,” noted Beijing’s statistics bureau.
And it revealed what Peking University Professor of Economics Liang Jianzhang calls “the shocking statistic” of China’s new fertility rate. To keep the population stable, a country needs to hit the replacement rate – the number of babies that the average woman gives birth to in her lifetime – of 2.1. But China’s fertility rate is now just 1.3 according to the census. That’s below even’s Japan’s rate of 1.4, meaning that China’s ageing will be even faster. The implications are stunning.
A sociology professor at the University of California, Irvine, Wang Feng, says that he expects China’s population to begin to fall within five years. And it will be “a decline that sees no end”, he tellsThe Wall Street Journal.
The Chinese Academy of Social Sciences projects that a fertility rate of 1.3 – if sustained – will halve China’s population by 2100. So it would shrink to 700 million within about three generations. This finding is supported by the Vollset study, funded by the Gates Foundation and published in The Lancet last year.
In one way, this is entirely normal. A country’s fertility rate falls as it grows richer. It’s a mark of social success as women are better educated and have more options and fewer children. But in China’s case, it’s quite abnormal. Other countries have become rich first and then gone into population decline. But China’s national income per person averages just over $US10,000, which only barely makes it a middle income country. The average for the rich countries of the OECD is $US46,000 and for Australia $US62,000, according to the IMF.
In other words, China is in the process of becoming the first country to get old before it gets rich.
The implications are profound. First, China has invested much of its national status and political standing in the fact that it’s the world’s most populous country. But it’s now on track to be overtaken by India within a few years.
Second, China’s accelerated ageing will restrain its economic growth. One of the key reasons behind China’s superfast growth of the past 40 years has been its “demographic dividend”, the fact that its working age population hugely outnumbered retirees. That’s going to exhaust itself by the end of the decade, according to the People’s Bank of China.
China’s still expected to overtake the US to become the world’s biggest economy, but it might not hold that distinction for very long. “If China has narrowed the gap with the United States in the past 40 years, relying on cheap labour and a huge demographic dividend, what will it rely on in the next 30 years?” China’s central bank posed in a research paper last month.
“The big picture,” said the economic research firm Trivium China, is that “a shrinking, ageing population is a major headwind to growth over the next few decades”.
A key problem will be the rising number of retired people for each person in work, the old age dependency ratio. As this rises, there are fewer workers able to pay taxes to support the health needs and pensions of the elderly. And by 2050 China’s old age dependency ratio is expected to be higher than Australia’s, America’s, Britain’s or Germany’s, according to the Vollset study.
This also has political implications as well as economic. The young workers of today, mostly only children thanks to the One Child Policy, will be expected to pay increasingly large tax burdens in support of a rapidly ageing population in an increasingly sclerotic economy. Not exactly the China Dream as advertised.
Of course, China’s not unique. All the world’s rich nations have low fertility, below replacement rate. Canada’s is 1.5, America’s 1.6, Australia and Britain 1.7, New Zealand’s is 2, for instance. The big difference is that each of these Five Eyes countries happens to be an immigration society. The average population age can be kept young by simply admitting more young immigrants. China doesn’t have that option. The Chinese Communist Party is increasingly suspicious of immigrants and Xi’s treatment of ethnic minorities like the Uighurs and Tibetans is hardly reassuring to potential immigrants.
This helps explain the urgency of the plea by the People’s Bank of China last month to Xi’s regime: “We should not hesitate and wait for the effects of existing birth policies. The birth liberalisation should happen now when there are some residents who still want to have children but can’t. It’s useless to liberalise it when no one wants to have children.” Unless Xi heeds this advice and takes dramatic steps to boost fertility, the “rejuvenation” of China will exist only in his political slogans.