China's population decline: A deepening crisis

China's population has experienced a significant decline for the second consecutive year, marking a continuation of a worrying trend that has vast implications for its economic future and demographic structure.

2023: A year of demographic shifts

According to the National Bureau of Statistics, China’s population dropped by 2.08 million, or 0.15%, to 1.409 billion in 2023.

This decline was higher than the population decrease of 850,000 in 2022, which was the first since the Great Famine of the Mao Zedong era in 1961.

COVID-19 and its impact

The COVID-19 pandemic has played a significant role in this demographic shift. After three years of strict screening and quarantine measures, China experienced a dramatic nationwide COVID surge when authorities abruptly lifted curbs in December 2022.

This led to a 6.6% rise in total deaths to 11.1 million in 2023, the highest death rate since the Cultural Revolution in 1974.

Record low birth rates

New births plummeted by 5.7%, with the birth rate hitting a record low of 6.39 births per 1,000 people. This decline is attributed to decades-long trends, including the one-child policy and rapid urbanization, making child-rearing in cities more costly.

In comparison, Japan’s birth rate was 6.3 per 1,000 people in 2022, while South Korea’s rate was 4.9. As observed in other low fertility countries, reversing fertility decline often proves very difficult.

Declining workforce and economic impact

The declining population adds to concerns about China’s growth prospects. With fewer workers and consumers, the rising costs of elderly care and retirement benefits are putting more strain on indebted local governments.

Moreover, youth unemployment hit record highs in 2023, wages for many white-collar workers fell, and a crisis in the property sector, where more than two-thirds of household wealth is stored, intensified.

Katya Stead, finance correspondent at Invezz, says,

Ageing population and pension crisis

The proportion of the population aged 60 and over reached 21.1% in 2023. The Chinese Academy of Sciences forecasts a pension system shortfall by 2035, as the retirement-age population is expected to exceed 400 million.

Rural struggles

Individuals like Xin Lu, a resident from Gansu province, highlight the financial challenges faced by the ageing rural population. With meagre pensions and limited savings, reliance on familial support is increasing.

Read Katya Stead's latest article on how China's house prices hint at the storm to come

Government response and public sentiment

Despite government efforts to encourage childbirth through various incentives, the effectiveness of these measures remains questionable. Beijing's local policies lack uniform implementation, and the root causes of declining birth rates remain unaddressed.

Twenty-six year IT worker Xian Wu expresses skepticism towards the government's incentives, indicating a deeper societal shift in attitudes towards family planning.

Long-term, U.N. experts see China’s population shrinking by 109 million by 2050. China’s population aged 60 and over reached 296.97 million in 2023, about 21.1% of its total population, up from 280.04 million in 2022.

The country’s retirement-age population is expected to increase to more than 400 million by 2035, more than the entire population of the United States.