China’s working population will shrink in the coming decades and keep the nation’s economy from surpassing America’s, research firm says – DAVID RAUDALES

DAVID RAUDALES

Businessman, musician / former Full Stack Developer

DAVID RAUDALES UK

China’s working population will shrink in the coming decades and keep the nation’s economy from surpassing America’s, research firm says

A Chinese flag flying over Shanghai.

Liu Liqun/Getty Images

Decades of China’s one-child policy have led to an aging population and lopsided ratio between elderly and youth. 
The country is on pace to lose nearly half of its current population by 2100, per Terry Group, which says that bodes poorly for economic growth.
Chinese government data showed China’s population shrank in 2022 for the first time since 1961.

China’s aging population will have a direct impact on its ability to compete with the US and other nations on the world stage, according to a report from consultancy firm Terry Group.

The latest United Nations projections say China will lose nearly 50% of its population by the end of this century. Further, the Terry Group researchers say it’s not only overall population decline that poses a threat, but the climbing proportion of elderly people.

In 1990, 5% of Chinese people were 65 or older. Thats nearly tripled to 14% today, and the Terry Group anticipates the cohort making up 30% of the population by 2050.

These skewed proportions are “pushing China’s overall dependency burden back up,” the authors wrote. “In 1975, there were thirteen times as many children as elderly in China. By 2050, the UN projects that there will be twice as many elderly as children.”

Chinese total dependency ratio of children plus elderly per 100 working-age adults

Terry Group

Over several decades, China has undergone a shift from high mortality and high fertility to low mortality and low fertility. This year, China’s population shrank for the first time since 1961, Chinese government data illustrate, and Terry Group researchers highlighted that old-age dependency burdens are climbing, which amount to a “demographic gauntlet.”

“China’s population is not only aging, but is also entering a gathering decline that will be difficult, if not impossible, to reverse,” Terry Group researchers noted. “Gone are the days when China’s deep reservoir of labor seemed inexhaustible.”

According to the consultancy firm, by the next decade, the country will be losing an average of 7 million working-age adults each year, which will accelerate to 12 million a year by the 2050s.

The UN projects China’s working-age population to shrink by three-fifths by 2100, which in turn will put pressure on young people and government initiatives to support that cohort.

For comparison, between 1990 and 2010 when China’s demographics were favorable, its working-age population grew 1.7% per year on average. Those figures are on pace to soon reverse, and instead the working-age population will contract at an annual rate of 1%. 

“All other things being equal, this nearly 3 percentage point reduction in the growth rate in the working-age population will translate into an equivalent reduction in the growth rate in employment and potential GDP,” the researchers said.

Meanwhile, the Financial Times reported Sunday that Beijing officials have been warning experts not to talk about the economy in a negative light. Specifically, sources told the FT that they weren’t supposed to talk about slumping foreign investment, deflation, and faltering growth. 

The crackdown follows months of data that point to a muted post-pandemic rebound in China and no economic recovery in sight

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