China moved away from its one-child policy in 2015, allowing two and later three children for couples along with various incentives. With all that, the country is struggling to encourage people to even have their first child.
Per The Guardian, in China, 10.62 million babies were born in 2021, which matched with the 10.14 million deaths the same year, producing a growth rate of 0.34 per thousand head of population, the lowest rate since the 1960s.
“The demographic challenge is well known but the speed of population aging is clearly faster than expected,” said Zhiwei Zhang, the chief economist at Pinpoint Asset Management.
“This suggests China’s total population may have reached its peak in 2021. It also indicates China’s potential growth is likely slowing faster than expected.”
National Bureau of Statistics Commissioner Ning Jizhe on Monday attributed this slow growth to a decline in the number of women of childbearing age, per CNBC.
- The number of women between the age of 21 to 35 declined by 3 million in 2021, he said.
- He added that China’s annual number of births is expected to remain above 10 million a year, keeping the population above 1.4 billion for the near future.
What does it mean for economic growth?
Barbara M. Fraumeni, a professor of the Central University for Economics and Finance in Beijing, said that her team’s analyses found that new workers who value things like education, will enter the workforce, creating a productive labor force, making up for a smaller labor pool, per Barrons.
Michael Petti, a professor of finance at Peking University, said that consumption won’t be affected because production will fall too.
“In the end the only thing that really matters is how much Chinese households receive (directly and indirectly) relative to how much they produce (GDP),” he said.