Earlier this year, China reported being on a population decline for the first time in more than six decades, with the number of deaths exceeding the number of births for the year 2022 by almost one million. This statistic has caused a storm, prompting discussion regarding the country’s future economic development. Other developed countries, including China’s East Asian neighbours, South Korea and Japan, are reportedly heading towards a similar fate.
Meanwhile, the overall world population continues to be on an upward trend despite the rate of population growth declining, which according to demographers, will eventually come to a standstill by the end of the century.
That being said, you may ask, what is the big deal with China’s population decline? Or rather, on the grand scale of things, wouldn’t it be more pertinent to address the (larger) issue pertaining to the overpopulation of societies instead?
These are questions that I will address in this article.
The Demographic Transition Throughout Human History
To understand the matter at hand deeper, we can first look at the history of the world’spopulation, from prehistoric to modern times. Over this (long) time period, the total world population has continued to grow, gradually from the pre-industrial revolution period and then rapidly in the 20th century. At this current point in history, most developed societies are experiencing the fourth stage of what is known as the Demographic Transition.
The original demographic transition theory posits that most societies from the historical to present context have experienced (and will eventually experience) the shift from stage one, where populations experience high birth rates and high death rates, to stage four, where populations witness a decline in both birth and death rates. Most developed societies including China are witnessing the fourth stage of this phenomenon. This shift in birth rates is attributed to reasons such as better access to education and changes in family planning; social changes including access to contraception and the prevalence of women in the workforce. On the other hand, low death rates are attributed to food production, better sanitation, and access to healthcare.
In the case of China, due to rapid social and economic change, the country passed the four stages of the demographic transition model quickly and saw accelerated population growth after the Second World War. National policies aimed at decreasing fertility rates (that you most likely are familiar with), such as the “one child” rule, achieved its goals of reducing the number of children born per family by the 1970s. This decrease in fertility came together with the increase of life expectancy and a shift in work-culture that rendered young people incapable of having children — more or less resulting in today’s national population decline..
Is China headed for an Economic Crisis?
A decline in population of the most populated country on Earth seems like a small and temporary issue. However, according to experts such as American Development Economist Lant Pritchett, a smaller working population could “upend” economic growth and send ripple effects across the global economy.
Lower birth rates would mean a smaller workforce among a growing ageing population. In fact, the problem does not lie in the actual decrease in overall numbers but with the population becoming an inverted demographic pyramid, where the elderly population outnumbers the young instead of the opposite, which is desired. This trend, if it continues, will result in a need for increased labour in elderly care alone without having enough people to take up those roles. For a country that depends heavily on its skilled labour force for economic growth, the future appears economically volatile.
Thus, with China’s labour force declining, areas that are vital to the global economy such as manufacturing will inevitably see changes in cost structures, possibly leading to higher prices and high inflation across other major economies like the United States.
On the Flipside
Despite the predicted economic woes of a declining population, the overarching counter to this is the narrative that a declining population is good, and in fact, what’s ideal. From one perspective, less people would mean better access and allocation of resources and would possibly be beneficial for the environment.
This school of thought echoes Malthusian theory, developed by English Economist Thomas Robert Malthus. The Malthusian camp postulates that the scarcity of resources would be an inevitable outcome of overpopulation and that population growth will threaten environmental limits, affecting areas such as food supply and thus resulting in poverty and famine. From the reactions to China’s population decline, the overall consensus across social media platforms and forums seems to lean towards this perspective.
As a response, I’d like to put forward the Boserupian theory, theorised by Danish Agricultural Economist Ester Boserup. Her theory proposes that population growth is independent of the supply of resources and that societies will adapt to scarcity. Contrary to the idea set forth by Malthus, Boserup believes that population growth is in fact the driver of productivity and innovation. If we look briefly at the entire human history, her theory seems to make sense. Humans have been known to adapt and to transform ecosystems to sustain ourselves. Akin to this idea is a quote by Sheik Yamani, “The Stone Age did not come to an end because of a shortage of stone”. In fact it was the discovery of new mediums such as bronze that ended the Stone Age.
Although the Malthusian theory may ring true in some contexts, it fails to acknowledge the development of new technology which has evolved agricultural systems. Boserup does not deny that environments may have their limits and that unsuitable practices exist, but acknowledges instead that humans are adaptive and capable of innovations which can be seen in agricultural practices such as irrigation, seeding, and weeding, which may overcome certain environmental limits. In short, Boserup offers a more optimistic outlook on population and asserts that an increase in population may not spell certain disaster after all.
That said, what then can be done for China’s declining population? One solution seems clear-cut.
An Obvious (and Already Existing) Solution
In contrast to the low growth rates of countries like China, Japan, and South Korea, is the higher growth rates seen in developing nations. From an economic perspective, one obvious solution to mend a declining workforce is to encourage migration and attract an influx of foreign workers. In fact, migration may actually serve as a mutually beneficial pact when you consider the lack of suitable jobs for a growing labour force in developing countries. The US and South Korea are examples of nations that have used this strategy. As South Korea currently has the lowest birthrate in the world, it has turned to its immigrant workforce to fill labour shortages and sustain its economy.
China unfortunately, unlike most of its developed counterparts, is seeing a negative net migration rate. Despite the relative success of migration in bolstering a country’s workforce, China has mostly concentrated on upgrading technology to increase productivity and, for the most part, focused on its domestic workforce. Other barriers such as language also play a part in making immigration unappealing to migrant workers.
So far, other methods to promote population growth such as the removal of the one-child policy, monetary incentives and longer maternity leave have been futile, and their trajectory may continue to prove bleak. Reverberating the words of Professor Steve Tsang, Director of London’s School of Oriental and African Studies’ (SOAS) China Institute “the few incentives the Chinese state puts in place are unlikely to be sufficient to change the attitude of people. The demographic shift in China looks structural and it will take a lot more than some government incentives to reverse”.