The End of the Beginning: China’s Looming Population Crisis

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” – Winston Churchill

When China’s National Bureau of Statistics reported the nation’s first population fall in six decades in 2022, anxiety and complaints over the looming population crisis again captured the minds of the Chinese. A concern once associated with its wealthy Eastern neighbors never seemed closer to the lives of ordinary Chinese than it does today. Some were shocked, but few were surprised, as policy developments since 2015 have all hinted at this troubling reality. Scattering youngsters even applauded the population decline, as increasingly many young people blame their long working hours and fierce career competition on China’s large population. Few realized, however, that this reality has been lurking behind the statistics for over three decades.

The roots of China’s population crisis today go all the way back to 1980 when the country first adopted the One Child Policy. Born out of the socio-economic concerns of the country’s rapidly growing population during the 1970s, the policy received great attention and was listed as one of the principal national policies since its introduction, implemented through violation fines and accessible abortions. In urban environments, the One Child Policy enjoyed much success. The original propaganda slogan, shǎo shēng yōu yù (fewer births, better upbringings), successfully captured and influenced the minds of the city dwellers during the period of rapid economic development. In rural areas, traditional agrarian philosophies of large families prevailed, resulting in more lenient enforcement in the countryside. Nevertheless, the results were clear. China’s fertility and birth rates declined after 1980, and the policy has been said to have averted 400 million births. At least in its early years, the One Child Policy seemed to have achieved its goals. 

One common criticism of the One Child Policy centers around the man-made gender imbalance. Today, China has around 722 million males and 690 million females. The traditional preference for boys, when coupled with accessible abortions and birth quotas, has led to this 32-million gender gap. Demographically speaking, forming a new family has never been harder for the young Chinese and in the future, could become a source of social unrest. 

Empirically, fertility is bound to decline as societies get richer, especially as the opportunity costs of raising children increase with tradeoffs of time and wealth. China is no exception, but the One Child Policy has blurred judgments and accelerated its population decline. At first glance, the One Child Policy has seen China’s population grow steadily from around 980 million to today’s 1.4 billion. But it was not the fertility rate that made the difference. An average Chinese could expect to live 64 years in 1980. Today, this number is 78. The UN has projected that China’s population over 65 will more than double in the next 25 years, surging from 12% to 25%. To make matters worse, China’s working-age population has been shrinking since 2012. By mid-century, its size will be a fifth smaller than today. The country is no longer the largest nation by population, and some have already predicted that China will get old before it gets rich, for that shrinking labor pool could push the wages up and decrease the returns on capital investment.

Not everyone is discouraged by such prospects. Calls for higher wages and shorter working hours are the loudest among young working classes, and the decline in population could incentivize companies and the government to address these present concerns. Many cities are already adjusting their municipal policies, making it more attractive for university graduates to move in. But on the macro level, a shrinking working-age population could pose a serious threat to the country’s long-term economic growth, which depends largely on labor force participation and productivity. A smaller population could also decrease China’s grand infrastructural projects, which have seen enormous expansion over the years as its urban population grows.  

In early April, French President Emmanual Macron visited China. Meanwhile, on the streets of Paris, protesters are ramping up their rallies against Mr. Macron’s decision to raise the minimum retirement age. Behind his decision lies the concern that lower birth rates and longer life expectancies could drive the French pension system into deficit. The French reality today could very much become the future of China’s population labyrinth: A report published in 2019 by the Chinese Academy of Social Sciences has warned that China’s main pension fund could run out of money by 2035. China is also considering raising its retirement age, which currently sits at 60 for men and 55 for women, below the 64 average in many rich countries. This decision could prove to be deeply unpopular. 

Mr. Xi’s government will do anything it can to at least try to negate such risks. In 2016, China officially moved away from the One Child Policy, allowing all married couples to have a second child. The birth rate briefly rose, but soon fell again. The idea of “fewer births, better upbringings” has transformed the mindsets of Chinese parents. Spending on education, particularly on after-school tutoring classes, has gradually become a huge trend, dramatically increasing the cost of education. In 2021, the government issued a ban on private tutoring companies from making a profit in teaching core subjects and offering classes on weekends or holidays. While some parents welcomed it, others argued this ban would only decrease the supply, not demand.

Tax deductions, longer maternity leave, and housing subsidies have also been rolled out after Mr. Xi pledged to make the country’s demographic challenges a top priority. The state council is currently working to encourage flexible working hours and locations, and preferential housing for families with multiple children is also on its to-do list, especially when real estate prices are becoming increasingly unaffordable for young urban couples.

 The present headache, perhaps, is only the end of the beginning. If Mr. Xi looks eastward, he might find that money and policy support might not be sufficient to untangle China’s population problem. His Japanese counterparts, including the sitting Prime Minister Fumio Kishida, have been trying to implement similar reforms for years. Nevertheless, increasingly burdening conflicts between traditional family responsibilities and long-term career ambitions are making more women think twice before committing to forming a family. In China, similar concerns are also true and alive. Perhaps the perfect solution to this puzzle should be a plural one. But for Mr. Xi, his Party, and China, time is quickly running out.