
China’s slowest population growth in decades may be felt more acutely beyond its borders than within them. The economy will keep humming and incomes can continue to climb, albeit at a slower rate. The rest of us, however, will need to adjust to a persistently slacker pace of global expansion and the prospective ebbing of deflationary pressure. The caricature of China as an unlimited supplier of cheap labour holding down the cost of everything from dishwashers to dolls should be consigned to the history books.
Beijing’s once-in-a-decade census showed there were 1.412 billion people in China last year. The annual average growth of 0.53% in the past decade was the slowest since 1953. Longstanding trends became more pronounced: The working-age population slumped to 63.4% from 70% a decade ago, while the share of residents aged 60 and above jumped. More than half of Chinese citizens live in cities.
While it’s possible that China’s headcount will actually decline in a few years, that doesn’t mean a crisis is looming. Some of the world’s wealthiest economies have wrestled with population retreat — or something close to it. Japan’s population peaked in 2010 and South Korea logged its first dip in 2020. Singapore reported its first decline since 2003 last year. Each of these nations has long contended with an aging society and a diminished fertility rate, while citizens have consistently resisted prodding by officials to churn out more kids. Yet each has first-class infrastructure, great schools, high standards of living and a niche in technology supply chains that gives them a shot at long-term prosperity in the pandemic era.
China need not fear for its commercial viability just because this inevitable byproduct of progress has caught up with it. After all, it’s a relatively common pattern of economic development: Living standards rise, people spend more time in school, get married later, wrestle with more expensive living costs and want to spend more on the children they do have. Even if Beijing has taken steps to reverse the damaging one-child policy imposed under Deng Xiaoping, I doubt it will make much difference. The broader global trend may be too entrenched for even Beijing’s state muscle.
The consequences for the rest of the planet may be more significant. The world’s economic output has been driven by China the past few decades, especially since the financial crisis of 2007-2009. Its gross domestic product has increased at an average annual rate of about 8% since 2000. The equivalent figure for the US has been a bit less than 2%.
—Bloomberg