Is China’s economic engine shrinking now?

For a few decades now, China has been converging with the US economically. Depending how you measure it, its gross domestic product has either already passed that of its great global rival or is getting ever closer. Average incomes are still much lower in China, but by another key metric of living standards, life expectancy, China matched the US in the pandemic year of 2020.
As this century progresses, though, it appears that China will be experiencing economic convergence with the US of another, less positive kind. The country’s working-age population of nearly a billion (defined here as those ages 15 through 64) has been essential to its economic rise, enabling it to become the workshop of the world and a vast consumer market.
But according to population projections released by the United Nations, this cohort will start declining rapidly in the 2030s, and shrink by almost two-thirds by the end of the century. With the US working-age population projected to be about the same size in 2100 as it is now, China’s will go from more than four times larger to less than twice as big. Throw in Canada and Mexico, which aren’t exactly part of the same labor market as the US but do share a free-trade zone, and China’s working-age
population is projected to be only 1.2 times bigger.
These projections, from the “medium scenario” of UN forecasters, are arguably over-optimistic about population trends in China. They assume that the country’s fertility rate will rebound from its sharp decline of the past few years and edge closer to that of the US as the century progresses.
The projections may be too optimistic about fertility trends in the US as well, but this country can at least rely on another source of population growth that China hasn’t embraced and probably won’t in the future: large-scale immigration.
The UN also offers a “low-fertility scenario” in which birth rates stabilise at lower levels in both China and the US. In it, China sees its working-age population drop by more than 80%, and North America’s surpasses it in 2097.
The year 2097 is a long time from now, of course, and none of this — beyond the 2030s drop in China’s working-age population that’s already been baked in by the recent decline in births — is fated. The UN has been making long-term population projections since the 1950s, and while these have been quite good at capturing the overall trajectory of global population growth, they’ve often been much less accurate in the particulars. The disappearance of two-thirds or more of the working-age population envisioned for China is unprecedented in the modern world, and the threat of it may bring policy and societal changes that slow or even halt the trend. Lots of other things could happen in the next 75 years to supersede these forecasts: climate catastrophes, world wars, alien invasions, the singularity, you name it.
Also, the UN population forecasts contain other information about future labor supply that may end up being much more important than how China and the US stack up.
Africa is projected to be the big gainer, with a working-age population expected to nearly equal Asia’s by the end of the century.

—Bloomberg