24, February, 2024
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Navigating China’s Population Challenges: Economic Implications and Future Strategies

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China is grappling with a persistent decline in its population, posing significant economic challenges as its birth rate hits a record low. In 2023, China’s population decreased by 0.2%, amounting to 1.409 billion people, marking the second consecutive year of decline. This trend is attributed to a multitude of factors, including a dramatic surge in COVID-19 cases, high mortality rates, and a record-low birth rate.

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The impact of the COVID-19 surge in China last year contributed to a 6.6% increase in total deaths, reaching 11.1 million and marking the highest death rate since 1974. The unexpected removal of screening and quarantine measures in December 2022 fueled the surge, intensifying the demographic challenges facing the country.

New births fell by 5.7% to 9.02 million, with the birth rate hitting a record low of 6.39 births per 1,000 people in 2023, down from 6.77 births in 2022. Decades of plummeting birth rates, influenced by the one-child policy from 1980 to 2015 and rapid urbanization, have led to a demographic shift. As seen in earlier economic booms in Japan and South Korea, the migration from rural areas to cities has made child-rearing more expensive.

In 2023, China faced additional hurdles in boosting birth rates, including record-high youth unemployment, declining wages for white-collar workers, and a property sector crisis. The data underscores concerns about the diminishing growth prospects for the world’s second-largest economy, with fewer workers and consumers, coupled with rising costs of elderly care and retirement benefits.

Notably, India surpassed China as the world’s most populous nation last year, prompting discussions about the potential relocation of supply chains from China to other markets. According to U.N. estimates, China’s population is projected to shrink by 109 million by 2050, raising questions about the long-term economic impact.

China’s 2023 death rate of 7.87 deaths per 1,000 people was higher than the 2022 rate of 7.37 deaths. The aging population, expected to surpass 400 million by 2035, poses challenges for the pension system, with projections suggesting its depletion by that year. High childcare and education costs, along with uncertainties in the job market, deter many couples from having children.

President Xi Jinping has emphasized the need for cultivating a new culture of marriage and childbearing linked to national development. While local governments have introduced measures like tax deductions and longer maternity leave to encourage childbirth, challenges persist due to insufficient funding and a lack of motivation.

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As China navigates these demographic challenges, a comprehensive and unified nationwide family subsidy scheme may be essential to address the root causes and pave the way for a sustainable future. The economic implications of these demographic shifts require careful consideration and strategic planning to ensure China’s continued growth and stability.

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