Heading into 2020, China’s birth rate fell to its lowest level in the country’s modern history. This is drawing concern from all across the nation as it is hastening the aging population and shrinking the current and future workforce. Despite the government’s efforts to avoid this pitfall, it is undeniable that this is a very real issue.
Currently, about a fifth of China’s population is already at the age of 60 or older. This results in a shrinking working-age population; which in turn results in lower productivity and higher employment costs, dragging down the national economy. The higher number of elderly also results in increased health-care costs.
This issue is not a new phenomenon. Both South Korea and Japan have been facing this similar problem for years now, albeit on a much smaller scale. Even the US and other developed nations are dealing with these issues to some extent.
“The lesson from other East Asian countries is that once the birth rate declines, it’s hard to get back up,” said Julian Evans-Pritchard, an economist at Capital Economics, an economics research firm. “China’s going to have to get used to a continuous drag on growth from shrinking employment.”
Economists are predicting that China’s economy is expected to grow around 6 percent in 2020. Capital Economics suspects that if the current population trend continues, by 2030, population changes will result in China losing half a percentage point each year from the nation’s GDP growth rate.
There were 10.5 new births per thousand Chinese people in 2019, the lowest rate since the Communist Party established the People’s Republic of China in 1949, according to official data released. Since the recovery from the country’s worse famine in 1961, birth rates have generally seen a downward trend, with relatively few exceptions.
Chinese families are having fewer babies as cultural expectations shift and the cost of living in urban cities skyrockets. Many Chinese are becoming more educated and forming different views on career and marriage. A good number of these individuals are putting-off childrearing in favour of a career; with some even abandoning the idea of starting a family altogether.
While China’s economic rise is undeniable, the country is still lagging behind other developed nations in terms of employee and social welfare systems. Parents are often left with more responsibility over their children’s’ education and care. Discrimination in the workplace over pay and recruitment can also discourage women from having children.
Due to the massive time investment that goes into raising a child, many Chinese women, especially those living in the city, are forced to dedicate less time on their careers. Many employers have responded by offering less wages to these women, further disincentivising them from starting a family.
In hopes of relieving demographic pressures on the economy, the government began allowing families to have two children in 2016, after economists warned that the strict one-child birth-planning program implemented in 1980 was creating a demographic time bomb. The country’s workforce began shrinking eight years ago.
The move sounds good on paper, but in reality, it had little effect. Soon after the implementation. Having two children in China’s current economic simply put too much strain on an average family’s economic situation.
It goes without saying that there is no easy solution to this issue. Other nations suffering from the same problems have only had marginal success in stemming their own shrinking workforce. China’s government will have to find some way to incentivise their population to start families. If not, their workforce could very well see a huge crisis within the next few decades.