China's Declining Population

• This demographic change is projected to propel India to the position of the world's most populous nation soon, and it's bound to have profound implications domestically and internationally.
• In this article, we will delve into why economists and other experts are concerned about China's declining population and the potential global consequences.

The Impact on China's Economy:

• China was once known for its large workforce that produced inexpensive goods for global markets.
• However, the shortage of workers in China now indicates that the cost of goods could increase, compelling companies to shift their manufacturing units to other countries like Vietnam and Mexico for cost efficiency.

Decrease in Consumer Spending:

• A decrease in China's population implies fewer consumers, which could impact multinational companies like Apple and Nike that have significant market share in China.
• This could significantly influence the global economy.

Effects on China’s Real Estate Sector:

• The declining birth rate in China could negatively influence its economy. The real estate sector, which contributes to around 25% of China's economic output, could face short-term impacts.
• The demand for housing is fueled by population growth, and homeownership is a major aspiration for many Chinese citizens.

Ageing Population and Sustenance Challenges:

• The ageing population in China is increasing, and the government may face difficulties in supporting a large elderly population with a shrinking workforce.
• A report by the Chinese Academy of Social Sciences suggests that the country’s pension fund could deplete by 2035, partly due to the decreasing workforce.
• Economists argue that China’s demographic crisis is reminiscent of Japan’s economic crisis in the 1990s.

China’s Retirement System:

• China has one of the lowest retirement ages globally, with most workers retiring by 60, adding pressure on the country’s pension funds and healthcare system.
• The average income of households in China is lower than in the US, and many elderly Chinese citizens rely on state pension payments during their retirement.

China’s One-Child Policy

• China implemented the one-child policy in the late 1970s to curb unsustainable population growth.
• Couples who had more than one child were subject to heavy fines, and in some cases, women were forced to undergo abortions.
• Even though China relaxed its family size restrictions in 2013, experts argue that the change was too little too late to reverse the country’s population trajectory.
• Despite government incentives, such as cash benefits and permission to have up to three children, attempts to increase birth rates and resolve the demographic crisis have been unsuccessful.

Conclusion:

• The decreasing population of China will have significant and long-lasting consequences within the country and globally.
• This trend indicates that China will face an ageing and shrinking population similar to its neighbouring Asian countries.
• However, given China’s size and economic influence, the effects of this demographic shift will be felt beyond the region and at a global level.
• The impact of China’s demographic shift will have repercussions for generations to come.