The most populated country in the world, China is on brink of a population crisis as the country witnessed a population decline in 2022, for the first time since 1961. According to the latest numbers released by the National Bureau of Statistics, the overall population in China suffered a drop of 850000 in 2022. The country also suffered an economic impact last year due to the COVID-19 pandemic and the trade war with the United States.
China which had 1.41260 billion population at the beginning of 2022 had only 1.41175 billion people by end of the year. Experts had earlier projected that the country will move into a population decline by 2022 or 2023.
In 2022, the birth rate in the country was 6.77 per 1,000 people. The birthrate was holding at a rate of 7.52 in 2021. Analysts are stating that COVID-19 and resultant province-wide lockdowns might have had an impact on the birthrates.
Due to the population explosion and building pressure on the economy, the Chinese government in 1979 decided to implement one child policy in the state. This one-child policy continued to be implemented by central and provincial governments in the country till 2015.
Realizing that the country might get pushed into a population crisis, the Chinese government in 2015 decided to make a change in population policy by allowing two children per parent. Several provincial governments have already announced financial and taxation incentives for families who will have more children.
Why is China undergoing a population decline?
Strict implementation of One child policy and two-child policy is cited as the major reason for the decline in the overall population of the country. Along with the population control laws, the impact of COVID-19 on the large population is also stated as one reason for the decline in the population.
According to World Health Organization, there have been 1,09,22,742 confirmed cases of COVID-19 in the country. The Chinese government a few days ago announced that more than 60000 COVID-19 deaths have been reported in the past month. Even World Health Organization does not have proper statistics regarding the total number of deaths in the country as the health ministry is not providing exact data from the international organization.
Economic Impacts of COVID-19 and population decline
Along with the declining population, the country is also facing an economic crisis as the zero COVID-19 policy followed by the Chinese government forced various multinational corporations to move out of their production facilities from the country.
Strict lockdown and virus-containing measures put factories and manufacturing facilities under quarantine for a long time. This led to a severe contraction in manufacturing and exports. Domestic consumption also faced a decline as the economic crisis hit the households.
Declining birthrate and population will also mean that a significantly large number of people will be aged 65 or above within the next few decades. As the old age population increase in the country, the government will be forced to invest more in healthcare systems. Real estate markets will also be deeply impacted as demand for newer properties and houses will be lesser among an aging population.
In between the crisis in the manufacturing sector and domestic consumption, instability in the property market also impacted the economy badly. Various mega projects were abandoned due to the crisis in the real estate market.
A second-largest property developer in China, Evergrande Group based in Shenzhen, Guangdong was on the verge of bankruptcy due to a severe cash crunch and economic crisis. The Chinese government was forced to intervene in the real estate market to get things back on track.
Global impacts of population decline in China
China has the second-largest economy in the world. Population decline in China will have deep impacts on its domestic economy. It is also important to note that major international manufacturers such as Apple and electric vehicle giant Tesla have huge manufacturing facilities in the country.
According to the latest numbers, china has a working-age population of 62 percent. In real numbers, the working-age population in China currently stands at 867 million. In the next few years, the working population in the country will decline and start impacting the economy.
Manufacturing and production sectors will face difficulties finding a workforce essential for keeping plants running at full capacity. An economic crisis in China will have effects all over the world as the country acts as the primary manufacturer of cheap technology products.
China is the global manufacturing hub of various electronics and nonelectronics products ranging from children’s toys to phones, electric cars, and chips. The country is considered an engine of global economic growth.
A few hours ago, the government announced that the gross domestic product of china grew by 3 percent in 2022. This is the second-lowest annual growth rate since 1976. A slowing Chinese economy will also mean that the global economy will slow down in 2022 and 2023. Being the second-largest economy in the world, the growth, and slowdown of the Chinese economy have great significance on the global economic performance.
Short term phenomenon
Amidst concerns about population decline and a slowing economy, various analysts and economists think that what is happening now in China is a short-term phenomenon. According to them, the Chinese economy will get back on track in 2023 or 2024. They also hope that china can reduce the impact of population decline on economic growth by increasing productivity through other means.
