Following the news that China’s population has declined for the first time since 1961;

Francesca Gregory, Thematic Analyst at GlobalData, offers her view:

“According to GlobalData’s latest report, ‘Demographics – Thematic Intelligence’, China will suffer from a shrinking working-age cohort by 2035, increasing the strain on the world’s second largest economy. The country has been suffering from falling births for years, with fertility rates having dropped below the replacement level of 2.1 in 1991 and have yet to recover.

“The country will accelerate the rollout of fertility incentives at the province level in the coming years. For example, Shenzhen is developing a subsidy for families who give birth to their first child and register the birth in the city. However, these initiatives will likely come too late for China to avoid an aging population.

“China’s fertility rates will fall to new lows before these policies can take effect. The country’s belated response to its demographic conundrum will undoubtedly cost its economy in the coming years.”

Daniel Clarke, Thematic Analyst at GlobalData, offers his view:

“GlobalData’s report also notes that China’s demographic dividend, which has propelled the country to global power and prominence, is over. The Chinese Communist Party has failed in its attempts to prevent this crisis. Societal factors heavily influence birth rates. Zero-COVID-19 and the 9-9-6 working week have stifled the impact of other policies designed to increase birth rate. China’s youth is overworked, economically constrained, and thus less interested in having children.

“The US has a much more favorable demographic outlook, partially due to its historic embrace of immigration. This demographic deficit will give the US the edge in its technological and geopolitical battle with China. A higher proportion of dependents—retirees and children—requires an increased tax rate. This will inevitably suffocate Chinese productivity and innovation.”