Posted on January 31, 2021

China’s Demographic Time Bomb Quickly Ticking Down

Frank Chen, Asia Times, January 13, 2021

China’s declining demographics are gloomier than previously estimated, a life and death challenge for the world’s second-largest economy policymakers who have so far failed to address. 

Preliminary provincial findings of a nationwide census now underway indicate that population growth in 2019 plunged to a 60-year low, despite Beijing’s move in 2016 to abandon its notorious “one-child” policy.

The 14.65 million newborns recorded across China last year were a third lower than the annual average throughout the 1990s and 2000s when the strict population control policy was still in place, initial nationwide census findings show. 

China Business News recently reported that China had 142 million fewer births between 1990 and 2019 compared with the proceeding 30 years of population growth, based on National Statistics Bureau population database statistics.

During the 1960s, nearly 240 million Chinese were born with a gross birth rate of 43.6%. The sharp demographic decline since 1990 comes despite the fact that the enforcement of the “one-child” birth control policy, in place since 1979, slackened off during the period before being scrapped altogether in 2016.

Annual new births started to slip below 20 million from 1998, while total births in the 2000s dropped to 162 million, 45.9 million fewer than in the 1990s. If current trends continue, China’s population will peak at 1.44 billion in 2029 before entering “unstoppable” decline, according to a Chinese Academy of Social Sciences study released last January. 

Beijing’s belated population control loosening, which since 2016 has allowed all couples to have no more than two offspring, spawned a baby boom in that particular year. However, it was a small and short-lived spurt: While total births hit 17.86 million in 2016, they dropped again to 15 million two years later. 

Current and previous headcounts show that China added a total of 163 million new babies between 2010 and 2019, 477,000 more than the previous decade. But the baby boost is likely not enough to offset what some predict will be the opening of a “population sinkhole” in the mid-2020s.  

Fewer Chinese means less domestic consumption at a time Beijing has prioritized more consumption-led growth as part of its recently announced “dual circulation” policy. Moreover, the ratio of young-to-old will be dramatically imbalanced by the soon surging ranks of the elderly, putting unprecedented strain on the ties that hold society together.

The latest data from Shanghai’s Statistics Bureau reviewed by Asia Times indicates that there are now half a million more senior residents aged 65 or older than young aged below 35 in China’s most populous and reputedly most vibrant city. Only 92,000 babies were born in 2019 in Shanghai, a city of 24 million residents.  

The bureau has warned of a coming “retirement tsunami” that threatens to drain the city’s already nearly depleted pension funds in the next two to five years, as most of the baby boomer generation of the 1960s are set to retire or be pensioned off. 

Beijing has already broached the idea of pushing back the current retirement age for female workers from 55 to 60 in the next five years.

While the central leadership drafts policies to entice more births, the final census report will not be submitted to top policymakers until the end of the year.

But there are already indications cities are seeking to lure more growth-driving young people in apparent defiance of Beijing’s previous insistence on capping population inflows into key urban centers. 

Last year Shanghai, already grappling with the fastest aging population among major Chinese cities, lowered its hukou, or household registration threshold, to woo fresh graduates from prestigious institutions like the city’s Fudan and Jiaotong universities to take up residence in the city. 

Guangzhou, another top tier city in southern China, has also pulled down its population control barriers by scrapping a quota regime and now welcomes young migrant workers to settle in its suburban districts.  

Ding Changfa, a professor of economics at Xiamen University, told Asia Times that – just like the Netherlands, Japan and Singapore, which are opening their doors to quality, new immigrants to ensure an ample and capable labor force – Chinese cities see the inflow of young people from elsewhere as a solution to their emerging population problems. 

“Young people are the future as they produce more GDP, consumption and overall, when they settle down in a city, they raise their own families and have babies,” said Ding. But he doubted if such a scramble for young people could be sustainable when the nation’s overall population growth is decidedly on the wane.

An official with Shanghai’s Municipal Commerce Commission told Asia Times on the condition of anonymity that the city’s decision to grant hukou to outside youth was a key measure in driving the city’s home sales and revenue growth.  

“Being China’s largest city, we are confident that young people will be lured to Shanghai now that we promise them hukou, and home sales will for sure benefit when they come en masse. So will the government coffers,” said the cadre. 

He admitted that with Shanghai joining the race to attract young people, the population “hollowing-out” effect hitting northeastern provinces – Liaoning, Jilin and Heilongjiang, sometimes referred to as China’s rust belt – would only intensify.

Northeastern China’s gross fertility rate, or the average number of babies a woman will have over her lifetime, stood at an alarmingly low level of 0.55 in 2015. It is among the world’s lowest due to the region’s harsh natural environment, stagnant economic growth and brain drain to Shanghai and other coastal regions.

A 2019 report by Xinhua said two million people had left the three backwater provinces between 2008 and 2018, most of who had resettled in coastal cities. 

“Formulating concrete, long-term policies to encourage local people to have more babies should be the right, sustainable option for Shanghai and other key cities but it takes more than 20 years – from when more babies are born to when they reach adulthood – for new policies to pay off to increase labor supply,” said the official. “So a quicker, easier fix is to entice young people from northeastern China and elsewhere to Shanghai.” 

In other major cities across the Yangtze River Delta that surrounds Shanghai, 600,000 reportedly moved last year to Ningbo, a port city and trading hub. Nanjing, the provincial capital of Jiangsu province, is also a favored destination for young people leaving central, agrarian provinces like Anhui, Jiangxi and Henan. 

Beijing is said to be contemplating applying more red tape on hukou applications to stem such outflows of people from poor regions when it reviews its overall birth and population policies late this year when the census results are known.

Deputies of the National People’s Congress, when they meet for this year’s plenary session in Beijing in March, are expected to discuss policies and call for Beijing to further loosen the number of children a couple is permitted to have. 

Liu Xiaobo, a Shenzhen-based financial commentator and a former business reporter with Xinhua, told Asia Times his sources said that China would soon allow all couples to have no more than three children by the end of 2021 or in 2022, with incentives like free high school education and special mortgage rate discounts for couples with more than two children to be discussed by top policymakers.