With China reporting its first population decline since 1961 in early 2023, the country’s looming Demographics Market is rapidly maturing. Given that fertility rates fell below the replacement level of 2.1 in 1991 and have not recovered since, this news is not surprising. The world’s largest population has officially begun to shrink as a result of a perfect demographic storm brought together by economic, social, and political factors.
Why demographics will limit the Chinese economy Falling birth rates raise the question of whether the nation will age before becoming wealthy. There is no denying the connection between the population and the state of the economy. China’s high birth rates in the past resulted in a demographic dividend among its working population, which has contributed to the country’s growth thus far. However, as China’s largest cohorts continue to age, falling birth rates will result in a shrinking working population. The world’s second-largest economy will be put under more and more pressure as a result of the generational gap.
As a result, China’s economy will have to learn how to deal with a larger number of people who depend on it. China’s economic goals may be hindered by the fact that it is joining a growing list of nations with aging populations. Compared to the size of the economy in 2020, President Xi Jinping has reiterated his promise to double the size of the Chinese economy by 2035. However, China will need to quickly address the demographic decline that will stifle its economy if it wants to overtake the United States and maintain its lead.
