Death of a superpower: is China facing a decade of decline? 

China’s population has fallen for the first time in 60 years, leading to predictions that after years of booming growth the country is now facing a period of economic and social decline.

China’s National Bureau of Statistics released figures yesterday showing the national birth rate has hit a record low: 6.77 births per 1,000 people. By comparison, in 2021, the United States recorded 11.06 births per 1,000 people, and the United Kingdom, 10.08 births.

The country’s birth rate has been dropping for years, but after a series of failed efforts to curb the trend, including the replacement of the one-child policy with a two-child policy seven years ago, then a three-child policy, then the lifting of rules on the number of children in 2021, officials now concede that they are entering an “era of negative population growth”.

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And while those who believe “the world has too many people already,” population decline harbours numerous negative impacts, said Bret Stephens in The New York Times (NYT). “The road downhill will not be smooth – not for [China] or for us.”

What did the papers say?

Declining population growth correlates directly with economic decline, the NYT’s Stephens said, pointing to data from Ruchir Sharma, a former head of emerging markets at Morgan Stanley, which shows a decline in economic growth of roughly one percentage point for every percentage-point decline in population.

Given that China’s economic boom has helped power the rest of the world for decades “its weakness will ripple through the world economy,” Stephens said.

However, China’s declining population has not come out of the blue, but has arrived much earlier than either the country’s government or the United Nations expected.

Yi Fuxian, an expert on China’s population changes, said the decline has emerged a full decade ahead of most projections.

“Meaning that China’s real demographic crisis is beyond imagination and that all of China’s past economic, social, defence, and foreign policies were based on faulty demographic data,” Yi said on Twitter. Consequently, “China’s demographic and economic outlook is much bleaker than expected. China will have to undergo a strategic contraction and adjust its social, economic, defence, and foreign policies. China will improve relations with the West.”

So far the news coming out of China about the state of its economy isn’t wholly negative. Yesterday, Beijing announced the GDP had grown 3% in 2022. According to The Guardian, that figure would mark “one of the slowest periods of growth in decades, but was still higher than predicted”. But the unexpectedly rosy report prompted “some scepticism among analysts given the incredibly stringent zero-Covid restrictions in place during the fourth quarter”, the paper added.

Stuart Gietel-Basten, a professor of social science at Hong Kong University of Science, told NPR’s Morning Edition that the country’s population decline will complicate its economic and political plans.

“The era of rapid growth, double-digit growth, of cheap labour, of a younger labour force – that era is now really at a close,” Gietel-Basten said.

What next?

In the wake of the most widespread protests China has witnessed since the Tiananmen Square demonstration of 1989, the sudden relaxation of China’s “zero-Covid” strategy, and Xi Jinping’s efforts to solidify his rule, the last two months “have been among the most momentous in recent Chinese history”, said Jonathan Tepperman in the Foreign Affairs magazine. “But underneath the noise, the events all carried the same signal: that far from a rising behemoth, as it is often portrayed by the US media and American leaders, China is teetering on the edge of a cliff.”

Assuaging the effects of the population decline internally, some economists believe that the rise of automation in China will counteract the problems that emerge as the number of available workers shrinks. But according to the Financial Times, “analysts are largely in agreement that the country’s social welfare and medical infrastructure are ill-prepared for an ageing population.”

On the global stage, India has been predicted to replace China as a driving force for economic growth; it is already the world’s fifth largest economy and “has the potential to keep expanding”, said NDTV.

However, former RBI governor Raghuram Rajan said that while the hypothesis is compelling, it is too early to say whether India will come to replace the role that China has offered to the global economy.

“The argument that India will replace China is very premature as India is much smaller economy as of now,” said Rajan at a World Economic Forum (WEF) press briefing yesterday. “But over a period of time, that may change”.

China’s downturn offers an opportunity for the US to pressure China on its human rights record, said the NYT’s Bret Stephens. This will be critical because “in the long run, the greatest hope we can have for China is its people. The greatest investment we can make in the coming decades of turbulence is to keep faith with them.”