The world’s most populous country and second largest economy is facing a major demographic challenge: its working-age population aged 15 and 64 is shrinking — with the trend expected to continue in the coming years, demographers say.
Given the massive role it plays in the global supply chain and as a key driver of economic growth around the world, China’s dwindling workforce could have significant implications, and spell disaster for the global economy.
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One-child policy
One of the main factors contributing to China’s shrinking working-age population is the country’s rapidly aging population. The Chinese Communist Party’s (CCP) infamous one-child policy — which was implemented in 1979 and eradicated in 2015 — resulted in Chinese authorities boasting that more than 400 million births had been prevented.
For more than three decades, men and women in China were forced to undergo forced sterilization or late-term abortions if they were found to be “illegaly” pregnant. Those caught with more than one child were forced to pay hefty fines, and some even saw their children being forcefully taken away.
Even as the one-child policy was promulgated in 2015 to encourage couples to have more children; with the CCP rolling out the slogan: “All families should have two children,” many couples are opting to still have only one child, or remain childless altogether. The two-child policy was then further broadened in May 2021 to allow three children per couple.
Aging population, fewer workers
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The stringent one-child policy also impacted fertility rates and contributed to a rapidly growing aging population. As a result, China’s overall population is aging more rapidly than other countries — with more than 12 percent of its population comprised of senior citizens aged 65 or older.
The shrinking working-age population could result in severe implications to its economic growth, experts warn. As the labor force is reduced, there will be fewer workers contributing to the economy, and fewer people consuming goods and services — resulting in stagnant economic growth, and potentially even a recession.
“The demographics dictate that China’s economy will be accompanied by a long-term and rapid decline,” Dr. Yi Fuxian, an obstetrics and gynecology professor, and expert on Chinese demography at the University of Wisconsin told the National Post.
“We are unfortunately witnessing the irreversible decline of a civilization that has been alive for thousands of years, because of a misguided one-child policy,” Yi said.
Far-reaching implications
Another factor fueling China’s shrinking working-age population can be attributed to declining birth rates — with its overall population growing by just 480,000 to 1.4126 billion, according to government statistics — with demographers warning that a “national decline appears inevitable” as birth rates continue falling, and people live longer.
“Trend growth is basically labor force plus productivity, and China is facing poor prospects for both,” George Magnus, a research associate at Oxford University’s China Center, and former chief economist at investment bank UBS, told The South China Morning Post (SCMP).
Fueled by rising education, childcare and living costs, a growing number of younger couples are opting to spend their incomes on other “tangible experiences” such as traveling, fine dining, or shopping. There’s also been a growing demand for women to enter the workforce, resulting in more women choosing to not have children in hopes of advancing their careers.
Impacted supply chains
As the country’s labor force shrinks, it could lead to labor shortages and higher wages — increasing the overhead costs of foreign enterprises trying to operate out of China — forcing companies to find alternative sources of labor, or relocate operations to other countries.
Disruptions to global supply chains caused by draconian “zero-COVID” lockdowns, movement curbs, and travel restrictions in China have also intensified as factories cannot fulfill orders, and hundreds of businesses were forced to close.
In November, thousands of workers at the Taiwanese-owned Foxconn plant, located in the provincial capital of Zhengzhou, Henan Province, took to the streets to protest the government’s far-reaching COVID laws.
The facility — which is the world’s largest iPhone factory — had been under quarantine with its 200,000 staff since mid-October after a number of positive infections were detected. Following the protests, the tech giant warned shoppers around the world to expect delays in receiving their products.
Fearing a prolonged lockdown similar to that of Shanghai’s, some of Foxconn’s employees (many of whom are migrant workers who travel to large cities in search of manual labor) fled to their hometowns.
Known as the financial capital of China and home to nearly 27 million people, Shanghai was locked down for nearly three months from March to early June — fueling a myriad of tragedy and violence as reports of people starving to death, or being violently beaten by pandemic staff for breaking quarantine were widely circulated on social media.
