China’s Sluggish Population Growth Raises Alarm

Slowest growth in six decades . . .

On Monday, China’s National Bureau of Statistics announced that in 2021 the population only grew 0.034%, setting a record low for the country. Population growth in China has not been this low since 1960, during Mao’s ‘Great Leap Forward’ campaign and the subsequent famine. Beijing tried to encourage greater population growth when the current downward trend was initially revealed in May 2021 (with the release of China’s once-a-decade census) through the introduction of a ‘three-child policy’ that permits married couples to have up to three children. This marked a significant shift away from the ‘one-child policy’ that lasted for 35 years before being replaced in 2016 with a more relaxed ‘two-child policy.’

Is it enough?

Many analysts believe the Chinese government needs to do more if it wants to reverse this downward trend. The two-child policy resulted in only a slight uptick in the population, after which the birth rate dropped again, leaving little reason to expect that a three-child policy will have the intended effect. Many factors likely contribute to the reluctance to have children, including the extremely high costs of health care, housing, child care and education; insufficient maternity leave; imbalances in the division of domestic labour; and, inadequate legal protections or financial support for single mothers.

Possible impacts on China’s economic outlook . . .

China’s economic growth surpassed expectations last year, with GDP growing 8.1 per cent. However, the government’s recent cutbacks on major projects, such as the Belt and Road Initiative, indicate that the pandemic has caused some economic stress. The falling birthrate will only compound economic strains in the coming years, as China experiences similar issues to Japan; namely, a large elderly population without a similarly large working population to offset the pressure put on the health-care system and pension plans. However, some analysts have argued there are policy options that could help overcome the impending demographic deficit, such as increasing the retirement age (currently only at 60 for most workers), encouraging immigration, and removing obstacles facing young couples that want a family.