The end of China’s population boom has arrived. How will the country’s changing demographics shape its future?

Update: This week, China made it official: For the first time since 1961, when the country was in the grip of famine, its population fell last year. Official figures reported Tuesday show a drop of 850,000 in China’s population during 2022. As Grid first reported in July, there are many reasons why China’s population has begun to shrink, and the potential consequences for the country are profound.

China has edged over a demographic precipice: Its population has begun to shrink. United Nations data published on Monday showed that the long-anticipated tipping point came in the first half of the year; it’s a significant moment for a country whose large population helped transform it into a manufacturing powerhouse.

And it’s only the beginning of a long-term demographic shift: The U.N. study projects that China’s population will be cut nearly in half by 2100 — a plunge that brings profound questions for the country and its leaders. The report also says that next year, India will surpass China as the world’s most populous nation.

Earlier this year, Grid took a deep dive into the social changes behind China’s falling birthrate and the sweeping economic and political ramifications of the coming population decline. This week’s U.N. report sheds new light on the speed and scope of China’s demographic transition.

“An unprecedented historical population decline is taking place at the same time as China’s rapid economic growth has cooled down significantly,” Wang Feng, a sociologist at the University of California, Irvine, told Grid. “This could call for a national mental adjustment for China’s leaders as well as for its people.”

Driving the change: one-child nation

In some ways, China’s demographic slide is a common story: Many countries around the world have experienced falling fertility rates as they have grown wealthier. But China’s experience is unique in at least one respect. The country’s one-child policy, officially implemented in 1980, led to millions of one-child families and a greater gender imbalance — women had sex-selective abortions and families even abandoned or killed female babies. So today, there are fewer would-be mothers than there would have been absent the one-child policy.

In recent years, as the demographic crisis loomed large, the Chinese government has tried to reverse the trend — announcing a new two-child policy in 2016, and then relaxing it further, allowing and even encouraging families to have three children beginning in 2021.

But the government’s prodding hasn’t brought a wave of baby showers. China’s birthrate increased briefly in 2016 before dropping again, and the new U.N. data shows clearly that the three-child policy hasn’t changed the picture. The fertility rate — the number of children born to each woman — currently stands at 1.2; that’s well below the so-called replacement rate of 2.1 children.

Broader social trends have kept the birthrate low in China, even after the one-child policy was lifted. In a survey conducted by the China Youth Daily, millennials cited a lack of child care options and financial pressures as their top reasons for not having a second child. For many, the current economic slump has exacerbated the financial strain of life in China’s major metropolises.

At a launch event for the U.N. report, Cui Hongyan — the deputy director of the Department of Population and Social Statistics at China’s National Bureau of Statistics — cited another reason for China’s recent decline in births: covid-19. “According to our past projections, we did not project that China would have such a low fertility level,” she said.

The economic fallout

How will the country’s changing demographics affect its economic future? The raw numbers paint a grim picture. The working-age population in China has already been shrinking since 2012. From 2022 to 2050, China’s workforce will contract by another 22 percent, according to U.N. projections; that means 217 million fewer people to power China’s factories, farms and services. To put that figure in perspective, 217 million is roughly the population of Nigeria.

Some demographers told Grid that the economic impact of the downsized workforce may be partially offset by the fact that China’s young people are increasingly well educated. Theoretically at least, that means that per capita, they could be bigger contributors to the economy.

While demographers have debated the labor implications of the demographic transition, they are clear that the government will face a much greater fiscal burden. The U.N. data forecasts a swelling elderly population over the coming decades: The percentage of the Chinese population over 65 will increase from 14 percent in 2022 to 30 percent in 2050. Wang’s research has shown that pension spending alone could burn up half the government’s revenue by midcentury. That means the government may need to introduce unpopular measures like property taxes to provide for the retiree set, who will have fewer young relatives to care for them.

As China grapples with its current economic slowdown, brought on largely by endless covid lockdowns, the dropping birthrate has sounded an alarm bell for leaders. The government had introduced new policies, including extended maternity leave in Beijing and Shanghai, to try to convince families to have more children. But demographers don’t expect those policies to have a dramatic effect.

That means managing the challenge of China’s declining population will be a central task of leaders for decades to come. “The key to the ‘Chinese Dream’ and China’s regime is economic development and its global ambitions,” Ye Liu, a sociologist at King’s College London, told Grid. “The demographic crisis holds China’s economy back, and holds its global ambition back, so it’s definitely a real concern for the top leadership.”

Thanks to Lillian Barkley for copy editing this article.