After announcing its first population decline in six decades, what is next for China?

For decades, China’s large population was seen as a burden. Is the latest announcement of demographic decline negative? Is the structure of its population, with imbalances of both age and gender, the real problem?

University of Michigan professor Mary Gallagher , an expert in Chinese politics, law and society, and labor politics, and assistant professor Yun Zhou , a social demographer and family sociologist, share insights on what to know and what is next for China and the significance of the country’s population shrinking.

Significance

Gallagher: This question about significance is important because it’s not a surprise. We’ve known for a couple of decades that China’s population structure was changing, even in the early 2000s. There were labor shortages in manufacturing zones in China. Back then, economists started to talk about the problem of China getting old before getting rich.

The government did try to respond recently with changes to the one-child policy and changes to the social insurance system to get ready for an aging population. It seems that those policies haven’t had the effect they hoped to have. This dramatic announcement is an important watershed for the Chinese economy and society.

Zhou: For the Chinese National Bureau of Statistics to report a population shrinkage-the first one we have seen in decades-is a significant shift, not just of degree, but of kind. Although China’s birth rates have remained below-replacement since the early 1990s, to see this inflection point in China’s population trends represents a "sea-change.”

Size vs. imbalance

Gallagher: The emphasis should not be on the population’s size but on the population’s structure considering China’s population is still large. Even if India surpasses China, it will still be the second-largest country by a long stretch. It’s really about the age and the sex imbalances. So those are the issues that the government has to address.

In some ways, having a smaller population should help China. It reduces the burden of feeding the people; or remaining self-sufficient in the food supply, which is no longer possible. In addition, in terms of climate change and the environment, a smaller population would put less stress on China.

This is a problem of structure. And how do you address the structural imbalances? It’s about trying to increase the productivity of the workforce, for example. The country needs better-educated people who should stay in the workforce longer. The Chinese retirement age is very, very low, and it’s different for men and women. So the retirement age should be raised. They also need to prepare for an increase in automation, which means you don’t need more workers. You need better-educated and highly skilled workers to prepare for the changing labor market.

Fighting imbalance

Zhou: The sex imbalance of China’s population was baked into the country’s population control policies. Scholars have worried that the relaxation of the one-child policy (in 2016 and again in 2021) would exacerbate the sex-ratio imbalance. People have different incentives for favoring boys when planning-or deciding-about their fertility. So in many ways, the sex-ratio imbalance is both a symptom and a cause of entrenched gender inequality. There’s no way to rebalance the population regarding sex composition without addressing the root cause of gender inequality.

Gallagher: One of the government’s strategies to address the imbalance is to try to change the education and housing costs because those are the two high costs for parents. There’s also the expectation for male children that the parents purchase an apartment for the male child before he marries.

Some of these policies are wrong-headed. For example, one of the policies in education is to ban the use of private tutoring to clamp down on the upper end of the education market. Tutors are very, very high priced. Only people with more resources and higher incomes can get ahead. The government shouldn-t address this inequality in education by clamping down on the top, but on helping the bottom get access to these resources. What happens is that there’s now a black market for these types of resources. Leaders should address the educational access issue for rural children of low income more broadly. To do that, they need to do a better job of redistributing income through higher taxes on the wealthy.

Impact on China’s economy

Gallagher: I’m a little bit skeptical about the real doom and gloom reports about the impact on the Chinese economy. The Chinese population is still large. The consumer market is big, and, in some ways, an older population needs access to better health services, financial services and retirement planning. Switching to more highly automated jobs could lead to a huge transition to higher-end manufacturing that would benefit China overall. The country’s growth rate is slowing for a lot of reasons.

The government needs to take action to exploit this kind of bad news about population decline to create more broad policy changes in the labor market and the economy.

What is next?

Zhou: We have seen now that the policy changes that tried to incentivize births have yet to work. The open question becomes: to what extent and to what extreme will the leadership go to limit individuals’ right to not have children? If we think of the one-child policy as a restriction upon the right to have children, then are there going to be policy changes that essentially limit the right to not have children?

There have been anecdotal and journalistic reporting that seem to show such limitations. For example, in 2021 the Washington Post published a piece showing that some hospitals were trying to limit vasectomy for unmarried young men. On Chinese social media, we have seen young women talking about being unable-or very difficult-to access abortion. The nature of the Chinese regime invites the question of to what extreme it will go.