Existential threat before China
With a wobbly population structure, will the Dragon be able to face a hostile international scenario?
Two apparently non-descript statements of Li Keqiang, the Chinese Premier, in the recently held National People’s Congress of China merit attention. Li said China “would work to achieve an appropriate birth rate” and that China would raise the statutory retirement age “in a phased manner”. These two statements point out to an existential threat that China is now faced with although Li has tried to soft-pedal it.
Li’s country is going through a continuously declining rate of population growth. In 2020, only 10.4 million newborn babies were registered with the government, 14.8% lower than the corresponding figure for 2019. Moreover, China is expected to hit the Lewis Turning Point (a term used by economists when labour force migration from rural to industrial sectors stops, wages increase, profitability of industries decline and capital formation is halted) between 2020 and 2030. Taken together, they are likely to push China towards an uncertain future.
Warning Signals
China’s population dynamics each year is becoming more disastrous than the previous one. 2019 was the year when population growth in China — with 14.6 million newborns — had touched its nadir in six decades. But warning signals were there since 2017 when 17.2 million babies were born compared with 17.9 million in 2016. In 2018, the figure came down to 15.2 million. Now 2020 has overtaken 2019.
According to a recent report published in the medical journal Lancet, the population of China is supposed to decline from 1.4 billion in 2017 to 732 million by 2100, a drop of 48%. More important, the 20-24 years age group, the most important component for China’s total labour force in industry and the army, is expected to shrink by 64% in 2100.
Fast Towards 60s
But the year 2100 is still far off. Meanwhile, let us see what is in store for China in the immediate future. In 2025, the total population of China is expected to reach its highest point. After that, it will decline continuously — in other words a negative growth, which is always a nightmare for any economy striving to penetrate and take control of competing economic systems. But in 2030, around 25% of the Chinese population will be over 60 years of age. In 2010, this percentage was only 13. So only after nine years from today, China will be faced with a shortage of working population. This puts into question the future utility of its Belt and Road Initiative (BRI).
Detailed population figures for 2020 are yet to arrive. However, the Financial Times of London has provided some interesting details about 2019. Concomitant with the falling birth rate, growth rate of the gross domestic product of China came down to 6.1%. A survey of 353 companies in Sichuan, one of China’s most populous provinces, revealed that 57.8% of respondents had trouble filling vacancies due to a decline in working age population. With the number of young population decreasing, consumption has been hit hard. In 2019, retail sales increased by just 8%, the worst since 1999.
One-Child Policy
Almost every China watcher ascribes this scenario to the country’s one-child policy. Till 1978, China merrily witnessed a 20% annual population growth. After the death of Mao Tse Tung, economic reforms came about, which demanded a tight leash on the population boom. So Beijing imposed a one-child policy from 1979. This led to another problem. The number of new births started falling. But with an improved healthcare system, people now live longer. So China has started to become old. The size of the young workforce is shrinking rapidly.
According to a study by the Deutsche Bank, the number of Chinese workforce in 2015 was 911 million. But it is scheduled to come down to 848.9 million in 2020 and will further reduce to 781.8 million in 2030. The Chinese political leadership has been quick to grasp the gravity of the situation. Already some exemptions were in existence to the one-child policy. But in 2013, those couples one of whom was the only child of their parents were permitted to have a second child and in 2015 every couple was entitled to reap the same benefit. From 2018, China’s National Health Commission dropped the word family planning from its tag.
Men Rule
But there is very little sign that China will bounce back. Very few Chinese couples are willing to procreate because the cost of living has soared, particularly in the area of housing and education. So fertility rate per woman has come down to 1.6 although the population replacement mark is much more – 2.1 per woman. Moreover, being a male-dominated society, China witnesses the rampant killing of female foetus. In 2014 alone, 62 million women were counted to be ‘missing’ (they were in fact killed in their mothers’ womb). The year is important as a significant number of Chinese women were expected to be carrying after partial relaxation of the e-child policy a year ago.
China is now at a critical juncture. On the one hand, the number of women is declining. On the other, a large number of those women who were born after 1979 are already past their prime virile age. Life expectancy has surged from 43 in 1960 to 75 at present. By 2050, 39% of the population will comprise retired persons putting a serious strain on the state treasury. Alongside, labour cost is rising — the year-on-year growth stood at 11.9% during 2001-12. It is expected to rise by 12% for the period 2013-20.
Joseph Biden, the American President, has already castigated China’s ‘coercive and unfair economic practices’. So America’s Trump-era hard attitude towards China is likely to continue. With a wobbly population structure, will China be able to face a hostile international scenario?
(The author is a senior journalist and commentator specialising in politics and international affairs)
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