Mayank Chhaya-
For the first time in over six decades China’s population has shrunk with deaths outpacing births, causing apprehensions of a demographic crisis with a direct impact on the global economy.
This is even as India’s population is expected to surpass China’s sometime this year, according to the United Nations (U.N.) The U.N. has also said in its World Population report that China is expected to experience an absolute decline in its population as early as 2023, which is in line with the figures released by China.
According to Beijing’s National Bureau of Statistics (NBS), there were 1.41175 billion people living in China at the end of 2022. That represents a drop of about 850,000 compared to the previous year’s end.
A total of 9.56 million people were born in the country in 2022 in contrast against 10.41 million people dying, according to the NBS. How much of those death figures were a result of its disastrous COVID control policies may never be known.
The numbers have dropped in China despite Beijing having ended its draconian one-child policy in 2015 after it was imposed in 1980. Seven years after the relaxation in family planning policies, the country is now facing a potential demographic crisis, according to experts. Clearly, the reversal of the one-child policy has not worked with fertility rates having declined over decades.
Of course, Beijing still has the option of dramatically incentivizing births, but those incentives are a function of how well its economy is doing. In 2022, China’s economy grew by just 3% compared to 8.1% in 2021. Partly to blame was its disastrous zero-COVID policy that locked down millions in their homes without any assured availability of vaccines.
It is widely believed that with this demographic shrinkage, the era of the blockbuster double-digit growth propelled by younger and cheaper labor force has ended in China. Add to that the widespread disaffection that President Xi Jinping has faced over his handling of the zero-COVID policy and how that might impact his drive to reinvigorate the economy by increasing state spending. Incentivizing births is just part of this likely effort.
As the world’s second largest economy, any slowing down in the Chinese economy can be deeply problematic for the global economy. India’s economy has not grown commensurately even as its population has continued to rise. According to the World Bank, the country’s economy was $3.18 trillion in 2021 with GDP per capita of $2256. Compare that with China’s economy of $17.73 trillion in 2021 and GDP per capita of $12,556.
With figures like that, while India will end up with the dubious distinction of being the world’s most populous country anytime now if it has not already done so, it will not be able to replace China in terms of its economic heft creating global repercussions. There are projections that India’s population will continue to rise until 2030 when it reaches 1.515 billion. Unless the country’s economy grows commensurately, there could be serious problems.
The U.S. with its $23.32 trillion economy (2021) and GDP per capita $70,248, as per the World Bank figures, will still end up significantly powering the global economy but with a weakening China and a tepid India, it may not be enough.
This is notwithstanding the sanguine predictions made by people such as Mukesh Ambani, one of India’s two most influential industrialists, who has said the country’s economy will be $40 trillion by 2047 when it completes 100 years as an independent nation.
Replacing China as the world’s most populous country presents India some powerful opportunities. Apart from the opportunity to expand its economy such that it begins to challenge some of China’s gains globally, on an unrelated note, its long-held claim of permanent membership of the U.N. Security Council (UNSC) becomes even stronger. The idea that the world’s most populous country and a democracy to boot has no seat on the UNSC will begin to seem more jarring than it has had so far as the second most populous country.
Next five years will reveal how China’s first population decline in over 60 years affects the global economy but for now there are apprehensions that it will be significant.
