China’s population has started to shrink. On January 16, the government announced that, in 2022, the number of deaths had surpassed the number of births. This demographic milestone is the culmination of a steady decline in the birth rate and is one which hasn’t occurred since the widespread famines under Mao Zedong’s leadership. In fact, the situation is so dire that China lost its title as the world’s most populous country earlier this year to India. (1) The country’s population concerns may be a recent development, but they mirror the current demographic trends of the rest of the East Asian region, as well as similar economic implications.
All of China’s regional counterparts are trending toward a super-aged population, where more than 20% of its inhabitants are over the age of 65. Japan’s population is considered one of the world’s oldest. Its reproductive rate has been described by its own government as a “critical situation.” (2) South Korea reports the world’s lowest birth rate. The average South Korean woman is expected to bear 0.79 children, well below the 2.1 replacement rate needed to keep the population at the same level. (3) Taiwan’s birth rate is also declining rapidly. Forecasts predict that by 2035, Taiwan’s fertility rate will be lower than South Korea’s. By 2025, one in five Taiwanese citizens will be over the age of 65, joining Japan as one of the world’s super-aged societies. (4)
East Asian nations also share similar causes behind their low reproductive rates. The primary concerns of young adults in these countries are economic. Many couples cannot afford to pay for expenses such as childcare with low wages and pessimistic career prospects, especially alongside the societal expectation to take care of aging parents. Furthermore, the demanding corporate culture of East Asian nations also means there is little time outside of work to properly raise children. (5) Clearly, rising costs in a slowing economy have limited the desire for young East Asians to have children. However, the region faces economic consequences for an aging population as well.
As the median age increases, the young workforce supporting the elderly gets smaller. The government will collect less revenue from taxes, but expenses will be greater as retired citizens collect their pension benefits. National healthcare systems will also be strained from addressing the various health issues the elderly face. The economic impact of an aging population is undeniable. Japan’s average annual GDP growth will slow by 1% over the next three decades as a result of aging. China may see a decline of 170 million workers over the same period of time as well. (6) For the domestic economy, a scarcer workforce would lead to increased production costs. China may currently be known as the factory of the world, but such changes would lead to manufacturing shifting to other, cheaper nations. As China reports its slowest GDP growth in almost half a century, its aging population will only exacerbate the situation.
East Asian governments have long recognized the worrying trend and have taken steps to address the issue. However, current efforts to increase the reproductive rate have been limited to financial incentives for young families. Infants under a year old receive a monthly payment of $230-$540 from the South Korean government, with plans to increase that amount to further encourage reproduction. (7) Beijing relaxed its infamous “one-child” policy and now offers cash, tax cuts, and property incentives. There are also other solutions to an aging population. Automation can fill the productivity gap left by a shrinking labor force. Foreign workers can also fulfill the same purpose, with the added benefit of contributing to government revenue. (8)
China’s economy has dominated the global market for years. The Asian Tigers, Taiwan, and South Korea grew rapidly in the late twentieth century. Japan is the world’s third-largest economy. Yet the aging populations of East Asia must be addressed to maintain economic growth in the 21st century.
Endnotes
- Alexander Stevenson and Zixu Wang. “China’s Population Falls, Heralding a Demographic Crisis.” The New York Times. January 16, 2023. Accessed January 30, 2023, https://www.nytimes.com/2023/01/16/business/china-birth-rate.html.
- Mari Yamaguchi. “Japan births at new low as population shrinks and ages.” AP News. November 28, 2022. Accessed January 30, 2023, https://apnews.com/article/business-japan-economy-82a54de52e3d121b80b9ba2bc0917225.
- Paula Hancocks. “South Korea spend $200 billion, but it can’t pay people enough to have a baby.” CNN. December 4, 2022. Accessed January 30, 2023, https://www.cnn.com/2022/12/03/asia/south-korea-worlds-lowest-fertility-rate-intl-hnk-dst/index.html#:~:text=South%20Korea%20recently%20broke%20its,is%20down%20to%20just%200.79.
- Focus Taiwan. “Taiwan’s fertility rate to fall to world’s lowest by 2035: NDC.” October 31, 2022. Accessed January 30, 2023, https://focustaiwan.tw/business/202210310020.
- Alexander Stevenson and Zixu Wang. “China’s Population Falls, Heralding a Demographic Crisis.” The New York Times. January 16, 2023. Accessed January 30, 2023, https://www.nytimes.com/2023/01/16/business/china-birth-rate.html.
- IMF Blog. “Chart of the Week: The Cost of Asia’s Aging.” May 1, 2017. Accessed January 30, 2023, https://www.imf.org/en/Blogs/Articles/2017/05/01/chart-of-the-week-the-cost-of-asias-aging.
- Paula Hancocks. “South Korea spend $200 billion, but it can’t pay people enough to have a baby.” CNN. December 4, 2022. Accessed January 30, 2023, https://www.cnn.com/2022/12/03/asia/south-korea-worlds-lowest-fertility-rate-intl-hnk-dst/index.html#:~:text=South%20Korea%20recently%20broke%20its,is%20down%20to%20just%200.79.
- Kelly Ng. “Should China worry about its shrinking population?” BBC News. January 20, 2023. Accessed January 30, 2023, https://www.bbc.com/news/world-asia-china-64329890.
