Renowned Chinese affairs scholar Gordon Chang wrote in an article published on December 23rd in Newsweek that, although reports indicate China’s population is 1.41 billion, the revised 2024 United Nations World Population Prospects forecast estimates that by the end of this century, China’s population will decrease to 403.8 million. Scholar Wang Feng from the University of California, Irvine, remarked that “China has embarked on an irreversible path of population decline.”
The total fertility rate typically refers to the average number of children a woman has in her lifetime. In 2023, China’s total fertility rate stood at 1.0 and has been declining gradually over time. A country generally needs a fertility rate of 2.1 to maintain a stable population.
Chang pointed out that without war, disease, or famine, no other society has faced such a severe population decline. While there have been instances in history that led to catastrophic population declines, populations have usually rebounded afterwards. Following the famine during the “Great Leap Forward” in the late 1950s, China rapidly recovered its population growth.
He believes that the reasons behind China’s population decrease include deep social changes, sustained economic decline, and deepening feelings of depression. China’s youth now refers to themselves as the “last generation” of China. Part of the reason for the younger generation’s anti-natal attitudes is the continuous indoctrination of the “one-child policy” by the Chinese Communist Party. This policy was established by Deng Xiaoping in 1979. During this “potentially the largest social experiment in human history” of the mandatory plan, China’s fertility rate continued to decline from 2.9 births per woman to 1.1 in 2015. The CCP implemented the “two-child policy” in 2016, but the subsequent relaxation of policies, including the “three-child policy” in 2021, did not yield the desired results.
Nicholas Eberstadt from the American Enterprise Institute pointed out, “While authoritarianism may brandish a bayonet and use police to forcibly lower birth rates against the will of the people, using state power to increase fertility rates is much more difficult.”
Looking ahead, economic and political challenges will intensify with population changes over the coming decades, which should compel Chinese leaders to seek and maintain friendly relations with the United States and Western Europe. These countries are not only export markets for Chinese products but also sources of innovation and new technologies for China.
Chang also wrote on the 19Fortyfive website that China is deeply mired in deflation and is taking desperate economic measures. In November 2024, China’s producer price index fell compared to the same period last year, marking the 26th consecutive month of decline. The national gross domestic product (GDP) deflator index (a broader measure of national prices) has been negative for six consecutive quarters. In November 2024, the consumer price index rose by only 0.2% compared to the same period last year, far below the national target of 3%.
He mentioned that China is grappling with deflation, and deflation is an economic killer. Falling prices are leading to successive business bankruptcies. When people anticipate lower prices, they delay purchases, further exacerbating the economic slowdown.
According to the National Bureau of Statistics report, China’s economy grew by 4.6% in the third quarter of 2024. Chang said that in reality, China’s economic growth rate seems to be hovering around 0%, maybe slightly higher or even possibly slightly lower. Beijing announced a 5.2% growth in domestic gross domestic product (GDP) in 2023. However, the authoritative US economic research firm Rhodium Group claimed that China’s economic growth rate is only around 1.5%.
Since 2023, China’s economy has been visibly deteriorating. In fact, China is now experiencing the long-overdue crisis of 2008. In 2008, the CCP implemented the largest stimulus program in peacetime history. Governments at all levels borrowed as quickly as possible, sparking a construction boom that resulted in double-digit economic growth for China.
Now, the stimulus policy of borrowing for consumption has reached its limit. Chang estimates that due to excessive spending, China’s total national debt to GDP ratio is around 350%, possibly even as high as 400%. However, no one knows the actual ratio because the “hidden debt” is so massive, with estimated off-balance sheet debts of local governments reaching up to $11 trillion.
Chang believes that China’s debt crisis is looming and will be the most severe in decades. So what plans does Beijing have to avert this disaster? To address the potential debt crisis, the top Communist Party leadership decided to increase borrowing. However, the risk of such an approach is that it could trigger a rapid credit collapse. Thanks to tight currency controls, the CCP can “delay” the credit collapse.
In December 2024, the CCP Politburo essentially confirmed allowing the Renminbi (RMB) to devalue. Since early November, the RMB exchange rate against the US dollar has been noticeably dropping. The devaluation of the RMB benefits Chinese exports. However, RMB devaluation could pose two risks: other countries might weaken their own currencies to maintain a competitive position or raise tariff barriers. Even countries dubbed by Beijing as part of the “Global South” are setting up tariff barriers against Chinese goods.
Overall, China’s economic planners may know what needs to be said and done, but they are fundamentally unable to put it into practice within their political system. The CCP seems indifferent to the worsening deflation. As Anne Stevenson-Yang, the founder of J Capital Research, pointed out: “The CCP’s goal is to prevent bank defaults, and no one within the Communist Party system would consider the true interests of the Chinese people.”
An editorial in The Guardian UK stated that China is not the only country facing the challenge of an aging population with a dwindling young workforce. However, unlike Western countries, in China, people have grown old before becoming wealthy. The scale and speed of this challenge are extraordinary, largely attributable to the decades-long restriction of the “one-child policy.” This also means that the number of retired individuals relying on their children for support is diminishing.
China’s population decreased by 2.75 million in 2023, marking the second decline in many years. According to official Chinese media, by 2035, the proportion of the population aged 65 and above will double from 14.2% in 2021 to reach 30%. Eswar Prasad, an economic observer from Cornell University, warned that China’s economic outlook “is flashing red or very close to red.”
The article points out that the youth unemployment rate in China is high. Over the years, popular phrases like “lying flat” have made many realize that extended working hours yield limited returns, making all the busyness seem unworthy. One online comment complained, “When I was born, they said (children) were too many. When I had kids, they said there were too few. When I wanted to work, they said I was too old. When I retired, they said I was too young.”
From a political perspective, making people wait longer to receive retirement benefits is never popular. In China, the issue is not just about defusing the demographic time bomb but also an economic and social challenge.