In 2025, only 7.92 million children were born in China – the lowest score since 1939, erstwhile the population of the country was only a fraction present. Although Western analysts frequently paint apocalyptic visions of the collapse of the Chinese economy under the weight of an ageing society, reality is much more complex. Demographic decline is simply a fact, but China has powerful tools – from automation to interior migration – to effectively manage this process.
The Demographic story of the Apocalypse
The figures are ruthless: the fertility rate in China has fallen to about 1.09, well below the generation replacement threshold of 2.1. As of 2015, the working age population has steadily shrinked. According to forecasts, by 2050, there will be only 2 people of working age per individual over 65. Over the next decade, China could lose nearly 60 million citizens, corresponding to the population of France.
However, identifying a smaller population with an inevitable economical collapse is simply a mistake. “China is getting older faster than it gets richer,” notes RAND corp analysts, pointing to the difference between China and Japan and the US. Nevertheless, the Chinese economy is no longer based solely on inexpensive labour, but is undergoing a transformation towards advanced productivity.
From demographic dividend to talent dividend
For decades China has benefited from the “demographic dividend” – a huge, young population supplying the factory. Today, this model gives way to “a talent dividend”. The key is no longer the number of hands to work, but their quality.
Hundreds of millions of Chinese workers present are far better educated than the generation of their parents. Investment in education means that a smaller population can make higher added value. Moreover, there is inactive large possible for interior migration. Although migration from agrarian to urban areas slows down, the importance of mobility between cities themselves is increasing, allowing for better allocation of qualified staff where they are most needed.
Robots alternatively of Humans
China's most powerful consequence to the deficiency of hands to work is unprecedented automation. China is presently installing more industrial robots than the remainder of the planet combined. In factories, logistics and even agriculture, machines and artificial intelligence are systematically replacing the ageing workforce.
If China manages to keep a steady increase in productivity through robotics and digitalisation, they can compensate for the fall in the number of workers. In this context, population decline can paradoxically accelerate the technological transformation of the country, forcing innovation in sectors that have so far relied on inexpensive physical work.
State policy change
Beijing does not stay passive. The departure from 1 kid policy in 2016 and the introduction of 3 children policy in 2021 are just the tip of the iceberg. The government implements systemic financial incentives – as announced for 2025 subsidies of 3600 yuan per year for a kid under the age of three. Work is besides ongoing on improving access to pre-school care and reducing education costs, which are the main barrier to discourage young Chinese from starting families.
At the same time, the authorities face the challenge of securing pensions for a increasing number of seniors. The systematic increase in retirement age (now 1 of the lowest in the world) is inevitable and is simply a key component in the strategy to mitigate the effects of ageing.
The Chinese demographic decline is unprecedented in its scale and pace. However, this does not mean an automatic end to Chinese growth. Rather, it is simply a catalyst for transformation – from an economy based on mass production to a model driven by innovation, automation and advanced qualifications.
Source:
- Lauren Johnston, “China’s demographic decline is not the disaster many feat”, Nikkei Asia.
- Jennifer Bouey et al., “China’s Aging Population and the Implications for China’s Security”, RAND Corporation.
- Allen Feng, “China’s Democratic Future Is Now”, Rhodium Group.
- “China’s Working-Age Population Shrinking From 900 Million to 250 Million”, Apollo Academy.
Leszek B. Glass
Email: [email protected]
