China’s birth rate drops to a record low, experts fear economic instability

In a trend that refuses to be stemmed despite the government’s best efforts, the birth rate in China dropped to a record low of 7.52 per 1,000 people in 2021. The previous year, this figure was 8.52, as per the National Bureau of Statistics data. As the country faces the dual problem of a rapidly aging population and a shrinking workforce, the Chinese government has ramped up its efforts to encourage people to have more children.

Most experts blame China’s “one-child” policy, enforced with an iron hand from 1980 to 2015, for this population conundrum. The restriction was intended to limit population growth and conserve resources. But in 2011, China’s working-age population peaked at 925 million and then started to drop sharply. In 2016, officials relaxed the one-child policy, allowing couples to have two children. But it did not lead to the expected baby boom. Then last year, the authorities relaxed the policy further, allowing couples to have three children, in addition to offering incentives and pledging improvement in workplace rules and the early education sector.

Declining population

The changes are yet to bear any fruit. The declining population has now become a serious threat to the country’s economic and social stability even as President Xi Jinping is investing heavily to create global competitors in electric cars and other technologies. So, how big is the population dip problem for China? In 2021, the number of births was just about enough to outnumber the 10.1 million deaths. Compared with 12 million in 2020, only 10.62 million births were reported in 2021. The population grew by a meagre 480,000 to rise to 1.4 billion. In fact, the natural growth rate fell to 0.034%, lesser than even 1961, when a failed economic policy by Mao Zedong had led to widespread famine and tens of millions of starvation deaths. Also, the birth rate was the lowest since 1949, when the Communist China was founded and the statistics bureau began collecting the data.

Many demographers assert that the peak may have been reached already. “The year 2021 will go down in Chinese history as the year that China last saw population growth in its long history,” said Wang Feng, sociology professor at the University of California, adding that the 2021 birth-rate was lower than the most pessimistic estimates. The main issue here is that China’s workingage population is fast declining. The falling birth-rate combined with the increased life expectancy means the number of working-age people, compared with the number of people too old to work, has been falling steadily. This will severely impact the country’s ability to care for its elderly population. Soon, this could all translate into labour shortages, hampered economic growth and reduced tax revenue.

The demographic challenge

Zhiwei Zhang, chief economist at Pinpoint Asset management, said, “The demographic challenge is well known but the speed of population aging is clearly faster than expected. This suggests China’s total population may have reached its peak in 2021. It also indicates China’s potential growth is likely slowing faster than expected.” Analysts like Zhang warn that a faster-than-expected aging population could deepen China’s economic growth concerns. In 2021, 267 million people were aged 60 and above in China as compared to 264 million in 2020. On the other hand, as per some demographers, the working-age population might fall to half by 2050. Not surprisingly, China reported that its growth in the last quarter of 2021 had slowed to 4 per cent. Other countries are also reporting a similar population decline. For instance, Japan and Germany also face the challenge of supporting aging populations with fewer workers.

But these countries have invested heavily in factories, technology and foreign assets. China, however, primarily depends on farming and manufacturing for its economic growth and both are labour-intensive sectors. Experts say one more major issue sets China apart from other such countries – the complicated legacy of its one-child policy. When the policy was first implemented in 1979, China’s population was fast approaching the one-billion mark. Local administrations forced millions of women to undergo abortions, terming the second pregnancies illegal as under the state law. In what many term as the history’s largest population control experiment, the policy reportedly prevented nearly 400 million births. Though it contributed to managing the Chinese population, the policy also had an unintended impact– the country has one of the worst gender imbalances in the world today as China has a patriarchal culture and people prefer to have a male child. As a result, fewer women are reaching the childbearing age.

Future predictions

So now the Chinese government is leaving no stone unturned to encourage more births and its tune has completely changed. Last year, more than 20 provincial or regional governments amended their family planning laws to include longer maternity leave for women. Eastern Zhejiang province has mandated 188 days of maternity leave for the third child while in the northern Shaanxi province, a third child can get the mother a-350 day paid leave. Other common incentives include cash handouts, and real estate subsidies.And yet, many Chinese women are not convinced. They say this will make their candidature for work in companies weak as establishments may not want to give their employees so many leaves.

Although recently Beijing promised to prohibit discrimination against working mothers, Chinese women assert that workplace discrimination against young mothers is quite common. Families that need two incomes cannot afford to have more children as it can mean a career setback for them. Also, culturally women are deemed the primary caregivers for children in China and having more children will add more work to their already hectic schedules. So, an increasing number of women are postponing marriage and motherhood and many do not want children at all.In fact, the government’s rigorous efforts are only adding to the anxiety around parenting and marriage. “Unmarried women are increasingly reluctant to get married. If you get married, you will have a more limited set of options,” said Zheng Mu, an assistant professor of sociology at the National University of Singapore.

Another hurdle is the high cost of raising children in China. High property prices and rising education costs in the country are a big deterrent for young people considering parenthood. In China, education is still considered the main path to a better life and parents spend most of their earnings on kids’ education. To encourage young couples to have more children, the Chinese government cracked down on the private tutoring industry last year, banning all for-profit after-school tuition centres. Will these measures be enough to bring China’s population back on track? Time will tell.