Why China's population is shrinking

0:01 This chart shows China's birth and death rate over the last 60 years. For most of it, births are high. But in 2022, China had more deaths than births causing its population to decrease for the first time in 6 decades. To get why this is such a big deal, consider this: China is the world's manufacturing superpower and that's in large part because of its huge population. Nearly 30% of the country's economic output comes from manufacturing. Now, here's China's population over the last 60 years. Even after losing almost a million people in 2022 its population is still about as big as it's ever been: 1.4 billion people. But that's projected to shrink by nearly half by the end of the century. Over the years, China's growth and policies

0:48 have contributed to its population decline. Today, it's looking to reverse course to keep its population steady. The problem is it might be too late. In the 50s, under Mao, China experienced one of the most gruesome famines on record. 30 million people died. If we look at that on the birth and death rates chart you'll see a big spike in deaths. At the same time, the birth rate dropped causing the population to shrink. But, as often happens with wars, famines, and other major crises immediately after, there was a baby boom. Combined with global medical advances that decreased infant mortality rates China's average family now had 6 children. The birth rate had skyrocketed which the government saw as a big problem.

1:34 The Chinese leadership realized the population was growing too fast and something needs to be done. The government came out with a policy... They called it “Later, Longer, Fewer”. Later marriages, longer birth intervals, and fewer births. As a result, China's birth rate started trending down... but it wasn't low enough for China's leaders. And in 1980, they implemented the extreme one child policy which limited most families to one child. That policy was also backed up by very harsh measures. There were campaigns of sterilization... IUD insertion and induced abortions. And while these campaigns began during the Later, Longer, Fewer era they were at their worst under the one child policy when China sterilized 20 million men and women

2:22 and induced nearly 15 million abortions in a single year. But China had accomplished its goal. Population growth was under control. Except, as China would soon realize these restrictive policies worked a little too well. In order for any population to stay the same size in the long run each couple needs to have, on average, 2.1 children. This is called the replacement rate. The idea is that one child replaces one parent and that 0.1 makes up for children who die before they become adults. But China has had a fertility rate that's far below 2 for over 3 decades. To bring that up in 2016, China finally ended the one child policy. And after briefly trying out a three child policy,

3:08 in 2021 they finally let families have as many children as they'd like. But it hasn't worked. One big reason is the unique family structure produced by the one child policy. We're looking at what's called a 4-2-1 family structure with a couple having 4 parents above them and 1 child below. Most countries have diverse family structures some with 3 kids, others with none. But with China's 4-2-1 model millions of only children are under increasing pressure to care for their aging parents and elderly grandparents. And this can make having multiple children even harder... especially as the cost of living keeps rising. A recent survey revealed that more than 50% of young people don't want more than one child

3:55 because of financial and work pressures. We have seen cash subsidies for additional birth longer maternal leaves... subsidies for kindergarten and all sorts of monetary support. Well, the thing is, almost none of them have worked because having a child is exceedingly expensive and it's a lifelong commitment. And so it's really actually hard... to put a price on this. But China's population crisis isn't just about babies. It's also about the balance between young and old. If we look at population pyramids that show distribution by age... we see that countries like Kenya with rapid population growth look like this:

4:40 wide at the bottom representing a lot of new young people, and narrow at the top. Countries experiencing slower growth like the Philippines, are still triangular. But the difference between top and bottom is less pronounced. Now take a look at China, and notice the narrow bottom, so, fewer babies. And the heavy top: a larger number of elderly people. Which is a happy... outcome of our improvement in health and in standard of living but combined with sustained low fertility... that just produces sustained population aging. In 2050, that pyramid is projected to look like this. And that will further drive down China's population shrink its labor force and put the whole country in a uniquely difficult position.

5:30 In the 80s, China became a hotspot for foreign investment cheap manufacturing and exports. A generation later, it was shooting up the ranks and becoming one of the world's leading and fastest growing economies by GDP. But not only did that economic modernization drive birthrates down further, it also didn't translate to an equally strong economy for everyone. If we look at the GDP per capita the best indicator we have for standard of living China is much lower than these high income countries. China became a major world economy nearly overnight but it's still a middle income country. Many, especially in rural areas haven't benefited much from China's economic boom... and China has yet to develop the necessary safety nets to support its aging population.

6:17 To build the social infrastructure... like the social programs in health care and in pensions... It takes time. And that's getting... actually tougher with the economy that's slowing down. And a slower economy will inevitably redefine China's role in the world as a manufacturing superpower. What this means for China, for the world is that the resource constraints from within... would also constrain Chinese ambition... and its global reach. In some ways, China isn't alone. A lot of Asian and European countries are experiencing population declines, too. What makes China different is how fast this all has happened.

7:03 It was only 40 years ago that China started leveraging its booming population to become an economic superpower... all while still trying to stem population growth. Now that China's population growth is officially over... China may have to rethink its future not just as a global superpower but for its citizens at home too.