China’s GDP grew only 3% last year, well below government targets and the country’s slowest growth rate since 1976 (aside from 2020, because of you know what). And somehow, that’s not even the worst news China got yesterday.
Driving the news: China’s population fell last year for the first time since 1961, declining by 850,000 people as the death rate sprinted past the birth rate.
- Between 1980 and 2015, China tried to fight excessive population growth with its one-child policy. It now faces the opposite problem and, in recent years, has tried to spur population growth as the nation rapidly ages.
- Government incentives encouraging people to have kids have been fruitless as young Chinese people have proven reluctant to start families.
And the problem is getting worse. China’s population is on track to dwindle even further. By 2050, the UN expects China to shrink by 109 million people—more than triple the decline it initially forecast in 2019.
Why it matters: The global economy depends on China’s massive population, which provides both the world’s largest pool of workers and a massive consumer base for everything from cars to commodities to luxury goods.
- The rapid decline of these workers and consumers will be a serious headwind for the global economy in the years to come.
- It could also create serious social problems in China, as fewer and fewer workers are asked to fund retirement and care for a much larger, ageing population.
Yes, but: This may not be bad news for everyone. India is set to surpass China as the most populous country this year (if it hasn’t already) and could step in to fill the gap it leaves behind.