How Falling Birth Rates Will Affect the Chinese Economy
**China’s Population Decline, the First Since 1961, Could Put Economy and Growth at Risk**
China’s population experienced a decline for the first time since the great famine in 1961, 850,000 fewer inhabitants than the year before, according to a report published Tuesday, a decade before what Beijing and the United Nations expected. The drop in the birth rate was already in constant decline due to the one-child policy which was reversed in 2016, allowing up to three children per family.
Despite the government’s efforts to encourage couples to have more children, the cost of living and burden of caregiving felt mainly by women, have contributed to this trend. Experts believe that the population could be reduced by 40% by the end of the century, decreasing to below 800 million, when it’s currently at 1,412 million. These consequences could thereafter lead to a decrease in economic growth due to the lack of young, productive workers and a decrease in wages, which in return, could make it difficult to overtake the United States as the world’s largest economy.
In order to reverse this trend, the country needs to focus on innovation and technology-driven growth, in order to increase productivity and allow workers to accumulate new skills to help in this growth. Furthermore, China must encourage businesses to focus on labor efficiency, rather than labor output.
To avoid a decrease in economic growth and people living a good life, China must implement massive reforms in order to enhance age productivity, create acceptable working hours, reduce the burden of care that falls on women, allow parents to provide a quality education to their children and offer better financial incentives. The key to the future prosperity of China lies in the government’s capacity to successfully tackle all of these obstacles.