The Demographic Decline of China
Introduction
Over the past half century, China has experienced massive growth—from the world’s 10th largest economy in 1980 to the number two spot today. It boasts a massive and expanding military, advanced technology, and a wide range of natural resources. Perhaps though, the greatest Chinese asset is the Chinese people, 1.4 billion of them to be exact. While the U.S. is still ahead of China as the world’s economic power and its military continues to have an edge, its population of 340 million is dwarfed by the behemoth of the Chinese population of 1.4 billion. That’s at least 4 Chinese people for every American. China’s population has been key to its strength: the economic output of a Chinese citizen per year is $12,600, which is far below the U.S. average of $82,700, but since there are 1.4 billion Chinese people, the total economic output of the country is around $18 trillion and that’s much closer to the U.S. total which is at around $29 trillion. If China had America’s civilian to active military ratio (0.4%) then it would have an active military of 5.4 million—giving it the potential to overpower the U.S. active military which stands at 1.4 million. With such a large population, it’s no wonder that China has made incredible strides in AI and quantum computing with its incredible supply of human capital. The country is still seen as the world’s factory as it has an overabundance of cheap labor, and it remains one of the world’s largest markets. However, although China has benefited massively from its large population, its demographic future is in danger.
The One Child Policy
China’s size is a massive challenge to the U.S. right now, but in the long run China will eventually lose its massive demographic advantage. China’s population may be big, but it has a bigger problem: it is shrinking rapidly. By 2100, studies estimate that China’s population will shrink to around 525 million people, which is a decrease of over 50% from its current population. That’s an incredible loss of educators, workers, soldiers, and leaders. But why such a dramatic decline? The answer goes back to the one-child policy under Deng Xiaoping which started in 1979. The belief then (which is still held by some people now) was that the world’s resources could not support the massive increase in population and that there should be some method of population control. With China’s rapidly expanding population, there were fears of widespread famine and unrest; thus, the Chinese government enacted the one-child policy under which every family could only have one child. To enforce this policy, Chinese officials would fine families and deny benefits for 2nd or 3rd children. In some cases, there were forced abortions and sterilizations. Because Chinese couples were limited to one child, many chose to get rid of their first child if it was a girl or disabled since a healthy son would bring in more wealth and pass on the family name. Many of these babies were adopted by foreign families, with U.S. families adopting over 80,000 Chinese babies over the past 25 years.
The policy was effective, as fertility rates plummeted from 6.5 children born per woman in 1968 to 1.7 children born per woman in 2015. It worked a little too well, however, as the Chinese government began to worry about a decreasing population instead of overpopulation, leading the government to change the policy in 2015 to allow 2 children born per family and then raise that limit to 3 children per family in 2021. However, fertility rates did not increase, instead they continued to decline. China’s fertility rate today stands at 1 child born per woman. To demonstrate how devastating that number is, imagine you have 100 Chinese people who are all married. Now because half of those 100 are women that means that 50 women will have 50 children if they all have 1 child per woman. Again, only 25 of those 50 children will be women who will then each have only one child. Again, half of these 25 children will be women who will then give birth to 12-13 children. Thus, within 4 generations, the number of people per generation decreases from 100 to 13, decreasing by 87%.
Lingering Problems
Although the one-child policy is gone, the question as to why Chinese couples are not having kids with their newfound freedom persists. There are multiple reasons behind this: the legacy of the one-child policy, wide-spread access to abortion and contraception, late marriages, rising divorce rates, and a high cost of living. The gender imbalance caused by the one-child policy (there are about 25 million more men than women in China) also is a factor as there are less women to get married and have children. There is also a sense that the demographic problem is a vicious cycle. Since demographic decline will contribute to economic decline, more and more people will feel the pressure to avoid the expense of children, and thus indirectly cause greater economic decline, and thus further enforce demographic decline.
Can China stop the demographic decline? The data is shaky. There exist multiple provinces that have natalist policies (the national government has so far only encouraged and set guidelines for marriage and having children). In Hangzhou, the capital of Zhejiang Province, parents who have a 2nd child will receive a sum of 5,000 yuan ($693) and 20,000 yuan ($2,775) for a 3rd child. In Shenzhen, a city in Guangdong province, couples that have a 3rd child will receive 19,000 yuan ($2,636). In Jinan, the capital of Shandong province, the local government has promised a monthly subsidy of 600 yuan ($83) for a 2nd or 3rd child until the child turns 3. In Liaoning province, officials have offered nurseries subsidies of up to 365 yuan ($50) per child per month that they take in. There has also been an extension of maternity leave throughout the provinces beyond the mandated amount of 98 minimum, with most provinces now providing 158-180 days or 5-6 months of maternity leave. Furthermore, there has been an increase of fertility care in health insurance. In Beijing, there have been 16 new reproductive health clinics. The Guangxi Zhuang Autonomous Region has started providing IVF and other fertility services as part of its provincial health care system and Gansu province is now reimbursing fertility treatments. The national government has also made it a point to encourage marriage and childbirth. In some municipalities, local officials call young married women on a regular basis to inquire when they intend to have children. Slogans from government media which used to be “one child is good” are now “have more children for the country”, “three children is just right”, and “childbearing is a family responsibility and social duty.”
The European Example
Despite this messaging and the expansion of pro-natalist policies, there has not been a significant increase in births. It may be too early to assume that these policies are a failure since the Chinese government dropped the One-Child policy only about 10 years ago. Would it be wrong to assume that eventually the childbirth subsidies will increase to such a level that will lead to a significant rise in births? How could one even think that these policies will not work? The answer is simple: look at Europe. European countries have several advantages over China in the scope of child rearing. There is no history of the one-child policy and there is a good work-life balance and extensive maternity and paternity paid leave. Europeans outrank China on the Human Development Index and on the Happiness Index. Europeans are healthier, happier, richer, and have a better standard of living than the Chinese. To have a child in Europe is far easier than in China—there is no anti-child culture and it is more affordable for the Europeans to have children. In Hungary, perhaps the most generous in terms of natalist policies, a woman under 40 can apply for an interest-free loan of €30,000, and repayment is forgiven once she has her 3rd child. Women who have 4 or more children are tax exempt. Larger families also have access to daycare and housing subsidies and grants to purchase 7-seater vehicles. For large families, France offers 400 per month, while Germany offers 250 euros per month per child. In Sweden, Norway, and Iceland, parental leave can exceed 400 days. Yet for all of these pro-natalist policies, Europe’s TFR (Total Fertility Rate) has continued to decline. Even in the case of Hungary, with its generous policies, it has experienced a decrease from a recent increase of 1.6 to 1.5.
The theory is that since Europeans, even with their higher quality of life, happiness, and economic opportunities, have not been significantly affected by their countries’ generous pro-natalist policies, then it should hold the same for China. Currently, the economic situation makes copying these European policies unsustainable in China. Local governments are already in trouble as they face billions in debt due to a collapsing housing market. To increase spending for natalist policies that fail to turn the birth rate around may be an unwise choice for local Chinese governments. The pressure to work, the shadow of the one-child policy, the bitterness at the government for its hypocrisy, and limited economic means and social mobility all make the natalists policies ineffective at turning the birth rate around. Thus, for the foreseeable future, the Chinese population will continue to decline, regardless of what the government does.
Implications for the U.S.
The next question is what does China’s demographic decline mean for the U.S.? If the global trend is declining population due to lower birth rates, then why would the U.S. not be in the same situation as China? Our TFR is 1.6, much higher than China’s 1, but still far below the replacement level of 2.1, thus meaning that by natural births and deaths, the U.S. population is in decline. In comparison to Europe and East Asia, it has few policies that one could call pro-natalist. There is no federal mandated parental leave in the U.S., no universal healthcare, and no nation-wide federally supported day-care system. Yet, there is little concern in the U.S. about falling birth rates since the population has been increasing due to immigration. In 2023, the U.S. foreign-born population reached a record 47.8 million people, which make up about 14.3% of the population. The U.S. is an attractive destination as it is seen as a land of upward social mobility, opportunity, wealth, tolerance, and freedom. Every year since the 1990s, the U.S. has let in over a million people every year. If immigration remains high and the TFR is stable, the U.S. population will reach 430 million by 2100, an increase of over 20%. Historically, immigration to the U.S. has been high and assimilation into American society has generally been successful. In general, by the 3rd generation of immigrants, English fluency is achieved completely while the foreign language of parents and grandparents is weak or unknown. Furthermore, by the 3rd generation, most children of immigrants identify more as American than their parents or grandparents. This has to do with the fact that American identity is defined not along ethnic lines, but along active participation in American society. Furthermore, the process to become a U.S. citizen is relatively straight-forward, and it takes at least 5 years to become a citizen. Lastly, anyone born on U.S. soil is assured citizenship, making all children of immigrants born in the U.S. automatic citizens, further integrating immigrant families into U.S. society.
Put this in contrast with China, where the number of foreign born is less than one million (excluding immigration from Taiwan, Macau, and Hong Kong). Even though China has experienced massive economic growth, it has brought in few immigrants. This is because there are strict rules affecting migration. The logic behind such rules is as simple as China’s status as an authoritarian state, and the fact that accepting large numbers of immigrants causes social and political change that threatens the CCP’s power. Furthermore, Chinese identity is not identified by participation in Chinese society, but rather by Chinese ethnicity. Chinese citizenship can only be obtained when one is a child of a Chinese citizen. It is almost impossible to become a naturalized citizen in China without Chinese ethnicity. Given China’s authoritarian nature and its lack of a naturalization process, it fails to attract long term immigrants who want to integrate into and contribute to Chinese society. It is unlikely that China will change its immigration and naturalization policies, as to do so would relinquish control of its citizenry and change the very definition of what it is to be Chinese.
Conclusion
To summarize, China’s birth rate has dropped dramatically over the past 40 years, mainly thanks to the one-child policy. Local Chinese governments have begun to offer a wide variety of child and family-oriented benefits and subsidies. However, these policies have had little to no effect and do not come close to reversing the population decline. An examination of even more generous European natalist policies that have also failed to raise the birthrate, suggests that if China improved its policies it would be to no avail. In contrast, the U.S. population is set to increase—not naturally, but through immigration. China, in comparison to the U.S., is not an attractive destination for migrants, given its authoritarian nature, lack of naturalization process, and a cultural understanding of Chinese identity firmly rooted in ethnicity.
What does this mean for the U.S. and China in the years to come? Looking at the year 2100, China will have lost much of its demographic advantage over the U.S. as the Chinese population will have decreased from 1.4 billion to 525 million. The U.S., in contrast, will have increased its population to 430 million, assuming continuing levels of immigration. In losing over 700 million people, China will experience demographic decline as it struggles to meet labor demands and is saddled with an increasingly aging population. There will be fewer Chinese workers, soldiers, leaders, doctors, teachers, and innovators to aid the economy and uphold the state. In contrast, the U.S. is much better positioned in the long run for economic growth as its population increases and thus labor and innovation increase. Of course, 600 million Chinese people still outnumber 430 million Americans, but America will not be stuck with the same problems that a declining China will have, and thus America is much better prepared to maintain its global position in the long term.
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