China's Demographic Turn

For centuries, China was the world’s most populous country. In 2023, India overtook it, according to United Nations estimates. China’s population began shrinking in 2022, a turning point with major economic consequences.

The one-child policy

From around 1980, China enforced a one-child policy limiting most urban couples to one child, with some exceptions, especially in rural areas. It was intended to slow population growth and speed development. It was enforced strictly, sometimes with fines and forced procedures.

The policy was relaxed to allow two children in 2016 and three in 2021, and most limits were removed. But birth rates kept falling. China’s fertility rate is now around 1, far below the replacement rate of 2.1.

Why births stayed low

Even without limits, many Chinese families choose to have few children because of:

• High costs of housing and education.
• Long working hours and intense competition.
• Rising education and careers among women.
• Changing norms around marriage and family size.

Economic effects

• Shrinking workforce: China’s working-age population has been falling since the mid-2010s.
• Rapid ageing: the share of people aged 60 and over is rising quickly. China is ageing faster than most countries did, and at lower income levels.
• Pension pressure: fewer workers support more retirees.
• Gender imbalance: son preference combined with the one-child policy produced more men than women in some age groups.

Responses

China is responding with automation, efforts to raise productivity, higher retirement ages and incentives for families, such as childcare subsidies. Economists debate how much ageing will slow China’s growth. Rising productivity and better use of its large, educated workforce could offset some of the effects.