David Chao

Opinion | China’s shrinking, ageing population should drive its transition into a digital economy

Shifting demographics are not necessarily bad news for China, provided it continues to move away from manufacturing towards a more productive digital economy

Investment in services and technology, particularly those needed to support an ageing population, can ease workforce pressures and improve standards of living

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An elderly man carries a young boy at a park in Beijing on February 9, 2021. Births fell in China for the fifth year in a row in 2021, adding to fears that country will soon be left with a reduced and overburdened working-age population. Photo: AP

David Chao

Published: 3:30am, 5 Feb 2022

China’s National Bureau of Statistics recently published census data that showed the country’s population is ageing and its growth slowing sooner than anticipated. Last year’s population growth was the slowest since the Great Leap Forward in 1959-1961.

If births continue to decline this year, then China’s population could have already peaked, which raises longer-term economic and policy questions.

The most remarkable data point has been the drop in total births, which was as much as 11.5 per cent last year. There is evidence that the pandemic is partially to blame; in Hubei province, which was the epicentre of the Covid-19 outbreak in 2020, births decreased by 27 per cent in 2020 compared to a 1.6 per cent drop the previous year.

Covid-19 aside, the number of marriages and women at peak child-bearing age have also been declining for years. Families cite several deep-rooted socioeconomic issues as reasons for deciding to delay marriage or having children, including the high cost of living and child rearing, onerous work hours and obligations of elderly care. A 2021 survey indicated that Chinese women were willing to have just 1.8 children on average, below the 2.1 replacement level needed for a stable population.

This demographic challenge is not just a problem in China. Birth rates across the globe were falling even before the pandemic, including in developing markets. Even India, where the GDP per capita is around one-fifth of China’s, reported in 2021 that the country’s birth rate had fallen below the replacement level for the first time on record.