Revised Demographic Forecasts for China: Key Takeaways (The Economist Intelligence Unit, 5 min read)
Using the most comprehensive, once-a-decade national census of Chinese population in combination with periodic mini-census studies, the Economist provides a neat update on demographic changes in China. After a relaxation of the birth policy to allow for a second child in 2016, there was a jump in fertility. But this was quickly exhausted and levels fell again in 2018. It is expected that the peak population is likely to be reached earlier than expected – in 2026, in fact, when the EIU predicts a population of 1.41bn. The population overall, similar to aggregate OECD levels, is aging and by 2030 almost 18% of the population will be over 65. There will be a drop in the labour force due to the lower working age population, meaning higher labour costs and a sharp need for increased productivity to maintain GDP levels.
Why does this matter? As well as facing domestic credit challenges, China now has to deal with a potentially falling working-age population, which will hit trend growth by lower immediate output. But also the population is ageing which will hit public finances. This is all happening faster than expected.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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