By Bilal Hafeez 11-07-2019

Revised Demographic Forecasts for China: Key Takeaways (The Economist Intelligence Unit, 5 min read)


(You can read the article by clicking here)

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.

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