Demographic change in China

In January 2023 China announced it had entered an era of negative population growth. By the end of 2022, the country had 1.41175 people compared with 1.41260 a year earlier - a decline of 850,000. Chinese officials believe this fall in population is going to mark the start of a long-term decline in China’s population. China also has an ageing population with numbers over 60 growing to 19% of the population and set to surpass 300 million by 2025. 

The economic consequences of demographic change are interesting to speculate on.  As with so much data of this type, the population changes in China will not be evenly spread across the country. Some regions, often rural areas away from urban centres, are often the hardest hit by depopulation. Fewer people in the region mean less tax revenue is raised to pay for public services and there is a fall in demand for public services like schools and hospitals. Less demand for schools and hospital services sounds good but it can often adversely affect their provision. If, for example, the numbers in a school drop too much it means the school is forced to close and local people have to travel further to find another school.

Fewer people of working age in an area can cause a fall in the supply of labour. This is good in that it can reduce unemployment and can push up wages for workers but this means higher business labour costs along and the problem of skill shortages. This can push up prices and disrupt production.

The ageing population in China will change the demand for goods and services. This is particularly true in healthcare where older people are more likely to need health-related services such as hospitals and health-related goods such as drugs. Healthcare services are mainly provided by the state in China so financing them will be a challenge for the Chinese government. 

An ageing population is also going to have demand implications for areas such as housing, leisure facilities, tourism and media. Businesses such as those in the tourism sector, for example, are going to see a rise in demand for the types of holidays favoured by older people.

Possible questions to discuss with a class

1. What are the costs and benefits for China of a falling population?

2. Choose an industry and discuss how it might be affected by an ageing population?

3. Discuss the impact of demographic change on Chinese public services.