A superpower denied? China’s economic growth rate will slow appreciably going forward, as will its pace of development and innovation, thanks to a demographics nightmare. And the world needs to take notice.
Western media outlets frequently seem awed by both the fact of China’s economic success and the way leadership in Beijing has managed it – the country’s rate of growth, despite even the Covid pandemic; the torrid pace of modernization; and perhaps especially the ability of its centrally planned system to marshal resources for grand projects. Reporting about China, and many full-length books, often combine that awe with not a little fear of the power implicit in such accomplishments. Behind the veil of such reporting, however, lies considerable evidence that China will increasingly face economic problems, chief among them, its rapidly aging demographic profile. One bit of errant central planning, Beijing’s long-held one-child policy, has come now in the 2020s to starve the economy of an adequate workforce and so raise the average age of the population that China is poised to lose much of its economic dynamism and face severe growth constraints.
The critical demographic measure in China’s case is the relative size of its working population. It, more than most economic measures, gauges the human resources available to meet the population’s current needs and importantly to support investment for future growth. Because Beijing’s one-child policy so limited birth rates for decades, China is losing on this front. The flow of new people into the workforce is falling short of the numbers retiring out of it. United Nations (UN) demographers calculate that already China’s workforce has begun to shrink even as the country’s dependent elderly population has continued to grow rapidly. Limited labor resources, absolutely and relative to the largely unproductive retirees, cannot help but limit the country’s economic options. Of course, labor power is not the whole story. Technological advances, especially artificial intelligence (AI), and productivity increases will allow more efficient use of China’s available human resources, but the demographic situation will impose constraints nonetheless, especially when it comes to the huge development projects that have awed so many around the world, including the so-called “Belt and Road,” as well as China’s military buildup.