In 2023, China’s population shrank for the second consecutive year, and the country reported a record low birth rate. The pattern signaled the intensification of a demographic dilemma that is expected to have a big impact on the second-biggest economy in the world.
China’s National Bureau of Statistics (NBS) said on Wednesday that the nation had 6.39 births per 1,000 people, down from 6.77 a year earlier. Since 1949, when Communist China was founded, the birth rate has never been lower.
In contrast to the 9.56 million babies born in 2022, there were about 9.02 million babies born. According to the statistics, the total population decreased by 2.08 million For sure, the steep drop.”Lawrence Hu, chief China economist at Macquarie Group, said that while the structural downtrend is still there, the sharp decline from the previous year should be partially attributed to the lockdowns and new births will probably rebound in 2024.” from the previous year from the previous year to 1.409 billion in 2023.
The demographic change in the nation is occurring at a time when economic growth is faltering. China’s GDP expanded by 5.2% last year, according to the NBS, above the government’s objective of about 5%.
Although China’s GDP increased by just 3% in 2022, this expansion represents a major improvement over that year. Nevertheless, it remains one of the worst economic performances in the nation’s history going back more than three decades.
Following the data announcement on Wednesday, Chinese markets fell. The Hang Seng Index for Hong Kong ended the day 3.7% down. The 300 large equities listed in Shanghai and Shenzhen make up the CSI300, which saw a 2.2% decline. 2023 was a terrible year for both indexes, falling by more than 10%.A number of economic issues, such as deflation and investor flight, have plagued Japan
. Beijing’s economy will now need to undergo certain structural adjustments as a result of the population decline, particularly the housing and health care sectors.
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Based on NBS statistics, Reuters calculated that new home prices dropped in December for the first time in almost nine years. Additionally, property investment decreased 9.6% in 2023 compared to the previous year, which was a second consecutive year of decreases.
The most recent statistics follow China’s population loss in 2022—which observers said was the nation’s first since the famine of 1961 brought on by previous leader Mao Zedong’s Great Leap Forward—for the first time in decades. India overtook China as the nation with the largest population globally last year.
Despite decades of restrictive birth policies, the government is pushing for more married couples to have children, which is why the birth rate is going down.
Fewer individuals are getting married and having children.Since “its impact on the economy – the economic slowdown, the high unemployment rate among young people – all of that has discouraged people from being married and having kids,” he said, the Covid-19 pandemic most certainly also had an impact on the current trend.
The population in China is aging quickly and the birth rate is declining. This presents the government with two challenges: it must pay for health care and pensions for the elderly while sustaining economic growth in a country where fewer people are of working age.
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The “economy of silver”
The number of people working in China, defined as those between the ages of 16 and 59, fell by 10.75 million in the previous year, contributing to the country’s continued decline. Meanwhile, the population of people over 60 kept growing. Nearly 297 million people, or more than one-fifth of the population, are currently in that age range.
As part of top-down initiatives to address the difficulties of providing care for an increasing number of senior citizens, China’s highest administrative body, the State Council, published instructions this week to expand the so-called “silver economy.”
Companies in a variety of industries, such as housing, healthcare, and banking, are urged by the rules to customize their services and goods for senior citizens. It further stated that land development and local government funding ought to back facilities for senior citizens.
Growing the “silver economy” is being urged in response to demonstrations thousands of senior citizens staged in at least four cities last year against monthly health benefit reductions implemented as local governments struggled with budget shortfalls.
Data released on Wednesday also showed that China’s death rate and total number of fatalities increased in 2023 over the previous year. Authorities recorded 11.1 million fatalities and a death rate of 7.87 per thousand persons. 10.41 million people died in 2022, translating to a mortality rate of 7.37 per thousand.
A significant Covid-19 epidemic occurred in China last year; infections began to spread throughout the nation in late 2022 as a result of the sudden easing of strict pandemic measures. Despite the government’ defense of their Covid-19 data transparency, experts claim China has not disclosed comprehensive data on fatalities.When compared to smaller, gradual increases during pre-pandemic years, the 690,000 additional fatalities in 2022 are “noteworthy,” according to CFR’s Huang.
He said that the comparison demonstrates a noticeable rise in deaths during the Covid era. The cumulative increase in mortality between this year and last, he pointed out, falls short of scientific forecasts of fatalities during China’s reopening. Nevertheless, the most recent data “may not fully capture the actual number of Covid-related deaths,” he continued.
Returned data on young unemployment
After a five-month break, the NBS unexpectedly reinstated the monthly youth unemployment rate.According to Premier Li, China’s GDP expanded by roughly 5.2% in 2023.Data on youth unemployment was withheld by the NBS in August following successive record highs of almost 21% in the midst of a wider economic downturn. The methodology was deemed in need of improvement.
The unemployment rate for individuals aged 16 to 24 in December was 14.9%, the report stated on Wednesday. About 62 million students were left out of the statistics, according to the NBS, whose primary responsibility should be “to study” rather than finding employment.
Reversing the 0.2% drop that occurred in 2022, retail sales climbed by 7.4% in 2023. Though they fell short of forecasts of 8% growth, December retail sales jumped 7.4% over the previous year. Sales of cars and medications grew less quickly, which was a major factor in the shutdown.
The contradictory evidence indicate that the government needs to implement additional stimulus plans, according to experts.The Swiss private bank UBP’s senior economist for Asia, Carlos Casanova, stated that “policy easing will continue to be desperately needed to ensure the economic recovery is secured in 2024.”
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