China's Demographic Dilemma: A Shrinking Population and Its Global Impact
A ticking time bomb for China's global ambitions
While the world often focuses on the tensions between China and the Trump administration, a far more critical challenge looms within China itself. The country is facing a rapid and unprecedented population decline, a phenomenon that will send shockwaves through its economy and society for decades to come.
This demographic shift could potentially derail China's long-term growth trajectory, jeopardizing its mission to become a global superpower on par with the United States. Moreover, the massive labor shortage it creates will have profound implications for global supply chains, affecting everything from Barbie dolls to electric vehicles.
"Demographic decline is almost impossible to reverse," warns Louise Loo, head of Asia economics at Oxford Economics. She estimates that China's shrinking workforce could reduce annual GDP growth by 0.5% over the next decade.
A Demographic Snapshot: Then and Now
In 1990, China's median age was a youthful 23.7 years, and the average woman gave birth to 2.51 children, well above the replacement rate of 2.1 needed to maintain a stable population. However, by 2023, the picture had dramatically changed. The median age had soared to 39.1, and women were having, on average, just one child.
China's population peaked in 2022 at 1.4 billion, but it has since begun to decline. The United Nations projects that by 2050, China's population will fall to 1.26 billion, and the age distribution will become even more skewed. Only about 10% of the population will be under 15 years old, while a staggering 40% will be over 60.
By 2100, China's population is projected to halve to 633 million. Just 49 million people, or 7.8%, will be under 15, while almost half, an astonishing 52%, will be over 60.
How Did China Get Here, and What Does It Mean for the World?
At the heart of China's current demographic woes are the population control measures introduced in the 1970s. A government campaign advocating for later marriages, fewer children, and longer gaps between births led to a sharp decline in the birth rate in the early 1970s.
However, fearing that these measures were not enough, the Chinese government formally limited most parents to one child in 1979. Authorities resorted to forced sterilizations and abortions to enforce the one-child policy, imposing crippling fines for excess births.
While the one-child policy was effective, it was perhaps too successful. Birth rates plummeted, forcing authorities to relax the policy in 2015, allowing parents to have two children in 2016, and then three children in 2021. Yet, birth rates have not rebounded significantly, aside from a small post-COVID blip in 2024. In fact, as population control measures were lifted, the birth rate dropped even further, from 1.77 children per woman in 2016 to 1.12 in 2021.
The declining fertility rate is likely a reflection of the rising cost of raising a child in China, which averages about $74,963, including food, health insurance, and tuition from birth to college graduation, according to a report from the Beijing-based YuWa Population Research Institute. The cost is even higher in major cities like Shanghai, where it can cost $140,747 to raise a child.
The Chinese government is throwing significant resources at the problem, but it may be too little, too late. Last month, Beijing announced a new subsidy of about $500 per year for the first three years of a child's life. On social media, some commentators suggested they would consider having more children if the subsidy were ten times greater.
Many prospective parents are deterred by the financial and lifestyle burdens associated with having children.
"I'm afraid of having children. I don't want kids. Raising one requires sacrificing too much, especially for women," said Zhao Zijuan, 35, an executive at a tech company in Hangzhou. "I have no intention of making that kind of sacrifice. Life is already exhausting, and I just don't want to make it even harder."
Zhao and her husband of seven years don't consider themselves outliers. Many of their friends and colleagues of a similar age have made the same decision. "Some people call me selfish, but I don't care. I just want to live life on my own terms," Zhao added.
Fewer Weddings, Fewer Children
In an attempt to boost the birth rate, the Chinese government is trying to convince the increasingly skeptical Generation Z to get married. In 2024, only 6.1 million Chinese couples registered for marriage, less than half the 13.5 million who tied the knot in 2013, according to China's Ministry of Civil Affairs.
Marriage rates are a good indicator of future birth rates, given that almost all Chinese children are born to married parents.
The Chinese state is persistent in its efforts at all levels. Universities teach "love courses" on dating etiquette, companies encourage their single employees to marry within a set timeframe, and local governments offer cash subsidies for marriages.
The government has even moved to curtail public discourse questioning the value of marriage, with state media criticizing talk-show skits that glorify divorce.
For those who do get married, the state continues to intrude. Family planning officials, once tasked with keeping the birth rate down, now pester newlywed women about their plans to have children and when their most recent period was.
An Aging Population
Not only are there fewer new Chinese citizens, but the older generation is living longer. China's life expectancy has been increasing, and the number of people in the elderly population is expected to double over the next 30 years.
China's aging population will put unprecedented strain on the country's pension system, which is largely funded through taxpayer revenue. By 2100, according to the U.N., there will be more people outside the workforce than within it.
The aging population could create a vicious cycle, as elderly people "will need the government to take care of them," said Yi Fuxian, a demographer at the University of Wisconsin at Madison. "But there will not be enough resources to support the children. Without enough money for childbearing costs, it will be very difficult to improve the birth rate."
A Shrinking Labor Force
For decades, China has played a pivotal role as the "world's factory," leveraging its immense labor force to manufacture goods cheaply and quickly. However, as the number of working-age people in China drops sharply, this era may be coming to an end.
"China's manufacturing capacity currently comprises 30% of the global total. But that will have to decline because China won't have enough labor productivity," Yi said. "The collapse of China's manufacturing capacity is unavoidable."
It's not just about the numbers; it's also about attitude. "China as the world's factory was primarily made possible through the generation born between 1960 and 1980. Those people were very willing to do manufacturing work and work in factories. But now, the younger generations simply aren't willing to work in factories," Yi added.
Other countries have addressed worker shortages through immigration, but Beijing, which values cultural homogeneity, has been reluctant to embrace this solution. Instead, China is increasingly turning to robots to make up for the worker and productivity shortfall, although automation will have limited impact in some sectors, such as service industries.
Factories and manufacturers are already feeling the strain. Labor costs have risen in the past few years for LC Sign, a Guangzhou-based digital sign manufacturer with around 200 factory workers.
"We are already facing competition," said Tony Zhu, LC Sign's head of marketing, pointing to sign manufacturers in India, Europe, and Mexico. "We aren't the cheapest option. Among our [foreign] competitors, our prices are a bit higher, so there's competition there."
LC Sign is not overly concerned about China's shrinking labor force—at least not yet. But "perhaps in the next five or ten years, we'll face this problem," Zhu said.
President Donald Trump's tariff regime aims to convince American manufacturers to move out of China and back to the United States, but this effort will be hindered as companies flock to wherever labor is cheapest, which is unlikely to be China.
However, "if China's manufacturing capacity collapses too quickly, other countries—India, in Southeast Asia, elsewhere—will not have time to build up their manufacturing capabilities and replace Chinese jobs," Yi said.
The impact on consumers worldwide will be less efficient manufacturing and more inflation for goods like iPhones and Nike sneakers.
The impact on China will be even more profound, Yi said. "It will be a challenge for China's economy, politics, society, culture, and national security—it will be a comprehensive challenge."
About This Story
Population data is broken down by age groups, based on data from Our World in Data. Values are as of July 1 of the indicated year. Projections from 2024 onward are based on the U.N.'s medium scenario. The working-age group includes those aged 15 to 59. China's legal retirement age for women is 55; China began a gradual increase in the retirement age on January 1.
