China is facing a shrinking population, a demographic trend that is expected to have negative repercussions on its economy, labor force, and fiscal policy.
Analysts predict that the working-age population in China will decline significantly over the next decade, leading to a 1% drag on GDP growth each year. The aging population is already putting strain on fiscal resources, with estimates suggesting that raising the retirement age could help alleviate some of the financial pressure.
The declining birth rates in China, as well as in other developed nations, are attributed to factors such as rising living standards, increased costs of raising children, and a culture of long working hours. This demographic shift is expected to have far-reaching consequences, including a shrinking workforce and increased burdens on healthcare and pension systems.
Chinese policymakers are focusing on enhancing productivity growth through digital solutions and technology development. To address the challenges posed by demographic changes, economists recommend measures such as raising the retirement age, providing tax rebates for child-rearing expenses, and promoting affordable housing construction.
Despite the economic challenges posed by its changing demographics, China’s economy has maintained strong growth over the years. Analysts believe that even modest growth rates can still lead to improvements in living standards for the Chinese population in the years to come.
