Beijing needs to play its cards right and avoid Washington's high-tech blockade to prosper despite its declining numbers
This week, China announced its first drop in national population since 1961, with the total number of people in the country declining by about 865,000.
Such a decline has been a long time coming, especially due to the legacy of the one-child policy beginning in 1978 and the country's continuing economic development. This year, India will become the world's most populous country, taking an important psychological marker away from Beijing. But how much does the impending population decline in China really matter? And will it have an impact on China's struggle against the US for geopolitical influence? The answer is: not really provided it can successfully transition its economy and take the right steps. After all, this decline isn't occurring in a vacuum.
Lower fertility rates are a product of modernity, a change in the way humanity lives and functions, and a reflection of our economic lives. Some time ago, family sizes were larger because life was different. Women were typically not part of the workforce, and more children typically meant more hands to help the family, especially for farmers in agricultural communities. In such a world, parents did not have to pay for children to be educated at university. Instead, working life for many started in their teens. This, combined with a greater emphasis on religion and less birth control, meant people generally had more children.
In the modern era, however, not only is having a large number of children no longer seen as an economic necessity, it is now viewed as an economic burden. This has led to smaller families. Most couples now both work, and every child in the family brings a financial cost and obligation. In developed countries, children no longer begin working at a young age but instead usually attend university, which requires investment and parental support. When they do reach adulthood and begin working, they do not contribute to the family unit any longer but effectively become individuals who earn for themselves.
These are changes that are felt throughout the whole world, and China, which has rapidly transformed from being a peasant agrarian society into an industrialized urban one, is no exception. This has caused a dramatic fall in the national fertility rate. While of course the one-child policy undoubtedly contributed to that decrease, the fundamental nature of the change is demonstrated by the fact that the cancellation of the policy has not made any difference in the declining birth rates. The Chinese work long hours and have significant commitments, urban living is expensive, and as a revolutionary society that since the Mao era has rapidly assimilated women into the workforce, women are also deeply committed to their professional lives and have little interest in being 'full-time' mothers.
Given these factors, policies to reverse the population decline - short of encouraging immigration -seem scant. But the question is, will it make a difference to China economically? Western economists argue that a shrinking and aging population means a shrinking labor force (once unrivalled in size) and, by extension, lower productivity. This spells the long-term demise for China as the 'factory of the world' and as an industrial giant, as countries such as India, with a younger and cheaper work force, become more suitable destinations. However, this does not mean China is doomed economically. Rather, this means it must succeed in transitioning to being a high-income, high-tech and consumption-driven economy before it is too late.
This, of course, is not an easy task, and most US analysts believe that Beijing has only a small window to maximize its own capabilities. They realize that China cannot be a low-cost manufacturer forever, and that its continued development requires moving up the value chain. This is why the US policy of containing China involves attempts to blockade China's advance in high-end technologies. After all, we should consider that China obviously isn't the only Asian country with a low fertility rate facing population decline. The reality is that the demographic situations are far worse in South Korea and Japan. The difference is, however, that these countries are already fully developed and thrive off of high-end manufacturing, as well as consumption. The US hopes to effectively block China's ability to reach that stage, and leave it stuck in the "middle income trap," rendering it unable to advance further due to structural economic flaws. This is why some of the more pessimistic China voices, such as Hal Brands, argue that US-China tensions will keep rising and a potential war may be more likely in the long run as China perceives its opportunities to avoid a decline are receding before economic and demographic trends run against it. How will China offset these population challenges? What policies will it enact? We'll just have to wait and see.