China's population declines for 2nd year in row, how it will impact economy? India remains at number one

For the second consecutive year, China's population has experienced a decline, while India maintains its position as the most populous country.

The second-largest economy in the world, China, has observed a continuous decrease in its population, raising concerns about its future development. Last year, China lost its top position to India in terms of population, and this trend persists.

Government data released Wednesday showed that China’s overall population by the end of 2023 was 140 crore 97 lakh, down about 21 lakh people from 141 crore 18 lakh in 2022. The year-to-year decrease may seem relatively small, but experts say it represents a significant trend for the country and a major threat to its plans for growth.

The population of India is 142 crore 50 lakh and it remains at top place ahead of China.

These figures show that the birth rate in China is declining and the country is rapidly urbanising.

China says its birth rate has dropped to 6.39 per 1,000 people, which is a record low.

After the controversial one child policy from 1980 to 2015, China had in the past years resorted to subsidies and other policies to encourage families to have children.

However, these tactics did not have any major impact.

The birth rate is continuously decreasing amidst the increasing awareness about quality of life and career among women in the country.

China’s birth rate last year stood at 6.39 per thousand, down from 6.77 per thousand in 2022, according to the National Bureau of Statistics, as high costs of childrearing and record-levels of youth unemployment appear to be leading to an increasing aversion to having kids.

Impact on economy

China has been beset by a series of economic problems, including investor exodus and deflation. The shrinking population will now force Beijing to make some structural changes in its economy and reshape sectors including healthcare and housing.

Over time, a deficit in the number of factory workers in China, driven by a more educated labor force and a declining population of young individuals, might lead to increased expenses for consumers beyond China. This could potentially worsen inflation in nations such as the United States, which heavily depend on imported Chinese goods.

While all countries will reach a point where their population will begin to decline, China’s trajectory has been shaped by its draconian policy of the mid-1980s that permitted only one child per family. This not only skewed its sex ratio through gender-selective abortions but has led to the precipitous shrinkage of its population. 

Since 2016, couples have been allowed to have two children, but it is proving difficult to change attitudes which are born primarily out of concerns relating to the cost of rearing children.