by Guido Santevecchi
GDP grew 3% in 2022, the worst result since 1976, but it’s the empty cradles that worry Xi Jinping: Last year, the death toll exceeded newborns by 850,000 units
China is in danger of growing old before it gets rich, economists and sociologists have been saying for years. The prediction is coming true: China’s population has shrunk by 850,000 in the past year as a result of the dramatic and steady decline in the birth rate, which experts say is now irreversible. The Chinese today number 1.411 billion, the National Bureau of Statistics in Beijing found.
In 2022, 9.56 million children were born in the People’s Republic, while 10.41 million died: the first time in over sixty years that deaths have exceeded births. It had happened in 1961, but in that calamitous year, China paid the price for the famine triggered by Mao’s failed industrial leap forward, causing millions to die of starvation. Now that China, the world’s second largest economy, is discovering that it is suffering from the same dark evil that is ailing the most industrialized and wealthiest countries: the declining birth rate. The Chinese are having fewer children: 9.56 million last year to 10.6 million in 2021, to 12 million newborns in 2020 to 14.6 in 2019.
UN demographers forecast that by 2025 India will overtake China as the world’s most populous nation. Other demographic curves suggest that India could overtake India as early as this year. Most importantly, at this rate, the Chinese population will fall to less than one billion (757 million in 2100 according to the most restrictive projections) by the end of the century, while the world population will increase from 2000 to 2000, from the current 8 billion to 11, with India at 1.5 billion. A change in demographic weight also means a change in power relations.
The economy is based on domestic consumption and labor: few children reduce both factors in the long run, to use the language of Beijing’s five-year plans. The most affluent working-age population aged 16-59 has declined by 40 million compared to ten years ago. It remains impressive at about 880 million, but will shrink again and rapidly, creating a new problem for the party state: elderly people who must be supported by a shrinking labor force. Again, this is no different transformation than the one we are already facing in the West, but so far China has relied on its enormous manpower for its rise and today to make the leap from the world’s old and no longer viable factory model. A mature society must adapt focus on domestic consumption.
Citizens over 65 now account for 13.5% of the total, compared to 8.9% in 2010. It is estimated that by 2035, the over-65s non-production Chinese group will account for more than 30% of the population, at 400 million. In this scenario, China will face tight labor markets, stagnant consumption, a healthcare system to be revolutionized to support the elderly, and tremendous pressure on the pension system. All dramatic problems that we in the West are already familiar with.
But the birth crisis in the People’s Republic has different origins than in the rest of the world: in 1979, concerned about the demographic bombshell that would have undermined per capita domestic product growth, the party implemented the one-child policy. In the 1980s, the walls of Chinese towns and villages were covered with red banners that read, “Raise more pigs, have fewer babies.” This policy was maintained with brutal impositions for almost forty years. The law forbidding Chinese people from having more than one child was repealed in late 2015. Not that Xi Jinping suddenly began to love large families: it is above all an economic and power equation. However, Chinese couples also proved at the time that they could count: raising children involves sacrifices, sacrifices and expensive, even in the nominally socialist People’s Republic, which promises shared prosperity. Raising a child from birth to age 18 costs a Chinese family 485,000 yuan, or 6.9 times the annual GDP per capita of an adult Chinese citizen. In this ranking, China is second behind South Korea, which has the lowest birth rate in the world. In the United States, raising a child to adulthood costs 4.11 times the average citizen’s GDP per capita; in Japan 4.26 times. The Chinese data is even more alarming when we look at the cost of the metropolis: a child in Beijing costs 969,000 yuan; in Shanghai 1 million.
Now Xi Jinping says that we will establish policies to increase the birth rate and counteract the aging of the population. The industrial metropolis of Shenzhen has just announced financial incentives for families with three children: up to 37,500 yuan (5,100 euros). The population decline, the loss of half a million newborns in a year, surpassed the GDP figure for 2022. Chinese growth slipped to 3%, falling short of the government’s 5.5% target for the first time. If we exclude 2020, held back by the outbreak of the pandemic, China’s 2022 economic outcome was its worst since 1976, when the country paid for the chaos of the Cultural Revolution.
In 2022, it was the Covid Zero policy that held back industrial, commercial and service activities with lockdowns and quarantines while the rest of the world had already decided to live with the consequences of the pandemic. Between October and December, when infections started to rise dramatically, growth halted: the fourth quarter resulted in zero growth compared to the previous one. The unemployment rate is officially around 5.5% (however urban youth unemployment is estimated at around 18%).
In general, we have achieved positive results in coordinating Covid-19 prevention and economic and social development management in 2022, said Kang Yi, director of the National Bureau of Statistics, this morning. Per warned that the basis for economic recovery is not yet solid, weighed down by the complicated international situation and internal pressures.
A 3% expansion in 2022 means China’s domestic product will reach 121 trillion yuan, equivalent to $17.93 trillion.
For many other countries, this number would be more than acceptable under these tragic circumstances with hundreds of millions of infections and thousands of deaths per day. But not for Xi Jinping, who needs steady growth of over 5% per year to fulfill his promise to transform China into a modern and progressive socialist country in all social and economic areas by the end of this decade.
January 17, 2023 (change January 17, 2023 | 10:55 am)
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