China’s population continues to decline for the third consecutive year, despite government efforts and a slight uptick in births in 2024. This demographic shift presents significant economic challenges, including a shrinking workforce, strained pension and healthcare systems, and a decline in consumer spending related to childcare. The slight increase in births, attributed partly to the auspicious Year of the Dragon, is insufficient to reverse the long-term trend of a declining birth rate, driven by economic anxieties, changing social values, and gender inequality. The government’s decades-long one-child policy, while successful in curbing population growth, has contributed to the current demographic crisis, leaving the nation struggling to adapt to a rapidly aging society.
The government has implemented various measures to incentivize childbirth, including tax breaks, housing subsidies, financial assistance for in-vitro fertilization, and even the relaxation of penalties for single mothers. These policies, however, have yet to produce a significant impact on the birth rate. Local officials have been tasked with monitoring population changes and promoting a “marriage and childbearing culture,” in some cases resorting to intrusive inquiries into women’s reproductive health. Even private companies have joined the effort, offering financial incentives to employees who have children. Despite these diverse initiatives, the birth rate remains stubbornly low. The fundamental issues driving the decline appear to be deeply ingrained societal factors, rather than simply financial barriers to parenthood.
The economic consequences of the declining birth rate are multifaceted. The shrinking working-age population is placing an increasing burden on the already underfunded pension system, while the growing elderly population is straining the healthcare system. The closure of obstetrics units in hospitals, idling factories producing baby formula, and widespread job losses among preschool teachers highlight the ripple effects of the demographic decline across various sectors. China’s reported 5% economic growth in 2024, while meeting expectations, masks an underlying crisis of confidence among households grappling with the ongoing property crisis. This confluence of economic uncertainties further discourages young couples from having children.
The underlying causes of China’s declining birth rate are complex and interconnected. While rising costs of education and childcare are significant factors, they are intertwined with broader societal shifts. Young couples are increasingly burdened with the care of their aging parents, adding another layer of financial and emotional strain. Furthermore, the aspiration for a “Double Income, No Kids” lifestyle reflects changing priorities and a desire for greater personal freedom and economic security. For women in particular, the decision to have children is often influenced by concerns about gender inequality, insufficient legal protections, and the societal pressure to prioritize career advancement.
The impact of the declining birth rate extends beyond economic concerns to encompass significant social and cultural changes. The closure of kindergartens and loss of teaching jobs demonstrate the immediate consequences of fewer children. Companies are adapting to the changing demographics by shifting their product focus from infant care to products for the elderly. Nestlé, for example, is closing a baby formula factory and focusing on adult nutrition products in the Chinese market. Hospitals are grappling with declining demand for obstetrics services, leading to job losses and financial instability within the healthcare sector. The once secure career path in obstetrics, traditionally seen as an “iron rice bowl,” is now precarious.
China’s demographic challenge is not unique, mirroring trends observed in other developed nations where rising incomes and education levels correlate with lower fertility rates. However, the rapidity and severity of China’s population decline pose unique challenges. The government’s previous efforts to control population growth through the one-child policy have exacerbated the current situation, leaving less time to adapt to the consequences of an aging society. The recent slight increase in births offers little hope of reversing the long-term trend. With more than 400 million people projected to be over 60 within the next decade, China faces the urgent task of addressing the economic and social implications of a rapidly aging population. The government’s efforts to encourage childbirth have thus far been insufficient to address the deep-seated societal factors driving the decline in fertility.
