China’s Population Crisis Threatens Economic Stability

China’s shrinking and aging population is poised to deliver a significant economic blow, with a declining workforce, rising dependency ratios, and strained social systems threatening the world’s second-largest economy. The country’s population fell to 1.408 billion in 2024, down 1.39 million from 2023, marking the third consecutive year of decline. A record-low birth rate of 1.0 total fertility rate (TFR) in 2023, coupled with an aging population—22% aged 60 or over in 2024—creates structural challenges that could halve China’s economic output by mid-century.

The shrinking labor force, down from its 2013 peak, is expected to reduce GDP growth by about 1% annually, as fewer workers support a growing retiree population. The old-age dependency ratio, now at 21%, is projected to hit 53% by 2035, straining pensions and healthcare. The property sector, accounting for 25% of GDP, faces a demand slump as fewer young people buy homes, exacerbating a crisis that has already destabilized developers. Youth unemployment, estimated as high as 46.5% in 2023, and rising living costs deter young couples from having children, despite government incentives like childcare subsidies and relaxed birth policies since 2015.

China is countering with automation, raising retirement ages, and boosting sectors like healthcare and the “silver economy.” However, limited immigration and a weak social safety net hinder progress. Globally, reduced Chinese demand could impact commodity exporters like Brazil, while a smaller consumer base may slow retail and innovation. Some analysts argue automation and policy reforms could mitigate near-term risks, but long-term challenges remain formidable.

Developing Story

China’s demographic crisis demands urgent reforms to sustain growth. Without significant policy success, its economic slowdown could ripple worldwide.