China Hits the Demographic Great Wall

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China Hits the Demographic Great Wall

To understand what will happen in the future, one needs to both identify trends and interpret accurately. That seems self-evident, and yet China’s leaders failed so them spectacularly at interpreting trends that the country’s economy is now facing a self-inflicted catastrophe.

China’s labor force is shrinking just when it needs more people to fuel its growth, and its population is aging so rapidly that the United Nations predicts that the percentage of China’s population aged 60 and older will triple (from 16.8 percent to 45.4 percent) by 2050. Even sooner than that, in 2030, the number of workers for every retiree will drop to two-to-one, from five-to-one today.

Let’s go back to see how this happened. China’s fertility rate—the average number of children born to a woman during her lifetime—reached its peak at 6.2 in 1965. Fears that China’s population would grow so fast that the country would run out of food were stoked by the 1972 publication of a Club of Rome report called Limits to Growth.1

As a recent article in Scientific American explains, “According to Shanghai Academy of Social Sciences economist Liang Zhongtang, who participated in debates about the policy’s adoption, the findings of Limits to Growth—though widely criticized elsewhere—swayed some of the decisions in China.2 Indeed, one influential proponent of the policy, Soviet-trained missile scientist Song Jian, applied theoretical methods borrowed from European mathematicians to generate wild population growth projections for China that helped sway leaders. . .”

In 1980, to prevent overpopulation, Chinese leader Deng Xiaoping imposed the notorious one-child rule on China’s families. Xiaoping saw a trend in population growth, combined it with bad information, and reached the conclusion that reducing the number of mouths to feed would lead to economic prosperity.

For the next 35 years, China harshly enforced the one-child rule, leading to forced sterilizations, loss of jobs and heavy fines for parents who broke the rule, and hundreds of millions of abortions according to the Chinese government’s own statistics. As a result, China’s fertility rate has fallen to somewhere between 1.2 and 1.6, depending on which source you believe. That is far less than the 2.1 “replacement rate” that is needed to keep a population from declining...

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