Why China and east Asia’s ageing population threatens global Covid recovery

·3-min read
<span>Photograph: Xinhua/REX/Shutterstock</span>
Photograph: Xinhua/REX/Shutterstock

For many years China watchers have been concerned that its ageing population will slow economic growth, causing social as well as political problems. So today’s census data may be an alarm bell for leaders in Beijing.

But it is not just China that is witnessing this trajectory. Most countries in east Asia, even without fertility control policies such as China’s one-child or two-child policies, share the same predicament: how to continue economic growth while encouraging people to have more children?

This trend of slowing population growth, even population decline in some cases, matters not just for countries in the region. It also matters globally as economists are eyeing east Asia as one of the biggest potential sources of post-Covid growth.

Related: China’s population growing at slowest rate in generations

“Fertility in east Asia is much lower than most other low fertility countries around the world,” said Andrew Mason, a population economist of University of Hawaii. “This will lead to significant population decline, lower standards of living, slower GDP growth, and serious fiscal challenges.”

Today’s census data from China showed the population grew at the slowest rate in decades, with the over-65s age group increasing much faster than the 0-14-year-olds. China is far from alone. In neighbouring Japan, the number of births in 2020 fell to another record low. In South Korea, the population has already begun to decline last year.

‘No magic fix’

Authorities across the region have been scrambling to come up with policies to reverse this trend over the years. Governments in South Korea and Japan have been incentivising couples to have babies with a generous stipend. And in China, Beijing expanded its decades-long notorious one-child policy to two-child in 2015.

In the last few years, an experiment of a three-child policy has been under way in the north-eastern Chinese province of Heilongjiang. However, some Chinese experts said that the result has been less effective than previously thought. This predicament has now led to a stronger call for a complete abandonment of birth control in China.

But whatever the policy, it’s already too late, said Prof Wang Feng of University of California Irvine, who specialises in Asian demographics. “Chinese authorities, for example, should have already abandoned its birth control policy. It’s outdated. What China needs is not another state policy, but rather a better and fairer society.”

Wang said that there are multiple reasons for east Asia’s population dilemma today, for example the lack of gender equality. In many patriarchal Asian societies, women are still expected to fulfil the roles of housework and child bearing, and this is not easy to change overnight.

But some are optimistic about the benefits of a slowing population. They argue it allows governments to invest more in the health and education of children raising future productivity. Some say that a smaller population could cancel out the negative effects of automation and artificial intelligence.

While automation means a less crowded job market, it could cause headaches for tax authorities who cannot tax machines, added Wang. “And according to various studies, automation is not reducing inequality. Profits go to capital owners, not workers.”

So policy options for governments across the region are rather limited, argues Stuart Gietel-Basten of the Hong Kong University of Science and Technology, whose research explores the causes and consequences of low fertility in east and south-east Asia.

“There is no magic fix to the low fertility rate issues. In the years to come it’s going to play out differently in different places across the region. But on the other hand, we have a lot more levers to pull now,” he said, this could include supporting fewer people to work more productively and delaying retirement age.

“But when these ideas are translated into policies, there could also be political challenges and consequences, wherever you are in the region.”

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