China’s Population Is Shrinking—and Graying. Here’s What It Means for the Future

It wasn’t expected to happen so soon, but it has been a long time coming. Earlier this week, for the first time in six decades, official statistics revealed a dip in China’s population.

At the bottom of a 10-point press release outlining notable figures of the last year, China’s National Bureau of Statistics announced on Tuesday that the country’s total population declined by 850,000 between the end of 2021 and the end of 2022. While for a country of more than 1.4 billion people, the difference is relatively small, it’s indicative of a problematic demographic shift for the country in which the old increasingly outnumber the young.

It’s not clear if COVID-19 played a significant role in deaths exceeding births last year in China, amid concerns that the government isn’t being transparent about the virus’ true death toll. But population contraction has long been in the cards for China, and further decline is expected in the years to come. “The pandemic has pushed the timeline probably a little earlier,” says Feinian Chen, a professor of sociology at Johns Hopkins University, “but this was going to happen within this decade anyway.”

“What is concerning is not so much the decline in sheer size, but rather rapid aging and the socioeconomic challenges of adapting to the rapid change in population structure,” says Shuang Chen, an assistant professor of international social and public policy at the London School of Economics. Experts are alarmed that, if trends continue unabated, China—a manufacturing, labor-focused, middle-income economy with little in the way of a social safety net—is headed for a crisis. By 2035, 400 million people—or over a third of China’s current population—are projected to be above the age of 60, which would put an unprecedented strain on the country’s infrastructure and resources for its elderly.

What’s the cause of China’s population downturn?

China experienced rapid demographic growth after World War II: its population went from around 540 million in 1949 to some 969 million in 1980. But more people meant faster consumption of a limited supply of resources. So in 1980, Communist Party leader Deng Xiaoping instituted the one-child policy, which was ostensibly in effect for more than 35 years before the limit was expanded to two children in 2016 and then expanded to three in 2021.

While enforcement of the strict birth controls has been uneven, China’s social experiment in family planning did achieve its initial goal. The country’s fertility rate steadily decreased since the 1970s, while life expectancy has gone in the opposite direction, rising from 57 years in 1970 to 78 in 2020, according to the World Bank.

Read More: China’s Aging Population Is a Major Threat to Its Future

But China also experienced rapid economic growth over the last few decades, and young people struggling for a foothold in its economy have been reticent—amid high living and education costs, extensive work hours for those with jobs, and few opportunities for those without—to have children, despite growing encouragement from the government. Unemployment among those aged 16 to 24 was at 16.7% in December, and women disproportionately stand to suffer from getting pregnant: the country ranks 102nd among 146 countries in the World Economic Forum’s Global Gender Gap Index.

Earlier this week, an April 2022 survey claiming that 80% of China’s college students wanted two children resurfaced on Chinese social media. The purported finding “shocked many,” according to state media outlet Global Times. One user reportedly remarked in dismay, “it can’t be true. Maybe those who want two children are those who don’t need to work and aren’t burdened with house bills.”

How does the demographic shift affect China?

Due to COVID-related lockdowns and real estate market slump, China’s economy grew by only 3% in 2022, the worst rate in nearly 50 years. Many believe the country’s low fertility rates and aging workforce may further threaten future economic growth—especially as state treasuries may struggle doling out pensions for the elderly.

With an economy shored up by low-cost labor, a decline in the workforce may slow down China’s economy, Yi Fuxian, who studies Chinese demographics at the University of Wisconsin-Madison, tells TIME over email.

But some demographers argue that catastrophe is not inevitable. “It would only be a crisis if you just carried on regardless,” says Stuart Gietel-Basten, a professor of social science at Khalifa University in Abu Dhabi. There are things the government can do to address the problem, and it’s already started to try.

President Xi Jinping said China will “improve the population development strategy,” in his speech at the National Party Congress in October, vowing to “establish a policy system to boost birth rates, and bring down the costs of pregnancy and childbirth, child rearing, and schooling.”

Read more: The World’s Future Is in the Hands of Chinese President Xi Jinping

The Chinese government has since rolled out programs to ease the burden on families. Some localities offer cash incentives to parents that give birth to a third child. But whether these programs will work remains to be seen.

Others point out that demographic trends are only one of many factors affecting China’s economy. It’s also about productivity, says Jin Keyu, a Chinese economist at the London School of Economics. Automation already substitutes for labor in many ways, Jin writes to TIME, and education-skill mismatch may be an even bigger problem: “You have highly educated students without the prospects of appropriate jobs for the post-industrialization knowledge economy.”

What does this mean for the global economy and world population?

As the world’s third-largest economy, obviously what happens in China will have global repercussions. “China’s labor force engaged in manufacturing is starting to shrink, meaning higher manufacturing costs in China will lead to high prices and high inflation in the U.S. and EU,” Yi tells TIME.

But while China’s population is now declining, the world’s population is still growing, albeit at the slowest rate since 1950, according to the U.N., which estimated last July that the total people on Earth would peak at 10.4 billion in about 60 years.

Read More: Global Population Size Should Not Be Cause For Alarm, But a Rally Cry For Change

The world’s population growth poses challenges to eradicating global hunger and poverty, as well as to mitigating climate change, but China is not alone in worrying about its domestic population decline and its increasingly skewed age demographics. The U.N. projects that 61 countries or territories will see their population decrease by 1% or more between 2022 and 2050, thanks to declining birth rates and outward migration. At the same time, the World Health Organization estimates one in six people worldwide will reach the age of 60 by 2030.

China may learn lessons from countries like Japan, Singapore, South Korea, Australia, and others in the Asia-Pacific that have already been facing these headwinds. Meanwhile, the U.S., which has so far been spared a shrinking population thanks to immigration, must nonetheless also deal with the increasing challenges posed by the “graying” of its people.