China: Shrinking working-age population may hit global economy

According to projections released by the United Nations in July, it will start declining rapidly in the 2030s and shrink by more than 60 percent to 378 million by the end of the century, reports The South China Morning Post.

As a result of low fertility rates and increased longevity, populations in many developed countries are both ageing and declining, and China is not alone in experiencing these profound demographic trends.

“Trend growth is basically labour force plus productivity, and China is facing poor prospects for both,” George Magnus, a research associate at Oxford University’s China Centre and former chief economist at investment bank UBS, told the newspaper.

“There’s a 1:1 relationship between the change in the working-age population and economic growth. So with China’s [working-age population] falling, that GDP will be lower by the same amount each year on average, unless it can be mitigated by, for example, immigration, higher labour force participation by women and older workers, and stronger productivity growth.”