China’s Ageing Population: A Global Paradigm Shift
Remy Szabo
China’s rapidly ageing population is poised to be a transformative force that will reshape the global order. As a manufacturing powerhouse, China plays a pivotal role in the world economy. In 2019, the country accounted for an astonishing 28.7% of global value-added manufacturing output, surpassing its nearest competitor, the U.S., which contributed 16.8%. This industrial dominance has shifted the epicentre of geopolitical power and competition from Europe to the Indo-Pacific.
Demographic Overview
China accounts for 17.7% of the world’s population. Its evolution into ‘the workshop of the world’ owes much to a demographic dividend fuelled by massive population growth during the second half of the 20th century. A demographic dividend occurs when a surge in population growth leads to a substantial increase in the workforce relative to dependents (children and the elderly). However, this advantageous demographic trend is now at a critical juncture.
The country's fertility rate has plummeted to an alarming 1.09 births per couple, well below the replacement level of 2.1 births per couple required to maintain a stable population. In 2022, China experienced its first population decline since the 'Great Leap Forward,' the infamous economic and social campaign led by the Chinese Communist Party from 1958 – 1962, with a staggering decrease of 40 million in the working-age population between 2019 and 2022.
Regional Trends
This demographic decline is not unique to China; it mirrors trends observed in neighbouring nations like Japan and South Korea. Japan has been a notable forerunner in this phenomenon, and its ageing has been well publicised. In 2022, Japan’s fertility rate reached a new low of 1.25. South Korea has the lowest birth rate, at 0.78 births per couple.
The exceptionally low birth rates in East Asia, even compared to other industrialised nations, cannot be solely attributed to family planning initiatives such as China's infamous 'one-child policy.' Instead, geopolitical analyst Peter Zeihan presents a compelling theory in his 2022 bestseller, "The End of the World is Just the Beginning."
Zeihan argues that industrialisation and urbanisation lead to declining fertility rates as societies transition from agrarian societies to densely populated urban environments. Raising children becomes more challenging in such settings, and the economic calculus for parents is inverted. The pace of urbanisation and industrialisation corresponds to the speed and depth of demographic decline, and East Asian nations have experienced these transformations swiftly and extensively.
Challenges and Implications
The consequences of this demographic shift are already apparent. With a contracting labour force, China faces challenges in maintaining and expanding its export-oriented manufacturing growth. The economic strength built on impressive industrial growth is now threatened, and China risks being trapped in the ‘middle-income trap.’
The concept of ‘Latent Power,’ explored by international relations scholar John Mearsheimer, emphasises the socio-economic factors contributing to military power. China’s latent power, rooted in its massive population and industrial system, has been a key driver of its global influence. However, if China’s population continues to age without radical economic and social reforms, the nation will become smaller, weaker, and poorer in the coming decades. The implications of this shift extend beyond China’s borders, promising profound and complex ramifications for the global economy and world order.
With China at its nucleus, the intricate web of global supply chains will face extreme disruption. This will impact the 120 countries heavily reliant on China for trade, reshaping the geopolitical landscape as China's economic and military capabilities diminish.
In this evolving scenario, international cooperation will be imperative to address the ripple effects of China's demographic decline. Collaborative efforts in trade, innovation, and socio-economic development will be crucial to mitigating the destabilising effects on the global economy.
The coming decades will witness a new chapter in international relations unfolding, shaped by the powerful consequences of China's ageing population. It is paramount that global actors strategize and collaborate to navigate the challenges and maintain equilibrium in the evolving global order.
Remy Szabo is a young professional working in International Affairs for an Australian NFP. He holds a Bachelor of International Relations and Bachelor of Commerce (International Business) from ANU, and a Graduate Diploma of Education from ACU. His research interests include Australian Foreign and Strategic Policy, and the role of ideology in world politics.
