The View | For China, a smaller workforce is no problem as long as good jobs are plentiful

To say that China’s population decline is irreversible is analytically imprecise. While falling birth rates are difficult to reverse, a population declines only when annual deaths exceed births. Thus, birth rates are only half the equation. Life expectancy in mainland China is lower than in Japan and South Korea, as well as Hong Kong, and this can be improved with better healthcare, particularly in the rural areas.

China’s population decline this year is likely to be steeper than last year’s, driven by Covid-19 deaths. But the population can be stabilised if people live longer, with life expectancy approaching that in Hong Kong.

The economic fortunes of nations are shaped by the proportion and quality of its workforce. China’s working-age population peaked in 2014 and has fallen over the past eight years. But its work force has also become more educated – with a record 10.8 million graduates last year.

Even with a shrinking working-age population, China sustained an annual economic growth of 6-7 per cent from 2015-2019. As youth unemployment grows – it was extraordinarily high in the second half of last year – job creation, particularly high-value jobs for graduates, may be a more critical factor for continued economic growth than the shrinking workforce.

China’s exit from zero-Covid was a necessary condition for job creation, but on its own, insufficient to boost broad-based consumption. Well-paying and secure jobs must come first. Faced with an uncertain future, people tend to save, rather than spend. Consumption is grounded in confidence in the long-term future.