China’s population is shrinking while India’s is growing, but both economies face demographic woes

China is facing productivity challenges with an ageing population and shrinking workforce, while India risks missing its demographic dividend as its growing population overwhelms economic planning

Kavitha Yarlagadda

Published: 11:15am, 11 Sep, 2022

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India and China, the world’s two most populous countries with more than 1.4 billion people each, are facing rapid demographic changes in the coming decades that threaten their hard-earned economic progress.

China faces a shrinking, ageing population that will dampen its economic productivity while India’s challenges are the opposite – its population growth, much of it among the poor, uneducated and malnourished, will put increasing pressure on society and the state.

As the world’s largest democracy, India is projected to overtake China as the world’s most populous country next year, according to the latest annual UN World Population Prospects. Just three years ago, the UN projection was for India to overtake China around 2027. By 2050, China’s population is expected to have fallen to about 1.32 billion while India’s will have hit 1.67 billion.

For China, falling fertility is the main cause of population decline. Its total fertility rate has dropped from about 2.6 in the late 1980s, above the 2.1 required to replace deaths, to just 1.16 last year.

The country abandoned its one-child policy and began allowing couples to have two children in 2016 in response to demographic concerns, before expanding the threshold to three children last year. But the policy U-turn has had little effect in halting the population decline because most people have become used to having a smaller family, and few parents are choosing to have a second child.

Another reason is gender imbalance. After more than three decades of the one-child policy in a society that favours boys, there are, quite simply, fewer women of child-bearing age, a problem of “missing women” that has afflicted rural areas especially.

Why babies are no longer on every Chinese woman’s checklist

In response, Beijing has continued to introduce measures aimed at raising the birth rate, including encouraging flexible working arrangements and preferential housing policies for families. Some expect the government to eventually remove all limitations on the number of children a couple may have.

Researchers expect that, by around 2080, the number of elderly people in China will surpass those of working age. Defined as those aged from 15-64, this working-age population is expected to fall by 1.73 per cent annually.

To care for an ageing population with a shrinking workforce, China will inevitably need to devote more of its productive resources to the provision of health, medical and aged-care services.

This means China is looking at considerably slower economic growth and higher labour costs. Its low-margin, labour-intensive manufacturing will probably complete the move to labour-rich nations such as Vietnam, Bangladesh and India. China’s average labour costs are already twice those of Vietnam. Demand from countries like the US, a major buyer of goods from China, will migrate towards new and developing centres of manufacturing.

07:02

China tackles challenges posed by its ageing population

In contrast to China’s underpopulation worries, India faces the challenges of overpopulation – what should be a demographic dividend is looking more like a demographic nightmare at present.

In particular, the combination of a high birth rate and short life expectancy means that a large part of the population is young and dependent. This puts pressure on household savings and hinders the growth of capital formulation that is so important in supporting economic expansion.

What will it take for India to copy China’s demographic dividend?

Indeed, India’s population has grown beyond its capacity, presenting a major obstacle to economic planning and development. This overpopulation is putting pressure on infrastructure, resulting in poverty, unemployment, food shortages, a low quality of life, increased costs, social problems and a huge burden of unproductive consumers.

The main reasons for India’s overpopulation are child marriages, religion (dictates against birth control, for example), and a favouring of boys that leads many families with girls to keep on having children.

Many legislators have tabled private bills on population control but none has been passed. This is a society that still bears the scars of the 1970s sterilisation campaigns.

But birth control policies are not the only option. The government could also improve women’s education, introduce better family planning policies and incentives, and drive awareness with more campaigns and healthcare centres.

02:23

World population set to hit 8 billion, with India overtaking China as most-populous country

India has a sizeable working-age population, giving it the potential to become the next growth superpower, but it will need to work hard to raise the country’s standard of living to fully benefit from this demographic windfall.

The key is economic development. India’s economic reform strategy needs to focus on a few areas: the workforce, infrastructure, the growth model and global openness.

If an atmosphere can be developed to foster education, training and job creation for the millions of young Indians about to enter the workforce, India will have a major economic opportunity. With the working-age population set to tip over the 1 billion mark in the next 15 years, India will have the world’s largest workforce.

Outside the West, China undoubtedly possesses the best physical infrastructure, underlining its status as an economic power. India, for all its ambitions, is still a developing nation but it has a genuine chance here; by boosting investments and infrastructure, India can still grow.

Kavitha Yarlagadda is an independent writer based in Hyderabad, India