A crisis is looming for China. The country’s workforce is greying and its population will soon begin shrinking – if it is not already. This is set to create big problems for the world’s most populous country. While there are signs China’s leadership is starting to take the demographic “grey rhino” seriously, Beijing has not yet grasped the enormity of the situation, taking it for granted China’s population of 1.4 billion is too big and sticking to a family planning policy that essentially punishes “excessive” new births. On one side of the crisis is a sharply falling birth rate . To maintain population stability, China’s fertility rate – the average number of children per woman – has to be 2.1, the figure dividing growth from contraction. If the rate drops to around 1.1, the next generation will be about half the size of the current generation. China’s fertility rate is about 1.5, according to official figures, although demographers argue it could be closer to 1.1. China’s looming demographic crisis Beijing’s decision to relax its stringent one-child policy and allow two children per family has failed to boost new births. Decades of economic growth and urbanisation have changed the country’s culture. Last year new births dropped to the lowest level since the Great Chinese Famine in the early 1960s. Like neighbouring Japan and South Korea, China is heading towards a shortfall in new births. The other side of the story is China’s fast-ageing population . Over the next decade, some 245 million baby boomers born in the 1960s will retire, according to official data, proving a huge test for the pension and health care systems. Outside Beijing, mainland cities are all trying to attract young, educated talent to support the local economy. Shanghai, which is known to have high barriers for granting residency, relaxed regulations last week to allow students from its top four universities to settle as permanent residents upon graduation. But while cities like Shenzhen and Hangzhou have reported steady inflows of people, many smaller towns and cities are suffering from an exodus of talent. Some 7 million statisticians will fan out across the country in November for the seventh census since the People’s Republic of China was founded in 1949. The once-in-a-decade event will offer the most accurate picture to date of China’s demographic situation. It will also be the perfect opportunity for Beijing to face reality and correct its policies.