Why China must wake up to demographic reality

China’s headline economic growth figure for 2017, released last week, may have confirmed its economic resilience and prospects for dethroning the US as the world’s biggest economy. But another number – for births – is casting a shadow over its long-term growth potential.

According to the National Bureau of Statistics, there were 17.23 million babies born in China in 2017, a drop of 630,000 from a year earlier. That is a lot less than China’s National Commission of Health and Family Planning had expected, having estimated that the new two-child policy would push the number of births to more than a 20 million last year, even in a “low-birth scenario”.

The commission was wrong because Chinese couples, just like their counterparts in Japan and Germany, have become less willing to have babies as their income has risen, regardless of whether bigger families are allowed or even encouraged.

The conventional wisdom, that China, the world’s most populous country, has too many people, is no longer valid. The harsh new reality faced by the authorities in Beijing is that China’s population is ageing at a faster rate than previously imagined and the country’s shortages of workers, students and babies are set to worsen at an alarming rate.

Such demographics are set to have a far-reaching and long-term impact on Chinese economic and social development, with recent reports about pension fund deficits in a growing number of Chinese provinces just the tip of an iceberg of trouble.