The demographics of the world’s most populous country is set to change as China will experience a negative growth after 2025, which will result in shortage of consumer demand, a Chinese economist has cautioned.
China’s population is set to peak in just four years’ time and the milestone will be marked by a significant downturn in consumer demand, said Cai Fang, a member of the monetary policy committee of the People’s Bank of China, the central bank. “When the total population enters negative growth (after 2025), there will be a shortage of demand,” Cai was quoted as saying by Hong Kong-based South China Morning Post on Sunday.
“We need to pay attention to the impact of demographics on future consumption,” he said. Cai’s comments came as China is due to release its latest census later this month.
According to a PBOC study released a few days ago, China should immediately liberalise its birth policies or face a scenario in which it has a lower share of workers and higher burden of elderly care than the United States by 2050.
In a rare frank appraisal, four researchers from the PBOC said the country should not interfere with people’s ability to have children or it will be too late to reverse the economic impact of a declining population. Since 2016, Chinese couples have been allowed to have two children.
“We should not wait for the effects of existing birth policies,” the researchers said in a working paper published early this week.
“The birth liberalisation should happen now when there are some residents who still want to have children but can’t. It’s useless to liberalise it when no one wants to have children,” it said. After implementing the controversial one-child policy for over three decades, China is facing a demographic crisis with a rapidly ageing population over 60 years, which according to official figures, has increased to 420 million in 2019.