China is Running Out of People, Again

Given current realities, it’s hard to turn away from the immediate economic and political situation, but sometimes an overflow of ignorance demands it. The claim that a country is facing a crisis due to a falling birthrate should be an immediate signal that you are not hearing from a serious person.

Those of us who learned arithmetic in grade school can quickly do the calculationsshowing that the impact of even modest rates of productivity growth swamp the impact of a declining ratio of workers to retirees. The demographic story also becomes more pathetic to arithmetic fans when we remember that workers also have to support children. Furthermore, people can and will choose to work later in life as health improves, fewer jobs require major physical demands, and we have vastly increased opportunities for remote work. (I’m not advocating raising retirement ages, I’m saying this will be a choice.)

Anyhow, our elites have never let reality interfere with the story they want to tell; hence we got a major frontpage article in the Washington Post warning about China’s “existential crisis,” that it is running out of people. The piece attributes much of the blame to China’s “disastrous” one-child policy, which it implies continues to have repercussions today even though it was ended a decade ago.

I’ll make three quick points here:

1. First, do the arithmetic yourself. China had a productivity growth rate of more than 5.0% last year. I wouldn’t bet on them sustaining that pace, but the elite media constantly tell us that AI is taking all the jobs. Another word for that is “productivity growth.”

Let’s suppose China’s productivity growth rate slows to 3.5%. In 25 years, when the kids who are not being born today would otherwise be entering the labor market, average output per worker hour will be 2.4 times what it is today.

China has around 3 workers to each retiree today. In 25 years let’s say the ratio falls to 2 workers per retiree. If we assume retirees consume 80 percent as much as working age people, this would still allow for a growth in consumption per worker and retiree of almost 70 percent over this period. That’s way better than most people have seen in the United States over the last quarter century.

If you don’t like my numbers, plug in your own, but please try to be respectful of reality.

2. It’s hard to attribute the low birth rate in China to its one-child policy. China’s fertility rate of 1.02 births per woman, is higher than the 0.74 rate in Hong Kong and 0.69 rate in Macau, where the one-child policy never applied. It’s also higher than 0.86 rate in Taiwan and 0.75 rate in South Korea. These low rates birth rates imply that there are deeper issues of both culture and government policy that make it difficult for woman to have and raise children that have nothing to do with the one-child policy.

3. Even if stories of economic collapse due to low birthrates are nonsense, there is real cause for concern here. In a good society people should be able to have children, if they want them. It’s possible that people in these countries simply are deciding in very large numbers that they would rather not have kids, but that seems unlikely. In any case, it is important that society provide the social support in the form of childcare, paid family leave, and anti-discrimination laws to ensure that women can have kids and still maintain a career without serious hardship.

Anyhow, since touting the imminent collapse of China due to its declining population is a major growth industry here, you can be sure that there will be many more pieces like this Washington Post article. Just remember, they are there to provide entertainment, not to provide information.

This first appeared on Dean Baker’s Beat the Press blog. 

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