[Meanwhile] Chinese dream eclipsed by population

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[Meanwhile] Chinese dream eclipsed by population

The author is the head of the China Institute of the JoongAng Ilbo and CEO of China Lab.

China is a vast country with rich resources and a large population. The population of China during the Warring States Period (403 B.C. to 221 B.C.) is estimated to have been around 20 million. It stayed around 50 million for a long time after that, surpassed 60 million in the Ming Dynasty, and then rapidly grew during the Qing Dynasty.

The Chinese population passed 100 million in 1724, 300 million in 1812, and 400 million in 1901. At the time of the founding of new China in 1949, the population was 540 million. After Chairman Mao said that population was power, it continued to grow to 1 billion in 1982 and exceeded 1.4 billion in 2019.

But nothing lasts forever. After peaking at 1.417 billion in 2021, the Chinese population decreased by 850,000 last year. The downward trend started nine years earlier than the Chinese authorities’ expectations. The decline of China’s population is a historical event.

There are three repercussions of the decline. First, China has lost the title of “the world’s largest population” in a symbolic sense. According to the UN, India will overtake China in mid-April to become the world’s biggest population. So it is no longer valid to call China “the world’s largest developing country” or “the world’s largest consumer market.”

Second, China is losing the so-called “population bonus” it has enjoyed, which will deal a direct blow to the Chinese economy. The “population bonus” refers to the economic growth from an increase in savings rate as the workforce continues to flow in, thanks to a large economically active population and a smaller aging population. But China no longer can take advantage of these merits. The growth model of “the factory of the world,” thanks to the abundant cheap labor, won’t work any longer.

Third, the Chinese dream of overtaking the U.S. to become the world’s No. 1 is likely to go up in smoke. Chinese President Xi Jinping’s ambition to create the world’s strongest China by building a manufacturing powerhouse is likely to end up as a pipe dream as its labor force decreases. The Japan Center for Economic Research presented an interesting prediction on China’s GDP over the past three years. At the end of 2020, the center predicted that China’s GDP will surpass the U.S. by 2028. In 2021, it pushed back the timing to 2033. Then, at the end of last year, it said China will not be able to surpass America in GDP.

Chinese people often use the axiom, “My body has grown old already before I could get rich.” Perhaps, they may have to lament China is already on the path of decline before it could get strong enough to surpass the U.S.
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