HONG KONG (CNN) — In 2023, China’s population declined for the second consecutive year, and the birth rate hit a record low. The trend marks a deepening of established demographic challenges and could have significant implications for the world’s second-largest economy.
China’s National Bureau of Statistics (ONE) announced on Wednesday that China’s birth rate per 1,000 residents was 6.39, down from 6.77 last year. The birth rate is the lowest since China was founded in 1949.
The office said there will be about 9.02 million births in 2023, down from 9.56 million in 2022. The total population will drop to 1.409 million in 2023, a decrease of 2.08 million from the previous year.
Larry Hu, chief China economist at Macquarie Group, said: “There is no doubt that part of last year’s sharp decline was due to lockdowns, and while the structural downward trend remains, newborns A rebound is likely in 2024.”
The demographic change comes as the country’s economic growth falters. The National Bureau of Statistics confirmed that China’s economy grew by 5.2% last year, higher than the government’s target of around 5%.
While the expansion represents a significant rebound compared with China’s economy growing at just 3% in 2022, it remains one of the country’s worst economic performances in more than three decades.
Chinese stocks fell on Wednesday after the data was released. Hong Kong’s Hang Seng Index fell 4.1% in the afternoon, hitting its lowest closing level since October 2022. The CSI 300 index of 300 large-cap stocks listed in Shanghai and Shenzhen fell 2.2%. Both indexes had a bad year in 2023, with losses of more than 10%.
China has been plagued by a series of economic problems, including investor outflows and deflation. The population decline will now force Beijing to make some structural changes to its economy and reshape industries such as health care and housing.
Wednesday’s data wasn’t entirely bleak. In the fourth quarter, China’s GDP grew by 5.2%, accelerating from the 4.9% growth rate in the third quarter. However, experts say the boost may not be long-term.
“There are two key factors: an unexpected but short-lived release of pent-up demand during the holidays (in the third quarter), and a low base effect in 2022 (in the fourth quarter),” said The Conference Board’s Center for Economics and China Business.
Montufar-Helu believes that China’s GDP growth will slow to 4.1% in 2024 due to growth headwinds such as the ongoing housing crisis and slowing consumption.
Reuters calculated based on data from the National Bureau of Statistics that new home prices fell the most in the past nine years in December, and real estate investment fell 9.6% year-on-year in 2023, falling for the second consecutive year.
The latest figures come after China’s population fell in 2022 for the first time in decades, which analysts said was the country’s first decline since the famine triggered by former leader Mao Zedong’s Great Leap Forward in 1961. Last year, China was overtaken by India as the world’s most populous country.
The slowdown in birth rates comes despite government efforts to encourage more married couples to have children after decades of restrictive birth control policies.
“Fewer people are getting married, and fewer couples want to have children,” said Huang Yanzhong, senior fellow for global health at the Council on Foreign Relations (CFR) in New York.
The Covid-19 pandemic may also have affected existing trends “because of its impact on the economy – a slowdown, high youth unemployment – all of which discourage people from getting married and having children”. ,” He said.
The decline in birth rates coincides with a shrinking active population and a rapidly aging population: China’s government faces a dual challenge, as it must confront the financing of health care and pensions for the elderly while trying to maintain population growth. Economies with smaller working-age populations.
China’s “Silver Economy”
Last year, China’s labor force aged 16 to 59 fell by 10.75 million people, further exacerbating ongoing shrinkage. The population over 60 years old continues to grow. More than one-fifth of the population, or nearly 297 million people, currently fall into this age group.
China’s top administrative body, the State Council, last week issued a series of guidelines to strengthen the so-called “silver economy” as part of efforts to address the challenges posed by caring for a growing number of elderly people.
The guidance urges companies in the housing, healthcare and financial sectors to adapt their services and products to suit the needs of older adults. Additionally, land development and local government funding should support facilities for older residents.
The call to develop a “silver economy” follows protests in at least four cities last year, when thousands of senior citizens took to the streets to protest against cuts in monthly health benefits by local governments to address deficits.
Data released on Wednesday showed China’s death rate and death toll also increased in 2023 compared with the previous year. Authorities reported a mortality rate of 7.87 per 1,000 people and a death toll of 11.1 million. In 2022, the number of deaths will be 10.41 million, with a mortality rate of 7.37‰.
China experienced a massive Covid-19 outbreak last year, with infections spreading across the country starting in late 2022 after strict epidemic controls were suddenly relaxed. Experts say China has not released comprehensive data on its death toll, although authorities have defended the transparency of its Covid-19 data.
The CFR’s Huang said the 690,000 more deaths last year compared with 2022 was “noteworthy” compared with the smaller and gradually increasing death toll in previous years of the pandemic.
He said the comparison highlighted the significant rise in deaths during the coronavirus pandemic. However, he added that the latest data “may not fully reflect the actual number of deaths related to COVID-19,” noting that the total increase in deaths between this year and last year was lower than scientific estimates of deaths during China’s reopening.
Return to youth unemployment data
In a surprising move, the Office for National Statistics has republished its monthly youth unemployment rate after a five-month break.
In August, amid the general economic recession, the youth unemployment rate continued to hit a record high of around 21%, and the National Bureau of Statistics suspended the release of youth unemployment data. The approach needs improvement, he said.
The unemployment rate among young people aged 16 to 24 was 14.9% in December, it was reported Wednesday. The National Bureau of Statistics said this figure does not include about 62 million students, whose main task should be to “study” rather than find a job.
It also added a new unemployment rate category for people aged 25 to 29, which hit 6.1% in December.
The housing crisis that is at the heart of many of China’s economic problems persists.
Home sales per square meter fell by 8.5% in 2023, falling for the second consecutive year, and investor sentiment remains weak.
Real estate investment will drop 9.6% in 2023 compared with 2022, which is also the second consecutive year of contraction.
The real estate industry plays a leading role in China’s economy, accounting for as much as 30% of GDP. Real estate assets account for approximately 70% of household wealth, the largest proportion.
In the years leading up to 2021, land sales to property developers accounted for more than 40% of local government revenue. The industry plunged into crisis about three years ago after the government introduced lending restrictions to developers.
Analysts expect demand for housing to fall in the coming years due to an aging population, which will weigh on the real estate sector and affect growth prospects.
There were other bright spots in Wednesday’s data, however.
Industrial production rose 6.8% in December, higher than expected. This is the fastest growth since February 2022. Industrial production will grow by 4.6% in 2023, up from 3.6% in 2022.
Fixed asset investment also exceeded market expectations, growing 3% year-on-year in December.
Retail sales increased by 7.4% in 2023, reversing the 0.2% decline in 2022. However, retail sales increased by 7.4% year-on-year in December, lower than the expected 8% growth. The slowdown was mainly due to slower growth in auto and drug sales.
Analysts said the mixed data pointed to the need for more government stimulus.
“Policy easing remains urgently needed to ensure economic recovery in 2024,” said Carlos Casanova, senior Asia economist at Swiss private bank UBP.
——CNN’s Marc Stewart contributed reporting.