China census reveals depth of demographic challenge

Six years after her wedding, Haley Zhang has no plans to have a child. The 33-year-old marketing manager in Shanghai worries about parenthood’s effect on her career and the high costs of raising children.

“My supervisor has made it clear I must choose either my current position with a lot of growth potential or an inferior role with more time for family,” said Zhang. “There is no middle ground.”

Zhang’s reluctance to have one child — let alone two, as the Chinese government has officially encouraged since 2015 — highlights the demographic challenge facing the country.

The release of China’s ten-year census last week has prompted a national debate over whether the world’s most populous country is moving too slowly to avert a crisis.

The census for 2011-20 showed the population was growing at its slowest rate in decades. Births fell to just 12m last year, the lowest figure since the early 1960s when China was emerging from a catastrophic famine.

Ning Jizhe, director of the country’s National Bureau of Statistics, fended off calls from experts, the public and China’s central bank that family planning limits should be lifted entirely, saying existing policies — which to encourage most families to have two children — were sufficient. “As long as we have supportive policies in place, China’s birth potential can be realised,” he said.

The NBS pointed to the fact that China’s population estimate last year was 1.4bn for 2019, with the official figure for 2020 an increase of 11.7m.

The Financial Times reported last month that the government was poised to report its first year-on-year population decline in 60 years. According to people briefed on the census research, initial estimates suggested the 2020 population figure would fall to at least 1.37bn, but was revised upwards.

Ernan Cui, an analyst at Gavekal Dragonomics, the research company, said there were “some obvious inconsistencies” in the official data. “It’s even possible the actual population peaked in 2020, a decade ahead of schedule,” she said.

Sensitive data delayed

The census release was delayed more than a month as officials combed through the data. China’s official population figure is extremely sensitive, as it determines everything from family planning policies to fiscal outlays and is only disclosed publicly after government departments agree on a consensus.

Many ministries and regions seek bigger population figures to justify higher budgets, but the People’s Bank of China has warned that a reckoning is coming. The central bank argued in a report issued last month — after the census data’s postponement — that birth rates had been consistently overestimated. “We must realise that China’s demographic picture has reversed,” it said.

Chinese officials have acknowledged that there is little the country can do to reverse its ageing population. Analysts at Goldman Sachs noted that over the past ten years, the country’s “old-age dependency ratio” — the ratio of people 65 or older to its working-age cohort — increased from 11 per cent to 20 per cent.

The country’s fertility rate, the average number of children a woman typically has, stands at just 1.3, lower than the US at 1.7 and even Japan at 1.4, where population decline is a reality.

The concerns of women such as Zhang suggest that scrapping family planning policies will not be sufficient. As with millions of people in China’s cities, she lacks a local household registration, or hukou, that would entitle her children to attend government-subsidised schools in Shanghai. Zhang would instead have to send them to expensive private day care centres. “There isn’t a social safety net that enables women to have children,” she said. “Simply relaxing birth control isn’t enough.”

Bert Hofman, director of the East Asian Institute at the National University of Singapore, said he expected China’s population to “start to decline [this decade], and [do] so for the rest of this century”.

But he added that “demographics is not GDP”, noting that China has been dealing with a shrinking labour force since 2012 while still achieving strong economic growth.

Between 2010 and 2020, China’s working age population fell more than 3 per cent to 968m, but higher education rates, technological advances and adjustments of the retirement age will help boost productivity.

“In some senses, China’s population trajectory should be welcomed,” Hofman said. “A population of half its current size will be far less of a burden on China’s local environment, its water resources and its limited land.”

Many analysts, however, believed the government needed a greater sense of urgency. Huang Wenzheng at the Center for China and Globalization, a Beijing-based think-tank, said the official population increase had given authorities “a false sense of security”.

“The latest census has sent a message that there is no need for a major policy shift,” he added. “That creates a time bomb.”

Questions over quality

Sceptics have also pointed to inconsistencies between the NBS’s annual data sets and its ten-year census.

The 2020 census reported that China had 255m people aged 14 or below at the end of last year. But annual birth figures for 2006-20 added up to 239m — a discrepancy of 16m.

“This goes against common sense,” said Zhuang Bo, chief China economist for TS Lombard, the research group. “The government must significantly adjust the numbers to make the demographic statistics consistent.”

Such inconsistencies are common, and officials have argued that census figures were more accurate. The 2010 census, for example, found 38m fewer people aged 14 and under than annual surveys did.

The NBS also did not report an official death toll for 2020, which could shed light on the damage from the coronavirus pandemic, which peaked in China early last year.

Arguments over the quality of China’s demographic data have fuelled concerns that the government’s population policies were based on inaccurate projections.

When the State Council unveiled the nation’s long-term demographic development plan in 2016, its goals for 2020 included a population of 1.42bn and fertility rate at 1.8, far above the current figure of 1.3.

“What matters is not whether and by how much China’s population exceeded 1.4bn [last year], but the plunge in birth rates that could continue into the years to come,” said Huang.

Additional reporting by Xinning Liu in Beijing