With China’s natural population growth approaching zero last year, Cai Fang, the former vice president of the Chinese Academy of Social Sciences (CAAS) and a member of the Central Bank’s Monetary Policy Committee, believes it is entirely possible that China’s population will reach its peak in 2022.
According to the 2021 population data released by China’s National Bureau of Statistics, the country’s total population was 1.41 billion at the end of last year, with a natural growth rate of 0.34 per 1,000.
Cai said in a speech at a conference on March 18th that the most prominent factor affecting China’s long-term economic growth is population.
The demographic factors are now creating constraints on the demand side. Cai noted, “In the past we had negative growth in the working-age population, which was a supply-side constraint. Now we may be experiencing negative growth in the total population, which will create a new constraint on the demand side.”
Cai added that with the weakening of the comparative advantage of manufacturing and the slowdown of the growth in GDP, the export-and-investment-driven growth model is unsustainable. There is an urgent need to shift to a model that relies more on domestic consumption. As the population growth rate has declined, the growth rate of total consumption has also declined, and it is declining rapidly. He pointed out that the trend of population change is irreversible and cannot be reversed in the short term or in the foreseeable future. He said that the only thing that can change is the income distribution.
Source: Lianhe Zaobao (Singapore), March 21, 2022