China announced that it would
loosen its decades old one-child policyat the third plenum. Couples will be allowed to have more than one child if at least one of them is an only child.
Not only did the policy exacerbate labour shortages, it also skewed China’s sex ratio.
“China’s demographic dividend is gradually turning into a deficit, adding headwinds to underlying growth momentum,” write Morgan Stanley’s Yuande Zhu, Helen Qiao, and Yin Zhang.
We picked out 8 key charts from Morgan Stanley that show how the demographics of the nation have changed and what it means for China’s economy.
1. China has had three baby booms since the People’s Republic was founded in 1949.The first was in the post-war period between 1949-1958. The second boom came after the great famine and lasted from 1962-1972. The last boom came in decade from 1981-1991 as “the second generation of baby boomers entered childbearing age, the high base naturally pushed the birth rate to a higher level.”
2. China’s fertility rate fell from 5.5 in 1970, to 1.6 by 2012. Meanwhile the birth rate fell from 33 per 1,000 in 1970, to 12 by 2012.
3. The population growth rate fell from a high of 2.6% year-over-year in 1970 to 1.2% YoY in 1980.
4. China’s population growth is set to decline from here and contract from 2030 on. Post-war baby boomers have already entered retirement age, which Zhu says is speeding up China’s ageing process.
5. The working age population is expected to decline as early as 2017, which is more significant for the economy.
6. Companies are having a harder time hiring employees despite the economic slowdown.
7. While the one-child policy was created to alleviate population pressures on the economy, it skewed the gender ratio towards boys.
8. People typically save while they work and spend post-retirement.“The economic structure will skew towards consumption rather than investment,” as China’s total dependency ratio begins to turn and baby boomers begin retiring.
Thanks to Morgan Stanley for giving us permission to feature their charts.
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