This was the title of a recent column by the New York Times’ columnist, Ross Douthat.[1]
I was expecting to read about increases in that country’s massive population.
Instead, it was about a birth rate that was below replacement level, which Douthat said was “one of the most important geopolitical facts of the 21st century.” Yes, it is true that the U.S. and many other developed countries are also experiencing declining birth rates,[2] but it was China and some other developing countries joining this “club” that was creating the crisis.
Although China has experienced amazing economic growth in recent years, “Chinese per capita G.D.P. is still about one-third or one-fourth the size of neighboring countries like South Korea and Japan. And yet its birthrate has converged with the rich world much more quickly and completely — which has two interrelated implications, both of them grim.”
“First, China will have to pay for the care of a vast elderly population without the resources available to richer societies facing the same challenge.”
“Second, China’s future growth prospects will dim with every year of below-replacement birth rates, because low fertility creates a self-reinforcing cycle — in which a less youthful society loses dynamism and growth, which reduces economic support for would-be parents, which reduces birthrates, which reduces growth.”
Moreover, as “ Lyman Stone writes in the latest National Review, the human race is increasingly facing a “global fertility crisis,” not just a European or American or Japanese baby bust. It’s a crisis that threatens ever-slower growth in the best case; in the worst-case, to cite a recent paper by the Stanford economist Charles Jones, it risks “an Empty Planet result: knowledge and living standards stagnate for a population that gradually vanishes.”
“As we contemplate the demographic challenge of the future, we should reserve particular opprobrium for those who chose, in the arrogance of their supposed humanitarianism, to use coercive and foul means to make the great problem of the 21st century worse.”
One commentator on this column said that Douthat missed an important fact exasperating China’s problem…–the enormous gender imbalance of . . .[its] ‘one child’ years. Boys were overwhelmingly favored, so there are many fewer women to birth those babies. One man can impregnate many women, but each woman can only birth at most one baby a year for a few decades (assuming she’s willing to be nothing but a baby machine, ehich is a huge stretch.”
A Hong Kong financial reporter suggests that China’s lower birth rates and aging population should increase the demand (and, therefore, higher prices and lower interest rates) for Chinese government bonds. As a result, buying such bonds now may lead to capital gains.[3]
Conclusion
We should thank Douthat for pointing out the important issues raised by China’s declining birth rate although the “Empty Planet” scenario seems absurd.
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[1] Douthat, The Chinese Population Crisis, N.Y. Times (Jan. 19, 2020).
[2] E.g., Implications of Reduced U.S. Population Growth, dwkcommentaries.com (Jan. 10, 2020).
[3] Bird, How to Invest in China’s Perilous Demography, W.S.J. (Jan. 20, 2020).