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How China's baby bust can help birth a second American Century

👶 How China's baby bust can help birth a second American Century

By James Pethokoukis, NY Times

Pax Romana and the Golden Horde had pretty long runs, but modern countries generally don’t get more than a hundred years or so as the globe’s dominant power. The British had the 19th century and America the 20th. But the 21st century, many experts confidently predict, will be the Chinese Century due to the Middle Kingdom’s massive population, efficient governance, and rapidly growing technological savvy. Bold Beijing gets big things done, while a decadent and distracted Washington dithers. Rising China, Declining America.

If you’re looking to counter this “Chinese Century” consensus, however, you just got a pretty compelling data point. China’s National Bureau of Statistics said Monday that the number of newborns fell for a fifth straight year, sinking to the lowest number in modern Chinese history. There were, according to the agency, 10.62 million births, down from 12.02 million in 2020 — barely outnumbering the 10.14 million deaths. Those results put China’s year-end population at 1.413 billion, up a tiny 0.034 percent from 1.412 billion at the end of 2020. (The birthrate — the number of births per thousand people — fell 7.52 in 2021 versus 8.52 in 2020.) “China is facing a demographic crisis that is beyond the imagination of the Chinese authorities and the international community,” Yi Fuxian, a professor at the University of Wisconsin-Madison, told The New York Times.

And China’s demographic crisis is happening despite a persistent push by Beijing to get its people to have more babies. In 2016, Beijing scrapped its four-decade one-child policy and allowed married couples to have two children, leading to a brief upward blip in the birthrate. Officials have also banned private tutoring to constrain soaring education costs and made it illegal to discriminate against young mothers in the workplace (although new laws do not seem to be enough to fight cultural expectations about the role of women in Chinese society). Local governments have also tried various natalist measures, notes The Wall Street Journal, including cash rewards and longer maternity leaves.” All to little effect, apparently. The trend “cannot be reversed,” the NYT quotes one Chinese demographer.

As demographically dour as these numbers are, they may actually be severely understating China’s baby problems. In 2019 the United Nations projected that China would still have around 1.3 billion people by 2065. But there’s considerable skepticism about that forecast from various quarters:

  • A July 2020 study in Lancet suggests Chinese population will halve by 2100, (while India’s working-age population will surpass China’s in the mid-2020s).

  • In a study published last October, researchers at the Institute for Population and Development Studies at Xian Jiaotong University in northwest China argued that those UN estimates are way off. For instance; Those 12 million newborns in 2020 were 25 percent lower than the UN's estimate. Overall, the study forecast China's population could decline by half within the next 45 years. The projection was based on a forecasted birth rate of 1.3 children per woman versus the current rate of 1.7. Chinese authorities "need to pay close attention to the potential negative inertia of population growth and make a plan with countermeasures in advance," the study concludes.

  • A report published last November by Simon Powell, analyst at Jefferies, predicts “China’s population will peak in 2022, which is almost 10 years earlier than the United Nation estimates. . . . If births decline by 20% p.a. from 2020 onwards, deaths will surpass births by about 6 million in 2025. We estimate China’s population will peak in 2022, which is almost 10 years earlier than the United Nation estimates.”

There are numerous economic implications that come with a shrinking population, especially a shrinking working-age population. As Goldman Sachs explained last May:

On economic growth, a shrinking working age population will likely lower overall economic growth via two channels. Firstly, a shrinking working age population reduces the potential GDP level and slows down potential GDP growth, holding labor productivity constant; secondly, population aging increases burdens in supporting the senior population: working-age adults tend to work and save more than the young or those aged 60 and older. An economy with a greater working age population is generally assumed to have higher savings rates which would add to GDP growth by boosting investment rates. The latter channel is much less certain than the first however, as empirical evidence from many economies including China suggests that precautionary savings, especially in economies with still-evolving social welfare systems, can be strong even in old age.

I would add that some research finds the older a country’s population, the lower its overall rate of entrepreneurship. And the fewer people you have, the smaller share of the population that can be devoted to doing scientific and technological research, reducing idea creation. In the 2020 paper “The End of Economic Growth? Unintended Consequences of a Declining Population,” economist Charles I. Jones warns of an “empty planet” scenario of falling population and stagnant incomes.

Of course, the United States has its own demographic issues. Americans in 2020 had the fewest babies since 1979, while the total fertility rate was the lowest since the government started tracking it in the 1930s. Yet the pandemic-driven health and economic crises probably dissuaded some women from getting pregnant. But birth rates never really recovered after the Global Financial Crisis, costing the US some nearly 8 million additional people since the GFC.

Of course, the US has a big advantage over China if it chooses to fully use it: immigration. As it is, the Census Bureau forecasts the US population to expand to just over 400 million by 2060. So we would could be looking at a scenario where China’s population edge over the US would be reduced from 1.4 billion vs. 330 million to 750 million vs. 400 million. Implementing a more expansive US immigration policy could narrow that gap even further. Indeed, why not try to close it completely? Back in May 2020, I did a podcast chat with Matthew Yglesias about his book One Billion Americans: The Case for Thinking Bigger:

Pethokoukis: One billion by when? And should readers interpret this book as you saying you want a billion Americans by any date? Or is this just more of an interesting thought experiment to argue for more Americans? number, and it makes for a fantastic book title? (I find it very compelling.)

Yglesias: Look, if we settled on 850 million Americans, it would be okay. What’s one billion? It’s a round number. It makes a nice title. One billion by 2100 is two nice round numbers together. By coincidence, we would need Canada’s population growth rate sustained for 80 years to get there. That sounds totally reasonable to me. I’ve been to Canada. You may know Canadians. Listeners may be familiar with it. It’s a fine country. They are doing well for themselves.

Also, one billion Americans would get us the population density of France. It would get us one half the population density of Germany. Those are also countries that people are aware of. They know they have a high standard of living in France and Germany. Say what you will about France, it’s not a dystopian hell of overcrowding, whatever problems people may have with it. They’ve got nice vineyards. There are some woods, a beautiful coastline. Everybody likes Paris.

That’s why I say one billion. Yes, it’s a little bit of a vague aspiration, but it’s an idea that I think we can anchor ourselves on. You need to pick goals in life, and I think this is a good one.

But US immigration seems to be going in the opposite direction right now. Whether you want more Americans for geopolitical, economic, or human rights reasons, this is a bad chart. From Axios last month, it uses experimental Census Bureau data to show that the population of foreign-born citizens and residents plummeted for the first time since the GFC.

How do Americans currently feel about immigration? Despite the rise of anti-immigrant populism, the share of Americans wanting more immigration has boomed over the past decade.

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