China demographics thread.

gadgetcool5

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Well, the fact that it's late November and there haven't been Twitter screenshots of Chinese-language tables with data from the Provinces of horrendous collapses in the birth rate for 2022, or dooming South China Morning Post headlines about the same, makes me cautiously optimistic that the drop in the number of births this year won't be as bad as last year.

Last year, the number of births dropped from 12 million to 10.62 million for a 11.5% drop. This year, China would have to have at least 9.4 million births to match the drop in the birth rate; below that is bad, above that is good, considering expectations and everything.

Additionally in 2020, the number of marriages dropped to 8.14 million from 9.27 million, or a 11.2% drop. That's similar to the 11.5% drop in births for 2021. In 2021, the number of marriages dropped to 7.6 million from 8.14 million, or a 6.6% drop. That would suggest 9.9 million births. If there was even close to that many births in 2022, it would count as good news.

Finally, there is the marriage data for 2022. If marriage is a leading indicator of births, then that is a critical number to project births for 2023. I fear for whether it has been affected by lockdowns and the slowdown in China's economy this year. A rate of 7.1 million marriages would represent a constant trajectory of decline (6.6% annually) based on 2021 numbers. Anything above that is good; below that is bad. A renewed acceleration in the decline of marriages would be very bad news.
So it seems I was slightly mistaken in the above post. According to a
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out today, the number of marriages in 2021 was actually 7.64 million, down from 8.14 million in 2020, or a 6.15% drop. Continuing the same 6.15% drop in 2022 would mean 7.17 million marriages. Anything above that is good; below that is bad. For the first three quarters of 2022, according to the SCMP, the number of marriages was 5.4 million. That is a rate of 1.8 million marriages per quarter. If we assume the same number of marriages in Q4, then we would get 1.8 x 4 = 7.2 million marriages for 2022. On the other hand, if the trend is that of declining marriages, the fourth quarter may come in a bit lower, which would put the final number at awfully close to 7.17 million exactly.

That means the trend of declining marriages is neither accelerating or slowing, but that the rate is staying steady at a 6.15% decline per year.

The SCMP also mentioned a new statistic from the China Statistical Yearbook 2022, not previously widely reported, called "the number of individuals entering their first marriages" and claimed that it "is considered a better gauge among young adults and is more closely related to the birth rate" and that it stood at 11.58 million in 2021 and that was "half the rate" of 2013.

If you use the
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to calculate average annual decline, you come up with ((1/2)^(1/8)-1)*100, since only the fact that it halved in eight years is relevant; or -8.3%. An 8.3% decline from 11.58 million is 11.58 million x .917 = 10.62 million. So we would expect 10.62 million Chinese people to enter their first marriage in 2022. Anything above that is good; below that is bad. However, that is a rough estimate from the SCMP claiming that the number had halved since 2013.

If anyone has the actual table for this figure from the China Statistical Yearbook 2022, please post it here.
 
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gadgetcool5

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If anyone has the actual table for this figure from the China Statistical Yearbook 2022, please post it here.
Actually, I found the China Statistical Yearbook 2021
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, and that gives up the figures through 2020. Using the SCMP's number for 2021, we can reconstruct the full series for the number of people entering first marriages up to this year. The relevant statistics are:

2013: 23,859,600
2014: 22,868,100 (-4.16%)
2015: 21,089,700 (-7.77%)
2016: 19,132,600 (-9.28%)
2017: 17,463,300 (-8.24%)
2018: 15,986,700 (-8.45%)
2019: 13,987,100 (-12.50%)
2020: 12,286,000 (-12.17%)
2021: 11,580,000 (-5.74%)

Here we learn a few of important facts that the SCMP won't tell us. First, in 2016-17 there was a mini-surge in China's birth rate. This was associated with China lifting the conditional one-child policy in November 2015 and allowing all couples to have two children. We now know that during this period, the rate of young people getting married was in fact falling fast; thus, the effect of the policy change was more dramatic than originally thought for a temporary boom. Why was the boom temporary? Because it focused only on birth and not marriage. Nonetheless, it shows that government policy can have an effect.

Second, the decline in the number of young Chinese getting married has been going on since 2013, but accelerated in 2019, before Covid. So Covid isn't to blame for China's birth rate decline in 2020. It was a secular trend that had already been going on before.

Third, 2021 actually saw a slight stabilization of the trend of falling marriages. If that was kept up, we would expect 10.91 million first marriages in 2022. But it's possible it's some kind of statistical mirage.
 

Abominable

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Technological progress is dependent on many factors, but the core foundation is population. Without it, the other factors are meaningless. If we viewed a competition between two groups - one with only 1 person, and the other with 10 people - ceteris paribus, I would expect the next innovation to come from the group with more people in it. We can of course modify it by varying things like investment capital, education level, and so on but the base these things are built on is population.

China is in a unique scenario where it's population is going to shrink in the future, but it's population is also getting significantly more educated with more investment capital, more productivity, etc. So a shrinking demographic doesn't cause the same doom as if it happened to Japan or other developed economies. As long as net productivity and innovativeness increases, China will make it out okay.

But sometimes I see people go too far the other way and try to argue that population shrinkage is fundamentally a good thing. Population shrinkage isn't a good thing, it's just a manageable thing because of China's status as developing country. China should always be looking to increase it's population - just on a timescale and plan that works for it. It absolutely should not be looking at shrinking it's population in the long-term.
A population reduction would be fine if it was weighted evenly among all age groups. However that isn't what happens with low fertility rates. You just end up with a growing economically inactive elderly population being supported by a shrinking economically active population and and that leads to a lower standard of living.
 

Staedler

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A population reduction would be fine if it was weighted evenly among all age groups. However that isn't what happens with low fertility rates. You just end up with a growing economically inactive elderly population being supported by a shrinking economically active population and and that leads to a lower standard of living.
That case only really applies to developed countries.

This is because the productivity of both the elderly and the young are not significantly different in developed economies. They are both educated to roughly similar levels and have roughly similar skills. So any net lost in active population is a net loss to the economy.

This is not the case with China. Because of the recency of its development, many of the elderly in China are semi-literate and lack sufficient skills to work in higher-tech factories, etc. That is, the elderly are relatively unproductive workers as compared to the youth. So when a youth enters the workforce, it isn't anywhere close to a 1-1 replacement in productivity. That young worker may be well over ten times more productive than the elderly worker retiring.

For China to see a lower standard of living, gross productivity would have to drop. If a young worker is 10x more productive than the elderly, then China's population would have to shrink to 1/10 it's current size for gross productivity to decline. Not even the most pessimistic projections predict such a drop.


To put it more concretely, China's labor productivity growth rate has been averaging around 8-9% since 1990. We can do some simple napkin math to get a sense of what sort of productivity growth we're talking about. Let's say someone works for 40 years (25-65). 8% growth every year over 40 years is a total of 21.7x the original productivity.

Compare that with the USA at about 1-1.5% or Germany/Japan at roughly 0% growth rate per year. At 1.5%, productivity after 40 years at only 1.8x the original. Germany/Japan at 0% growth rate is obviously still the same productivity after 40 years. That's why population shrinkage is a disaster for these countries.


In 2015, Chinese labor productivity was estimated at around 7k USD per worker as opposed to the US's 99k USD. Japan was somewhere close to 61k USD in 2020. The exact numbers don't really matter here, just to note that Chinese productivity has some ways to go before reaching the same level as the developed economies. That means I don't see that 8-9% labor productivity growth rate YoY slowing down for China any time soon. It also means I don't see China suffering lower standards of living due to population reduction any time soon.

Of course, having two engines of growth is still better than one. So even though China will be fine despite population reduction, population reduction shouldn't be a goal.
 
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Abominable

Major
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That case only really applies to developed countries.

This is because the productivity of both the elderly and the young are not significantly different in developed economies. They are both educated to roughly similar levels and have roughly similar skills. So any net lost in active population is a net loss to the economy.

This is not the case with China. Because of the recency of its development, many of the elderly in China are semi-literate and lack sufficient skills to work in higher-tech factories, etc. That is, the elderly are relatively unproductive workers as compared to the youth. So when a youth enters the workforce, it isn't anywhere close to a 1-1 replacement in productivity. That young worker may be well over ten times more productive than the elderly worker retiring.

For China to see a lower standard of living, gross productivity would have to drop. If a young worker is 10x more productive than the elderly, then China's population would have to shrink to 1/10 it's current size for gross productivity to decline. Not even the most pessimistic projections predict such a drop.


To put it more concretely, China's labor productivity growth rate has been averaging around 8-9% since 1990. We can do some simple napkin math to get a sense of what sort of productivity growth we're talking about. Let's say someone works for 40 years (25-65). 8% growth every year over 40 years is a total of 21.7x the original productivity.

Compare that with the USA at about 1-1.5% or Germany/Japan at roughly 0% growth rate per year. At 1.5%, productivity after 40 years at only 1.8x the original. Germany/Japan at 0% growth rate is obviously still the same productivity after 40 years. That's why population shrinkage is a disaster for these countries.


In 2015, Chinese labor productivity was estimated at around 7k USD per worker as opposed to the US's 99k USD. Japan was somewhere close to 61k USD in 2020. The exact numbers don't really matter here, just to note that Chinese productivity has some ways to go before reaching the same level as the developed economies. That means I don't see that 8-9% labor productivity growth rate YoY slowing down for China any time soon. It also means I don't see China suffering lower standards of living due to population reduction any time soon.

Of course, having two engines of growth is still better than one. So even though China will be fine despite population reduction, population reduction shouldn't be a goal.
While the first part of your post is true, only going back to the 80s is misleading. Japan had already industrialised at that point with a similar GDP per capita to western economies. Once you get to that point it becomes very difficult to improve productivity further. China is not at that stage yet. Once you reach a high level of human development there's only so much productivity can increase.

A better analogy would be to look at Japan in the 60s and 70s when they were growing rapidly like China is today. Their economy and standard of living continued to improve until it hit a wall. Once you have prolonged low fertility rates it becomes nearly impossible to reverse without a significant reduction in standards of living.

If anything I'd say improved productivity is a bad thing because it masks the problem until its too late to solve.
 

Staedler

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While the first part of your post is true, only going back to the 80s is misleading. Japan had already industrialised at that point with a similar GDP per capita to western economies. Once you get to that point it becomes very difficult to improve productivity further. China is not at that stage yet. Once you reach a high level of human development there's only so much productivity can increase.

A better analogy would be to look at Japan in the 60s and 70s when they were growing rapidly like China is today. Their economy and standard of living continued to improve until it hit a wall. Once you have prolonged low fertility rates it becomes nearly impossible to reverse without a significant reduction in standards of living.

If anything I'd say improved productivity is a bad thing because it masks the problem until its too late to solve.
There is no high level of human development where there's only so much productivity increase. This is an illusion created by the lower levels of investment and R&D in many developed countries as well as the many other problems within their economies.

For example, South Korea is at the same level or slightly above Japan in terms of GDP per capita (both PPP and nominal). Their labor productivity is better at 123 vs 105. Yet Japan's labor productivity growth rate is close to flat while South Korea is consistently around 2-2.5%. This is despite all the multitudes of problems in South Korea.

We have to be careful not to simply look at the developed economies and assume that is the pinnacle of human development future and present. Almost all of these societies are in almost terminal decline due to hitching their wagons to America - by consent or otherwise. So there is a huge distortion when looking at growth rates across the board. Their stats may represent the richest societies today, but not the richest ones in the future.


Furthermore at these current labor productivity growth rates, China may take another 30-40 years to reach Japan's current productivity levels. By that time, all of these developed countries in Europe, Japan, etc. will have coped with population reduction / flat productivity growth for many decades. China is not the leading the way here and so benefits from being a late comer. Do we actually expect China to do basically nothing for 30-40 years - not even to learn from the experiences of the developed world around them?
 

Abominable

Major
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There is no high level of human development where there's only so much productivity increase. This is an illusion created by the lower levels of investment and R&D in many developed countries as well as the many other problems within their economies.

For example, South Korea is at the same level or slightly above Japan in terms of GDP per capita (both PPP and nominal). Their labor productivity is better at 123 vs 105. Yet Japan's labor productivity growth rate is close to flat while South Korea is consistently around 2-2.5%. This is despite all the multitudes of problems in South Korea.

We have to be careful not to simply look at the developed economies and assume that is the pinnacle of human development future and present. Almost all of these societies are in almost terminal decline due to hitching their wagons to America - by consent or otherwise. So there is a huge distortion when looking at growth rates across the board. Their stats may represent the richest societies today, but not the richest ones in the future.

Furthermore at these current labor productivity growth rates, China may take another 30-40 years to reach Japan's current productivity levels. By that time, all of these developed countries in Europe, Japan, etc. will have coped with population reduction / flat productivity growth for many decades. China is not the leading the way here and so benefits from being a late comer. Do we actually expect China to do basically nothing for 30-40 years - not even to learn from the experiences of the developed world around them?
I'm not understanding the point you're making. Which of Japan and South Korea isn't supposed to be high human development?
 

Staedler

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I'm not understanding the point you're making. Which of Japan and South Korea isn't supposed to be high human development?
The developed countries, which South Korea and Japan are part of, represent the highest human development we have today. But they do not dictate the future paths nor form a ceiling for other nations. That is because each nation has different problems which is reflected into its social-economic conditions. One of the common problems of the developed countries is that they are all part of the US hegemonic system. Their rise and fall is constrained fundamentally by US influence both economically and politically[1]. China does not have this problem to nearly the same degree.

Hence whilst we know countries can reach the productivity development status of these OECD countries and that many of these OECD countries have had significant declines in labor productivity growth, it does not follow that all countries must have labor productivity growth decline when reaching those levels. In other words, I dispute that low labor productivity growth is caused by high labor productivity, but rather that it is caused by the circumstances that each OECD country is in.

Previously I offered the example of South Korea and Japan to illustrate that labor productivity growth rate and overall labor productivity are at best correlated and do not have a causal relationship. South Korea has quite a bit higher labor productivity than Japan yet its labor productivity growth rate is still significantly higher than Japan.


In the past, Song China was a peak of human labor productivity. Today it would be impossible to argue that Song China represented the limits of human labor productivity and labor productivity growth. The Industrial Revolution put that case to rest. So I am saying the labor productivity growth rate "wall" we see today is in a similar category. It reflects only the limitations of those OECD countries and does not represent a limit for the rest of humanity. The problems of the OECD countries are not the problems of China or other developing nations, especially as we are in the decades of transition away from "Pax" Americana.



[1]For example, the US can initiate takeovers or sanctions of rival companies in other developed countries (Samsung, Toshiba, Alstrom, etc). Enact hard/soft coups as well as other political measures to constraint the growth potential of its developmental peers. It also means the corrupt form of investment and business that presides throughout American society is extended into other developed countries. Hence, the OECDs are tied to the American wagon whether they like it or not.
 

Eventine

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I see a lot of talk about raising productivity per capita, but none of this addresses the aging issue. It's a biological fact that old people do not contribute much productivity. They also don't consume much. This will be a drag on economic growth, no matter what, and a persistent problem if the demographic pyramid continues to invert.

Also, while productivity can be raised via automation, education investments, etc., the problem of demand isn't as easy to solve. A single person only needs so much - demand doesn't exactly keep up with wealth. So having tons of productivity but no demand isn't a great place to be if global trade slows and countries become more protectionist. It might make China a wealthy country in per capita terms, but it won't result in more aggregate power, which is important in a Cold War against the West.

Finally, until AI takes over all human endeavors, there will always be a talent dividend from demographics. China's main advantage is its large and quality talent base, and its relatively effective government management. I mean, it's not like China's advantage is its natural resources or its geographic location - in a post-human labor world, we'd have to rely strictly on the CCP to out maneuver competing governments to gain any sort of advantage. I don't see that as sustainable especially if AI begins to take on more decision making. So the way I see it, there needs to be urgency in over taking the US in technology while China's demographic dividend lasts, and a national effort to delay demographic decline as much as possible. Only by reaching technological singularity first, can China secure its future against the West.
 

tonyget

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I agree with this video. These "experts" who are in charge of the policy has always been overestimate Chinese people's desire to produce more kids. Because these “experts” themself were born in population booming era,so they tend to use their own experience to speculate todays younger generation's mindset
 
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