Shrinking population imperils CCP regime|Poon Siu-to

Published (HKT): 2021.05.05 09:46

The authorities have put off twice promulgating the results of the seventh census conducted in China. The Financial Times reported that it is because this is the first time the size of the population has shrunk since 1960. In response to this, the National Bureau of Statistics of China issued a statement only expressing that “the population growth is maintained”. Meanwhile, a media outlet on the mainland reported that the census results would be made public by mid-May.

A shrinking population in China is already an indisputable fact. Figures from the Ministry of Public Security of China showed that up to the end of last year, the number of new-born babies amounted to 10.035 million (boy: 52.7%; girl: 47.3%); in 2019, the number was 11.79 million. That was a decrease of 1.755 million, after the universal two-child policy implemented. In fact, after the two-child policy put in practice, the number of new-born babies did not pick up as what had been expected by population experts, but rather descended every year. To put it simply, the trend of a shrinking population is irreversible.

Population is not only about statistics, but profoundly influential in political and economic affairs, people’s livelihood and education. No sooner had the Chinese Communist Party (CCP) founded an administration in China than it was totally aware of the significance of population issues. During the mid-1950s, Ma Yinchu, demographer and then president of Peking University, proposed birth control to curb population growth progressively, which was yet criticized by Mao Zedong, who instead put forward an opposite population policy upon a notion: Many hands make light work.

As a result, a great number of people did give birth for the Party and country, which gave rise to an explosive growth of the population. When the Deng Xiaoping era commenced, the administration did a U-turn on the population policy by forcing through stringent birth control – one-child policy, for overpopulation was considered the culprit of China being a poverty-stricken nation. The policy ended up contorting the ratio of male to female in the birth rate, so that the demographic structure was deformed with the population ageing at a gallop after few decades.

Economic pressure escalated by ageing population

The enormous labor force was one of the major impetuses that drove the economic growth, which in other words, benefited from “demographic dividends”. Nonetheless, the incoming labor force started declining as early as 2012, nine years from now. Since then, the total working population has been going down by 3 million every year, and the target of economic growth rate turned 6% from 7%. In the near future, the conditions will only get worse. Some specialists anticipated that during the 14th Five-Year Plan period (2021 to 2025), the labor force will decrease by 35 million. That is why factories and enterprises in China have found it so difficult to hire labor, and the wage rates have been so high in recent years. What it has directly led to is the soar of production costs, which has further jeopardized the China’s status as a world factory.

Not only will a population in decline strain the supply of labor force, but also endanger domestic demand, and even put property prices in a nosedive. With the coronavirus pandemic still ravaging the globe, demand of foreign countries for Chinese products plummeted, hence weakening foreign trade. So, the resulted fall in sales orders placed with factories enfeebled the driving force behind China’s economic growth. Worse still, punitive tariffs were levied on goods from China to the US during the Sino-US trade war. In response to the plight, Xi Jinping and his economic affairs minister suggested an internal circulation accordingly to offset the impact of insufficient demand of foreign countries by spurring the people to spend money. Two years on, domestic demand is still hesitating to press forward, thus impossible to substitute external demand as the locomotive of economic growth. If the decline in population is escalated, the inadequate domestic demand will be intensified. Provided the situation is only going to get worse, how can the economic prospect be promising?

What’s more, under the one-child policy, a lot of young couples were born as a single child, so most probably their offspring will be only children (the desire of young couples to give birth to descendants is extremely weak). Simply put, innumerable kids will have to provide assistance and care for six elderly people alone (parents, paternal grandparents and maternal grandparents) when they grow up. If the elderly are billionaires, it is not necessary for them to worry about providing the aged with what they need for sure. But the Chinese society will get aged before getting affluent. Now that the number of the elderly aged above 60 is already more than 250 million, it will be 300 million or more ten years from now, accounting for 20% of the total population, which implies that the future young people will have to carry on the back much pressure of taking care of the elderly at home. Such a demographic structure is bound to exert exceptionally great pressure on personal finance and the coffers of the state, and then impact on investment capacity of the entire society. As such, another driving force behind economic growth will be gone. In recent years, the legitimacy of the CCP regime has come from economic growth, which is also the foundation of CCP’s internal and diplomatic policies. Once the economy gets stagnant, or even plunges into a pitfall where sluggish economic growth prevails like what Japan did for ten years, is the CCP regime able to prevent itself from being mired in a crisis?

A decrease in population can also bring about another governance crisis to the CCP – property prices going into a nosedive. Beijing has been dealing with it with extraordinary caution in recent years, as evidenced by the fact that the government, despite being debt-ridden, has been refraining from pushing through property tax or habitation vacancy tax. Last year, the governments of Shenzhen and Guangdong even lent a helping hand to Evergrande Group when the enterprise reached a debt crisis. Nevertheless, with a decline in population and demand for accommodations, can the property market stay unscathed?

In front of this impending crisis, Xi Jinping seems to be a study in calm. Since the two-child policy taking effect five years ago, he has not made any move to encourage reproduction. If the population is proved to still be increasing this time, it will be less probable for the regime to roll out any measures to cope with the situation, which will lead to the population shrinking at a higher speed, and the governance crisis will come earlier. When they are aware of how devastating the problem is, they will be powerless to turn around a hopeless situation!

(Poon Siu-to, veteran journalist)

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