By Eric Vandenbroeck and co-workers

The Consequences Of China's Demographic Decline

The country’s population surged from 540 million in 1949 to a peak of 1.4 billion in 2021 but tipped over into decline in 2022. In the coming decades, it will follow the rest of East Asia into a future marked by low fertility, rapid aging, and a steadily declining population. By the middle of the century, China is projected to have up to 200 million fewer people than it does today.

Simultaneously, the median age will steadily climb from 38 in 2020 to around 50. Demography is not destiny. Neither a shrinking nor a graying population necessarily spells doom for China. But the challenges presented by a declining labor force and surging numbers of elderly are significant and will require effective long-term planning and unpopular decisions. Official statements by the Chinese Communist Party indeed flag the importance of addressing the needs of an aging society, and Chinese officials and scholars have warned about the need to raise unsustainably low retirement ages. But China’s evolving political system under an increasingly autocratic General Secretary Xi Jinping seems unsuited to handle these challenges.

As China pivots back to an era of one-man rule, the country’s decades-long practices of technocratic governance are crumbling. This makes it harder to carry out long-term planning, particularly in rural China. Moreover, Xi has prioritized political stability over all else, limiting Beijing’s ability to undertake necessary reforms that might harm the interests of vested urban elites, such as trimming their retirement benefits. Beijing’s ideological pivot toward ethnonationalism will undermine China’s ability to rely on inbound migration as a tactic to mitigate the effects of a shrinking labor force. Finally, the Communist Party’s increasing embrace of traditionalist gender roles risks further exacerbating the decline in the fertility rate by reinforcing the underlying factors driving China’s youth—particularly women—to opt out of marriage and child-rearing.

By the middle of the twenty-first century, China will likely find itself beset by a host of severe internal challenges, including rising tensions with urban elites over pension and health care costs, steadily worsening conditions for the rural elderly, and a toxic atmosphere for women and foreigners that will increasingly constrain the country’s rise as a global power.

 

Beijing Turns Against Technocracy

China’s most severe demographic challenges lie in its poor rural areas. The country’s elderly population is disproportionally concentrated in the countryside: in 2020, 17.7 percent of rural residents were 65 and older, compared with only 11.1 percent in urban areas. These numbers will soar in the decades, placing enormous economic and social strains on communities. Planning for the needs of the rural elderly will be one of the most challenging tasks facing Beijing’s leaders.

On the surface, China would seem uniquely well-equipped to respond to this challenge. After all, it has a massive bureaucracy staffed with experts who regularly churn out detailed policy documents bearing impressive titles, such as the 2019 Mid- and Long-Term National Plan for Responding to Population Aging.

In practice, however, such plans often crumble in the face of China’s complex political realities. As the economist Scott Rozelle and the researcher Natalie Hell have documented, four decades of similar attempts to address the needs of rural children foundered on the Maoist legacy of the hukou (household registration) system, which tightly links citizens’ access to social benefits such as education and health care to their family’s place of registration. In doing so, it has entrenched inequalities between urban and rural residents regarding receiving government resources.

The same disparities exist among the rural elderly. Rural residents receive monthly pensions of roughly $26, far less than the $506 their urban counterparts receive. Healthcare resources and insurance coverage are similarly skewed. As the sociologist Yan Long and the gerontologist Lydia Li have noted, this two-tiered healthcare system has resulted in both a “disparate distribution of health resources among elders” and a dramatic divergence between how urban and rural residents see their relationships with the state: individuals living in cities view themselves as citizens with rights, whereas rural residents see themselves as “peasants unworthy of state care.”

China’s pivot back toward one-man rule is further eroding Beijing’s capacity to plan for the future. As Xi steadily marginalizes technocratic voices and institutions, state policies show worrying signs of catering to his whims. For example, plans rolled out this year to reform rural healthcare call for expanding the use of traditional Chinese medicine in responding to the needs of the rapidly aging rural population. Serious risks exist that such plans are less a carefully thought-out effort to improve the health of China’s elderly than an example of state bureaucracies tacking into the new political winds created by Xi’s decision to promote traditional medicine as a symbol of national pride, what he refers to as “the treasure of ancient Chinese science and the key to the archive of Chinese civilization.”

Beijing’s handling of the latter stages of the COVID-19 pandemic offers an unsettling preview of the practical problems caused by these political shifts. When Xi tied his legitimacy to China’s initially successful “zero COVID’’ policies in 2020-21, he rendered it politically impossible for officials to plan for or even discuss what might follow. Even as the virus became increasingly transmissible, they were forced to rely on escalating lockdowns as their primary tool to combat the pandemic. The country’s vaccination campaign remained patchy, and efforts to import foreign vaccines and stockpile antiviral medications languished. This left the elderly dangerously exposed.

In late 2022, Xi dramatically reversed course. Only weeks after the end of the politically sensitive 20th Party Congress, he abandoned zero-COVID virtually overnight and without warning. The elderly found themselves squarely in the path of the virus: rural medical facilities were overwhelmed, and shoppers emptied pharmacy shelves of anti-fever drugs in a wave of panic buying. Elderly rural citizens were left to fend for themselves, encouraged by state media to rely on home treatment with traditional Chinese medicines. Meanwhile, urban elites bought up limited stocks of proven treatments such as Paxlovid for inflated prices on the black market. 

As Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, has noted, these radical policy shifts had severe costs. They subjected hundreds of millions of citizens to exceptionally harsh lockdowns at the apex of zero-Covid policies in 2022. They fueled a death toll of one million to 1.5 million after their abrupt lifting only weeks later.

 

Hostage To Stability

Demographic change will also force Beijing to revisit promises made to earlier generations regarding government benefits. As Chinese society ages, retirement programs are becoming increasingly unsustainable. Retirement ages, set back in the 1950s, remain exceptionally low: 55 years old for women (50 for blue-collar employees) and 60 for men. The Chinese Academy of Social Sciences predicts that the leading urban pension fund, a relatively more generous system that covered roughly 450 million urban workers, retirees, and party cadres as of 2020, will run dry by 2035. (China’s underclass, comprised of over 500 million migrant workers and rural residents—a much more significant portion of the population— is covered by far skimpier system.) But just as in other countries, such as France, raising the retirement age or cutting back on benefits poses a severe challenge to the government because it risks triggering a widespread public backlash.

One might think China’s rulers are more capable of confronting such risks and ramming through necessary reforms than their democratic counterparts, given Beijing’s powerful repressive apparatus. But stability-obsessed party leaders instinctively flinch when confronted with widely shared grievances that could metastasize into collective resistance. Beijing’s abrupt decision to terminate zero-COVID policies in November came immediately after scattered anti-lockdown protests showed signs of leaping from city to city and transforming from complaints about lockdown policies to direct attacks on the party leader.

Such concerns have regularly hamstrung meaningful reforms under Xi. Although Beijing has acknowledged the need to raise official retirement ages for at least a decade, it has yet to do so. Leaders now vaguely gesture that they will release a plan by 2025. This delay reflects serious concerns that meaningful pension reform would strike at the interests of China’s large, established urban middle class, including retired government officials, party cadres, and their family members. These represent a crucial base of support that the party hesitates to offend, unlike other groups they have repressed in the past—LGBTQ activists, ethnic minorities in Xinjiang, and blue-collar workers laid off by state-owned enterprises in China’s northeast.

Redistributive policies aimed at reducing the rural-urban gap have met a similar fate. As scholars such as Wei Cui and Mary Gallagher have noted, Xi has steadily undone the limited spending reforms launched just over a decade ago under the administration of General Secretary Hu Jintao and Premier Wen Jiabao. Meanwhile, Xi’s own “common prosperity” initiative has remained little more than paper promises amid his increasing warnings against the dangers of “welfarism” among China’s disadvantaged.

 

Beijing’s Nativist Pivot

Aside from China, every East Asian society facing demographic decline has turned to imported labor to mitigate the effects of declining birth rates and rapid aging. But Xi’s pivot towards ethnonationalism will torpedo Beijing’s ability to use this tool. 

Despite fantasies of a twenty-first-century workforce populated by robots, technology has not eliminated the need for young human workers. The number of foreign residents in South Korea and Taiwan has surged from negligible in the 1980s to over three percent of the population today. Another percentage point consists of naturalized foreigners who have obtained citizenship through marriage. Taipei’s streets now echo the voices of Filipino and Indonesian women caring for elderly and infirm Taiwanese; tens of thousands of Vietnamese men now labor on Taiwanese construction sites and fishing boats.  

Other East Asian governments are trying to expand these trends to ameliorate growing labor pressures. Japan relaxed immigration laws in 2019, granting greater rights to foreign blue-collar workers and creating new visas to attract intermediate-skilled workers in various fields. Taiwan adopted a parallel reform in 2022, and the head of its National Development Council has proclaimed that Taipei seeks to attract an additional 400,000 migrant workers over the next decade.

Were Beijing serious about planning its aging future, it would have its cards to play. China has a host of embryonic links with Africa, the only region of the world that will experience a youth boom over the coming decades. African international students in China surged from 1,793 in 2003 to over 80,000 in 2018. A vibrant community of tens of thousands of African traders and migrants had developed in Guangzhou by 2010. Beijing is also engaged in a major expansion of vocational education in Africa. Theoretically, one could envisage carefully crafted programs to train a generation of African technicians to help run China’s factories and African caregivers to look after tens of millions of the rural elderly as China’s population ages and shrinks.

But that will almost certainly not happen. Under Xi’s banner of “rejuvenating the Chinese nation,” socialist slogans give way to a more explicit framing of China regarding culture and race. Authorities have banned foreign cultural products, whether architecture or Christmas celebrations, deemed inconsistent with China’s essence, while ethnic policies are pivoting away from Soviet-style autonomy to aggressive assimilationism.

This ethnonationalism turn is fanning latent flames of anti-foreign sentiment. During the early 2010s, local authorities in Guangzhou carried out a brutal immigration crackdown that would cut the city’s African community in half by 2016. Students and other foreigners encountered a wave of hostility with the pandemic outbreak in early 2020, including mass evictions of hundreds of Africans in Guangzhou, resulting in coordinated diplomatic protests by various African nations.

These hardening social attitudes have sunk China’s tentative efforts to liberalize its migration policy. Since the early 2010s, the government has overhauled its immigration system to deepen ties with the overseas Chinese diaspora and better attract foreign talent. But when Beijing released proposed draft regulations aimed at moderately expanding permanent residency for foreigners in 2020, it triggered a raging maelstrom of online nativist sentiment, with over four billion views of posts on the topic on the social media platform Weibo in a single week. As the scholar Tabitha Speelman has carefully detailed, officials shelved their proposals when faced with overwhelmingly negative commentary, accusations of selling out the nation to “fake foreigners” (that is, Chinese elites who had obtained foreign citizenship), and racist vitriol directed at communities of African traders.

 

A Gray Future

Such trends will severely test China as it ages and shrinks. In urban areas, the conflict will increase between the government and surging numbers of urban retirees intent on protecting their benefits. Recent protests offer a taste of China’s future: in February, thousands of retirees from state-owned enterprises gathered in Dalian and Wuhan to protest local reforms that reduced state contributions to their healthcare accounts. Such scenes will become a regular sight in coming years, involving one state benefit program after another as Chinese authorities are forced to reckon with rapid demographic shifts and increasing budget constraints. Local officials will be sorely tempted to backtrack on or delay measures adversely affecting urban communities while shifting costs to less privileged, less connected, and less vocal rural ones. 

For China’s countryside, these trends spell a future of rising desperation. The political economist Nicholas Eberstadt and the demographer Ashton Verdery project that by the middle of this century, roughly half of China’s citizens over 70 will have either one or no children, up from approximately 20 percent today. Eldercare demands will rise nationwide, but rural areas will face the heaviest burden. China’s rapidly aging migrants will increasingly meet the need to care for themselves and their aging parents in the countryside with limited support from the state or siblings.

Beijing’s turn inward will hamper its ability to build formal legal channels for international labor flows to respond to China’s rising needs. But pressing domestic demands will lead social pressures to evolve in darker, underground directions. Examples might include an expansion of human trafficking of Pakistani and Burmese women into China’s poor rural areas or the emergence of programs nominally bringing international students from less developed countries to China for education while exploiting them as a source of low-cost labor.

This is not a recipe for a rise to world dominance or even long-term social stability. Instead, China’s rapidly aging population and increasingly rigid, autocratic political system will severely hobble the country as it stumbles toward the middle of the twenty-first century.

 

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