China's birth rate crisis deepens amid economic woes
China is grappling with a declining birth rate despite efforts to introduce incentives. Beijing has relaxed rules on the number of children allowed and supports families, but the demographic trend continues. The economic downturn in the Middle Kingdom compounds this situation.
China has been striving for years to boost its birth rate but to no avail. Despite easing the one-child policy, the number of newborns in 2023 dropped to a record low of 9.02 million. CNBC writes that new marriage registrations fell by 25% in the third quarter, marking the lowest level since 1979.
According to Lauren Johnston from the University of Sydney, Chinese policy focuses on supporting families rather than significantly increasing the number of births. Recent actions include extending maternity leave to 158 days and offering tax breaks for families with children.
Youths concerned about China's economic slowdown
Harry Murphy Cruise from Moody's Analytics, as quoted by CNBC, notes that young Chinese are postponing their decision to start families due to slower economic growth. In August, youth unemployment reached a record high of 18.8%, affecting confidence in financial futures.
Urbanisation and the stress associated with living in large cities deter individuals from starting families. Darren Tay from BMI emphasises that the intense pace of city life undermines the effectiveness of pro-family incentives.
Tianchen Xu from the Economic Intelligence Unit highlights the need for substantial financial incentives, such as subsidies and housing benefits, to reverse the declining birth trend. Current policies are inadequate and inconsistent, making effective implementation challenging.
Not just demographics
Consumption, the economy's main driver, has weakened this year following a rebound associated with reopening after the COVID-19 pandemic. Amid widespread job and salary cuts and falling property prices, Chinese consumers have become more cautious with their spending, leading to intense price wars in sectors like automotive.
Retail sales increased by just over 3% in the first seven months of 2024, a far worse result than the over 8% growth recorded before the pandemic. According to a survey conducted by the central bank in the second quarter, confidence in future incomes fell to its lowest level since the end of 2022, one of the most intense lockdown periods associated with COVID-19.
