Early last week, a statement came from China that could change the balance of the world. President Xi Jinping has reportedly raised the limit on the number of children married couples can have in the country to three after a meeting with prominent Communist Party officials.
The country’s official news agency Shinhua said that in addition to the three-child policy, some supportive measures will be taken, which will improve the country’s population structure, address the issue of aging population and maintain the advantage arising from the wealth of human resources.
In fact, the move did not surprise those who follow developments in China closely. Because the results of the 2020 census, announced by the National Bureau of Statistics of China about three weeks ago, clearly showed that China was losing its population, its greatest power.
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THE NUMBER OF BABIES IS DECREASING, THE CHINA POPULATION IS AGING
According to the census results, the total population of China was 1.41 billion in 2020. In other words, the Chinese population has increased by 10 million in one year, and by 72 million since 2010.
12 million babies were born in the country last year. This number has gone down in history as the lowest level since the Great Famine that ravaged China between 1959 and 1961. In addition, the number of newborns has declined for four consecutive years. The number of babies born in 2016, in the previous census, was 18 million and the number of babies born in 2019 was 14.65 million.
China’s one-child policy came into effect in 1979 and continued until 2016. In 2016, the second child was allowed and 5 years later the third child leave came. However, it seems Chinese families are unwilling to have more children even though the second child leave has been issued. Because in the census results it was revealed that the fertility rate in the country has decreased to 1.3. This ratio must be 2.1 for the population to remain stable.
On the other hand, China’s elderly population continues to increase. While the rate of citizens aged 60 and over was 13.3% in 2010, it rose to 18.7% in 2020. The rate for the 15-59 age group fell from 70.1 % to 63.35%.
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CHINESE ARMY LOOKING FOR YOUNG PEOPLE TO JOIN THE ARMY
These ratios have important implications for China and the rest of the world. For example, an article in the South China Morning Post, one of the country’s English-language newspapers, on the same day the three children’s decision was announced, focuses on one of the issues facing Beijing. . The details of the information titled “China’s declining fertility rate makes it harder for the military to recruit new recruits” are quite striking.
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According to reports, in order for the People’s Liberation Army, the largest army in the world, to maintain its status, it is necessary to recruit thousands of young people every year. However, declining fertility and an aging population are straining senior military officials.
In addition, experts say that it is not possible to train young people born in the 21st century with 20th century techniques (according to the news, “some young soldiers even dare to disobey orders and question their superiors”), which forces the military to adapt and change.
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REDUCED RELEASE CRITERIA
Another problem is that new generation weapons require soldiers with not only advanced physical abilities, but also intellectual abilities. Despite the poorly educated soldiers in rural areas of the past, today there is a need for young university graduates who are capable of using technology.
It is stated in the newspaper that a decision was taken in 2014 and the minimum height was lowered from 162 centimeters to 160 centimeters for men and from 160 centimeters to 158 centimeters for women. Likewise, it is stated that the bar has been lowered on criteria which have been a reason for elimination in the past, such as overweight or myopia. The army has also opened its doors to university graduates who could not find jobs and to those with high school diplomas who could not enter university.
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“The shortage of soldiers may not be critical right now, but it is a fact that urban children with higher education do not want to serve in the military,” researcher Ju Chenming told the newspaper. in military sciences.
Military expert Antony Vong Tong recalls that since 1993, many army officials and analysts have spoken of the negative effects of the one-child policy on the army. Vong says the solution may be to increase the number of women in the military.
THIS WILL AFFECT THE REST OF THE WORLD
As the Beijing administration reflects on the future of the People’s Liberation Army, the economic effects of China’s declining population are the order of the day around the world.
For example, the Wall Street Journal published in the United States claims that China’s declining population will cause a problem that will affect every corner of the global economy. According to the newspaper, “One of the most important effects of this situation is a problem that is already on the minds of businesses today: inflation.”
Of course, the shrinking workforce due to China’s declining and aging population does not directly mean that the prices of labor-intensive consumer goods will increase. Many other factors such as demand, level of automation, transportation technologies are also effective in increasing prices. But in an equation holding all other factors constant, labor-intensive manufacturing costs are likely to increase over the next 10 years. India’s weak infrastructure and protectionism issues are also preventing China from filling its place. Vietnam is expected to contribute to the sector, but it is very difficult for China to close the gap. Because even the population of Guangdong province alone is 30 percent more than the population of Vietnam.
THE NUMBER OF MIGRANT WORKERS DECREASES
According to the Wall Street Journal, timing is the single most important reason why China’s integration into the global economy has had such an impact on the prices of labor-intensive goods. Between 1990 and 2010, when the country opened up to the world, there was an explosion in the population of the 15-64 age group, considered to be the working population. During these years, the population in question reached 75 percent with an increase of 10 points.
This very large and cheap workforce, made available to global companies, could also take risks and easily migrate to the major port cities on the coast, as there weren’t many dependents behind. it.
Today that image is reversed. Today, more than half of migrant workers in China are over 40. In 2008, this rate was around 30%. In addition, the vast majority of the workers in question have taken on the responsibility of caring for their elderly parents who have been left behind in their hometown.
The number of migrant workers and the total number of workers in cities have fallen sharply since 2017. This is a more alarming indicator than the decline in the population growth rate, as it shows the limit of China’s transfer policy. workers from low-value-added agriculture and local services, which is the most important source of productivity growth, to high-value-added manufacturing.
In 2018, official data indicated that labor force growth in cities fell below 10 million people per year. While these levels were observed for the first time since 2002, the trend continued in 2019. Studies also point out that the ratio of employment opportunities / number of workers in cities is constantly increasing.
IT AFFECTS EVERYTHING FROM COPPER TO STEEL
The aging of the Chinese population has other effects on the economy than the costs of production.
The aging of the low-income population over the next 20 years will lead to lower demand in the real estate sector. This will lead to a decrease in the demand for steel and copper. Although investments in clean energy and automobiles have protected the demand for copper to some extent, in 2018, the construction industry in China was still the largest customer for copper.
If real estate loses its safe investment position for the Chinese in the future, demand for almost all major industrial goods will suffer. This means that in the next step, the number of customers of manufacturers around the world could decrease.