Below is a complimentary Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe. Click here to read part 1.
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Is China on track to report its first population decline in six decades? The country’s decennial census results have been mysteriously delayed, which insiders say reflects a dreaded population dip—one that the government has denied. (Financial Times) |
NH: Last week, we looked at the impending release of the results of China's 2020 census, which has been delayed by the National Bureau of Statistics under somewhat mysterious circumstances.
(See "China's Population: A Mystery Wrapped in a Riddle.") The Financial Times claimed that NBS may be delaying because of news that China's population actually dropped in 2020. NBS promptly denied this rumor, and as I explained last week I too believe that an outright decline is unlikely.
On Sunday, China's State Council Information Office announced that the NBS will be releasing its topline census results on Tuesday, May 11. New speculation is emerging that the delay may have nothing to do with aggregate population metrics, but rather with the impact of Covid-19 on internal worker migration in 2020--which could skew "resident" counts by province.
As in the United States, regional counts are a very sensitive issue for local governments in China since these counts determine the allocation of national subsidies and credit.
At the risk of getting scooped by Tuesday's release, let me follow through with my promise to explain why an unexpected fertility decline may result in a lower estimated population trajectory since 2010 and in any case will bring down future population growth beneath current projections.
First, let's look at recent NBS totals for annual births. Through 2019, we take the actual NBS number figure, estimated as an update on the 2010 census. And for 2020, we take the "registered births" number (released in February; see "Registered Births in China Tumbled 15% in 2020") and increase it by the same adjustment factor that the NBS used for registered births in 2019.
Here we can see that China's annual births, after averaging around 16 to 17 million early in the 2010s, briefly surged to nearly 18 million in 2016 (this was widely attributed to relaxation of the one-child policy) before ratcheting swiftly downward in every subsequent year.
In 2020, we estimate roughly 12.5 million births. Alarmingly, that is barely 2.5 million more than deaths. Remember: China has negligible immigration to help cushion any negative natural increase. When its deaths exceed births, its population will decline.
What are the implications for the total fertility rate (TFR)? Well, when we look at years that are only three or four years apart, the delta in TFR will be roughly proportional to the delta in births.
The World Bank, which has avoided any close examination of year-to-year birth changes in China, simply assumes that China's TFR has been slowly rising from around 1.63 in 2010 to around 1.70 in 2019.
But if we do look at year-to-year changes, we can see that whatever China's TFR was in the early 2010s, it is only 75% of that level in 2020.
So if we assume that the World Bank was correct back in 2010-15 and that China's TFR was around 1.65, then in 2020 it was somewhere between 1.25 and 1.30. That's a dramatic descent.
Now let's take a longer view of births, going back to 1950, the founding year of the PRC.
The most obvious takeaway from this big-picture look is the dramatic decline in the birth rate. Back in the early 1950s, China's population was under 600M, barely 40% of what it is today, and yet it had many more births per year (over 20 million).
The next takeaway is the pulsating rhythm of birth surges separated by roughly 20-to-25 years in accordance with Sundt's Law. The "founding" birth surge of the early 1950s was followed nearly 20 years later, after the catastrophic great famine of the early 1960s, by another "cultural revolution" baby surge. The second surge clearly consisted of the sons and daughters of the first.
Then came another lull during the 1970s--these were the children of the great famine babies--before yet another echo-echo boom throughout most of the 1980s. Given the dramatic reduction in infant mortality, this "Deng boom" would have been much larger, possibly up to 40 million births yearly, had it not been for the enforcement of one-child laws beginning in 1980s. Still, births peaked at nearly 26 million in 1987.
OK, we've identified three great baby booms since 1949. So when will the fourth arrive? That's the question the Chinese have been asking ever since 2010, about 20 years after the third boom ended in 1990.
Since childbearing ages have steadily risen in recent years, we may have to wait more like 25 or 26 years between demographic crests. Which brings us to 2016 and 2017. That's when we witnessed a paltry rise of about one million births in each of those two years. And then, by 2018, it was all over.
In other words, the extra births in 2016 and 2017, widely attributed to the introduction of the two-child policy, may have actually been a faint and delayed "fourth echo" of the large cohort of Deng-generation parents. Just ahead, for the next ten or fifteen years, a much smaller baby-bust cohort born during the 1990s and 2000s will be reaching the age of parenthood. And as they do, the birth numbers will disappoint.
Another way to illustrate the remarkable impact of successive birth waves is to look at China's 2021 population pyramid.
The three major birth waves just leap off this chart. Note the large number of Chinese today in their late 60s (first wave); in their early 50s (second wave); and in their early 30s (third wave).
And the fourth wave? You can barely make it out. It's the slightly longer bar for children today age 5 to 9.
Note also btw the very small "bust" cohort born in the early 2000s, now age 15-19. In ten years they will of parenthood age. As you can gather by now, a "bust" parent generation--absent a large and positive TFR shift--gives birth to a "bust" child generation. Here is the population pyramid for 2030.
Take a look at the shortened, indented bars for 0- to 4-year-olds. The US Census IBD expects this age bracket in China to comprise 64.0 million children in 2030.
That's down from 76.5 million in the same age bracket in 2021. Equivalently, that translates into 2.5 million fewer births per year by 2030 than in 2021. And 2021 is unlikely to be much better than 2020.
So far we have been looking at total births as estimated by NBS. Yet even these estimates may be exaggerated since, as I explained last week, NBS pushes up the "registered births" by a positive "adjustment factor" to compensate for presumed under-reporting of births. Could NBS be over-compensating? Several Chinese academics believe it may be.
Mengqiao Wang of Sichuan University recently re-computed the annual fertility mini-surveys that NBS conducted for 2016 through 2018. He found these mini-surveys continue to point to an annual TFR of between 1.0 and 1.1.
But Wang also discovered something else: a reason why under-reporting may not be as serious a problem as it once was. Apparently, according to these mini-surveys, nearly all the decline in the TFR over the past fifteen years has been due to a decline in the rate at which women are giving birth to a first child.
There has been little or no decline in the rate at which they are having second or third children. (Note here that the total of first, second, third, etc., children equals the "total" fertility rate.)
Since 2013, we do see a modest increase in the rate at which women report giving birth to second children. Arguably, the increase is evidence of the impact of the new two-child policy.
Either more women feel they are now free to have a second child--or, after having had one, they feel freer to report it. This may indicate that under-reporting is now less a problem.
But the steady decline in the rate at which women are giving birth to first children does even more to undermine the under-reporting assumption. After all, there have never been any legal barriers to a woman having a first child. Yet these are the births that have been sinking the most.
Why are first children experiencing the steepest decline? Probably for the same reason first children are declining in Hong Kong, Singapore, Taiwan, Japan, and South Korea. Especially in growing urban centers, young women are less attracted to marriage; marriage and therefore childbearing is happening at older ages; two-income families have become the norm; and the costs of raising children seem less affordable.
As in other countries, economic hardship directly suppresses young-adult fertility. In China's three northeastern Manchurian provinces, struggling with high unemployment and industrial downsizing, the natural rate of increase has turned negative (meaning: deaths now outnumber births).
Wang also observes that the rapid decline in first births throws doubt on the efficacy of any further loosening of child limits. After all, if the growing challenge is women's unwillingness to having first births, liberalizing restrictions on higher-order births is unlikely to have much effect.
High-ranking Chinese officials seem to be leaning toward further liberalization. According to one suggestion floated by the vice governor of Liaoning Province, China's three Manchurian provinces ought to be the first to lift national family restrictions entirely.
The suggestion, though now mired in bureaucratic controversy, is likely to be approved. And it won't be long before the entire nation follows suit, especially if China's top leaders are galvanized into action by new fertility estimates made possible by the 2020 census. (See "China's Aging Population May Prevent It From Becoming a Global Superpower.")
Yet Wang is correct: Getting rid of current family limits is not nearly enough to reverse China's declining fertility trend. To have a shot at success, the PRC will have to reverse gears entirely.
It will have to shift overnight from punitive anti-natalism to generous pro-natalism, from throwing obstacles in the way of births to actively encouraging and subsidizing them. As we have seen throughout much of the rest of East Asia, even that reversal may not move the needle very far or very fast.
At which point China may be asking itself: Why did we wait so long? (See "China Embraces Pronatalism--Decades Too Late.")
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.
