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China's demographic problem - why it’s not a concern but a strength for China?

   22.01.2023 | Yishai Gelb
Image by Jerry Wang

This past week, China declared that in 2022 it’s population shrunk by 850,000 people, declining from 1.42 billion to 1.41 billion people. The concept running around suggests that China is in a slow decline, and by 2100, China will be just half of its population drawing the end of a potential Chinees empire.

Peter Zihan, among other leading demographers, illustrates that China, among many other countries in the world, is facing aging and shrinking populations, forever changing the world. I believe that the aging population in China, as well as other places, is bringing change, however, China still has enough potential to become a worthy competitor of the USA. China has a few possible solutions for its demographic problem.

First - rural China. In rural China, families weren’t as victimized by the one-child policy as the urban population. Families in the countryside had and still have larger families being a source of new labor for the next couple of generations. This might not be enough to fill the jobs left by the older generations, which leads to the second solution - Migration.
Like in Europe and the US, as labor costs rise to make the marketplace incompatible, governments' solutions are to allow the immigration of cheap labor to fill the jobs that the aging population left behind or simply the jobs spoiled and more affluent people aren’t willing to do anymore. China could either allow the migration of cheap young labor from Vietnam, Thailand, India, and Bangladesh, among other countries. However, China might choose the third option - Exporting labor to poor countries.

Like the US which exported its manufacturing jobs to Asia, China could do the same. The belt and road initiative wasn't just to import and export resources around the world, but also to create a system that could eventually turn Africa into China's labor house. Africa has a very high birth rate and a lot of cheap labor. For China, this could be a great source of labor, creating the goods consumed by the Chinees, and traded on Chinese trading routes. But there is a much greater phenomenon that is taking place in the world that could turn China's shrinking population into an advantage.

In the past, an empire's strength was measured by the size of the empire -  More people meant more troops to expand and maintain an empire. With the fourth industrial revolution at full speed, the opposite is true. Empires no longer need many people, but rather “quality people”. It’s no longer about the quantity, but rather about the quality. A country's


strength is measured by the people's ability to create and produce cutting-edge technologies and come up with new discoveries. The fourth industrial revolution is making the size of a population a weakness and not a strength. China's shrinking population could actually be a great thing, as long as it can balance out the number of productive people with the number of retired people.

The real race is in technology, and in the future, the space race will determine the next global empire. And China isn’t far behind anymore.

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