China's birth rate crisis deepens amid economic uncertainty
China is grappling with a declining birth rate despite efforts to introduce incentives. Beijing has eased restrictions on the number of children allowed and supports families, yet the demographic trend remains unchanged. The economic slump in China compounds this issue.
China has been striving to boost its birth rate for years, but this has proved unsuccessful. Despite easing the one-child policy, the number of newborns in 2023 fell to a record low of 9.02 million. CNBC reported that new marriage registrations also dropped by 25% in the third quarter, marking the lowest level since 1979.
Lauren Johnston from the University of Sydney states that Chinese policy emphasizes family support rather than drastically increasing birth rates. Recent measures 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, quoted by CNBC, highlights that young Chinese are delaying decisions about starting families due to slower economic growth. In August, youth unemployment reached a record high of 18.8%, impacting confidence in financial futures.
Urbanization and the stress of living in large cities discourage family formation. Darren Tay from BMI stresses that the fast-paced city lifestyle lessens the effectiveness of pro-family incentives.
Tianchen Xu from the Economist Intelligence Unit underscores the necessity for substantial financial incentives, such as subsidies and housing benefits, to counter the declining birth rate. Current policies are inadequate and inconsistent, complicating effective implementation.
Not just demographics
Consumption, the economy's primary driver, has weakened this year following a rebound linked to the reopening after the COVID-19 pandemic. Facing widespread job and salary cuts and declining property prices, Chinese consumers have become more frugal with their spending, resulting in intense price competition in sectors like automotive.
Retail sales grew by just over 3% in the first seven months of 2024, a significantly poorer performance compared to 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 dropped to its lowest point since late 2022, during one of the most intense lockdown periods associated with COVID-19.
