The birth rate in China has reached a record low. The economy is already feeling the demographic pressure. Experts point out that this could lead to a significant slowdown and even a decline.
For decades, the Middle Kingdom was regarded as the world’s factory. The vast pool of cheap labour, low production costs and ease of transporting goods led to a situation where Western companies massively relocated their production lines to the country. Beijing benefited from this situation as GDP grew rapidly. A symbol of the developing nation was the massive investment in infrastructure, which aroused both admiration and envy in the West. It seemed as though nothing could stop the Chinese dragon.
Meanwhile, although the economy continues to grow at a pace that is unattainable for most Western countries, it faces a serious problem that could significantly weaken it. Birth rates are at an all-time low and, unless the situation changes radically, the demographic crisis will lead to rising labour costs and prices for manufactured goods.
In 2023, China lost its title as the world’s most populous country to India. In 2025, Beijing recorded its fastest annual population decline since the great famine of 1960, which took place during Mao Zedong’s rule. Falling birth rates and rising mortality rates have reduced the country’s population by 3.39 million. In 2023, the birth rate fell to 0.99, well below the replacement rate of 2.1. This means that there must be 2.1 children per woman for the country’s population to remain stable. In practice, this means that one in three women must give birth to at least three children.
According to statistics, the number of people of working age in China (aged 16–59) has been declining over the years. In 2025, people in this group accounted for around 60.6 per cent of the total population, whereas ten years ago this percentage stood at 70 per cent. The demographic situation in China is exacerbated by migration, as more and more citizens are leaving the country. This unfavourable trend, as the analysis shows, could significantly weaken economic growth in the long term and dash Beijing’s hopes of overtaking the US.
One-Child Policy
Many experts point out that the current demographic crisis is, to a certain extent, the result of the ‘one-child policy’ that has been in place for decades. Since 1949, the Chinese population has grown rapidly. This led to food shortages and a housing crisis. For this reason, the government introduced the policy, which remained in force from 1979 to 2016. Children born as the second or subsequent child in the family were denied a hukou, i.e. an official registration that grants access to social services and other benefits. Families with an “excessive” number of children were also persecuted by the state apparatus and fined. As a result of the one-child policy, sons were favoured in most Chinese families. For this reason, women were forced to terminate their pregnancies when it became clear they were carrying a girl. This led to a gender imbalance. Although the ratio has stabilised in recent years at around 104 boys for every 100 girls (by way of comparison: in 2000, there were 118 male births for every 100 female births), there is still a shortage of women of childbearing age in China.
Beijing is now attempting to reverse this unfavourable trend. In 2025, China’s first national childcare subsidy scheme came into force. Every family receives 3,600 yuan, or approximately 503 US dollars, per year from the state for each child aged up to three. A decision was also made to raise the retirement age. However, it remains to be seen what the results of these changes will be. Another decision designed to encourage the Chinese to start a family was a change in the law allowing them to marry anywhere in the country rather than being restricted to their place of residence. The initial results appear promising: in the third quarter of 2025, the number of marriages rose by 22.5 per cent. From 1 January 2026, Beijing has also removed contraceptive pills from the list of tax-exempt goods and services. The government is also calling for a reduction in the number of ‘medically unnecessary’ abortions. It should be noted, however, that after many years of practising forced abortions, Chinese society is currently the most tolerant in the world when it comes to this procedure.
One of the most significant factors driving this demographic decline, which is affecting the economy, is the loss of productivity. According to recent forecasts, the proportion of the Chinese population aged between 16 and 64 is set to fall from 69.33 per cent in 2024 to 59.14 per cent in 2050. Unless this can be offset by technological innovation, stagnation in the Chinese economy appears inevitable.
Another negative factor is the weakening of domestic demand. Young people and middle-aged people are the two groups with the highest levels of consumption. The smaller their numbers, the lower domestic demand. The decline in the birth rate leads to a situation described as ‘still poor and already old’. In this scenario, China could fall into a ‘middle-income trap’, which refers to a situation where a country that has reached a middle income (measured by GDP per capita) is unable to effectively transform and modernise its economy (for example, due to a lack of innovation, stagnant productivity or institutional rigidity), leading to long-term economic stagnation and making it impossible to advance unhindered into the ranks of high-income countries. According to the World Bank, China’s gross per capita income in 2023 stood at US$13,390, placing China among the group of middle-income countries. If the demographic crisis persists, it will be difficult for China to rise to the ranks of the wealthiest nations.
