Revised U.N. data shows the speed of China’s aging after it accelerated its ‘demographic dividend’
4 min
When China launched its one-child policy more than four decades ago, it sped up an evolution toward smaller family sizes that would have happened more gradually.
The policy supercharged the country’s workforce: By caring for fewer children, young people could be more productive and put aside more money. For years, just as China was opening its economy, the share of working-age Chinese grew faster than the parts of the population that didn’t work. That was a big factor in China’s economic miracle.
There was a price and China is now paying it. Limiting births then means fewer workers now, and fewer women to give birth. A United Nations forecast published Thursday shows how quickly China is aging, a demographic crunch that the U.N. predicts will cut China’s population by more than half by the end of the century.
In the late 1970s, China’s leaders feared a population explosion that would drain the country’s resources. When Deng Xiaoping rolled out the one-child policy nationwide in 1980, he said, “We must do this. Otherwise, our economy cannot be developed well.”
A young population has helped drive economic growth in developing countries across the world, including in China’s neighbor Japan starting in the 1950s. Economists call it a demographic dividend—the window, generally of a few decades, when a country has far more working-age people than young and elderly dependents. As such countries grow wealthier, people naturally choose to have fewer children and the population starts to age.
That was also the trajectory in China—just faster.
Knowingly or not, China essentially borrowed from its own future by accelerating its so-called demographic window. How the effects of the policy have sped up China’s demographic bind is scrambling the long-term models demographers usually work with.
“The challenge with China is that from one year to another the situation can change quite fast,” said Patrick Gerland , head of the U.N.’s population estimates and projection section. “Within the last decade, the changes have been very big, both in policy and in the numbers.”
For example, in its just-published global estimates, the U.N. expects China’s population to drop from 1.4 billion today to 639 million by 2100, a much steeper drop than the 766.7 million it predicted just two years ago.
Even so, the U.N.’s prediction looks optimistic compared with other estimates. Researchers from Victoria University in Australia and the Shanghai Academy of Social Sciences have predicted that China will have just 525 million people by the end of the century.
It is impossible to say what China’s population trajectory would have been without the one-child policy. But a comparison with a broad group of other countries gives a clue.
Research by U.N. demographers illustrates how China’s demographic window opened faster and more sharply than in other “less developed” countries, and then closed equally quickly. The population of Chinese aged 20-64—the age when people are most likely to work—grew faster than children and the elderly in the years after the one-child policy was implemented. Before the policy ended, the trajectories had already reversed.
The broader group of other countries shows a smoother ride with the demographic window lasting well into the 2040s.
With China’s opening to the West, it became the world’s factory floor with millions of young people determined to work their way out of poverty. For most of the next decades, Chinese growth topped double-digit percentages.
The optimism was on full display during the 2008 Beijing Summer Olympic Games. When the global financial crisis hit soon after, China kept growth humming and was credited with helping to save the global economy. A few years later, China overtook Japan as the world’s No. 2 economy.
But by 2013, China’s demographic dividend was largely over, according to research by Andrew Mason , an emeritus professor of economics at the University of Hawaii, and Wang Feng , a sociology professor at the University of California, Irvine.
Now, slowing economic growth and demographic changes feed off each other for a gloomy outlook.
“People always count on the [Chinese] government to do more to prop up the economy but the reality is that there’s not a lot the government can do,” Wang said.
Over the next decades, China’s population is likely to show a contrast from, say, India, where the age distribution is following a more natural progression, or the U.S., where immigrant inflows help counteract the aging of the population.
By the end of the century, the U.S. population will be about two-thirds of China’s, compared with less than a quarter now, according to the U.N.’s latest projections. And by then, India, which has overtaken China as the world’s most populous country, will have more than twice as many people as China.
The real demographic impact in China won’t fully hit until the middle of the century, when many of those born during the one-child policy will reach retirement—while still caring for aging parents, said Wang.
By 2050, the U.N. now projects 31% of Chinese will be 65 or older. By 2100, the share will be 46%, approaching half of the population. In the U.S., the share is expected to be 23% and 28%, respectively.
The U.N.’s revised forecasts see Chinese births dropping below nine million this year. In 2022, it had predicted that 10.6 million would be born in China in 2024. The U.N. now expects China will have only 3.1 million newborns a year by 2100.
Not only are there fewer women to give birth these days, but many young women, mindful of their mothers’ suffering during the one-child policy, are less interested in marriage and children, driving down the fertility rate.
As births slip, China’s elderly population is ballooning.
China expects a glut of more than 40 million new retirees—more than the population of Canada—over the five-year period ending in 2025.
The old-age support ratio, a rough indicator of the number of workers for each retiree used by the Organization for Economic Cooperation and Development, is projected to decline from more than four now to fewer than two in 2050, according to The Wall Street Journal’s calculations of the U.N.’s latest data. It will likely reach one worker per retiree by the end of the century.
In reality, due to China’s low retirement age, with women clocking out as early as 50 and men at 60, the support ratio could be even lower.
Beijing as well as demographers and sociologists have said a highly educated population and the advancement of technology such as artificial intelligence, could help China weather such shocks, as more jobs will be automated.
The U.N.’s Gerland said that while the one-child policy was the main demographic event in recent decades, the waxing and waning in different Chinese age groups also reflect tumultuous periods in China’s past, such as the Cultural Revolution and Great Leap Forward, which had substantial demographic impact on the size of the various cohorts born during these years.
“Because of China’s history, the population is going to carry over some of these memories of the past and it will take many generations for all of these past stories to be forgotten,” he said.
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Multinationals like Starbucks and Marriott are taking a hard look at their Chinese operations—and tempering their outlooks.
4 min
For years, global companies showcased their Chinese operations as a source of robust growth. A burgeoning middle class, a stream of people moving to cities, and the creation of new services to cater to them—along with the promise of the further opening of the world’s second-largest economy—drew companies eager to tap into the action.
Then Covid hit, isolating China from much of the world. Chinese leader Xi Jinping tightened control of the economy, and U.S.-China relations hit a nadir. After decades of rapid growth, China’s economy is stuck in a rut, with increasing concerns about what will drive the next phase of its growth.
Though Chinese officials have acknowledged the sputtering economy, they have been reluctant to take more than incremental steps to reverse the trend. Making matters worse, government crackdowns on internet companies and measures to burst the country’s property bubble left households and businesses scarred.
Now, multinational companies are taking a hard look at their Chinese operations and tempering their outlooks. Marriott International narrowed its global revenue per available room growth rate to 3% to 4%, citing continued weakness in China and expectations that demand could weaken further in the third quarter. Paris-based Kering , home to brands Gucci and Saint Laurent, posted a 22% decline in sales in the Asia-Pacific region, excluding Japan, in the first half amid weaker demand in Greater China, which includes Hong Kong and Macau.
Pricing pressure and deflation were common themes in quarterly results. Starbucks , which helped build a coffee culture in China over the past 25 years, described it as one of its most notable international challenges as it posted a 14% decline in sales from that business. As Chinese consumers reconsidered whether to spend money on Starbucks lattes, competitors such as Luckin Coffee increased pressure on the Seattle company. Starbucks executives said in their quarterly earnings call that “unprecedented store expansion” by rivals and a price war hurt profits and caused “significant disruptions” to the operating environment.
Executive anxiety extends beyond consumer companies. Elevator maker Otis Worldwide saw new-equipment orders in China fall by double digits in the second quarter, forcing it to cut its outlook for growth out of Asia. CEO Judy Marks told analysts on a quarterly earnings call that prices in China were down roughly 10% year over year, and she doesn’t see the pricing pressure abating. The company is turning to productivity improvements and cost cutting to blunt the hit.
Add in the uncertainty created by deteriorating U.S.-China relations, and many investors are steering clear. The iShares MSCI China exchange-traded fund has lost half its value since March 2021. Recovery attempts have been short-lived. undefined undefined And now some of those concerns are creeping into the U.S. market. “A decade ago China exposure [for a global company] was a way to add revenue growth to our portfolio,” says Margaret Vitrano, co-manager of large-cap growth strategies at ClearBridge Investments in New York. Today, she notes, “we now want to manage the risk of the China exposure.”
Vitrano expects improvement in 2025, but cautions it will be slow. Uncertainty over who will win the U.S. presidential election and the prospect of higher tariffs pose additional risks for global companies.
For now, China is inching along at roughly 5% economic growth—down from a peak of 14% in 2007 and an average of about 8% in the 10 years before the pandemic. Chinese consumers hit by job losses and continued declines in property values are rethinking spending habits. Businesses worried about policy uncertainty are reluctant to invest and hire.
The trouble goes beyond frugal consumers. Xi is changing the economy’s growth model, relying less on the infrastructure and real estate market that fueled earlier growth. That means investing aggressively in manufacturing and exports as China looks to become more self-reliant and guard against geopolitical tensions.
The shift is hurting western multinationals, with deflationary forces amid burgeoning production capacity. “We have seen the investment community mark down expectations for these companies because they will have to change tack with lower-cost products and services,” says Joseph Quinlan, head of market strategy for the chief investment office at Merrill and Bank of America Private Bank.
Another challenge for multinationals outside of China is stiffened competition as Chinese companies innovate and expand—often with the backing of the government. Local rivals are upping the ante across sectors by building on their knowledge of local consumer preferences and the ability to produce higher-quality products.
Some global multinationals are having a hard time keeping up with homegrown innovation. Auto makers including General Motors have seen sales tumble and struggled to turn profitable as Chinese car shoppers increasingly opt for electric vehicles from BYD or NIO that are similar in price to internal-combustion-engine cars from foreign auto makers.
“China’s electric-vehicle makers have by leaps and bounds surpassed the capabilities of foreign brands who have a tie to the profit pool of internal combustible engines that they don’t want to disrupt,” says Christine Phillpotts, a fund manager for Ariel Investments’ emerging markets strategies.
Chinese companies are often faster than global rivals to market with new products or tweaks. “The cycle can be half of what it is for a global multinational with subsidiaries that need to check with headquarters, do an analysis, and then refresh,” Phillpotts says.
For many companies and investors, next year remains a question mark. Ashland CEO Guillermo Novo said in an August call with analysts that the chemical company was seeing a “big change” in China, with activity slowing and competition on pricing becoming more aggressive. The company, he said, was still trying to grasp the repercussions as it has created uncertainty in its 2025 outlook.
Few companies are giving up. Executives at big global consumer and retail companies show no signs of reducing investment, with most still describing China as a long-term growth market, says Dana Telsey, CEO of Telsey Advisory Group.
Starbucks executives described the long-term opportunity as “significant,” with higher growth and margin opportunities in the future as China’s population continues to move from rural to suburban areas. But they also noted that their approach is evolving and they are in the early stages of exploring strategic partnerships.
Walmart sold its stake in August in Chinese e-commerce giant JD.com for $3.6 billion after an eight-year noncompete agreement expired. Analysts expect it to pump the money into its own Sam’s Club and Walmart China operation, which have benefited from the trend toward trading down in China.
“The story isn’t over for the global companies,” Phillpotts says. “It just means the effort and investment will be greater to compete.”
Corrections & Amplifications
Joseph Quinlan is head of market strategy for the chief investment office at Merrill and Bank of America Private Bank. An earlier version of this article incorrectly used his old title.
