The One-Child Policy Supercharged China’s Economic Miracle. Now It’s Paying the Price. - Kanebridge News
Share Button

The One-Child Policy Supercharged China’s Economic Miracle. Now It’s Paying the Price.

Revised U.N. data shows the speed of China’s aging after it accelerated its ‘demographic dividend’

By LIYAN QI
Sat, Jul 13, 2024 7:00amGrey Clock 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.



MOST POPULAR

The Australian leather house has opened an immersive four-day pop-up in Manhattan, unveiling its Bloom Collection and redefining what a product launch can look like.

Following the successful launch of its Palais Collection, MAISON de SABRÉ has unveiled a new modular handbag system offering more than 720 styling combinations.

Related Stories
Money
The Sudden Unraveling of Wall Street’s Momentum Trade
By Gregory Zuckerman and Gunjan Banerji 31/08/2026
Money
Wall Street Is Counting on Nvidia to Keep the AI Party Going
By David Uberti and Krystal Hur 24/08/2026
Money
China Is Opening the First Regular Cargo Route Through the Arctic
By 18/08/2026

Wall Street’s hottest momentum trade has reversed sharply, as former winners tumble and heavily shorted stocks surge.

By Gregory Zuckerman and Gunjan Banerji
Mon, Aug 31, 2026 3 min

Wall Street’s hottest trade has gone ice cold.

For years, it paid off to buy stocks that were rising in price—and bet against struggling shares. The momentum trade was especially profitable this year, as investors piled into hot stocks including Micron TechnologyNvidiaAdvanced Micro Devices and other artificial-intelligence darlings while wagering against those likely to be hurt by the embrace of AI.

The S&P 500 Momentum Index soared 44% in the second quarter, its best quarterly performance on record, and it surged 133% over the past five years, nearly double the broad market’s performance.

Mega funds and rookie investors alike piled into the trade, some using leverage and options contracts in an effort to amplify their returns, propelling the underlying shares higher.

“It is a self-fulfilling prophecy,” said Matthew Tym, managing director at Cantor Fitzgerald, of the trade.

Suddenly, the trade is a loser. The momentum index has tumbled more than 9% since July 1, lagging behind the S&P 500’s 2.8% gain. The index—which tracks stocks in the S&P 500 based on a “momentum score”—is on track for the biggest quarterly underperformance in 25 years. July was the second-worst month for the momentum trade in around 40 years, according to Bank of America estimates; the only month worse was April 2009, in the teeth of the global financial crisis.

Hedge funds that bought momentum shares while shorting low-momentum stocks suffered even more. At the same time, a basket of the most popular stocks held by hedge funds tracked by Goldman Sachs recorded its biggest one-month underperformance in July relative to the S&P 500 in more than 20 years, according to the bank’s analysts.

Momentum trading is based on a rather simple observation: Investments that go up tend to keep outperforming; those that underperform often remain laggards. This kind of trading might seem too simple a stock-picking strategy to work. Yet it often has.

“For decades, it didn’t take a lot of sophistication to run a momentum strategy and make a decent living at it,” says Agustin Lebron, senior researcher at EquiLibre, a trading firm.

Part of the reason: It takes a while for corporate and other information to spread to various investors, so they slowly build positions, producing buying momentum.

“A huge pension fund can’t flip around its positions in a day,” says Lebron. “Behavioral biases also account for some of the effect, as well—people tend to sell their winners too early and hold losers too long.”

Fans of the strategy point to the human tendency to extrapolate from past results—and chase investment returns—noting that momentum patterns have been evident in markets for decades, even centuries. They also say that some of the worst months for momentum strategies are during longer periods of outperformance.

Some have been doing the trade by buying the strongest investments in a sector while shorting the weakest; others lean in to rising markets or asset classes. Still others use a quantitative approach or turn to banks or others who sell ways to make distinct wagers on momentum as a “tradable factor” or a “thematic basket.”

The fans remain believers. “Any strategy has disappointing periods,” says Antti Ilmanen, global co-head of the portfolio solutions group at AQR Capital Management.

The surge in Moderna and other biotech stocks helped crush the momentum trade. These shares were among the most heavily shorted in recent years, but positive news on a cancer vaccine from Moderna and Merck sent those stocks flying, crushing some quant and other hedge funds. Moderna is up around 150% so far this month.

These traders had an especially rough day on Aug. 19, which Goldman Sachs told its clients was the worst day for “systematic long-short managers” in more than two years. About half of the losses were because of momentum trades, the bank said.

Some traders have begun to short, or bet against, the very stocks that propelled the momentum trade earlier this year. Net short positions in futures tied to the Nasdaq-100 index among speculators recently climbed to some of the highest levels of the past two decades, according to data from the Commodity Futures Trading Commission.

The about-face is a sign of how markets have become more treacherous for investors, even as indexes keep climbing. Part of the issue: the recent meltdown of Situational Awareness, a hedge fund that had piled into some of the most popular momentum shares, including chip stocks. After a period of market tumult, Nvidia shares rocketed almost 9% after its earnings, showing how quickly sentiment can shift.

Some investors say the run-up in share prices driving tech stocks higher reminds them at times of the dot-com frenzy decades ago.

Mike Ogborne, the founder of San Francisco-based Ogborne Capital Management, said he has grown more cautious on technology stocks and is keeping more of his portfolio in cash than he typically does.

And he is nervous about the surge in spending by technology giants and quarterly capital expenditures that keep rising.

“It is a little bit like Cinderella and the clock striking midnight. You don’t know when midnight is going to come around,” Ogborne said. “They don’t send a memo around telling you when the capex cycle is over.”