China's population drops. What it means for Bangladesh

It was predicted quite some time ago. But when the data finally came on Tuesday that China's population has shrunk for the first time in 61 years it came with a bang, opening scopes for a widespread impact throughout the world including Bangladesh.

According to China's National Bureau of Statistics, China's population declined by 850,000 to 1.41 billion in 2022, which proved that pronatalist policies introduced in 2016 and 2021 did not yield the intended results.

Even before the historic fall, China's working-age population has been declining for years and projections show 25% of the population will be 60 years or above by 2030.

Compared to 2010, China's labour force has fallen by more than 10% in 2020 and its demographic dividend is likely to shrink or even disappear in the next 5-6 years.

According to a Bloomberg report, this threatens economic growth, which has been predicated on a vast labour supply – not to mention there may not be enough able-bodied people to take care of all those seniors. Also, China's economy may struggle to overtake the US in size and the country could lose its status as the world's most populous to India this year.

What it means for Bangladesh

Dr Mohammad Mainul Islam, professor and former chairman of the Department of Population Sciences at Dhaka University, said Bangladesh has a good chance to benefit from China's shrinking population.

He said as China's workforce has been declining, the country will shift from labour-intensive industries to capital-intensive ones. This is where he sees Bangladesh's opportunity.

"Low-skilled labour-intensive industries may shift to countries like Bangladesh. Also, investments from other countries may come to Bangladesh instead of China," Prof Mainul told The Business Standard on Tuesday.

But that shift will not come automatically unless Bangladesh addresses some key bottlenecks, such as skills of workforce, business environment and good governance, according to him.

He also pointed out the declining total fertility rate in Bangladesh, which stands at 2.3 now very close to the replacement rate of fertility from 6.3 in 1975-76.

The ageing population is already on a rise in Bangladesh and if the fertility rate goes down to 2 or below, it will rise further, creating challenges such as extending social security and care-giving expenses by the government, he added.

Dr Selim Raihan, professor of economics at Dhaka University, said China's population has declined as a result of the single-child policy introduced in the 1980s when the country was relatively underdeveloped with a high poverty rate.

As a result, per capita GDP of China rose to about $13,000 and the country is now on track to become a high-income nation, he said.

He said from now on China's economy will suffer somewhat as its working-age population will decline, but it is not a unique case for China.

He said prior to China, Japan and Europe also faced negative growth in demographic profile.

Countries that saw negative population growth had faced shortage of labour, and were forced to increase wages and spending on health care and caregiving for the aged population.

China would have to face the same type of crises, Selim Raihan, also the executive director of Sanem, said.

"The structural change in demography of China will hamper the competitiveness of the low-skilled labour dependent industries. The country will have to shift from low-skilled labour intensive to high-skilled or capital-intensive industry," he said.

He said industries like leather and readymade garments may not be viable in China and Bangladesh's competition with the country in these areas in the global markets will lessen.

"Also, Bangladesh's opportunity to export more in China will grow," said Raihan.

But he reminded that Bangladesh has to compete with Vietnam, Cambodia and even India to get its share.

"We will not be able to exploit the opportunity without increasing our competitiveness," he noted.

What led to negative population growth in China?

Decrease in China's population in 2022 was not a surprise as China's fertility rate has remained lower than the replacement level since 1992.

Replacement level fertility is the level of fertility at which a population exactly replaces itself from one generation to the next.

In most countries, replacement level fertility can be taken as requiring an average of 2.1 children per woman.

Partly because of the longer period of education in China, people are getting married late and having children even later.

In an article in the China Daily, Yuan Xin, director and a professor of the Research Center for Strategic Studies on Aging and Development at Nankai University, said it is believed that the negative growth of China's population is a natural outcome of long-term low fertility rate for decades.

"But contrary to popular opinion, I believe China is still seeing zero population growth, rather than negative growth. This is also because the Covid-19 pandemic has greatly suppressed childbirth in the past three years. For instance, people planning a baby were advised against getting vaccinated and those who had got infected were advised against planning a baby till six months after their nucleic acid test turned negative," Xin said.

Lu Jiehua, a professor of demography at the Institute of Sociology and Anthropology, Peking University, said the negative population growth is likely to become the new norm, requiring China to make full preparations and change her mindset and development mode for a relatively young society.

"To promote childbirths, China should build a pro-childbirth system covering not just childbirth policies, but also love marriages, employment, housing, medical care and elderly care. Only by building an all-around pro-humanity system and environment, we can help boost willingness among couples to have babies," said Jiehua.

Li Jia, deputy head of the Aging Society Research Center at the Pangoal Institution, said the negative population growth can be attributed more to a shrinking fertility rate, rather than a slightly increasing mortality rate, both caused by the Covid-19 pandemic in the last three years.

"The pandemic, which led to stressful working and living conditions for people, dented many people's willingness to get into a relationship or marry," China Daily writes quoting Jia.

She said since most Chinese people prefer having babies after tying the knot, fewer marriages mean a lower fertility rate.

Immediate impact in China

After the report that the population of China declined for the first time in more than 60 years, stocks of baby products and fertility treatments plunged in China.

Bloomberg reports Ningbo David Medical Device Co, a manufacturer of incubators, fell as much as 11%, while Kidswant Children Products Co and Annil Co, producers of apparel, each fell more than 7%.