The Effect of Population Growth in China

free essayThe increase of Chinese population influences the development on the country in a negative manner. Having experienced the baby boom in the past, Chinese government restricted the allowed number of children each family might have, which was aimed at restricting the population in the country and controlling the birth rate. However, in the long-term period it appeared that the one child policy restricted the availability of the labor power, which leads to the increase of 60+ aged people.

Labor reserves are the primary forces of the economy of any country. Focusing on China, it is necessary to mention that in the past, this country suffered from overpopulation, and to solve the problem of high birth rates and protect its economy in the process the government implemented a one-child policy. When thinking about the overpopulation problem and saving the Chinese economy from failure, the one child policy seemed like a good idea in 1980. Nowadays, more than 35 years have passed from the time when the policy was implemented and it is possible to state that the one child policy did not meet the expectations of the country leaders. Before the policy was implemented, it was common for Chinese families to have three, four, and even five children if not more. However, after the implementation of the one child policy, families were restricted to one birth only, or two children in rare cases. Nowadays, the situation has changed and one child policy works against Chinese society. The current population of those 35 years old and younger is considered the driver of the country’s labor force. However, this demographic group is far less numerous compared to aging population, which is constantly on the rise. As a result, the costs of supporting the aging population are increasing and it is hard for the working population to cover the pensions required to achieve this.

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The understanding of the influence of the population on Chinese economy is possible only with the deeper analysis of the country development. China is one of the oldest civilizations in the world. Over the long course of its history, it was run by a succession of dynasties, which contributed to different spheres of country development. Some of these dynasties could boast of inventions, while other managed to reach the highest prosperity of the social development. However, there were also the periods of decay and instability. The population of China during the period of Chinese dynasties was dense. In fact, its population was double that of the people on the entire European continent. Constant growth of the population spurred the economic rise of the country. During this time, farming was the main focus of economic development of China. Therefore, the increase in the population could be explained by the desire to have more support in the household and to gain more benefits (Chai, 2011). The major reason for controlling the birth rates was poverty. Poor families tried to plan the number of children that they intended to have and keep it at relatively low level. The birth rate during this period was high; however, for many reasons such as disease and the lack of the modern health care system that is taken for granted today, the infant mortality rate was also considerable. Moreover, many children did not survive past the age of ten. Manmade and natural disasters also influenced the mortality rate. The last emperor of the Qing Dynasty managed to strengthen the country and contribute to its development. However, the Revolution of 1911 put an end to monarchy rule and the Republic of China was founded. This sparked beginning of the modern history of Chinese development.

Chinese development from 1911 to 1949 was characterized by instability and disruption. Trying to raise the economy, some industries were developed including the military as China prepared for war with Japan. Overall, starting from the revolution and ending with the victorious communist regime, the country suffered from many wars, which took the lives of millions of people. In 1949, the Republic of China collapsed. As a result of Communist invasion, the new People’s Republic of China was founded (Chai, 2011). This is the beginning of the period, which will be analyzed in this paper. Reflecting the contemporary history of China, the period from 1949 can help provide a perspective concerning the dependency on the economy from the population raise in the country. The study will provide statistics and some grounded evaluation of the increase influence in the population, and the changes in relation to the working and aging population on the Chinese economy. According to Chai (2011), “exceptionally high-population density resulted in low labor productivity in agriculture, and at the same time generated a large pool of surplus in the traditional economy” (p. 12). This particular statement reveals the major issues in the Chinese economy, the raise of the economic development on the one hand, and problems on the other.

The population increase affects the economy of China and its influence is going to be discussed in the paper. Using different periods in the history of development of China, the paper will show the reflections on the economy. Also, the influence of the number of aging and working population in the country will be considered as it also has significant influence on the Chinese economy. Today, the growing imbalance between the working and aging population will worsen since the amount of aging people is set to increase dramatically and the number of the working population will rise at slower rates. If the one child policy is not changed, the number of working people will remain at the same low level, which can result in slower economic growth in China. The first section of the paper will introduce the problem associated with population growth and its relation to the economics. The issue of aging is also touched upon in order to show the dependency between the population and the economy. The second section is devoted to an analysis of the past and the present condition of the Chinese economy, to the statistics from different years about the level of working and aging population, and to the analysis of the level of economic development related to the number of working and aging population during different years. The third section will summarize the whole report about the impact of the population on the economy of China. By moving away from the one child policy, the population growth in China can positively affect the economics in the country due to the increase of the working population in the future.

Chinese Economy in the Past and Nowadays

Fang and Leong (2014) have divided the economic development of China into three major periods. These periods reflect different social, political, and economic development of the country, which was reflected in Chinese population and vice versa. The first period took place between 1949 and 1961, the second period occurred from 1962-1978, and the third period started in 1979 and continues today. The period between 1949 and 1961 can be characterized by high fertility and mortality rates. This was the period when the emerging communist government established new rules and tried to concentrate the economy of the country in their hands. Many new policies and changes were implemented and this period was characterized by its economic fluctuations. Having considered this as the Period of Recovery of the National Economy, the government invested heavily into industrialization, heavy manufacturing and other international trade, but neglected the agricultural sector, which led to the Great Leap Forward and resulted in famine in many regions and numerous deaths in the Chinese population (Thomas, 2007). During this period, the period when the reforms were implemented, and “the average growth rate of real per capita GDP was a modest 3% a year” (Zhu, 2012). Overall, the three periods mentioned above have specifically influenced the development of the Chinese economy and some particular relation to the level of population. The main idea of this section is to consider the economic development of China to be able to relate it to the statistical data of the population change in the following sections.

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The post-1949 was characterized by the high level of agriculture in the region. More than 80% of the lands were distributed to rural poor households, which received access to land due to the agrarian reform in 1950. Overall, this period of Chinese economics is characterized by the satisfactory level of development. As time passed investments agriculture increased, although industrial development of the country remained the top priority. Many people moved from rural areas to the urban ones. During the four years between 1953 and 1957, the agricultural sector was allowed to build its relations in the free market, but the problems appeared in 1958 due to the Great Leap Forward, which resulted in compulsory collectivization of the land and rejection of the free market relationships (Zhang, 2003). The Great Leap was the major event that negatively influenced the development of the economy during the mentioned period. This period was unstable and it gave way to the Cultural Revolution in China, which covered another period of economic development in China, starting in 1962 and lasting till 1978, the period of one child policy implementation.

The period between 1962 and 1978 was characterized by the reduced mortality rates as a result of improvements in the agricultural sector. Having brought technology to agriculture, rather than exclusively in the heavy manufacturing processes, Chinese government initiated the Cultural Revolution in the society. Although the mortality rates fell during this period, natural disasters influenced the population rate of the country considerably. Although several policies improved the life expectancy of China’s citizenry, the death of people due to disasters nonetheless prevented the country from experiencing the positive results that otherwise might have resulted. According to, Zhang (2008), “the speed of the economy fell slow, the industry suffered a great loss, and the national economy was going bankrupt had it been without the maintenance of the agriculture at a low level” (p. 14). Therefore, trying to focus on industrial development, China failed, since working on agriculture for a long time, this shift could not contribute to the economic development of China too fast. As for the economy, the annual compound GDP growth during this period reached 4.4% (Thomas, 2007). This was the period of the Chinese Cultural Revolution, which resulted in a serious regression of Chinese education and culture. Having closed China off from the rest of the world during this period, Chinese leaders wanted to impose their specific rule on the country. During this period starting from 1970s, the part of the agricultural sector significantly decreased, giving way to other economic sectors.

Looking at Figure 1, it is possible to see the level of economic development of different spheres during various years. Agriculture as a percentage of the general economic development of China began to decrease in 1970. The share of agriculture sector decreased by 24 points in 2000 compared to 1970, while other sectors experienced increases (Figure 1). In general, the economic development of China before its reforms was based on the planned system and only after the implementation of the reforms was a market-oriented system imposed that exhibited certain characteristics of capitalism. Figure 2 provides a detailed analysis of the Chinese economy development from 1970 to 2000. The pre-reform period depicts different development of economy in various sectors. Thus, the GDP was at the lowest level before the reforms and significantly increased after implementation of the changes in China. However, the rates of the foreign trade fell. The major barriers were the Cultural Revolution, which stopped economic development of the country and the closure of the borders during 1980. Only after the death of Mao Zedong foreign relations were renewed, having opened export and imports in China. However, these rates did not reach the pre-reform period in 2000 (Zhang, 2003). The Chinese economy developed differently during various periods of time for several reasons.

The period of economic development starting from 1979 is closely related to the one child policy, which resulted in the reduction of fertility rates in the county from 1.8% in 1978 to 1% in 1990s and 0.5% in 2005. At the same time there, other changes and reforms in China positively influenced the country development (Thomas, 2007). Starting from 1979, Chinese economy raised rapidly. The basic reasons for such growth were the opening of the Chinese borders for foreign investments, trade, and relationships. Overall, the best activities in the annual growth of the economy in China, as provided by Zhang (2003), can be observed during the period of the reforms. Despite the fact that current Chinese economy continues to grow, it has not be able to reach the high levels that it had previously achieved (Figure 2). For example, the growth in the service industry reached its peak in 1979-1984, while it experienced considerable stagnation in 2000. Grain production reached its lowest rates in 2000, while previously this section had experienced considerable growth between 1979 and 1984. The growth in oil crops from 1979-84 stood at 14.9% annually, but dropped to 5.6% by 2000. However, the fish industry saw gains of 7.9% in 1949-84 to 10.2% in 2000 (Zhang, 2003). This comparative analysis highlights the differences in the pace of Chinese economy development during each of the respective periods.

New financial injections in the forms of investments helped the country grow considerably. Opening its borders allowed China to sell its products all over the world. Paying attention to high level of productivity and working potential of Chinese population, a huge number of products entered the markets of many countries all over the world, increasing the financial potential of the country. Having chosen a market-based economy, China still was oriented on the domestic economy, rather than foreign. The state kept industrial and economic sectors under its control. The agriculture sector was under the ownership of private farmers due to long-term leases for farmers, and this sector contributed greatly to the development of China at the international arena (Zhang, 2008). The fast development of the Chinese economy nowadays can be attributed to several factors. Today China remains one of the fastest growing world economies. Having opened its borders, it still preserved it domestic orientation in such spheres as transportation and energy. Therefore, foreign investment has strongly set in the country, helping it develop and flourish by minimizing the importing of products and relying on domestic products only. Thomas (2007) has stated that “there are many problems associated with China’s current economic development policies, including heavy-handed government controls, abuse of the environment, and a growing competition with the global economy for scarce energy and other resources” (p. 27). In spite of these issues, scholars still believe that the Chinese economy will continue to prosper until at least 2020. This date assumes the one child policy will remain in effect, which influences the economy of the country in different directions.

How It Works

Contemporary level of Chinese economy has its roots in ancient history of its development. As one of the oldest civilizations in the world and possessing a considerable part of the world population, China has managed to improve its economic situation during the past 30 years. Basing the analysis from 1949, when China experienced decay in its development and problems in the economy, the analysis has moved to 1980s, when the reforms and changes in the structure of the economic development helped drive the country’s prosperity. Starting from agriculture, the government paid significant attention to social production, formed a specific mechanism of state control, including private ownership of farming lands, other industries of products development, and setting the economy in such a way that the government was the main consumer of the manufactured goods. As a result, the reforms have shaken Chinese economy and have set the tone of the country’s development. Twenty-five years have passed from the date of the first reform implementation, but the country still experiences its effect and contribution from the fast growing economy.

Statistics of the Population and the Level of Working and Aging People

China is a powerful country with strong economy. Examining its population rates through the years, families had about six children on average in the period from 1950 to 1955. The rate of newborns fell significantly from 1990 to 1995, from around 6 in 1950-1955 to 2 in 1990-1995 (Figure 8). On average, families had no more than 2 children. The life expectancy in China was approximately 73 years in 2010 and it was predicted to rise to 80 by 2050 (Banister, Bloom, & Rosenberg, 2010). The latest estimates about the population in China date back to 2015, stating the number of 1.37 billion people. The population in China in 1950 was 552 million. The employed population in China comprises 77,451 million, while the number of unemployed people is 966 thousand people. China Population 1950-2016 (2016) has reported about the averaged 59,668.23 million employed people in China from 1952 until 2015 with the highest rate in 2015 and the lowest rate in 1952 (20,729 million).

Figure 3 depicts the level of Chinese population during different years and it is obvious that the population continues to grow. The reasons for this include high life expectancy and baby boomers born from 1950s to 1980s, before the implementation of the one child policy. Based on the world’s population today, every fifth person lives in China. The numbers are constantly changing, but the tendency of the population to increase still remains, despite the fact that the growth rate is small, only 0.53% compared to the previous year (China Population, 2016). Examining other population characteristics, it should be mentioned that in 2015 17,084,027 children were born alive. The number of stillborn deaths was slightly more than half this number, 9,807,269 people (China Population, 2016). The male population exceeded the number of females (currently, 705 822 616 of males and 671 572 422of females). According to China Population (2016), the population of the county is expected to grow by 20,156 persons daily through the course of 2016.

Despite having an average population density of 143.3 people per square kilometers, the western and central parts of the country remain less populated compared to the east of the country, where population density is very high. Geographical peculiarities and the life conditions differ greatly in these regions, having influenced the distribution of the population. The working population Chinese population was 1,011,537,642 in 2015. The number of children up to 15 years old was 241,859,243 and the population aged 65+ was 121,740,953 (China Population, 2016). Aging and the number of aged population influences the economic development of the country.

Aging in China is one of the main problems as it is expected that the number of elderly in the country will closely approach that of the working population, which will lead to economic problems down the road. Taking into consideration the number of working and aging population, it is possible to calculate the age dependency ratio, which was 35.9% in 2015. This estimate means that the amount of people that depend on the working population and are under 65 is less than a half of the working population. Such estimates are considered to be low. The child dependency ratio, an estimate of the children up to 15 years old compared to the working population, was 23.9% in 2015, which was even lower than that of age dependency (China Population, 2016).

Banister, Bloom, and Rosenberg (2010) have “projected that the population ages 60+ and 80+ will reach 440 million and 101 million, respectively” (p. 5) by 2050. Nowadays, the percentage of the aging population is already very high. The situation is supported by the fact that about 37% of people aged 60+ are still employed. However, the situation began worsening starting from 2010 as the number of the aged population began growing considerably (Figure 5). It is obvious that the number of the population aged 80+ does not show any considerable discontinuities, while the statistics of people aged 65+ is predicted to be deviating starting from 2010 and continuing through 2050 when the number of aged population will continue increasing rapidly (China Population, 2016). The process of aging population growth continues today and what appeared to be the reason of the economic growth in the past can lead to difficulties in the future. According to Fang and Leong (2014) “the proportion of old people would reach 24% in 2050, while the working aged people would reduce from 74% in 2010 to 61% in 2050” (p. 2). Such estimates have been provided on the basis of the analysis of the birth rates and the life expectancy numbers. The crude birth rate in China was approximately 12.4 in 2014. As for the life expectancy, it was 74.7 years on average, with women living longer, 76.9 years, and men living 72.7 years (China Population, 2016). Overall, the changes of Chinese population from 1950 (the period where the analysis begins) to February 2016 can be seen on Figure 4, and the increase in population is obvious.

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The number of the aged population is increasing (Figure 6). The rate of the working people reached its peak in 2010 having shown a ratio of 2.53, which was reflected in the economic situation in the country. Nowadays, the rate of the working population has been on the decline, having peaked at the level of 2.5. It is predicted that the ratio of working-age to non-working-age population in China will reach 1.6, the same level that was seen in 1950 (Banister, Bloom, & Rosenberg, 2010). Such predictions are not optimistic as since the economy of the country depends on the population rates and on the ratios of working and non-working population, it can be presupposed that the economic development of 1950s can be expected with such a low ratio in 2050. This problem is a result of the one child policy, which started in 1980 and continues today. Developing and implementing one child policy in 1980, Chinese government expected only positive results, without thinking of the possible negative consequences the country could face in the future. Thus, the long-term effect was not considered having referred in the short-term effect only.

Despite the fact that China still remains among the leading countries in terms of population, the growth rate has fallen by 2014 (Figure 7). Statistics show that the rates of population growth began decreasing starting in the 1970s (being at the peak in 1967-1971, 2.73%) and reached the bottom in 2011-2012 (0.48%). Starting in 2013, the estimates have been growing, showing the positive tendencies in the population growth rate (China Population, 2016). However, this increase is too small to speak about considerable increases in the population in the future to be concerned about overpopulation.

Therefore, it can be said that the population issue in China is not an easy estimate. Having analyzed the changes in the population numbers and characteristics from 1950 to 2015, it is possible to conclude that this is one of the most fast-changing parameters in Chinese development. Being the highest populated country in the world, the Chinese population is distributed throughout the territory of the state unequally, having populated the east of the country and at the same time, the west and the center of the country are sparsely populated. Traditional Chinese families had many children and the population was mainly controlled by the high mortality rates of infants. Communist government of the People’s Republic of China reduced the level of hunger, increased the financial well-being of the population, improved the healthcare system, and eliminated various kinds of infections during the first years. All these factors provoked the reduction of the infant mortality and the increase of life expectancy. These factors led to the considerable growth of the population, which created serious concerns for the government. As a result, harsh administrative and political measures have led the natural reduction of population growth in China, having lowered it from the world average estimates. Nowadays, the population growth rate of the country remains at a low level, but the population in the country has increased as a result of high life expectancy and birth rates, supported by low mortality numbers.

The Analysis of the Level of Economic Development Related to the Population Growth and to the Number of Working and Aging Population

Economic growth depends on many different parameters and conditions, such as geographical location, political and social ties with other countries, economic relations with the outside world, financial capital inside the country and the opportunities to get it, technological development of the country, its market relations, and labor. Having taken China as a country under consideration, the analysis of the economic conditions and the statistical data about the population have been conducted with the purpose of seeing how population increase can influence economic development of China. Having divided Chinese economic development into three periods, it should be stated that fast and considerable growth in the economics during the initial two periods was possible because of foreign financial investments into its economy. In case of the country, which had incredible potential, but significantly lacked the technology and management practices, oversees investment brought not only the financial input, but helped China become an industrialized country with technological support and management know-how practices.

Overall, having considered the economic development and the population rate in China in different periods, it is possible to state that the relationship between the population and economic growth is undetermined. Having created a special environment based on economic and social policies, China has managed to encourage people to shift from agricultural sector to industrial sector, which promoted economic development. To the word, 90% of the economy in China in 1949 was focused on agriculture. The dependency of the economic development from the population was studied by Fang and Leong (2014), who focused on searching for explanations on how population growth can influence the economy in China. The period from 1962 to 2012 was selected because during this time China experienced substantial economic changes and one child policy through the reforms and policies. The research has managed to show that during the period when GPD growth was at 8.94%, the population growth was at a level of 1.41%. After the policies and reforms in terms of economy and birth were implemented, the GPD grew faster, reaching a level of 9.86% after the reforms compared to 7.12% GPD growth before the changes (Fang & Leong, 2014). This study has indicated proven that economic growth in China depends on population growth due to the specifics of the economy development. Having implemented technology in different spheres of economic development, skilled labor contributed to the GDP growth. The regression analysis conducted by Fang and Leong (2014) has found that 1% of the population growth in China contributed to 1.7% of economic increase. According to their research, “the population growth accounted 31% of the economic growth before the one child policy and dropped to 18% after” (Fang & Leong, 2014, p. 23). These numbers show the direct dependency of the economic development on the population growth. However, some researchers have presented counter arguments.

Wang (2010) has directed the views of the society, interested in Chinese development, not on the economy of the country as it is now, not on the energy and resource storages, but on China’s changing demography, which is considered to be one of the reasons for Chinese economic development. He predicts that the future of Chinese economy will be closely related to the population growth. The author indicates 160 million as one of the main numbers in Chinese future of economic development, as of 2010. Thus, Wang (2010) has indicated the following three aspects, which create the center of the issue. The first issue is “more than 160 million internal migrants who, in the process of seeking better lives, have supplied abundant labor for the nation’s booming economy” (Wang, 2010). The second issue is that “more than 160 million Chinese are 60 years old or older” (Wang, 2010) and the third issue is that “more than 160 million Chinese families have only one child, a product in part of the country’s three-decade-old policy limiting couples to one child each” (Wang, 2010). Being related to the population, these factors influenced Chinese economic development. Since the demography of China is changing, the future predictions are as follows. The number of the working population is going to decrease (a process that already started in the 1990s). Wang (2010) believes, “the era of uninterrupted supplies of young, cheap Chinese labor is over”. Nowadays, the raise of population in China increases the number of aged people. High level of expectancy supports the raise of the number of population aged 60+, non-working dependent on the labor population.

A deeper analysis of the situation has created the conditions under which one person will have to support two elderly parents. Moreover, paying attention to the same high rates of life expectancy, one child in the family may also be responsible for their grandmothers and grandfathers, as the increase in life expectancy rates makes this more likely. Therefore, one working person will be burdened with as many as four elderly people. This is a serious problem since aging is a process which cannot be stopped or regulated. Chinese government can only follow the process and search for other ways to prevent the coming economic crisis, led by an aging population. The Chinese government has taken a course on the fast growing economy that the country used to possess, with cheap and enthusiastic youth, willing to work. The issue of aging of the population will bring considerable changes in the demands for products and services, which the country has not experienced before. The government has started reacting to the situation it created. Waldmeir (2016) has spoken about repealing the one child policy since 2015, which he believes will result in a better balance between the young and old people in the society. However, this balance would be achieved not earlier than 60 years, when the first people born under this new policy will have reached their pension age.

In order to explain why the demographic changes in China influence the country’s economy is a sharp way and why China is taken as an example, as opposed to any other country, several factors can be indicated. First, China still remains one of the fastest growing countries economically and the country has not reached its peak of economic development. It still remains in the process of shifting from agriculturally-based country to one that is industrial. Second, the country’s international market relationships are at the developing stage. Even though China is experiencing the raise in the economic development, it is still in its evolution from the planned to market-based economy. Third, the government needed only 30 years to increase the life expectancy rates of the population. Wang (2010) states that some countries needed more than a century to reach those same numbers and some European countries have not reached such high rates in life expectancy even today. Fourth, only ten years were required for the Chinese government to halve the fertility rates in the country. Thus, all these factors show that China does not have time to prepare its economy due to the rapid aging of the population. The government will have to pay pensions and meet the health needs of older people, which are much higher that health needs of the country’s young population. The situation created by the Chinese government makes it difficult for it to adapt to the newly created situation fast and to prepare its economy to handle the upcoming changes. This is the major reason for the potential future economic crisis in China, caused by the population increase and overall demographic changes in the country.

Analyzing the relationship between Chinese economy and its population Wang (2010) uses terminology like the demographic dividend, which means “gains (or losses) in per capita income brought about by changes in a population’s age structure.” Using the statistical data of the World Bank, Wang (2010) managed to show Chinese per capita annual income growth from 1992 to 2000 to be on the level of 8.4% with the demographic dividend of 15% the country’s economic growth. However, starting from 2013 the demographic dividend turned negative, putting a serious imprint on Chinese economy. All the factors mentioned above along with the reduction of the working population negatively affect Chinese economy. The increased level of pensions is not the only problem Chinese population should experience in the future due to the raised number of aging people in the society. The reduction of the young population will influence many spheres in Chinese industries. The young population uses a number of services and facilities in the modern world. Young people are more interested in better and improved accommodation services, they are more inclined to eat out at restaurants and buy new products. By contrast, the aging population is less interested in new gadgets and new cars. Older people are also less likely to seek out entertainment and do not spend as much on new clothes and beauty services. Therefore, all these industries will also appear under the influence with the need to reduce the amount of sales.

Experiences cheap and excessive labor power in the past, the Chinese government structures its economy in this particular direction. However, the changes in the demographics should be considered. The falling number of the working population will lead to the reduction of the supply on employees and the increase in their demand. This is the first factor in increasing the cost of the working power, thus, the young working population will demand higher salaries for their qualified work, which will result in more negative influence on the country’s economy. In fact, such changes have already taken place in some spheres of country’s economy. Fang (2012) warns that qualified staff has already reduced the supply of labor power in the country since 2004, which has led to labor shortages and rapid inflation of wages. These processes have already activated others related to investment. The author states that “Beneath the surface of increase in labor costs, a decrease in investment profitability and slow-down in the improvement of productivity, lies the problem of a reduction of China’s potential growth rate” (Fang, 2012). Therefore, the increase of the cost of labor has reduced the amount of investment in the country and can result in more serious consequences for Chinese economy.

Gender disparities also have a link to the Chinese economy. As previously mentioned above, the birth rate of males is much higher than females. This disparity became possible due to the same one-child policy in which a couple that had a boy was not eligible to have any more children. On the other hand, if they had a girl, parents were allowed to have a second child in an attempt for a boy. Therefore, the rate of newborn males in China exceeded the world male/female ratio by a significant margin. Wang (2010) reported that a number of males do not plan to get married, although the reasons were not specified. At the same time, according to Lozeau (2007), a high level of education among females has led them to hold off on getting married until later in life. Thus, the contemporary tendency to postpone getting married until much later in life increases the odds of fertility problems, resulting in couples not having any children at all. This is a problem as it can worsen the current situation in terms of fertility, which is already at low levels. Lozeau (2007) agrees that “low current fertility will eventually translate into low lagged fertility which, in turn, will mean a slowdown in economic expansion” (p. 3). Therefore, the current increase in the country’s population, which still is the case despite the low level of fertility, will not contribute to the future of the Chinese economy due to the absence of the demographic perspectives.

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Thus, rapid changes in the demographic ratios have affected Chinese economic development. The increase in the population now and the predicted peak of the population growth, differences in gender rations, age and child dependencies, and other parameters related to population change have influenced the economy of the country. Previously, population increases in China positively influenced its economy and allowed for improvement in all the spheres of its activities. Nowadays, the population still continues to increase, but under different circumstances, and the processes are ultimately going to influence the Chinese economy negatively. Due to the lengthy period of economic growth in the country, the growth of GDP, high level of export of the products, foreign investment, and involvement of the vast masses of population in the industrial production, China managed to create a modern industry, expand and improve its infrastructure, and create a variety of industrial sectors previously absent in the country and thereby significantly increase the share of industry and services in GDP. However, having achieved it by means of rapid increases in the population, the contemporary economy in China appears to be at risk. The conditions in the contemporary China have created favorable background for changes. If China takes this chance, it will manage to reach the developed countries level. This is the Chinese goal the country wants to achieve during the past 200 years.


Nowadays, the population increase in China can negatively influence its economy. However, some specific changes can make use of the situation and help the country reach the level of economic development of the other developed countries in the world. The Chinese government should decide now what is more important for the international domination in terms of military strength of the future of its economy. By choosing the direction for the international political changes, China has failed to implement the steps necessary to prevent a future economic crisis. After considering the economic situation in the country during different years, analyzing the population estimates, and examining the dependency of the economic development of the country from the population changes, it is possible to create a list of the recommendations China should consider in order to achieve its goals. Despite the risk of crisis development in the country, the conditions in China still hold great potential, which can help it reach the level of economic progress that rivals the developed counties.

The first step on the way of overcoming any potential economic crisis in China can become the creation of a better environment for the products supply and increase in productivity. However, it is impossible to achieve this without reforms aimed at “accepting migrant workers as urban residents with full access to public services” (Fang, 2012). Such privileges given to migrants will create a supportive environment for the employees and will stabilize the labor supply in the country. It is important to pay attention to the changes in the demographic ratios. The government should focus on these changes since the reference to the past pace of population growth can lead to the failure in forecasting economy development and failure of the economy in general. Fang (2012) mentions the following possible problems Chinese economy may experience if the population changes are not considered, “distortion of factor prices, deviation of industrial structure from where comparative advantage is strong, inflation, overcapacity and the protection of inefficient sectors and enterprises.” Therefore, the changes in industrial and demographic policies are required. These actions will promote the economical development of China, which will lead to the raise of the potential GDP. However, much time should pass before these changes can be seen.

A full repeal or at least the relaxation of one-child policy is another step required for improving the economy of China. The government of the country has already realized this need, and the policy was changed, allowing couples to have two children without the threat of financial penalty. This attempt is going to boost the fertility rates, which will facilitate the economic development in the future. Still, a great deal of time will need to pass before the country experiences positive changes and for now the government should tackle the serious issues related to the increasing aged population. Among the possible solutions can be increasing the retirement age from 55 to 60 for women and from 60 to 65 among men (Rafferty, 2013). While such measures will obviously not eliminate the problem, just merely delay it, these measures can help the country to avert any possible crisis, which, in combination with other measures, will help China avoid serious consequences of population increase for the state economy.

At the same time, the Chinese conscious has already accepted the fact that each family is restricted to having one child. Moreover, the young adult population, both males and females, are holding off on marriage and therefore having children until later in life. This fact along with the low level of fertility can create unfavorable consequences for the Chinese economy. Therefore, some financial incentives should be developed for those, who have decided to have the first and the second child, offering more for those who take a chance of a second child. Even though the population continues to increase, it will eventually reach its peak in the near future and will start decreasing at a rapid pace. Low levels of fertility in the country will not be able to make up for the mortality rates of the aging population. The increase in population rates seen now in the statistics is the result of the situation before 1979 when parents were not yet restricted on the number of children they could have. People should understand that their number is a result of high life expectancy rate. However, due to the low level of fertility, the growth of the population in the future is under question. It is important to change human vision of the role of a family and to guarantee the raised levels of the fertility rates in the future.

China is a powerful state and has seen high levels of economic growth in the past due to the raise in the population rates. The current population increase issues can negatively influence the economy of the country. The Chinese government can limit the negative effects if it imposes some economic changes and implements the much-needed reforms. The country should reexamine its one child policy since the characteristic of the increased population rates are different from what the country experienced at the end of 1970s. A new approach to the financial development of the country can help it to avert the extensive economic crisis that threatens China if no actions are taken. At the moment China is not experiencing any signs of a looming crisis and its economy continues to develop. Chinese government should make a choice and the future of the whole country depends on it.


In conclusion, China is a country with the history that goes back for thousands of years. The modern history of the economic development started in 1949, when the People’s Republic of China was founded under the rule of its communist government. The changes in social, political, and economical life of the population lead to the reduction in infant mortality, increases in childbirth and life expectancy. These and many other reasons have provoked the overall economic development of the country. Experiencing a considerable increase in the working population, Chinese economy received the benefits of cheap labor power, building a strong economy based on a large and enthusiastic population. Having noticed danger of a fast growing population rates, Chinese government implemented its one child policy aimed at regulating and controlling the size of the ever-growing population. The strategy worked to some extent. However, in imposing such a severe policy in order to reduce the fertility rate, the government failed to think about the long-term consequences. More than 30 years have passed since the time when the one child policy was implemented and the problems in the economy can already be observed.

China appears at the edge of a serious economic crisis related to the low birth rates and aging population. Having created the situation in which the amount of elderly people is on the rise while the work force population has fallen, the China has also unintentionally removed any possibility to align the rates. The life expectancy is rather high in the country, while the fertility rates are below the average. All these factors have created a situation in which the population increase and other future changes in the population structure will have considerable influence on the economy of the country. If no actions are implemented, China could experience a serious economic crisis. However, it is not late to implement changes now. Moreover, many scholars stress that the conditions that exist in contemporary China can actually give it a chance to reach the economic level equal to that of developed countries. The research has clearly stated that the population rates increase has a significant influence on the Chinese economy. The historical development of the country, its social and political changes have also affected the processes in the Chinese economy, as can be observed today.

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