China's demography is rotting. A crisis may get out of control and bring down a power
Animals play an interesting symbolic role in economics. “White elephants” refer to extremely expensive state projects that bring only modest benefits. The “black swan” symbolizes events that occur completely unexpectedly and surprisingly. And as its opposite, a “gray rhinoceros” has recently appeared – it symbolizes highly probable but ignored threats with huge consequences.
According to economists, this will also result in a significant slowdown in economic development. Moreover, something that once seemed certain may become a distant prospect. It's about overtaking the United States as the world's largest economic power.
According to data from the National Bureau of Statistics, only 7.92 million babies were born in China last year. In the previous year it was still 9.54 million, which means a decrease by approx. 17%. This a real breakdownwhich has been going on since 2020. In 2019, 14.65 million newborns were born – in six years the number of births has almost halved.
Currently, there is statistically only one child for every woman of childbearing age in China. This is even lower than in Germany, where very low birth rates have been recorded for years. However, in a European country the value is still 1.35. To keep population constant, a score of 2.1 would be needed. At the same time, the number of deaths in China continues to rise, so much so that China's population has fallen by 3.4 million people in 2025, down from 1.4 million the previous year.
Within two years, a population almost equal to the population of Berlin and Munich disappeared.
Ignored threat
Therefore, China's demographic problem can no longer be ignored. — Population statistics for 2025 should prompt changing the way of thinking – says Allen Feng from the China research team at the independent research and analysis company Rhodium Group. “What has long been described as a 'gray rhino' risk – a tangible threat that is being ignored – now appears to be coming to fruition earlier than expected,” the expert adds.
The rhinoceros is gaining momentum. “Our estimates of mortality trends indicate that China will lose almost 60 million people in the coming decade – a number almost equal to the population of France,” says Feng. In less than 10 years, in 2035, China's population will decline by 7.6 million people per year.
This scenario is much more drastic than what the UN has so far expected. Medium probability forecasts assume a decline of approximately 43 million by 2035 – which would also be a huge change. However, now the population decline may be approximately 40 percent. higher – and this would have consequences.
The International Monetary Fund (IMF) recently predicted in its analysis – based on current demographic forecasts – a drastic decline in the economic growth rate. “We predict that the aging of society itself may slow down the annual GDP growth by approximately 2 percentage points in the years 2024-2050,” the authors write.
It is true that the reforms introduced by Beijing last year could somewhat alleviate this effect. The authorities, for example, increased the retirement age. However, according to IMF economists, this positive effect is only 0.2 pp of GDP. Added to this is the fact that state spending on retirement security will increase dramatically.
Beijing under pressure
But that's not all. The decline in the number of the economically active population is associated with other effects. The aging of the population reduces not only the amount of work performed, but also indirectly, productivity, for example through less dynamics and innovationas the World Bank shows in one of its studies.
It also points out that older households consume differently and tend to contribute less to the recovery of the national economy. At the same time, significantly spending on health and social care is increasingwhich limits the state's financial room for maneuver and also inhibits economic growth – which is already limited by the extremely growing debt in recent years.
Official public debt in relation to GDP increased from 56 to 88 percent in 2018-2024. If we add the debt of local governments, we get a value of 129%, as calculated by the IMF. “Medium-term growth prospects remain constrained by slower productivity growth, high debt and an aging population,” the World Bank report concludes rather cautiously.
The government has recognized this problem, Allen Feng says, and is trying to encourage people to have more children. — However, the experience of most other countries that have pursued birth-supporting policies shows that Beijing can at best hope to slow down population decline, not reverse it, the expert explains.
The government in Beijing can order its citizens to do almost anything – but not to have children. And the reasons for the decline in birth rates are profound. On the one hand, this is a consequence of increased wealth and longer periods of education: people marry later and have fewer children, just like in Western societies. However, another important factor may be the collapse of the current economic growth model due to the coronavirus pandemic.
Residents of Fuyang City, July 31, 2025CFOTO/Future Publishing via Getty Images / Contributor / Getty Images
China in a trap
Career prospectsespecially for young people, have deteriorated significantly in recent years and unemployment is high. “Additional discussions about possible job losses due to AI may contribute to widespread uncertainty, which in turn negatively affects birth rates,” says Feng.
This leads to social phenomena such as “tang ping”, which literally means “lying flat”. Young Chinese people use the term to describe the trend of rejecting social pressure to work hard and work overtime. The most recent, more radical manifestation of this phenomenon is “bai lan” – “let it rot.” It's about coming to terms with the hopelessness of your situation and giving up the fight.
However, this attitude also destroys the hope that China can avoid the demographic trap thanks to the technological revolution, and especially through the increasing use of artificial intelligence. Giving up certainly does not increase the desire to have children.
The question remains whether it would really be that bad if China's economy grew 2 percentage points slower – after all, the growth rate has recently been between 4 and 5 percent. However, there have been serious doubts about these data for years. While Rhodium Group estimates that recent growth has been more like 2.4 to 2.8 percent, others consider the numbers too low.
Yet almost all economists do doubts about the quality of official data — due to low transparency, documented incentives for fraud, alternative, much lower estimates, and a national economy that is undoubtedly now in a deep crisis following the burst of the housing bubble.
However, if the actual increase was not 4.5, or even only 3.5 percent, then with the deduction of 2 percentage points it would drop to 1.5 percent. — and thus would be even lower than the US economic growth last year. From a purely mathematical point of view, however, China's growth would need to be 1.85 percentage points higher every year by 2050 to catch up with the United States in terms of economic size by mid-century. China's demographic downward spiral will likely make this impossible for the foreseeable future.
'Gray Rhino' stops China's race.
