Can a nation prosper with zero population growth? – Opinion


A family poses for a photo at the Central University of Finance and Economics in Beijing. [Photo provided to China Daily]

The annual sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference in March discussed how to ease the financial burden on parents to encourage them to have more children. Discussions were held on proposals such as providing monthly subsidies to families with more than one child and providing free child care for the third child in each household to increase the fertility rate.

Indeed, such measures will ease the financial burden on families, somewhat alleviating their concerns about raising children. And providing quality childcare services to parents will help improve women’s labor force participation and thus alleviate the labor shortage problem caused by the rapidly aging population in the Chinese mainland.

But will such measures really help to increase the fertility rate?

All of these measures are good but, based on experiences abroad and our empirical studies and given that small households are now the norm in China, they may help to slightly increase the fertility rate.

Additionally, the number of registered marriages in 2021 was at an all-time low. Along with this, the postponement of marriage and the tendency to remain single are not conducive to the increase in the fertility rate.

If it is necessary to take all possible measures to increase the fertility rate in order to counterbalance the effects of the rapid aging of the population and to avoid a drastic shortage of labour, the authorities could explore other means to increase the low fertility rate.

Perhaps they should focus on how to make the country thrive in an environment of little or no population growth, as we have seen in developed countries like Japan, Denmark and Sweden. Zero population growth is achieved when the population is stabilized by balancing death and birth rates. This only happens when births and immigration equal deaths and emigration year after year.

Zero population growth has huge implications for overall GDP growth, as well as consumption and investment levels. And the average global GDP growth rate will drop from the current 3.5% to 2.4% by 2040, showing a long-term trend of “regressing towards the mean”.

Due to a decline in disposable income, there would be a change in consumption patterns, perhaps with an aging population spending only on necessities. A stationary population also results in fewer young people devoted to research and development, thus slowing down technological progress. As a result, we could enter a condition of secular stagnation with the risk of economic recession and weak incentives for investment.

Zero population growth influences not only the size of the population, but also the age structure which constitutes an essential decline in labor participation rates, labor supply and productivity. And the decline in the global participation rate of 1.6% between 2015 and 2030 will trigger a large-scale labor shortage.

In addition, an aging workforce weighs on average productivity due to less ability to adapt to innovations and declining cognitive and physical abilities. Fewer young people entering the labor market also means a reduced “stock of knowledge” and a falling rate of increase in human capital, which to some extent offsets productivity gains.

In addition, the growing number of tax-exempt older people would require more social security schemes, health care spending and higher pensions, which would significantly increase the financial burden on governments. For example, higher rates of disability and morbidity from age-related degenerative diseases explain skyrocketing health spending in Japan, where the public deficit reached 10% of GDP in 2020 and could continue to rise. increase in the years to come.

Therefore, to sustain its development in an environment of zero population growth, a country must improve labor market participation.

It is important to provide better support for childcare services, while strict laws against gender discrimination could create more opportunities for female workers, and working arrangements such as part-time options and practical Working from home could help new mothers find a balance between career development and motherhood.

With regard to older workers, policies such as raising the retirement age, continuing vocational training and flexible working hours could encourage older workers to remain in the labor market and help society to take advantage of their comparative advantages.

There is also a need to develop labor-saving devices and machines using artificial intelligence, which could improve productivity in sectors such as supply chain management, logistics and manufacturing. Granted, automation is a double-edged sword, but while it eliminates jobs, it can also free up human resources to focus on high-level, nuanced tasks.

It is essential to recognize the technological divide and the polarization of jobs of low-skilled workers, and to develop policies to manage the distribution of gains and help vulnerable groups to exploit the advantages of technologies.

With limited empirical evidence, the issues surrounding zero population growth remain ambiguous, but research tends to cast a more negative light on its incomparable effects on population composition and structure.

The aging of the population has a price; it has an impact on economic sustainability, technological progress, labor and public expenditure. Authorities must therefore plan ahead and readjust policies appropriately to deal with the effects of population ageing. This demographic transition could pose a huge challenge, and its ability to lead to a new crisis or new breakthroughs would depend on the response and adaptability of governments.

Nicole Chung is a researcher at the Faculty of Social Sciences; and Paul Yip is Full Professor (Population Health) in the Department of Social Work and Social Administration, University of Hong Kong.

Opinions do not necessarily reflect those of China Daily.

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