Chinese Population Growth

Chinese Population Growth- Nicholas Sieb

As abundant as the infamous “Made in China” tags upon our products is the notion of the one-child policy enforced by the Chinese in a desperate attempt to stem overpopulation. However, this notion was out of a desire to control a population growing exponentially when the economy could not keep up and many were destined to a lifetime of poverty. While China still maintains a large population, it has obtained an urban unemployment rate of only 4.1 percent, one of the lowest in the world. Say what you will about the humanitarian conflicts of the Chinese regime, but the fact remains that China has enjoyed a rise to a modern economic power through their efficient and cost-effective factory workers that has brought both increases prosperity to China and sustains the consumers in more developed nations. 

                Enter the issue of development, while the world increasingly depends on the cheap production costs and abundant labor force that churns out a multitude of products, China is also experiencing the same economic development the consumer nations have already been through. With an increasingly abundant middle class, and the birth rate steadily declining, thanks in part to the one child policy allowing effectively 1.47 children per woman as well as the more urban nature of Chinese cities discouraging large families, the Chinese working-age population in beginning to decline. This decline in population has a worrying effect on the world economy that relies so heavily on imports and the outsourcing of manufacturing processes.  While China’s economy has grown at an average rate of 9.8 percent a year since 1995, only .7 percent of the growth can be attributed to an increased population, meaning more than just numbers is at play such an increasing service industry, economic development, and new technology to increase efficiency in factories.

China experienced a loss of 3.45 million workers, signifying a change in the trend of over a decade of vast increases to the working age population. Over the past 35 years China has added workers each and every year by the millions in order to keep up with the demand for labor, but the additions may now decline. Even removing the one child policy, according an estimate by Duke University would only yield an increase to 1.62 children per woman, not enough to reverse the trend. This trend could benefit the workers of China but will surely change the dynamics of international trade, while the international community is used to the low wage rates and high saving economic culture of China, with a decrease in supply for laborers there will be a greater demand, raising the cost of labor. Over the next 10 years the number of young workers is expected to decline by 21percent, even with improvements to efficiency, labor and production costs will surely rise.

The projected results upon the world economy vary greatly, with some estimates that the rural population of China will begin to urbanize and stabilize the workflow as the rising wages attract more workers. Another possibility is the restructuring of the Chinese economy, sending older less productive workers to service industry jobs and taking the younger workers to work in the factories. On the other hand the possibility of a decrease in supply of workers overall and an increased cost of production seems inevitable, but the time frame is a matter of debate. Developed nations tend to move away from pure manufacturing jobs and expand in the service sector; there is already evidence of such activity in China, with Chinese companies outsourcing their labor to poorer countries such as Vietnam. Regardless, China will need to carefully analyze policy in regards to population growth and economic development in order to soften a supply shock for cheap manufacturing labor that in destined to appear in the near future.

China has a new future, a perfectly valid and logical one, they are heading to development in the same way the US and Europe has done. Although this change will shock supply for a small time, new nations will take the place of China as a manpower driven manufacturing economy, or improvements must be made to bring manufacturing up to par with the economic development that China is expecting. As supply of workers drops in China, it will raise somewhere else as poorer nations seek to ride the same manufacturing wave that brought the Chinese economy back to power. Even if this news temporarily increases the price of manufactured goods, it will pay off in the end with a more developed and capable economic partner with China.

Q: What do you think the result of Chinese economic development and the subsequent drop in supply of workers will be? (Supply/Demand)

Q: Do you believe the one-child policy removal would create a different dynamic or would the trend continue?

Works Cited

"China Q4 2012 GDP." Business Insider. N.p., n.d. Web. 1 Feb. 2013. <http://www.businessinsider.com/china-q4-2012-gdp-2013-1>.

"China’s population: Peak toil | The Economist." The Economist. N.p., n.d. Web. 1 Feb. 2013. <http://www.economist.com/news/china/21570750-first-two-articles-about-impact-chinas-one-child-policy-we-look-shrinking>.