Chinese leaders do not like bad news, especially when it arrives earlier than expected. The initial reaction is to hide the bad news and try to delay admitting what they knew was coming. An example of this recently occurred in China where there was widespread chatter earlier in 2021 when the results of the once-a- decade national census, conducted during the last two months of 2020, were not released on time. The results were supposed to be released by early April 2021 but that did not happen. Then news leaked that the results of the census indicated the population decline had accelerated and for the first time since the 1940s, population had declined. This was not unexpected, nor was the subsequent government assertion that the leaks were false and that the delay was because of the need to further analyze the results and prepare a suitable announcement.
Tweaking official data to meet government expectations has been a major problem in China, at all levels, for a long time. Those problems began with the provincial government mishandling the financing of new businesses, infrastructure and home building.
The population decline was expected, but sometime in the late 2020s, not by 2020. The government has still not released the official data in detail, which usually means that creating a credible doctored report is taking longer than expected. The official announcement is that the decline did not take place and more proof will be made available later.
Past doctored data scandals have been a major embarrassment because those also involved massive corruption by banks, businesses and local officials. This malfeasance revealed a major banking scandal that threatened a major collapse of the financial system. This had been going on for years and explained official annual GDP growth that could not be justified by economic data analyzed by foreign economists. Chinese growth was driven by massive growth in Chinese exports. That provided data to foreign economists which allowed independent assessment of Chinese economic performance and health that made national leaders aware that there were problems at the provincial levels. This led to prosecution of a lot of senior provincial and national officials as well as bank and business managers for making bad loans and concealing the growing mountain of uncollectable debt.
The impact of the population decline was more visible. One aspect of this was a labor shortage that drove up wage costs. This reduced the cost advantage of producing goods in China. That led to other nations in Asia taking Chinese manufacturing jobs because they had more workers and lower wages. China knew it would have a growing labor shortage because of the smaller generations of Chinese produced after the “one child per family” program was instituted in the 1980s. The government eased up on the one-child policy in 2016 but it was too late. Many more affluent (than 30 years ago) Chinese women do not want to have more than one or two (or any) children and the government, like their counterparts elsewhere, has not yet found a way to compel obedience. This is a common problem with affluence and has already hit Japan and South Korea and every other industrialized nation that does not allow many foreigners to become permanent residents, much less citizens. China has always seen non-Chinese as lesser creatures, a designation many neighbors and adversaries do not appreciate. As the old saying goes, make a lot of enemies on the way up and you can expect others to hurt rather than help you when you are on the way down. That is what China faces now.
China has become increasingly alarmed at the impact of its “one-child” policy, its inability to keep things from getting worse. Chinese leaders never discussed how they would handle the obvious demographic implications of the one-child policy while several successive supreme leaders preferred to play political musical chairs and leave the problem unaddressed for their successors. Eventually one of those successors ends up the loser. But at least he can blame his weak predecessors for not doing what had to be done.
Some knowledgeable Chinese had studied the problem but realized they could not present their findings to a leadership determined to put off dealing with it. In May China announced that the leaks were false. There had been no population decline and more effort would go into dealing with this population “problem”.
Time is not on China’s side. The negative impact of the one-child policy began showing up in unmistakable ways more than a decade ago and there were numerous very obvious indicators. One of the more obvious was fewer Chinese available to fill the growing number of jobs. For example, the overall population increased 7.1 million in 2014, to 1.37 billion while the working age population declined 3.7 million. The number of Chinese over 60 increased 10 million to 212 million. All this very visible evidence was obvious in 2014 and will continue for decades. The biggest problem, though, is the growing shortage of workers. As the population ages, all those “one child” families mean there will be more elderly than the economy, and its shrinking workforce can effectively support. In 2015 there were eleven working age Chinese for every retiree. By 2050, if not earlier, there will only be two for each retiree. At that point, retirees will comprise 30 percent of the population versus over 15 percent now. Traditionally, children cared for their parents in multi-generation households. That model is dying out, and China is faced with huge pension cost increases at the same time they expect their economy to be the mightiest on the planet. In reality the largest single government expense will be the care of the elderly, and this will impose crushing taxes on those of working age and stifle economic growth. It will be more difficult to get workers for unpopular jobs. For example, the military, especially the navy, is already having problems obtaining enough qualified recruits for its smaller but far more high-tech force. The new navy spends a lot of time at sea and most young Chinese see that as an extreme hardship.
Many working age Chinese are worried about this, for there is no easy solution in sight. The population shrinkage is accompanied by another problem. Since the 1980s many of those couples forced to have only one child aborted a child if it was a female, because much more importance is attached to having a male heir. The result became obvious fifteen years ago when the first “one-child” generation started looking for wives. At that point there were 38 million more males than females in China, and the disparity is growing. The competition for wives is causing problems. Women are taking advantage of their scarcity, but men are also going to neighboring countries to buy, or even kidnap, young women to be wives. This is causing ill will with neighbors, where females are enticed or coerced (kidnapped by criminal gangs) to become wives of Chinese men who have no other options. It’s not just brides who are moving to China, millions of workers move to China each year. It’s these migrants that will become increasingly important in the next few decades for dealing with the labor shortage, but they cannot become Chinese citizens unless they can marry Chinese. China, Korea and Japan are all hostile to integrating other east Asians into their populations. It happens, but there is a social stigma for having a foreign parent or ancestor.
The affluence for hundreds of millions of Chinese was real and it did not just reduce the birth rate, it also increased the drug addiction rate. China will not release official figures but it is estimated, using arrests, drug seizures and such, that there are over 15 million addicts in China and that this is rapidly increasing. This is happening despite vigorous government anti-drug efforts. Arrests for drug offenses have increased more than ten times in the past decade yet the drugs keep coming, especially from neighbors like Burma, North Korea, Thailand and Afghanistan.
The government knew that once a census report made official the decline of the population, a lot more unwanted attention would be paid to the population problems. This will lead Chinese to take a closer look at South Korea and Japan, who enjoyed rapid economic growth a decade or more earlier than China. Japan got there first and now faces inexorable population shortages with no solution in sight. Integrating migrants into the culture is still forbidden although Japan has been forced to at least consider allowing qualified migrants to become citizens, although socially second-class ones. That will change Japanese culture, but that already happened in the aftermath of World War II and Japan thrived because of it.
South Korea is another matter, because the population decline is a decade behind Japan and the South Korean are more open to accepting qualified foreigners. Many South Koreans believe Korea will become united soon and hope this will somehow solve the population problem for a while, if ever if China does not cooperate and tolerate a unified democratic Korea as a neighbor. Europe and especially the former British colonies that became the United States, Canada, Australia and New Zealand all thrived by accepting migrants from everywhere and urging them to adapt to the new culture and become citizens. With a few exceptions, that population growth model was not widely accepted in Europe. But it was much more acceptable than in East Asia.