China reported a record low birth rate in 2023 as its population shrank for the second year in a row. The trend marked the deepening of a demographic challenge set to have significant implications on the world’s second largest economy.
The country recorded 6.39 births per 1,000 people, down from 6.77 a year earlier, China’s National Bureau of Statistics (NBS) announced Wednesday. The birth rate is the lowest since the founding of Communist China in 1949.
Some 9.02 million babies were born, compared with 9.56 million babies in 2022. The overall population fell in 2023 to 1.409 billion, down 2.08 million people from the previous year, the bureau said.
“To be sure, last year’s sharp decline should be partly due to the lockdowns and most likely new births will rebound in 2024, although the structural down-trend remains unchanged,” said Larry Hu, chief China economist for Macquarie Group.
The country’s demographic shift comes at a time when its growth is sputtering. The NBS confirmed that China’s economy grew by 5.2% last year, compared to a government target of around 5%.
While this expansion marks a significant pick-up over 2022, when China’s economy grew by just 3%, it is still one of the country’s worst economic performances in over three decades.
Chinese stocks tumbled on Wednesday following the data release. Hong Kong’s Hang Seng Index sank 4.1% by mid-afternoon, heading towards its lowest closing level since October 2022. The CSI300, which consists of 300 major stocks listed in Shanghai and Shenzhen, fell 2.2%. Both indexes had a dismal year in 2023, down more than 10% each.
China has been beset by a series of economic problems, including investor exodus and deflation. The shrinking population will now force Beijing to make some structural changes in its economy and reshape sectors including healthcare and housing.
Wednesday’s data wasn’t entirely gloomy. In the fourth quarter, China’s GDP expanded 5.2%, accelerating from the third quarter’s 4.9% growth. However, this boost may not be long-term, experts said.
“There are two key drivers behind this: the unexpected, but short-lived release of pent-up demand during the [third quarter] holidays, and the low base effect of the fourth quarter of 2022,” said Alfredo Montufar-Helu, head of the China Center for Economics and Business at the Conference Board.
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He believes China’s GDP growth will decelerate to 4.1% in 2024 because of several significant headwinds to growth, including the ongoing property downturn and subdued consumption.
In December, new home prices fell by the highest amount in nearly nine years, according to a Reuters calculation based on NBS data, and property investment slumped 9.6% in 2023 from the previous year, marking a second straight year of declines.
The latest figures come after China’s population declined for the first time in decades in 2022 in what analysts said was the country’s first drop since the 1961 famine triggered by former leader Mao Zedong’s Great Leap Forward. Last year, China was surpassed by Indian as the world’s most populous country.
The slowing birth rate comes despite a push from the government to encourage more married couples to have children following decades of restrictive birth policies.
