China's Population Crisis Threatens Economic Growth Through 2050s

China faces significant economic challenges due to its declining birthrate and aging population, according to a new report from Oxford Economics. The country's potential economic output growth could fall to half its current level by mid-century, with projections showing growth dropping below 4 percent in the 2030s and under 3 percent in the 2040s. This demographic shift represents a structural constraint on China's economy, which is described as the United States' primary economic rival.

Unlike many Western nations, China lacks the mitigating effect of large-scale immigration seen in countries like the United States, which helps offset declining birthrates. China's fertility rate is estimated at 1.2 births per woman in 2024, well below replacement level. The Chinese government has implemented various pro-natal policies including childcare subsidies and fertility treatments, but these measures have shown limited effectiveness in reversing the demographic trend.

The report highlights that China's shrinking labor force could reduce economic growth by approximately one percentage point per year by the 2050s. The country's old-age dependency ratio—measuring the proportion of people aged 65 and over relative to the working-age population—stood at 21 percent in 2024 and continues to rise. This growing imbalance is expected to strain China's social safety net, with costs falling on a diminishing base of workers.

While the long-term outlook presents challenges, some analysts suggest the near-term impact may be less severe. China's Generation Z will be joined in the workplace by the more numerous Generation Alpha over the next decade, providing temporary demographic momentum. According to economics commentator Noah Smith, China's dependency ratio in 2030 will still be comparable to Japan's during its economic boom period, with more significant demographic challenges emerging around 2050 when China's large Millennial generation begins to exit the workforce.

The demographic challenges facing China could have implications for the global economic balance of power, particularly in relation to the United States. As China grapples with an aging population and declining workforce, its long-term economic growth potential may be constrained. This demographic shift occurs as Chinese leadership continues to target around 5 percent GDP growth for the current year, a modest figure compared to the double-digit growth rates achieved during the country's economic boom in the 2000s and early 2010s.