China’s Population Shrinkage Crisis: Will “The World’s Factory” Survive?

China is undergoing a critical demographic turning point that poses an existential threat to its status as an industrial powerhouse. The biggest challenge now is not global trade wars, but an unprecedented population decline that will reshape the world’s economic order for decades ahead.

Recent economic analyses reveal that shrinking population will lower China’s annual GDP growth rate by half a percentage point in the coming decade, weakening Beijing’s ambitions to compete with or surpass the US economy. The looming labor shortage is set to disrupt global supply chains for essential products, with automation and robotics unable to fully offset the loss of human capital, especially in service industries.

Census data shows that China’s population peaked at 1.4 billion in 2022 and is now gradually decreasing. UN forecasts predict numbers will fall to 1.26 billion by 2050, with older citizens making up a rising share and youth becoming scarce, raising concerns about the sustainability of social welfare and pensions.

This crisis has roots in strict population control policies from the 1970s and the one-child policy adopted in 1979. Despite later reforms, birth rates have continued to slump amid soaring child-rearing costs and younger generations’ hesitance to marry and have children.

Despite government incentives, awareness campaigns, and educational efforts, birth rates and marriages have declined; for example, registered marriages are now less than half of the 2013 count. Refusing migration as a solution, China leans hard on automation, but this cannot resolve the shortage in service sectors.

The pressing question: Can China overcome the challenges of an aging population and labor shortage to retain its „World’s Factory” status, or will it face radical shifts that alter its position among global economic powers?