China’s working age population is shrinking

The country is rapidly aging as fewer people have children and lifespans increase. Births have fallen despite Beijing’s efforts in the last decade to start to unwind restrictions on households to one child each.

A shrinking working age ratio means fewer people have to support a larger share of the population, even as the number of people in China overall declines.

China’s total population dropped by more than 2 million people to 1.41 billion in 2023 from the prior year. That was a far greater decline than the drop of 850,000 people in 2022 from the year earlier — the first time the country’s population shrank since the 1960s.

China’s working age population has declined after reaching a peak in 2011, UBS analysts said in a report last month.

“A shrinking working age population along with structural shifts in labor supply demand dynamics are accelerating the adoption of technology — from automation and robotics to digitalization and AI — to 1) meet labor needs and 2) raise productivity while saving costs,” the analysts said.

They noted there are still opportunities for China to boost its workforce productivity by boosting vocational education, tapping oversupply in rural labor and raising the retirement age.

In the last year, China’s youth unemployment has soared to record highs above 20% amid slowing economic growth and a mismatch between available jobs and skills.

The statistics bureau in the summer suspended its release of the youth jobless rate, saying it needed to reassess calculation methods.

This week, the bureau resumed reporting the figure, along with a new breakdown of unemployment by more age categories as it said it takes time for people to transition from graduation into the workforce. The updated numbers exclude people who are still in school, or about 60% of people ages 16 to 24, the bureau said.

As of December, the unemployment rate for the 16 to 24 age category was 14.9%, that for people ages 25 to 29 was 6.1% and 3.9% for people ages 30 to 59.

The bureau claimed the overall unemployment rate in cities was 5.1%.

Mainland China’s total population of people ages 16 to 59 was 864.81 million in 2023 — more than double the size of the entire U.S. population of 334.9 million.

The World Bank’s latest figures, which use a broader working age range of 15 to 64, showed the segment’s share of China’s population fell in 2022 to 69%, down from 69.2% the prior year.

That share had exceeded 70% as recently as 2018, the data showed.

Despite the decline, China’s working age population ratio was greater than Japan’s 58.5%, 64.9% in the U.S. and 68.5% in Vietnam, as of 2022.

For India, the share was 67.8% of the total population in 2022, up from 67.5% the prior year, World Bank data showed.

— CNBC’s Michael Bloom contributed to this report.