First published: 3 February 2026
During a Covid lockdown in Shanghai, a government official warned a resident that his refusal to comply with quarantine rules would affect his family for three generations. The man calmly replied, ‘Sorry, we are the last generation, thanks!’ The throw-away line went viral, but it resonates still today because since the formal abandonment of the one-child policy (OCP) in 2016, births in China have continued to decline precipitously. The total fertility rate in 2025 was about 0.9-1. With a slump in fertility and high life expectancy after retirement, China is already the fastest ageing country on Earth and by 2050 it will be significantly older than the United States.
It is often said that demographics are destiny, but this is a misnomer. Despite the slump in fertility and the resulting adverse labour market, financial and economic consequences, governments can compensate for the decline in the labour force, especially because demographic change, unlike other economic and financial shocks, is at least glacial.
Nevertheless, the United Nations Population Division (UNPD) medium variant projection is that China’s population will drop to 1.3 billion by 2050 and to 633-800 million by the end of the century. All the time, it is getting older because there are not enough young people growing up to replace the workers reaching personable age. The economic, social and even geopolitical implications of this demographic tide are of great significance.
A short history of state-directed fertility policy
The OCP, launched nationwide in 1980, was a coercive policy that strictly limited urban couples to a single child. At the time, though, the fertility rate had already fallen from about 6 in 1973 to a normal 2.3 due to earlier and also coercive family planning policies prescribing, for example, a higher legal marriage age, a 3-year minimum interval between births, and a maximum of 2 children.
The OCP’s principal consequence was to aggravate gender imbalance, with the male per 100 female ratio peaking at 121 in 2004, and remaining elevated at about 112-115.Even when the OCP was relaxed in the mid-1980s to permit ethnic minorities and rural families to have two children if the first child was a girl, the preference for male children was underscored.
By the 1990s, China’s fertility rate dropped to 1.5-1.7, but after a decade or two of sub-replacement rate births, China’s leaders responded by easing the OCP further. In 2013, any parents who were themselves the child in a one-child family were permitted to have a second child. In 2016, the official abandonment of the OCP allowed this policy to extend to all couples. An array of family-friendly policies followed, with, over the years, dozens of provincial and local governments experimenting with birth incentive measures for first and or subsequent children. Tax deductions for children’s education were introduced in 2019. In 2021, the government tried to encourage couples to have 3 children. The following year, it introduced tax deductions for children under 3 years. In 2025, one-off or recurring childcare subsidies, and free pre-school education were introduced; officials promoted childbirth advice and incentives. From 2026, all out of pocket expenses related to childbirth, including pre-natal checks, will be reimbursed.
Rapid ageing will affect the whole of China, but the consequences are likely to sharpen
regional variations, with more mobile and better educated people being drawn to already more modern and preferred locations, leaving older and more disadvantaged regions and cities to languish still further.
Why is this happening?
The slump in fertility is certainly not China-specific. Along with other countries, China also presents high costs of child-rearing and childcare, and an array of ‘motherhood costs and features’ such as lifestyle choices, career breaks, lost or lower wage income, and skill and experience interruptions.
Yet, China has its own peculiarities too. Gender imbalance has played a significant role. The number of marriages has fallen over a decade, to just over 6 million in 2024, the lowest on record. According to 2024 survey of over 55,000 college students on marriage and parenting, two thirds of women wanted no children or one child only, and 15% were uncertain. The crucial child-bearing age cohort, aged roughly between 20-30 years, accounting for over 60 per cent of births, has fallen from 111 million in 2012 to 73 million last year, and is predicted to fall to 37 million by 2050. In addition, the sharp rise in tertiary educational enrolment, encouraged not least by the government, has lead to a 5 times increase in undergraduates since 2000 to almost 11 million, and a 10-fold rise in postgraduates to 1.4 million.
Further, economic conditions and expectations, specifically regarding the beleaguered real estate and weak jobs markets, are almost certainly an antidote to young people’s sense of well-being and confidence. Family planning governance, moreover, has a long history of coercion, surveillance, and cultural bias which has become embedded in a comprehensive network of institutions that has likely shaped their reproductive preferences and expectations.
How an ageing China will affect the economy
Given the significance of the economy at home and in relation to geopolitical developments, it is important to understand that rapid ageing is a corrosive influence over China’s economic prospects unless the government can offset the effects, even though it is not the most pressing problem the government has to address. In pole position here, for example, we might put real estate, the stall in productivity, misallocation of capital, and structural fiscal and financial weaknesses.Yet, the demographic drag which is slowly evolving is real.
China has clearly now passed the point where it was able to enjoy the so-called demographic dividend, associated with buoyant, expansionary economic conditions. Like so many other nations, it is also now facing mirror image consequences. The ‘dividend’ accrues while the fall in fertility steadily lowers child dependency (0-15 year olds as a proportion of the growing WAP – working age population) but before old age dependency starts to rise quickly. This is the demographic sweet spot, and China reached this point just as Xi Jinping came to power.
In Xi’s first five years, the number of over-60s accounted for about 15 per cent of the population, and the numbers of those aged over 60 and 0-15 were roughly the same. Today, though, the cohort of about 310 million older citizens is a third bigger than that of children, and, according to the UNPD, the former represent over 22 per cent of the population. By mid-century, that share will be will be 40 per cent, and by 2080, almost 54 per cent of a shrinking population.
This will change China’s old age dependency, measured as a proportion of the WAP, dramatically. From 21 percent today, the ratio is predicted to rise to 52 per cent by 2050, and still higher thereafter. Put another way, while there are now almost 5 workers to support each older person, there will be fewer than 2 by 2050.
Normally, we associate this demographic shift with a drag on economic growth equivalent to the annual fall in the WAP, which will be about 1 per cent per year. This then opens up to other drags. In the labour market. China could run up against possible labour and skill shortages, and labour immobility as older workers move jobs and places of work less. This could also be inflationary. Against this AI and robotics could come to the economy’s rescue, though no one knows if this could, at least for a while, exacerbate unemployment. China’s full-steam ahead programmes involving both AI and robotics could erase millions of jobs without the time or institutions that otherwise might cushion such shocks or enable a more sustainable transition.
Rapid ageing will change consumption patterns, as the tastes and preference of ‘silver consumers’ become more prevalent. Household savings should decline, as it has in Japan, for example, as older people tend to consume more out of income or assets, though corporate savings may offset this. And, as per consensus, an older population is likely to weigh on entrepreneurial zeal, productivity and innovation though we cannot know if under conditions of rapid ageing, new incentives and motivations will be triggered, pulling in the other direction.
With quite ubiquitous but not generous pensions, healthcare and long-term care provision, the plight of older citizens could deteriorate along with the fiscal position of already financially- challenged local governments, and a diminishing tax base because of the falling WAP. Neither the fiscal consequences of ageing in China, nor the present value of future age-related liabilities for pensions and healthcare are well documented but China’s gradually rising age-related public spending in relation to GDP will have to keep increasing to match current policy promises, and to stop the main pension funds becoming insolvent in the next 20 years.
What is to be done?
Ageing is inevitable, but the consequences on the economy and society are not. Essentially, there are two ways of trying to compensate for the effects of a falling and ageing working age population.
The first is to raise labour input, by raising immigration, having people work longer, and by raising the participation rate in the workforce of people typically under-represented, namely older people and women. Immigration from abroad into China is and will likely remain so small as to be irrelevant. The government decided in 2025, finally, to raise the low retirement age for men from 60 to 63, and for women from 50 or 55 to 53 or 58, dependent on type of work by 2040. This was a welcome, if still rather timid change.
And for a country, whose first leader proclaimed that ‘women hold up half the sky’, the less than 60 per cent labour force participation rate for women, attributed to childcare and elderly care responsibilities, and concerns about gender discrimination, sit rather uncomfortably. Ageing societies will typically see participation rates fall as older people leave the workforce, but the challenge will be to try and lift the elevated rates of about 50 per cent for the 60-65 age group, and try to get post-retirement participation rates at half that level to rise, at least until people reach 68 or 70.
The second, which is easier said than done is a widely desired elixir, namely to boost productivity, so that tomorrow’s labour force is better able to carry the fiscal, innovation and support responsibilities required by an ageing society. Set against a stall in productivity in China, except perhaps among a few leading global firms at the cutting edge of technology and science, the acid test will be if the government is prepared to undertake awkward economic and political changes to the structure of its polices and institutions.
It is not obvious that China can or will seize the years ahead to undertake these things. If rapid ageing in China exacerbates the dichotomy between some world class firms and industries on the one hand and a generally weaker economy, stagnant labour and consumption markets, and troublesome fiscal and debt dynamics on the other, it would be churlish not to imagine that China’s status in foreign policy, military capability, innovation, and regional or global power dynamics will not be affected.
India, which can savour its own demographic dividend for at least another 2-3 decades, may yet have something to say about all this.
