Do Demographics Delineate China and Japan’s Economic Destiny?
As peak population arrives, what are the shipping implications?
In this month’s Shipping Markets Monthly, our macro-economic essay asks whether China is about to enter a lost decade much as Japan did from around 1995. We compare demographics, the currency, trade, domestic consumption and the two nations’ different political systems in trying to draw some indications (conclusions might be too firm a word).
In this week’s Macro Macchiato, we summarise some of these points, particuarly around demographics. Japan’s population peaked in around 2010 at about 128 million people and has decreased only slightly so far to 126 million people, though that reduction is expected to accelerate as birth rates continue to underperform mortality, leading to a population forecast of 106 million people by 2050 and 75 million by 2100.
China’s population peaked at around 1,413 million in 2021 and fell by 850,000 people in 2022. The fertility rate of 1.66 children per woman is well ahead of Japan’s 1.3 and much higher than South Korea’s 0.81 while the world average is around 2.1 – just about the ‘replacement rate’ which politicians around the world find it harder to encourage as women’s economic lot improves and the cost of raising children requires two working parents, leading to smaller families.
There are about 65 million fewer Chinese aged 0-19 than aged 20-39. China’s population could be as low at 1.0 billion by 2050 and the central UN prediction is for it to reach 767 million by 2100 though the Chinese Academy of Social Sciences, using a prediction of 1.1 children per woman, predicts only 587 million by 2100.
Add in the pandemic, which is not yet over, and a generous helping of climatological millenarianism and it is not hard to intuit that the lower end of global population forecasts is becoming more likely. This poses a problem for China as its main economic resource to drive inward investment and growth has been its vast pool of cheap labour.
Japan’s urban population was 63% in 1960. It reached 78% in 1995, the year of peak economic output (counting in 2021 dollars), but went on to grow to 92% by 2022. Following from a similar starting point but 20 years later, China’s urban population was 19% in 1980 and had grown to 62% by 2022. China’s urbanisation process seems to be maturing at a lower percentage of the overall population than Japan’s did. Will China’s urbanised population peak at an earlier stage of development? Most developed economies have at least 80% urban population. But China’s further urbanisation might come not so much from migration from rural counties to new cities as much as it comes from faster stagnation in rural births than in urban births – urbanisation by default, you might say.
This may already be happening. Wang Dan, associate professor of education at the University of Hong Kong, says that roll calls at rural schools are falling fast and that a number are closing. “From the perspective of individuals and families, moving to the city offers the possibility of higher incomes and greater opportunities for their children. As the rural labour and brain drain intensifies, however, rural communities are driven further into decline, worsening the structural inequalities between the countryside and the cities and pushing more residents to migrate.”
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