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China’s One-Child policy could lead to labour shortage

China is staring at a labour shortage

At a time when China is looking at overtaking the US economy to grab the top rank in terms of absolute gross domestic product, it is staring at a demographic problem.

The country’s birth rate has been thinning since 1961. While this has helped the country address many of its problems until now, ageing population could lead to shortage of labour for China, which has always relied on its labourforce to drive economic growth. A reduced workforce could dent China’s ambition to overtake the US.

News agency ANI quoted a report from Capital Economics which said that China's workforce is expected to shrink by more than 0.5 per cent a year.

This would mean that fewer “young people would be able to replace an increasing number of retirees, which is in dire contrast to the US, where the workforce is expected to expand throughout the next 30 years.”

It also said that the demographic problem could hit productivity growth and a shrinking workforce would prevent China from overtaking the United States, adding that the US will be helped by immigration that keeps refilling its supply of workers, ANI said, adding that the Covid 19 pandemic has further had an impact on the birth rate.

“While China could face a huge problem of thinning workforce due to a lower birth rate, the problem is aggravated with many locals — in the working age — also opting to move out of the country and settle outside,” an analyst said.

What may worry China is that this problem will have no quick fix solution.

China’s controversial one-child policy

China, the most populated country in the world, implemented the one-child policy in 1979, as a measure to control population growth. The aim of the controversial policy was to ensure that population growth did not become a burden on the country, which prioritised economic growth and food supply. Though the policy, put in place by Chinese leader Deng Xiaoping, officially ended in 2015, many couples continue to opt for just one child.

According to some demographers, the pandemic probably contributed to suppressing births, adding to problematic fundamentals including a declining number of women of childbearing age and a reluctance to have two children among many couples, ANI highlighted.