American writer and economist Paul Krugman said that the population decline in China threatens to make it exposed to problems of its own, and he warns against considering this as good news.
He pointed out that it is very important to realize that if the population decline results in a decrease in the number of workers, then this means that there will be a need to build fewer new factories, fewer office buildings, and so on, but if the number of families is declining, then this means that there will be no great need. to build new housing.
Krugman, who won the Nobel Prize in Economics in 2008, believes that the problems resulting from low population numbers are not difficult to solve if Chinese officials provide clarity of intellectual vision and political will, and he also believes that it is not clear if China will rise to the challenge in dealing with the situation. the new.
As for why the population decline - in his view - is not good news, this is because it causes two major problems for economic management in China, which will place heavy burdens on the planet's already limited resources and on the international community.
Society aging
He explained in
an article
for The New York Times that the first problem is that declining population leads to an aging society as every society depends on the youth to support the elderly.
Krugman describes China's social safety net as relatively undeveloped compared to that of the United States.
And official data issued by the National Bureau of Statistics in China (NBS), on Tuesday, showed that the country's population reached 1.4 billion people by the end of 2022, a decrease of 850 thousand people compared to 2021.
According to the author, the "staggering" rise in the old-age dependency ratio in China means that the state will have to cause, either a great deal of economic pain for this segment of the population, or a significant increase in taxes on younger citizens, or both possibilities.
Concern abroad from China
As for the other problem - according to the article - it is not so clear, but it remains dangerous, because full employment of labor requires society to maintain public spending at levels high enough to be in line with the productive capacity of the economy.
And the writer goes on to say that the Chinese economy seems to depend - at this stage - on an incredibly inflated real estate sector.
And that "is almost like a financial crisis is definitely about to happen."
The American economist admits in his article that he does not know how far demographic challenges will push China to stumble, "but there are good reasons for concern."
He concludes by saying that China is a superpower led by a leader who is "authoritarian and seems eccentric, and I think the concern about how China will respond, if its economy is underperforming, is quite to be expected."