China's population growth is coming to an end.

The world’s largest country by population could hit a ceiling six years earlier than expected, a new report predicts.

China’s population is likely to peak in 2023, according to a study by online database company Global Demographics and analytics firm Complete Intelligence. The Chinese government had previously estimated that the country would hit its maximum population size in 2029.

“What we see is the rate of growth slowing pretty, pretty quickly,” said Tony Nash, chief executive and founder of Complete Intelligence.

“People had expected peak population in China to be a decade away, when in fact, it’s not,” he said. “It’s right around the corner.”

The decline in births is driven by a “maternity cliff,” according to the report. The number of women of childbearing age in China — defined as aged 15 to 49 by the publishers — is set to fall from 346 million in 2018 to 318 million in 2023.

With fewer women of childbearing age and fewer births per 1,000 women, the total number of newborns will drop as well. The study predicts that 13.3 million babies will be born in 2023, down from 15.2 million last year.

China started easing its one-child policy in late 2013, and while those changes initially produced a boost in births, the effect may have worn off. That is, authors of the report wrote that Chinese mothers are no longer delivering on “pent up demand” for children since the policy was lifted to counter aging problems in the country.

The number of births per 1,000 women rose sharply from 45.6 in 2015 to 49.9 in 2016, the year where all Chinese couples were allowed to have two children. In 2018, the figure dropped drastically to 43.9. Total births fell 12 percent from 2017 to 2018.

“China has stabilized its total population successfully,” Clint Laurent, founder of Global Demographics said in a press release. “But delaying relaxation of the One Child Policy means it is now short of childbearing women.”

“There’s really nothing that the Chinese government can do to force more babies,” he added. That is, unless each woman has “profoundly” more children, but that is “unlikely” as China gets wealthier, Nash noted.

The impact of China’s peak population

China’s impending population decline is likely to negatively affect certain businesses, the report said. In particular, industries that geared up to meet growing demand from the “false dawn” in the last five years could suffer.

“The infant and child products will be the first hit,” Nash said.

Consumer goods companies will now play a “market share game,” instead of an overall market growth one, Nash said. “It gets much, much more competitive from here on out.”

Unlike the U.S., where there is a large millennial market to serve, China has a large baby boomer cohort, but it’s “hollow” afterward, said Nash. “That size of the market really continues to decline.”

The China Maternity Cliff report predicts a “significant” impact on businesses that are part of the preschool market, such as toys and daycare. Both private and public schools may also need to adjust to the falling number of students in the years to come.

Even further into the future, consumption could fall as dependency ratios increase in the country, said Nash.

The dependency ratio refers to the number of dependents compared to the working population.

“That dependency ratio only deteriorates from 2023 onward,” said Nash. “How much income do people have to spend, how much can they really put into the economy when, let’s say, somebody is caring for their parents and their children? ”

He also said the country, together with the rest of North Asia, will need to take a “serious look” at automation in order to “keep their edge.”

After 2023, Northeast Asian countries — KoreaJapanTaiwan and China — will all have peaked in population, according to the projections. “If that part of the world is going to continue to manufacture (around 35%) of global goods, they’re going to have to take a serious look at automation,” he said.

With no young, new entrants to the workforce, it will be “much more difficult” for China to have an average cost per worker that’s “affordable and competitive globally,” he said. There could be a “serious migration” of low-level jobs to places such as Bangladesh and Vietnam as wages rise in China, the Complete Intelligence chief added.

Aside from the concerns about businesses and the economy, Nash said one “big” concern is income disparity.

“As populations are in decline, those income classes solidify, and ... the economic mobility that people have declines,” he said. “So that’s a real risk.”


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