China's economic growth faces significant risks from a declining labor force and a rapidly aging population. According to Oxford Economics, potential output growth may decrease from 4% in the 2020s to below 2% by the 2050s. Falling birth rates have reduced the labor pool to maintain productivity, leading to challenges across consumption and innovation. With increasing government debt and growing dependency ratios, fewer working-age individuals will support an aging population, compounding these economic strains. Thus, sustaining economic growth becomes increasingly difficult for China.
According to a new report from Oxford Economics, the potential output growth for China could fall from around 4% in the 2020s to less than 2% by the 2050s.
As populations age, the younger cohorts are often smaller than older ones due to declining birth rates. This raises the dependency ratio, with fewer working-age people supporting a growing number of retirees.
China may be the only nation that could rival America's economic dominance. But its long-term prospects will potentially be cut off at the knees by a fundamental flaw: It won't have the people to keep its growth going.
The country's labor force is shrinking at an advanced rate, with its fertility rates falling below 'replacement levels' where new workers equal the amount of individuals leaving employment.
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