A nurse takes care of a newborn baby at a hospital in Fuyang, China. The country has experienced its first population decline since 1961. AFP
A nurse takes care of a newborn baby at a hospital in Fuyang, China. The country has experienced its first population decline since 1961. AFP
A nurse takes care of a newborn baby at a hospital in Fuyang, China. The country has experienced its first population decline since 1961. AFP
A nurse takes care of a newborn baby at a hospital in Fuyang, China. The country has experienced its first population decline since 1961. AFP

China population declines for first time in 60 years


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China has fewer people than at the start of 2022, the first decline in population since 1961.

Official figures from China's National Bureau of Statistics released on Tuesday showed mainland China had 850,000 fewer people at the end of 2022 than the previous year.

More than a million fewer babies were born last year and 300,000 more people died. China's population now stands at 1.41 billion.

The bureau reported 9.56 million births in 2022, compared to 10.62 million in 2021. Deaths rose from 10.14 million to 10.41 million.

It was not immediately clear if the population figures were affected by the Covid-19 outbreak that was first detected in the central Chinese city of Wuhan before spreading around the world.

China has been accused by some experts of underreporting deaths from the virus by blaming them on underlying conditions, but no estimates of the actual number of Covid deaths have been published.

Reticence from women to have children may also be a factor. Analysts point to the soaring cost of living — as well as a growing number of women working and seeking higher education — as reasons behind the slowdown.

“Who dares to have kids?” a Shanghai resident in his thirties told Agence France-Presse on Tuesday.

“The unemployment rate is so high, Covid destroyed everything, there's nothing we can do. Next year, we'll have declining growth again.”

China’s population has begun to decline nine to 10 years earlier than Chinese officials predicted and the UN projected, Yi Fuxian, a demographer and expert on Chinese population trends at the University of Wisconsin-Madison, told the Associated Press.

“China has become older before it has become rich,” Dr Yi said.

China ended its 1980s one-child policy in 2016, and extended the number of children couples were allowed to have to three in 2021.

Many local authorities have already launched measures to encourage couples to have children.

The southern megacity of Shenzhen, for example, now offers birth bonuses of up to 10,000 yuan (about $1,500) and pays allowances until the child is three years old.

But analysts argue much more needs to be done.

“A comprehensive policy package that covers childbirth, parenting and education is needed to reduce the cost of child-raising,” Xiujian Peng, a researcher at Australia's University of Victoria, told AFP.

“Women's job insecurity after giving birth should be addressed particularly.”

Experts are warning that the decline in population could have knock-on effects on China's economic prospects with a smaller workforce.

The last time China is believed to have experienced a population decline was during the Great Leap Forward, a disastrous drive for collective farming and industrialisation launched by then-leader Mao Zedong at the end of the 1950s that produced a massive famine that killed tens of millions of people.

China’s statistics bureau said the working-age population between 16 and 59 years old totalled 875.56 million, accounting for 62 per cent of the national population, while those aged 65 and older totalled 209.78 million, accounting for 14.9 per cent.

If handled correctly, a declining population does not necessarily translate to a weaker economy, said Stuart Gietel-Basten, professor of social science at Khalifa University in Abu Dhabi.

“It’s a big psychological issue. Probably the biggest,” Dr Gietel-Basten said.

The numbers mean India is drawing closer to becoming the most populous country. India has a population of 1.43 billion with a birth rate of 16.42 for every 1,000 people, while China now has 6.77 per 1,000. The third-most populous country is the US, with 337 million people.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: January 17, 2023, 4:43 PM