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East Asia's Population 'Death Spiral'

In 2014, Japan experienced the lowest birthrate ever, the fourth-straight year of record low births. There were 9,000 fewer Japanese born last year than in 2013, according to Health Ministry statistics.

Japan is shrinking as it sets one unenviable demographic record after another. Last year, the population fell by a biggest-ever 268,000. “2014’s population decrease was a ‘record’ but it’s a record that is going to be broken annually for the foreseeable future,” writes Forbes’s Mark Adomanis. “By this point it’s essentially inevitable: every January for at least the next 20 or 30 years there will be newspaper headlines stating that Japan’s population just suffered a new ‘record’ loss.”

Call it a “death spiral.” By 2050, Japan will be “the oldest society the world has ever known.” If the country’s fertility rate remains unchanged, the population will drop by almost a third by 2060 and two-thirds by 2110. And the last Japanese child will be born in 3011.

As Adomanis notes, “Since 1973, Japan has not had a single year in which its fertility rate was high enough for population stability.”

Japan’s total fertility rate—essentially the number of children born to each woman—is 1.4, well below the 2.1 needed for replacement. Japan’s low rate, however, is not exceptional for its region. China’s TFR, despite state media claims, is probably 1.4 as well. South Korea’s rate is 1.3. Hong Kong’s is at 1.2 but falls to 1.0 or lower if mainland women are excluded. Taiwan’s is 1.1. And what is Macau’s? That’s 0.9.

Yes, Japan is a “nation on suicide watch,” but so is much of the rest of East Asia. Once demographic trends are baked into a society—as they are in Japan and the rest of its neighborhood—governments can do little to change patterns. State incentives usually do no more than accelerate births that would have occurred anyway. As is said with only a tinge of exaggeration, “demography is destiny.”

So what is Japan’s destiny? Many are concerned that a shrinking population will not be able to support the extraordinarily heavy debt load that a succession of Japanese governments have incurred. Analysts will not be surprised when growth, which is already unimpressive, slows further.

More worrisome is China, a poorer society where adverse demographic trends in recent years have been accelerating. The workforce began to shrink in 2012 according to the official National Bureau of Statistics, or in 2010 according to the country’s leading demographers—in both cases well before the 2016 date that had been projected by the central government last decade.

The country as a whole will not peak in 2026, as estimated by the US Census Bureau five years ago, or after 2030, as Beijing’s official statistics indicate. Senior official Liu Mingkang, speaking at the Asia Global Dialogue in May 2012, admitted China’s population would top off in 2020, which means it will, in all probability, begin falling a year or two before then. The Chinese, who take great pride in their country ranking as the world’s most populous, will soon be dropped to second place. India will take the crown in no more than 10 years, probably fewer.

For China’s economy, changing demography will be especially consequential. The country’s three-decade bull run was largely powered by the “demographic dividend,” an extraordinary bulge in the workforce created by Mao Zedong’s policy of fast population growth followed by his successors’ strictly enforced one-child policy. Now that China is hitting demographic inflection points, Beijing’s central economic planners will be facing headwinds. By the end of this decade, the two major economies of East Asia will be struggling to overcome inexorable population decline.

Japan is leading the pack downward, but other countries in its region are not far behind. Together, they are headed to near-simultaneous demographic collapses, events without precedent in history. 

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