China’s population is shrinking, creating challenges and opportunities for its economy and British businesses
In 2022, China’s population fell for the first time in six decades, dropping from 1.4126 billion to 1.4118 billion, a decline of 850,000. This trend has accelerated, with losses of 2.08 million in 2023 and 1.39 million in 2024, according to China’s National Bureau of Statistics. The United Nations projects a further decline of 204 million by 2054, and by 2100, China could lose over half its current population, falling by 786 million. This shift, driven by low birth rates and an ageing population, is reshaping labour markets, consumer demand, and business prospects. For UK firms, understanding these changes is key to thriving in China’s evolving market.
The decline stems from the One-Child Policy (1979–2015), which limited most families to one child, reducing the number of women of childbearing age and skewing gender ratios. Coupled with high living costs, shifting attitudes towards marriage, and the economic impact of COVID-19, China’s birth rate in 2024 was just 6.77 live births per 1,000 people, slightly up from 6.39 in 2023. Meanwhile, the population over 60 reached 310.3 million in 2024, up from 297 million, while the working-age population (16–59 years) dropped from 61.3% to 60.9%, totalling 858 million. By 2050, those over 65 are expected to double, straining social systems.
To counter this, China has rolled out policies to boost births and manage an ageing society. Since 2016, couples can have two children, expanded to three in 2021. Subsidies, like Shenzhen’s RMB 19,000 (£2,050) for families with one to three children, aim to encourage childbirth, alongside tax deductions and childcare support. However, these measures have yet to reverse the decline. Starting January 2025, China will raise retirement ages, men from 60 to 63, women from 50 to 55 (blue-collar) or 55 to 58 (white-collar) over 15 years, to address a shrinking workforce. The government is also investing in the “silver economy,” with policies like rent exemptions and tax breaks for eldercare providers, as outlined in the 2022 National Development and Reform Commission measures and the 2024 State Council’s Opinions on Developing a Silver Economy. A private pension scheme, launched in 2022 and expanded nationwide in 2024, offers tax incentives to ease pressure on public pensions. Additionally, China is pushing automation and “New Quality Productive Forces” (NQPFs), focusing on AI, robotics, and biotechnology to offset labour shortages.
This demographic shift challenges China’s economic model, once fuelled by a large, young workforce. With 734.4 million workers in 2024, labour shortages are not immediate, but industries like manufacturing and construction may face higher wages and shortages as younger workers shun manual labour. A smaller population could shrink consumer markets, with older citizens spending less. Yet, rising per capita income – RMB 41,314 (£3,550) in 2024 – and policies like the Special Action Plan to Boost Consumption and the dual circulation strategy are strengthening domestic demand. British brands like Burberry succeeded by tailoring products to local tastes, highlighting the need for adaptability.
Despite challenges, China’s ageing population creates opportunities for British businesses. The eldercare market, projected to reach £2.6 trillion by 2030, demands healthcare services, pharmaceuticals, and medical devices. Healthcare Opportunities in China, allow UK firms like AstraZeneca to grow in China through local partnerships to meet these needs. Education is another growth area, with smaller families spending more on premium services and a shortage of skilled workers in technology, healthcare, and engineering. UK institutions are also helping to uskilling China’s workforce by expanding vocational training. China’s push for automation aligns with UK strengths in AI and robotics, as seen at the 2024 China International Import Expo, where British tech firms showcased innovative solutions.
To succeed, British businesses should invest in automation, partnering with Chinese firms to develop AI and robotics. Offering vocational training, diversifying products for an ageing, affluent market, and building local partnerships are critical. Flexible work arrangements can also attract talent in a competitive market. While China’s population decline poses risks like labour shortages and reduced consumer demand, it also opens doors in healthcare, education and technology. By staying agile and leveraging UK expertise, British firms can seize these opportunities in China’s changing landscape.
