#16. THE BRIEF: China's Demographics, is Covid an accelerant or temporary disruption?
Population growth slows, UN Demographic charts, Covid impact on births, Singles Economy, Retail sales, CPI PPI, CNY in Swift, Billionaire Cities
This is THE BRIEF, one of two of our weekly columns. We are a pair of finance professionals with boots on the ground in China, each with 10 years of experience in the country. This is The Brief, a collection of charts on China’s economy and what we find interesting.
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Population Growth Slows
UN Demographic Charts
Is Covid accelerant or temporary disruption to birth rate?
Consumption in a Singles Economy
CPI & PPI
CNY in SWIFT
I. Population Growth Slows
China’s population inched up last year, by 480,000 (net), the lowest increase since 1960 when China was dealing with a horrible famine.
Two statistics go into net population growth: births and deaths. The birth rate has been declining (note that is thousandths on the y-axis) to 7.52 per 1000 people:
For an idea how births will play out in the future, we look at the UN’s 2019 average annual birth projections for China. (It’s already off though, see next section.)
II. UN’s China Demographics Charts
These are from the UN’s 2019 World Population Prospects report (a 1200+ page pdf).
2019 Age Group Pyramid - Note the differences in males to females for below 35 age groups.
2040 Pyramid - UN is projecting the male baby preference will continue.
2060 Pyramid - Here we see a lopsided pyramid. This is the slow moving demographic problem in China’s future. How it is dealt with or adapted to will be very important to the people of the nation.
Births and Deaths - These 2019 projections already look wrong. Births in 2021 came in at 10.62 million, versus projections here of greater than 15 million.
The last two years actual births have declined sharply to the lowest recorded level.
III. Is Covid an accelerant or temporary disruption to China’s birth rate?
Accelerant means that women who chose not to have babies in 2020 and 2021 will continue to choose not to have babies in the future. This seems less likely to us.
A temporary disruption means women who put off pregnancy during the pandemic will come back. This could lead to a large number of births in a 1-3 year period.
If the sharp decline in births is mainly Covid related, the bounce back may not come until Covid has evolved into a seasonal cold-like virus—able to exist forever with its hosts. Hopefully this event is in our near future.
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IV. Consumption in a Singles Economy
What does declining birth rates mean? More one-person households.
The number of three-person households, commonly seen in China, is falling and is instead replaced by a rising number of one-person households. Census data and sample survey data from the National Bureau of Statistics show that the proportion of one-person households in China’s total has shot up from 2.52% in 2000 to 18.45% in 2019. A rough estimate suggests that more than 100 million Chinese live alone. (Caixin)
What does it mean for consumption? Single-person households spend more per capita than multi-person households.
In terms of the total consumption spending, singles do shell out more than married people. According to the 2017 CHFS data, on average, multi-person households spend 52,000 yuan per year, 15,000 yuan per capita, whereas single-person households spend 28,000 yuan per year. (Caixin)
These excerpts are from Caixin piece examining the “singles economy”.
V. Retail Sales
China’s retail sales growth inched down. (Note the Covid impact.)
The folks over at Yardeni published a chart on China’s Real Retail Sales Growth. They annualized nominal retail sales figures, divided them by CPI, created a 24-month moving average, then calculated the 24-month percent change. This helps smooth out the Covid impact seen above.
We took a look at the components of Yardeni’s chart to get an idea of how it may change in the future.
Our view: CPI was highest and retail sales were lowest during the 3month period from Jan-Mar 2020, which is weighing heavily on the 24-month average. By mid-2022, we believe Yardeni’s metric should be back above 3% or higher.
VI. CPI & PPI
Forecasts of 2022 CPI for large economies.
China’s December PPI remained well in double-digit territory and has not crossed into CPI. Jan-2005 ended 10-consecutive months where PPI was above 10%. Dec-2021 was the 8th month in a row. Will the 10-month record be broken?
VII. CNY in SWIFT
CNY percentage share ended 2021 the highest since 2015.
VIII. Billionaire Cities
According to Forbes, China has 5 of the top 10 billionaire cities in the world.
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China Charts Team