China's population is steadily declining, despite the years-old cancellation of the harsh Mao-era restriction that limited families to one child, a significant shift that will soon make India the world's most populous nation. The change will have enormous effects not only on the Chinese economy but also on the economy of the entire world. Here's the reason worldwide financial experts and others are frightened by the turns of events.
The global economy may suffer as a result of the dwindling workforce. For many years, China's enormous population of people of working age fueled the global economy by supplying factory workers with cheap labor for exporting goods. Costs for consumers outside of China could rise in the long run as a result of a shortage of factory workers in China, which could be exacerbated by inflation in countries like the United States that heavily rely on imported Chinese goods. This could be caused by a workforce that is more educated and a younger population. Numerous businesses have already begun moving their manufacturing operations to lower-paying nations like Vietnam and Mexico in response to rising labor costs in China.
A shrinking population could also mean that Chinese consumers will spend less, putting at risk global brands like Nike sneakers and Apple smartphones that depend on sales to China. The data are bad news for the important housing market in China. China has likewise been reluctant to relax migration rules to help the populace, and has generally given somewhat scarcely any green cards to renew its contracting labor force. China has been increasing factory automation and outsourcing low-skilled production to other Asian nations in an effort to address the labor shortage and increase its reliance on artificial intelligence and technology for future growth.