Policy Brief n.54 - China’s Demographic Decline Reconsidered

At the same time, the fertility rate in China has been falling already since the 1980s, with a sharper deterioration in the past 10 years. The number of births reached an all-time low of 7.92 million births in 2025 (only about double the US number although the Chinese population is 4 times larger).   

It thus seems that “China will grow old before it gets rich”. However, this narrative neglects one key fact: as the population shrinks, its skill level is increasing. The reason is that the young generation, while smaller, is more educated – much more than the parent generation.

This implies that while the number of working-age individuals is shrinking, on average they are much better educated. 

Our calculations suggest that at present the increasing qualification of the new entrants to the workforce more than compensates for the decline in raw numbers.

We also document a striking fact about Chinese demographics, namely the weakness of the ‘educational middle class’.  At present, those without completed secondary education still make up two thirds of the working age population (against less than a quarter in Europe and less than one tenth in the US). Whereas the educational middle class – i.e. those with secondary education completed– make up less than a quarter. This is very different from the US and Europe, where the middle level is usually the largest element in the working age population. 

The very high university enrollment ratios among the young today imply that the share of graduates will increase over the next generation, keeping the middle class a small minority.