I was reminded of a post I wrote last year by the news that China’s birth rate dropped by 45%. As I wrote then: “A study in the Lancet forecasts total world population will decline A LOT over the next 70 years. China’s population, for example. could drop by half. 700 million fewer people than their peak population year in 2024. As the study somewhat blandly puts it…”
Our forecasts for a shrinking global population have positive implications for the environment, climate change, and food production, but possible negative implications for labour forces, economic growth, and social support systems in parts of the world with the greatest fertility declines.”
“Possible Negative Implications?” Wouldn’t “multi-decade deflationary shock?” be a more appropriate descriptor?
The simplest example is housing. Fewer people need fewer houses. What do we do with the left-over homes no-one will ever live in again? What do we do with the cities and towns where they will be concentrated?
I don’t have any good answers to that and many other questions. I do worry that no-one else does either.
What we do know is that this trend is deeply deflationary. Most of those houses now carry some notional value often backed up by very real debt. But if no-one is there to buy the house when the last owner dies, the asset value (and the associated debt value) are gone. Buried in his/her grave.
You can make shorter-term arguments that a shortage of job-age workers will drive inflation. This makes sense, But the next 80 years will see fewer people occupying fewer house and buying less stuff in a world whose productive capacity and asset based is sized for millions more people who no longer exist.
We live in interesting times.
We are All Japan? Especially China? World Population DOWN by 2100? China’s Population Cut in Half?
“Barring some sort of birthrate uptick China’s a country of 1.4 billion that very soon is going to have a child population you’d expect in a country of 700 million. Very weird future.”
Births in China have fallen by 45% in 5 years, which is just catastrophic: pic.twitter.com/MFBAb7tilC
— Conor Sen (@conorsen) January 17, 2023
