China’s Point of No Return: World’s sole superpower by 2050? Wait

FOR YEARS, CHINA’S impending demographic collapse has been met with a shrug by the Chinese leadership. State-run media Global Times and news agency Xinhua carry upbeat stories on how automation and AI-powered humanoids will take over much of the work ordinary people do today. A declining population is not, they say, the demographic Armageddon it is made out to be.

They could be wrong. Rod D Martin, founder of US-based equity fund Martin Capital, says China’s population crisis is now “mathematically irreversible” and has crossed a point of no return. The consequences will be economic, social and geopolitical. Projections by the UN and Pew Research of China’s population collapse are grim. China currently has a total fertility rate (TFR) of 1.0. A TFR of 2.1 is needed to keep population levels stable.

According to the UN, China’s population decline could follow one of three trajectories, depending on its future TFR. In the best case scenario, if Chinese women start having more children and the TFR rises, China’s population could stabilise at 1.15 billion in 2100. A more likely scenario, however, is that the Chinese TFR will stay at 1.0. In that case, China’s population in 2100 would more than halve to 633 million. If China’s TFR falls below 1.0, the decline in China’s population would be catastrophic, plummeting to 488 million by 2100.

Independent agencies have arrived at similar conclusions. Victoria University projects China’s population at 525 million in 2100. The Lancet IHME study places the figure at 730 million. Professional demographer Yi Fuxian projects China’s population as low as 440 million in 2100.

Whatever the final number, China is standing at the edge of a demographic precipice. No amount of AI-powered automation can make up for the loss of more than half of a country’s population over two generations. Not only will economic productivity decline due to an ageing, shrinking workforce but the burden on pension payments will rise as the ratio of retired dependants to earning workers climbs.

China’s demographic problem is deepened by its insularity. With almost no immigration, China is one of the world’s most closed societies. Martin warns: “A shrinking workforce, collapsing taxpayer base, exploding retiree burden, and a hollowed-out consumer market, is not just a demographic crisis. It’s the end of China’s superpower dream.”

Signs of the population crisis are already evident.

Overburdened by debt, municipalities are running out of cash. The real estate market is now in the fifth year of a slump. Prices have fallen by nearly 50 per cent, eroding the average Chinese family’s asset value. Nearly 70 per cent of most Chinese households’ wealth is locked in real estate.

As a result, domestic consumption is falling. China continues to over-produce goods that the domestic market cannot absorb. The excess inventory is off-loaded to export markets at discounted prices, causing price disruptions globally. An unintended consequence is that China’s trade surplus has ballooned to $1.2 trillion, keeping the yuan steady against the US dollar but doing little to spur domestic consumption.

China’s economic growth meanwhile continues to slow. The growth target for 2026- 27 of 4.5 per cent is unlikely to be met. China is among the world’s most heavily indebted countries with a debt burden of over 310 per cent of GDP. A large portion of the debt sits in the books of state-owned enterprises.

China obviously retains enormous strengths in technology. It is the global leader in EVs, synthetic biology, solar energy and an array of diverse industries where it has overtaken the US. Washington has banned the export of Nvidia’s most advanced chips to China because AI is one industry in which the US still has a technological lead over China. That lead though is diminishing rapidly and could disappear in less than a year.

US President Donald Trump’s G2 construct is an attempt to rein in China before it expands its lead in key tech domains. In spite of these strengths, will China’s de-population stall President Xi Jinping’s publicly stated ambition to be the world’s sole superpower by 2050?

China’s population in 2050 will still be around 1.12 billion by most estimates. The slide to below 600 million will accelerate from the 2060s with China losing 100 million people on a net basis every decade. As Rob Martin says: “Demography is destiny.”