yi8_ Lintao ZhangGetty Images_li qiang Lintao Zhang/Getty Images

An Economic Hail Mary for China

Just as a baker cannot make bread without enough flour, China’s new premier, Li Qiang, cannot deliver growth without enough labor. With fertility far lower than official data show, improving China’s economic prospects will require Li to take a drastic – and unpopular – step.

MADISON, WISCONSIN – At a recent press conference, China’s new premier, Li Qiang, argued that the country’s demographic dividend has not disappeared, even though the population is declining. He supported his claim with impressive-sounding figures: China has nearly 900 million working-age people, out of a total population of 1.4 billion, with more than 15 million people joining the workforce every year. But should we believe these numbers?

An examination of Chinese demographic data reveals clear and frequent discrepancies. For example, the National Bureau of Statistics claimed that there were 474 million births between 1991 and 2016, which is in line with the 478 million first graders recorded by the Ministry of Education between 1997 and 2022. For 2000, the Bureau reports that there were 17.7 million births – a figure that aligns perfectly with the 17.5 million first graders in 2006. And yet, while the 2000 census showed only 13.8 million children under the age of one, there were 14.3 million ninth graders in 2014, implying a gross enrollment rate of 104%.

There are several reasons why Chinese demographic data are unreliable. For starters, China’s local governments have a strong incentive to inflate population figures. More residents mean larger fiscal transfers from the central government, including funds for priorities like education, pensions, and poverty alleviation. Likewise, households might claim to have more members in order to receive more benefits from local governments.