How the Demographics of China and India are Diverging
Within popular discourse, especially in the West, the profiles of China and India have become inextricably linked.
Aside from their massive populations and geographical proximity in Asia, the two nations also have deep cultural histories and traditions, growing amounts of influence on the world stage, and burgeoning middle classes.
China and India combine to be home to one-third of the world’s megacities, and they even had identical real GDP growth rates of 6.1% in 2019, based on early estimates by the IMF.
But aside from the obvious differences in their political regimes, the two populous nations have also diverged in another way: demographics.
As seen in today’s animation, which comes from AnimateData and leverages data from the United Nations, the two countries are expected to have very different demographic compositions over time as their populations age.
The easiest way to see this is through a macro lens:
Populations of China and India (1950-2100)
|🇮🇳 India||0.38 billion||1.37 billion||1.64 billion||1.45 billion|
|🇨🇳 China||0.55 billion||1.43 billion||1.40 billion||1.06 billion|
Although the countries have roughly the same populations today — by 2050, India will add roughly 270 million more citizens, and China’s total will actually decrease by 30 million people.
Let’s look at the demographic profiles of these countries to break things down further. We’ll do this by charting populations of age groups (0-14 years, 15-24 years, 25-64 years, and 65+ years).
China: Aftermath of the One-Child Policy
China’s one-child policy was implemented in 1979 — and although it became no longer effective starting in 2016, there’s no doubt that the long-term demographic impacts of this drastic measure will be felt for generations:
The first thing you’ll notice in the above chart is that China’s main working age population cohort (25-64 years) has essentially already peaked in size.
Further, you’ll notice that the populations of children (0-14 years) and young adults (15-24 years) have both been on the decline for decades.
A reduction in births is something that happens naturally in a demographic transition. As an economy becomes more developed, it’s common for fertility rates to decrease — but in China’s case, it has happened prematurely through policy. As a result, the country’s age distribution doesn’t really fit a typical profile.
India: A Workforce Peaking in 2050
Meanwhile, projections have India reaching a peak workforce age population near the year 2050:
By the year 2050, it’s estimated that India’s workforce age population will be comparable in size to that of China’s today — over 800 million people strong.
However, given that this is at least 30 years in the future, it raises all kinds of questions around the economic relevance of a “working age” population in a landscape potentially dominated by technologies such as artificial intelligence and automation.
While it’s clear that the world’s two most populous countries have some key similarities, they are both on very different demographic paths at the moment.
China’s population has plateaued, and will eventually decline over the remainder of the 21st century. There is plenty of room to grow economically, but the weight of an aging population will create additional social and economic pressures. By 2050, it’s estimated that over one-third of the country will be 60 years or older.
On the other hand, India is following a more traditional demographic path, as long as it is uninterrupted by drastic policy decisions. The country will likely top out at 1.6-1.7 billion people, before it begins to experience the typical demographic transition already experienced by more developed economies in North America, Europe, and Japan.
And by the time the Indian workforce age group hits 800+ million people, it will be interesting to see how things interplay with the world’s inevitable technological shift to automation and a changing role for labor.
China’s Economy: 40 Years of Soaring Exports
China’s economy today is completely different than 40 years ago; in 2021 the country makes up the highest share of exports globally.
Animated Chart: 40 Years of Soaring Exports in China
China has the second highest GDP in the world, and it exports 15% of all the world’s goods. But how did this come to be?
A mere 40 years ago, China’s economy was in an entirely different situation, making up less than 1% of global exports and still in the infancy stages of building its economy. The above animated chart from the UNCTAD showcases China’s rise to global trade dominance over time.
Timeline: The Rise to Power
The China of the mid-20th century looks remarkably different when compared to the modern-day nation. Prior to the 1980s, China was going through a period of social upheaval, poverty, and dictatorship under Mao Zedong.
Beginning in the late 1970s, China’s share of global exports stood at less than 1%. The country had few trade hubs and little industry. In 1979, for example, Shenzhen was a city of just around 30,000 inhabitants.
In fact, China (excluding Taiwan* and Hong Kong) did not even show up in the top 10 global exporters until 1997 when it hit a 3.3% share of global exports.
|Year||Share of Global Exports||Rank|
*Editor’s note: The above data comes from the UN, which lists Taiwan as a separate region of China for political reasons.
In the 1980s, several cities and regions, like the Pearl River Delta, were designated as Special Economic Zones. These SEZs had tax incentives that worked to attract foreign investment.
Additionally, in 1989, the Coastal Development Strategy was implemented to use strategic regions along the country’s coast as catalysts for economic development.
The 1990s and Onwards
By the 1990s, the world saw the rise of global value chains and transnational production lines, with China offering a cheap manufacturing hub due to low labor costs.
Rounding out the ‘90s, the Western Development Strategy was implemented in 1999, dubbed the “Open Up the West” program. This program worked to build up infrastructure and education to retain talent in China’s economy, with the goal of attracting further foreign investment.
Finally, China officially joined the World Trade Organization in 2001 which allowed the country to progress full steam ahead.
Made in China
Today China is a trade giant and manufacturing behemoth. Only the U.S. and Germany come close to its share of global exports, sitting at 8.1% and 7.8% respectively.
|Rank||Country||Share of Global Exports (2020)|
|#6||🇭🇰 Hong Kong SAR||3.1%|
|#7||🇰🇷 South Korea||2.9%|
China’s manufacturing industry has become dominant in producing just about anything from commonplace household items to integral pieces in automotive manufacturing. Some staples of Chinese manufacturing are:
- Precision instruments
- Industrial machinery for computers and smartphones
COVID-19 made China’s integral role in the global economy even more visceral, as major delays in the supply chain occurred when the virus hit the country.
An Economic Superpower
In 2021, China’s trade recovery from the crisis has bested most other countries—in Q1 2021, its exports grew by almost 50% compared to the previous year’s quarter, to around $710 billion.
And the country is not slowing down any time soon. Further plans for economic development are well under way, like Made in China 2025, with the goal of becoming a dominant player in global high-tech manufacturing. Additionally, the famous One Belt, One Road initiative has been funding infrastructure projects globally over the past decade, and the country is also a founding member of the RCEP—which is soon to be the world’s biggest trading bloc.
However, China still faces a series of challenges, such as:
- Population decline
- The onset of labor saving technology
- Trade wars with U.S. and sanctions from other trade partners, like Europe
- The emergence of ASEAN trade powers, like Vietnam
A declining population has many implications like a shrinking workforce and domestic market. Additionally, many companies are setting up shop in less costly manufacturing hubs like Vietnam.
Furthermore, inexpensive innovations in labor-saving technologies, such as robotics and automation, have already begun to undermine the cheap manual labor that has made China the world’s manufacturer.
All of these elements and more could potentially spell a slowing of growth in China’s export dominance. However, while the future for China may not be certain, currently, global trade and production could not function without it.
RCEP Explained: The World’s Biggest Trading Bloc Will Soon be in Asia-Pacific
The Regional Comprehensive Economic Partnership (RCEP) covers 30% of global GDP and population. Here’s everything you need to know about it.
RCEP Explained: The World’s Biggest Trading Bloc
Trade and commerce are the lifeblood of the global economy. Naturally, agreements among nations in a certain geographical area help facilitate relationships in ways that are ideally beneficial for everyone involved.
In late 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed, officially creating the biggest trade bloc in history. Here, we break down everything you need to know about it, from who’s involved to its implications.
Who’s in the RCEP, and Why Was it Created?
The RCEP is a free trade agreement between 15 nations in the Asia-Pacific region, and has been formalized after 28 rounds of discussion over eight years.
Member nations who are a part of the RCEP will benefit from lowered or completely eliminated tariffs on imported goods and services within the region in the next 20 years. Here are the countries which have signed on to be member nations:
|Country||Population (M)||Nominal GDP ($B)|
|🇰🇷 South Korea||51.8||$1,631|
|🇳🇿 New Zealand||5.1||$209|
But there is still some work to do to bring the trade agreement into full effect.
Signing the agreement, the step taken in late 2020, is simply an initial show of support for the trade agreement, but now it needs to be ratified. That means these nations still have to give their consent to be legally bound to the terms within the RCEP. Once the RCEP is ratified by three-fifths of its signatories—a minimum of six ASEAN nations and three non-ASEAN nations—it will go ahead within 60 days.
So far, it’s been ratified by China, Japan, Thailand, and Singapore as of April 30, 2021. At its current pace, the RCEP is set to come into effect in early 2022 as all member nations have agreed to complete the ratification process within the year.
Interestingly, in the midst of negotiations in 2019, India pulled out of the agreement. This came after potential concerns about the trade bloc’s impacts on its industrial and agricultural sectors that affect the “lives and livelihoods of all Indians”. India retains the option to rejoin the RCEP in the future, if things change.
The Biggest Trading Blocs, Compared
When we say the Regional Comprehensive Economic Partnership is the biggest trade bloc in history, this statement is not hyperbole.
The RCEP will not only surpass existing Asia-Pacific trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in size and scope, but also other key regional partnerships in advanced economies.
This includes the European Union and the U.S.-Mexico-Canada Agreement (USMCA, formerly known as NAFTA). How does the trio stack up?
|Nominal GDP, 2020||Population, 2020|
|EU||$15.2 trillion||445 million|
|USMCA||$23.7 trillion||496 million|
|RCEP||$26.1 trillion||2.27 billion|
|World||$84.5 trillion||7.64 billion|
With the combined might of its 15 signatories, the RCEP accounts for approximately 30% of global GDP and population. Interestingly, the total population covered within the RCEP is near or over five times that of the other trade blocs.
Another regional agreement not covered here is the African Continental Free Trade Area (AfCFTA), which is now the largest in terms of participating countries (55 in total), but in the other metrics, the RCEP still emerges superior.
Implications of the Regional Comprehensive Economic Partnership
The potential effects of the RCEP are widespread. Among others, the agreement will establish rules for the region around:
- Intellectual property
However, there are some key exclusions that have raised critics’ eyebrows. These are:
- Labor union provisions
- Environmental protection
- Government subsidies
The RCEP could also help China gain even more ground in its economic race against the U.S. towards becoming a global superpower.
Last, but most importantly, Brookings estimates that the potential gains from the RCEP are in the high billions: $209 billion could be added annually to world incomes, and $500 billion may be added to world trade by 2030.
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