February 12, 2025 • 24 mins
China, the world's second-largest economy, is facing a demographics crisis. Its population fell in 2024 for the third straight year and is projected to halve by the end of the century, while marriages – tightly linked to childbirth in the country – plunged to a record low. The trend of declining birthrates and an aging population, which threatens the labor market and growth, comes even after the government lifted its one-child policy and added a raft of measures to support families.
Bloomberg Intelligence analyst Ada Li spent more than a year gathering data from local governments and uncovering the cultural and social reasons behind the trends – with some startling conclusions. She speaks with John Lee and Katia Dmitrieva about why the government is unable to reverse the decline, how the cost of childcare is just one part of the problem, and why – surprisingly – it may not be so bad for consumer companies.
Read Ada’s full research (https://blinks.bloomberg.com/news/stories/SN47X8T0AFB7) and related news stories about Asia's baby shortage (https://blinks.bloomberg.com/news/stories/SM8W0PDWLU68) on the Bloomberg Terminal.
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Speaker 1 (00:02):
You're listening to Asia Centric from Bloomberg Intelligence, the podcast
that explores the big ideas and trends moving money across
the region. I'm John Lee in Hong Kong, and I'm.
Speaker 2 (00:12):
Kai JIDM Dreva, also in Hong Kong.
Speaker 3 (00:14):
John.
Speaker 2 (00:15):
Last month, China released some really interesting numbers and it
wasn't just GDP. They also released data on population. And
we've known for some time population has been falling in China.
While for the third year in a row, the nation's
population declined.
Speaker 1 (00:30):
And remember that twenty twenty four was the Year of
the Dragon, that's considered an auspicious year to have kids.
Speaker 2 (00:37):
Yeah, and it was. I mean, we had more babies
born in China, but it still wasn't enough to sort
of offset the population decline. And it's not necessarily a
bad thing to have a smaller older population. You know,
you have people living longer lives, and you also have
scientists point to fewer resources being used to sustain a
(00:57):
population or sustain a country.
Speaker 1 (01:00):
But unfortunately, financial markets take a falling population quite negatively. Well,
today we have a guest who's written extensively on this topic.
She is aiderly senior consumer analyst at Bloomberg Intelligence. Aida,
Welcome to the show.
Speaker 3 (01:13):
Thank you very much.
Speaker 1 (01:15):
Ada. What did the latest data release tell us about
Chinese population?
Speaker 3 (01:19):
Well, you know, for twenty twenty four, we have seen
the population at about one point four eight billion people,
so it was a decline from the previous year, even
though the birth rate has increased. So what we are
seeing is that people are getting older. The death rate
is definitely climbing on a year on year basis, and
(01:40):
the birth rate in terms of the boost is mainly
due to the year of the Dragon as well as
there's a pent up in babies because of COVID and
so forth. But if you look at the marriage rate
for twenty twenty four, it reached record low and hint's
going forward, if less people are getting married, the birth
rate is unlikely to pick up.
Speaker 2 (02:00):
Now, we have a lot of listeners in the States
and Western countries, and it may be good to explain
a bit about why the marriage component is really important
for stats here because in places like Friends or the States,
you know, you can have more than fifty percent of
children I think come out of outside of marriage. But
it's quite different in Asia.
Speaker 3 (02:18):
Right correct, especially in China where the society still view
marriage as the base of the society. And also what
happened is if your child is born out of a
legitimate marriage, it becomes quite tricky with the hukou system
where it is linked to social securities, healthcare, education, so
(02:40):
everything becomes a lot more difficult for the child born
out of marriage. So that's why it is very important
to look at the marriage rate and then to project
the birth rate.
Speaker 1 (02:50):
And ada, can you give us some numbers exactly how
many babies were born in China last year and how
does this compare versus the history.
Speaker 3 (02:59):
So last year we had about nine point five million
babies were born, and when you look at historically, they
were much higher. So twenty years ago, the twenty years
high was nineteen point eight million babies per year. So
this is literally half already and going forward, we are
projecting that it could gradually dip to about seven point
(03:20):
nine million babies by twenty thirty five. So the trajectory
is definitely going down. And that's because of the high
cost of having babies, and that's not only financially, but
it's also on the resources in terms of the mother's
time or the parents' time to raise the children. The
education system has been very tough, a high youth unemployment rate,
(03:43):
which means that if you have your child, now what
are they going to do when they get older? Will
they get a job? Will they be able to sustain themselves?
So all these are actually on the potential parents' mind
at the moment, and of course you know that will
come with what will the government be able to stimulate
them or learn them with bonuses or incentives. So the
(04:03):
government has been coming out with very very creative ways
of trying to stimulate people to have children. And I
have a very interesting case study recently. There's a lower
tier city called Tienmen. In twenty twenty four, Tienman's birth
rate went up by seventeen percent.
Speaker 2 (04:25):
That's virtually unheard of exactly.
Speaker 3 (04:27):
Of course, you know twenty twenty four the birth rate
went up, but seventeen percent is a massive search. And
when you dig deeper, the local governments have been putting
a lot of different subsidies, a lot of help to
the parents in order to lure them to have more children.
When you add up all the various subsidies, including some
(04:47):
of them is one time home buying subsidies, it could
be about thirty one thousand US dollar, so it is
actually quite a big if you call it a baby
cash bonus to stimulate birth.
Speaker 1 (05:02):
So can you dig deeper into some of these subsidies,
like what are they and what are some of the
more creative ones you've heard of?
Speaker 3 (05:08):
Well, for Tienman's when in particular, they have the subsidies
for genetic screening, so for like DWNCE syndromes, birth maternity leads.
These are you know, prolonging it giving also paternity leads,
monthly childcare subsidies after the age of three years old,
as well as other measure like the birth rewards, so
(05:29):
it's a cash reward, the home purchase incentives, and they're
also giving mothers a bunch of fresh flowers, a one
time taxi ride and all these a card also you
know to say well done, to heal a child. You know,
it's all these really really innovative ideas that the local
governments are doing in order to try to lure people
(05:51):
to have more children.
Speaker 2 (05:52):
How much do you think the flowers and cord helped.
Speaker 3 (05:56):
I think the flowers would help a little bit because
it's you know, showing a bit of appreciation, but definitely
I would rather take the cash. To be honest, monthly
monthly monthly monthly cash is very good. And also I
think beside the monthly cash is you know, the childcare system.
Who's going to look after the child when you go
back to work. I think it's the whole integrated system
(06:19):
that the government or the various local governments are trying
to fix. So these are some of the other innovative
ones we've seen. Is you know, having childcare support, the
crash open for a little bit longer, all these various
supportive measures just to help the parents in order to
have the kids.
Speaker 2 (06:38):
This is a really interesting case study that you mentioned.
Do you know why it worked in that particular region
but not elsewhere in China Because it's not just that
one government that's been dolling out cash so to speak.
This has been a few years now, you know, it
started with disassembling the one child policy and then since
(06:59):
then it's become basically a three child policy. The government
has been very vocal about it, and local governments have
been given cash subsidies at marriage at the point of
you know, getting married, as well as baby bonuses and
childcare subsidies and things like that. So do you have
a sense of why it particularly worked in this place.
(07:19):
Is it to do with the population maybe, or how
maybe all these things are tied together.
Speaker 3 (07:25):
I think firstly, when you look at Tienman as a
standalone case study, when you look at the birth rate
for the past ten years, the city has been declining,
so this is a V shape recovery from the bottom,
so there's a base effect as well, so that's the
first thing. Secondly, I think it all ties together with
maybe that's the timing of such that there was the
(07:47):
COVID delay in terms of having baby, the year of
the dragon, plus all these different bonuses coming all together
at the same time that stimulate the I was called
the demand for babies in terms of other cities and
other provinces, and correctly point out as you have done this,
so they have been increasing the subsidies maternity leaves, paternity
(08:11):
leaves or those for the past decade already and yielding
limited impact. I think it could be the amount, so
it's actually how much you're being subsidized, as well as
maybe just the population was the pen of demand.
Speaker 2 (08:28):
So overall, basically we shouldn't be reading into this as
a sign of more positive growth. To come In other words,
you know, you did a deep dive on this data,
you know, going back a year now, and you pulled
sort of provincial statistics and you came out with incredible
array of charts. I really wanted to ask you this
(08:49):
question just in terms of like your your overall findings, right,
which is that all of this data you crunched and
you found that the government probably won't be able to
reverse this. Why did you come to that conclusion overall?
You know, it's a big question.
Speaker 3 (09:06):
It is a very big question. Then you have correctly
somethed of my research as well. I believe that the
baby bus is irreversible. I think it will be a
very tall order for them to reverse. And that's not
only because you know they have done a lot of
things cash bonuses trying to fix the overall system. I
think that could help the baseline. But in terms of
(09:26):
the incremental increase of population, I think it is very
difficult because of the cultural shift. If you look at
the youngster these days, what are they focusing on self love,
self fulfilling and also trying to enjoy the moment. These
(09:47):
does not go hand in hand with having children. Some
people are saying Are these youngster being irresponsible because they're
not procreating? But in my view, I think they're actually
being more responsible because they they struggle to see their
own future, especially given the current job environment. They can't
see beyond maybe even next year. Are they still going
(10:08):
to have a job, Are they still going to have
money on the table? Is this the right time for
them to bring a life to earth? And you have
to support them going forward. And this is not a
one time item. This is ongoing maybe eighteen years if
you're lucky. But if the child decide to continue studying university,
you continue pushing and then when they have children, you
(10:29):
still need to give the highly if it's a man,
so you still need to have that kind of gift
for the bride's family. So you need the house, you
need the vehicle, you need everything. Everything is money. So
are the youngster being irresponsible? I don't think so. I
actually think they're being very responsible because they can't see
their own future. And in order for them to fix
(10:52):
it at the government level, I think the fundamental is
to fix the economy so that you get the economic
maybe the wealth effect coming.
Speaker 1 (11:02):
Through before for the listeners outside of Asia, usually the
man has to provide the house and the woman has
to provide everything inside the house. Is that generally how
it works.
Speaker 3 (11:14):
Yeah, I think generally how it works, but of course
the society has changed these days. So also what happened
is the men typically have to give the taily, which
is a monetary amount, as a gift to the wife's family.
So these ranges between the provinces in terms of monetary value,
but it can be quite a lot. So we've done
(11:36):
a research. When we look at Haylong Jiang, the highly
amount on a per annual GDP basis is three hundred
times of the families. It is very expensive as a
province on the northern side of China, that's the most expensive.
But it is in our research that we have ranked
them according to the GDP because absolute amount, I think
(11:58):
Beijing and shang High on the largest city you will
see the largest amount, but if you look on a
per GDP level, that is actually the province with the
highest taily amount.
Speaker 1 (12:09):
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(12:29):
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aida to what extent do you think this is a
self inflicted problem? Because China had a one child policy
for so many years and they only recently rolled that back,
And we've seen a generation of families used to having
a really small family like three people, like two parents
(12:51):
and one kid. Can cultural value suddenly change so quickly
to have a larger family.
Speaker 3 (12:58):
Yes, And I think if you look at the world
one child, two child, three child policy, it took them
thirty seven years to move from one child policy to
two child policy, and it only took them five years
to say maybe we need more children, so now it's
three child policy. But culturally, I think it is very
tricky because you're not use or the parents that supposingly
(13:19):
parents now they're not used to having large families, so
you're not used to having a lot of cousins. It
is not in the culture. They're not growing to have,
you know, share their stuff with other people, so it
becomes a very different dynamic versus you know, the Western
world where maybe you're used to having at least two
to three siblings. So I think culturally it is very
(13:41):
difficult to reverse if you think about it. If you
are if I can call it the product of a
one child policy, you are the princess or the prince
in your family when you get married. If you're the girl,
will you want to pick up someone else's dirty socks?
And if you are the men, why do I want
(14:02):
to spend money buying your chanel bag when I can
spend it on my gain. So it is all about,
you know, I need to love myself because I was
brought up to love myself and everyone loved me. And
then it's very difficult in terms of the change that
type of thought process.
Speaker 2 (14:21):
In my view, you've noted a lot of barriers here
to increasing the birth rate and increasing the population. So
there's the societal issues, there's the kind of cultural norms, economics,
you know, the fact that you might not be increasing
(14:43):
your income the way you like, You might not be
able to afford a house. The property market is still
in the red in China and economic growth is set
to slow starting this year. So is there anything I
guess that the government could do, Whether it's a policy
or a systemic shift that would actually help to increase
(15:07):
birth in fertility rates, or do you see this more
as perhaps like a regional or just a global shift,
because it's of course not just China experiencing population decline
and this rapid decline fertility rates. You know, there's also
South Korea, but there's also places like Italy. Even in
the States there's been declining fertility for some years. So yeah,
(15:29):
I guess is there anything the government you could do
or is it maybe just a case of we need
to find a way to slow down the decline.
Speaker 3 (15:38):
I think there are still some room for the government
to maneuver. Given that they have in row the one
child policy to child policy. They can definitely make it
more strange for you to have children. I think that's
one way of forcing people, But I think that is extreme,
to be honest. I think the Chinese government is very
careful in terms of how to implement this, and my
(15:59):
view is that they will likely try to use incentives
rather than strict policy measure to say everyone must have
a child. I think incentive wise, it is one of
the key performance indicator for most of the provincial governments
to stimulate birth. So I think, you know, given that
is one of these KPIs, I do believe that the
(16:21):
provincial governments are likely to increase the intensity of these
type of incentives going forward, so healthcare, maternity benefits, as
well as protecting the family when they have children, so
from you know, workforce equality and so forth. I think
these are all measures that they can still do and
(16:43):
still lots of room to improve. But going forward, I
do agree with you. I think it's about, you know,
slowing down the rate of decline. If you look at globally,
it is natural for country once they developed a certain stage,
to start declining in terms of population. It is almost
like a natural way of working. Can they buck the trend?
(17:06):
I think it is a little bitrick key.
Speaker 1 (17:07):
So I know, you came up with a detailed model
forecasting China's population. How bad can it get over the
next few years? Give us some numbers.
Speaker 3 (17:16):
Sure, So, based on our model, it could drop by
almost fifty million people to one point three six billion
people by twenty thirty five. This is our base case
scenario where birth rate will continue to decline except for
the years of the dragon. So we actually factor in
the nuances of year of the Dragon, as well as
(17:38):
our view on the marriage ray divorce rate, as well
of death rate. So we do believe that this will
continue to decline going forward.
Speaker 1 (17:46):
Fifty million, that's roughly the size of is that the
South Korean population or is it any other numbers there?
Speaker 3 (17:53):
It is as big as.
Speaker 1 (17:55):
At one point three times the size.
Speaker 3 (17:57):
Of California one point three times.
Speaker 1 (18:00):
What's the implications for some of the companies and sectors
that you cover, especially for the consumer space. It's got
to be negative, right for some of them.
Speaker 3 (18:09):
Is negative, but we do see some positivity coming from
it as well. So let's start with the negative. The
easiest one is definitely the baby milk formula. We have
seen the decline in terms of the baby formula demand,
and that's just less mouths to feed and the competition
is intensifying. We're also seeing dairy products, you know, under
a bit of pressure in terms of the demand because
(18:30):
once again less people drinking milk and consuming the product,
so basically a lot of the mass consumer product, we're
seeing that kind of demand decline. Even for beer as well.
If we use Japan as a case study, beer demand
has been going down because the population has been declining.
So we're seeing those type of absolute number declining for
(18:52):
you know, and drives the volume. But what we also
see in terms of opportunity and that something maybe like
past because people are swapping out babies for pets, They're
still looking for companionship. Remember our topic of self love.
They need the companionship, they need the experiment. So people
are willing to spend on their pets instead of having kids.
(19:17):
And I think with the pet's economy is still in
the growth pace, so with the decline in population and
people getting older and lonier, I think people will seek
more companionship from that as well. Other areas of actual
opportunities of course, what we call the silver hair generation
traveling these older people now some of them are retired
(19:40):
already but living with good pension. So what are they doing.
They can still walk around, they're still healthy, they're living longer,
so they are traveling a lot more, and we're seeing
those types of segments being benefiting from this trend. The
other one, of course is vitamins and supplement as well.
People as they get older, they are more willing to
(20:02):
spend to enhance the health and well being. So something
like this is also a good area to look into.
Speaker 2 (20:09):
So on note, is it kind of a maybe a
positive thing then that people are living longer. I mean,
I know there's fewer people making purchases, but it sounds
like if you're living longer, you're going to be buying,
like you said, more vitamins, You're going to be traveling more.
You might be doing more house reunnos. I mean, if
you have the money, I guess yes.
Speaker 3 (20:29):
So I think the spending categories will change. The spending
will still be there, I think, but it's just what
they spend on. Right, So if you look at the
most basic stuff, say, for example, drinks, soft drink, what
are you going to drink when they get older, They're
going to drink less fuzzy stuff, less sugar stuff because
they're looking for healthier alternative. So now what we're seeing
(20:50):
is a proliferation of no sugar, less calorie teas. So
it's the categories that are changing. Alcoholic drink also lower
alcohol content because people are looking for healthy alternatives. So
it's about the shift in the categories rather than the
shift in the spending that's interesting.
Speaker 2 (21:09):
So it's not necessarily, you know, as catastrophic as it
might be in other parts of the economy, like I'm
thinking of the labor market or the fears of you know,
less ingenuity, less productivity. It sounds like, at least for spending,
it's not necessarily a bad news story.
Speaker 3 (21:27):
Yes, And I think a lot of the spending will
also go into healthcare and pharmaceutical as well. So as
people ages, they naturally require more healthcare and pharmaceutical spending
and all the related items as well, such as e
commerce healthcare where they can you know, go online and
then just purchase and get the things deliver to the door.
(21:48):
So I think it's the purchasing behavior that is changing
as well, so it's not all catastrophic. And if you
look at a lot of corporate and the companies, they
are changing already. They're starting to go into like the
less sugar, the more online driven, more you know, focus
on older people. You'll see even on the apps they
have the elderly version apps because the writings are bigger
(22:12):
and it's easier to navigate. So you have to adapt
to that type of dynamics. And I think the sooner
the corporate adapt to it, the better. What we have
seen in say, for example, dairy companies or INFANTMOE companies,
they are started to put more effort trying to push
for the elderly milk market. So instead of having infant milk,
(22:32):
we're having elderly milk.
Speaker 2 (22:34):
Oh, I've seen that actually.
Speaker 3 (22:36):
Correct, instead of baby diapers, you have elderly diapers. So
it's all about maybe the same product but for different
groups of audience.
Speaker 1 (22:46):
And is there any companies do you think that have
done this quite well and quite aggressively.
Speaker 3 (22:51):
I think it's still in an early stage at the moment,
to be honest. Most of the dairy company I've seen
they have already started that and pushing, but the elderly
milk part is still relatively small. I think they are
definitely pushing, but it takes some time.
Speaker 2 (23:08):
Yeah, it's sort of that milk infused with specific vitamins
and minerals.
Speaker 3 (23:14):
Correct for bones and joints.
Speaker 2 (23:16):
Yeah maybe, I mean that's probably targeted at me too.
Speaker 3 (23:21):
But I also think the trend is to start preserving
your health or live a healthier lifestyle earlier. So if
you see on social media likes so Hongshore and Daoing,
a lot of the youngsters are going into this herbal
tea and it's one of the one of the trend.
Instead of them buying a bubble tea, they're buying these
healthy herbal tea and there are chains that are starting
(23:44):
now to sell those. So it is definitely a trend
that is healthier alternative for healthier lifestyles.
Speaker 1 (23:51):
Yeah, there's definitely a silver lining. And we should also
say as well, a lower population is also positive for the.
Speaker 3 (23:56):
Environment, definitely less carbon footprint.
Speaker 1 (23:59):
Yeah, Ada, it's been an interesting discussion. Thank you for
coming on.
Speaker 3 (24:04):
Thank you very much for having me.
Speaker 1 (24:06):
You've been listening to Asia Centric from Bloomberg Intelligence. I'm
John Lee in Hong Kong and you can find me
on LinkedIn by searching John Lee from Bloomberg.
Speaker 2 (24:14):
Intelligence, and I'm cart to me Driva, also in Hong Kong.
You can find me on LinkedIn.
Speaker 1 (24:19):
Or on the terminal and you can learn more about
Bloomberg Intelligence by going into the terminal and typing in big.
This podcast was produced and edited by Clara Chen. Thank
you for listening and see you next time.
You're listening to Asia Centric from Bloomberg Intelligence, the podcast
that explores the big ideas and trends moving money across
the region. I'm John Lee in Hong Kong, and I'm.
Speaker 2 (00:12):
Kai JIDM Dreva, also in Hong Kong.
Speaker 3 (00:14):
John.
Speaker 2 (00:15):
Last month, China released some really interesting numbers and it
wasn't just GDP. They also released data on population. And
we've known for some time population has been falling in China.
While for the third year in a row, the nation's
population declined.
Speaker 1 (00:30):
And remember that twenty twenty four was the Year of
the Dragon, that's considered an auspicious year to have kids.
Speaker 2 (00:37):
Yeah, and it was. I mean, we had more babies
born in China, but it still wasn't enough to sort
of offset the population decline. And it's not necessarily a
bad thing to have a smaller older population. You know,
you have people living longer lives, and you also have
scientists point to fewer resources being used to sustain a
(00:57):
population or sustain a country.
Speaker 1 (01:00):
But unfortunately, financial markets take a falling population quite negatively. Well,
today we have a guest who's written extensively on this topic.
She is aiderly senior consumer analyst at Bloomberg Intelligence. Aida,
Welcome to the show.
Speaker 3 (01:13):
Thank you very much.
Speaker 1 (01:15):
Ada. What did the latest data release tell us about
Chinese population?
Speaker 3 (01:19):
Well, you know, for twenty twenty four, we have seen
the population at about one point four eight billion people,
so it was a decline from the previous year, even
though the birth rate has increased. So what we are
seeing is that people are getting older. The death rate
is definitely climbing on a year on year basis, and
(01:40):
the birth rate in terms of the boost is mainly
due to the year of the Dragon as well as
there's a pent up in babies because of COVID and
so forth. But if you look at the marriage rate
for twenty twenty four, it reached record low and hint's
going forward, if less people are getting married, the birth
rate is unlikely to pick up.
Speaker 2 (02:00):
Now, we have a lot of listeners in the States
and Western countries, and it may be good to explain
a bit about why the marriage component is really important
for stats here because in places like Friends or the States,
you know, you can have more than fifty percent of
children I think come out of outside of marriage. But
it's quite different in Asia.
Speaker 3 (02:18):
Right correct, especially in China where the society still view
marriage as the base of the society. And also what
happened is if your child is born out of a
legitimate marriage, it becomes quite tricky with the hukou system
where it is linked to social securities, healthcare, education, so
(02:40):
everything becomes a lot more difficult for the child born
out of marriage. So that's why it is very important
to look at the marriage rate and then to project
the birth rate.
Speaker 1 (02:50):
And ada, can you give us some numbers exactly how
many babies were born in China last year and how
does this compare versus the history.
Speaker 3 (02:59):
So last year we had about nine point five million
babies were born, and when you look at historically, they
were much higher. So twenty years ago, the twenty years
high was nineteen point eight million babies per year. So
this is literally half already and going forward, we are
projecting that it could gradually dip to about seven point
(03:20):
nine million babies by twenty thirty five. So the trajectory
is definitely going down. And that's because of the high
cost of having babies, and that's not only financially, but
it's also on the resources in terms of the mother's
time or the parents' time to raise the children. The
education system has been very tough, a high youth unemployment rate,
(03:43):
which means that if you have your child, now what
are they going to do when they get older? Will
they get a job? Will they be able to sustain themselves?
So all these are actually on the potential parents' mind
at the moment, and of course you know that will
come with what will the government be able to stimulate
them or learn them with bonuses or incentives. So the
(04:03):
government has been coming out with very very creative ways
of trying to stimulate people to have children. And I
have a very interesting case study recently. There's a lower
tier city called Tienmen. In twenty twenty four, Tienman's birth
rate went up by seventeen percent.
Speaker 2 (04:25):
That's virtually unheard of exactly.
Speaker 3 (04:27):
Of course, you know twenty twenty four the birth rate
went up, but seventeen percent is a massive search. And
when you dig deeper, the local governments have been putting
a lot of different subsidies, a lot of help to
the parents in order to lure them to have more children.
When you add up all the various subsidies, including some
(04:47):
of them is one time home buying subsidies, it could
be about thirty one thousand US dollar, so it is
actually quite a big if you call it a baby
cash bonus to stimulate birth.
Speaker 1 (05:02):
So can you dig deeper into some of these subsidies,
like what are they and what are some of the
more creative ones you've heard of?
Speaker 3 (05:08):
Well, for Tienman's when in particular, they have the subsidies
for genetic screening, so for like DWNCE syndromes, birth maternity leads.
These are you know, prolonging it giving also paternity leads,
monthly childcare subsidies after the age of three years old,
as well as other measure like the birth rewards, so
(05:29):
it's a cash reward, the home purchase incentives, and they're
also giving mothers a bunch of fresh flowers, a one
time taxi ride and all these a card also you
know to say well done, to heal a child. You know,
it's all these really really innovative ideas that the local
governments are doing in order to try to lure people
(05:51):
to have more children.
Speaker 2 (05:52):
How much do you think the flowers and cord helped.
Speaker 3 (05:56):
I think the flowers would help a little bit because
it's you know, showing a bit of appreciation, but definitely
I would rather take the cash. To be honest, monthly
monthly monthly monthly cash is very good. And also I
think beside the monthly cash is you know, the childcare system.
Who's going to look after the child when you go
back to work. I think it's the whole integrated system
(06:19):
that the government or the various local governments are trying
to fix. So these are some of the other innovative
ones we've seen. Is you know, having childcare support, the
crash open for a little bit longer, all these various
supportive measures just to help the parents in order to
have the kids.
Speaker 2 (06:38):
This is a really interesting case study that you mentioned.
Do you know why it worked in that particular region
but not elsewhere in China Because it's not just that
one government that's been dolling out cash so to speak.
This has been a few years now, you know, it
started with disassembling the one child policy and then since
(06:59):
then it's become basically a three child policy. The government
has been very vocal about it, and local governments have
been given cash subsidies at marriage at the point of
you know, getting married, as well as baby bonuses and
childcare subsidies and things like that. So do you have
a sense of why it particularly worked in this place.
(07:19):
Is it to do with the population maybe, or how
maybe all these things are tied together.
Speaker 3 (07:25):
I think firstly, when you look at Tienman as a
standalone case study, when you look at the birth rate
for the past ten years, the city has been declining,
so this is a V shape recovery from the bottom,
so there's a base effect as well, so that's the
first thing. Secondly, I think it all ties together with
maybe that's the timing of such that there was the
(07:47):
COVID delay in terms of having baby, the year of
the dragon, plus all these different bonuses coming all together
at the same time that stimulate the I was called
the demand for babies in terms of other cities and
other provinces, and correctly point out as you have done this,
so they have been increasing the subsidies maternity leaves, paternity
(08:11):
leaves or those for the past decade already and yielding
limited impact. I think it could be the amount, so
it's actually how much you're being subsidized, as well as
maybe just the population was the pen of demand.
Speaker 2 (08:28):
So overall, basically we shouldn't be reading into this as
a sign of more positive growth. To come In other words,
you know, you did a deep dive on this data,
you know, going back a year now, and you pulled
sort of provincial statistics and you came out with incredible
array of charts. I really wanted to ask you this
(08:49):
question just in terms of like your your overall findings, right,
which is that all of this data you crunched and
you found that the government probably won't be able to
reverse this. Why did you come to that conclusion overall?
You know, it's a big question.
Speaker 3 (09:06):
It is a very big question. Then you have correctly
somethed of my research as well. I believe that the
baby bus is irreversible. I think it will be a
very tall order for them to reverse. And that's not
only because you know they have done a lot of
things cash bonuses trying to fix the overall system. I
think that could help the baseline. But in terms of
(09:26):
the incremental increase of population, I think it is very
difficult because of the cultural shift. If you look at
the youngster these days, what are they focusing on self love,
self fulfilling and also trying to enjoy the moment. These
(09:47):
does not go hand in hand with having children. Some
people are saying Are these youngster being irresponsible because they're
not procreating? But in my view, I think they're actually
being more responsible because they they struggle to see their
own future, especially given the current job environment. They can't
see beyond maybe even next year. Are they still going
(10:08):
to have a job, Are they still going to have
money on the table? Is this the right time for
them to bring a life to earth? And you have
to support them going forward. And this is not a
one time item. This is ongoing maybe eighteen years if
you're lucky. But if the child decide to continue studying university,
you continue pushing and then when they have children, you
(10:29):
still need to give the highly if it's a man,
so you still need to have that kind of gift
for the bride's family. So you need the house, you
need the vehicle, you need everything. Everything is money. So
are the youngster being irresponsible? I don't think so. I
actually think they're being very responsible because they can't see
their own future. And in order for them to fix
(10:52):
it at the government level, I think the fundamental is
to fix the economy so that you get the economic
maybe the wealth effect coming.
Speaker 1 (11:02):
Through before for the listeners outside of Asia, usually the
man has to provide the house and the woman has
to provide everything inside the house. Is that generally how
it works.
Speaker 3 (11:14):
Yeah, I think generally how it works, but of course
the society has changed these days. So also what happened
is the men typically have to give the taily, which
is a monetary amount, as a gift to the wife's family.
So these ranges between the provinces in terms of monetary value,
but it can be quite a lot. So we've done
(11:36):
a research. When we look at Haylong Jiang, the highly
amount on a per annual GDP basis is three hundred
times of the families. It is very expensive as a
province on the northern side of China, that's the most expensive.
But it is in our research that we have ranked
them according to the GDP because absolute amount, I think
(11:58):
Beijing and shang High on the largest city you will
see the largest amount, but if you look on a
per GDP level, that is actually the province with the
highest taily amount.
Speaker 1 (12:09):
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(12:29):
what you hear, don't forget to subscribe and chirm and
aida to what extent do you think this is a
self inflicted problem? Because China had a one child policy
for so many years and they only recently rolled that back,
And we've seen a generation of families used to having
a really small family like three people, like two parents
(12:51):
and one kid. Can cultural value suddenly change so quickly
to have a larger family.
Speaker 3 (12:58):
Yes, And I think if you look at the world
one child, two child, three child policy, it took them
thirty seven years to move from one child policy to
two child policy, and it only took them five years
to say maybe we need more children, so now it's
three child policy. But culturally, I think it is very
tricky because you're not use or the parents that supposingly
(13:19):
parents now they're not used to having large families, so
you're not used to having a lot of cousins. It
is not in the culture. They're not growing to have,
you know, share their stuff with other people, so it
becomes a very different dynamic versus you know, the Western
world where maybe you're used to having at least two
to three siblings. So I think culturally it is very
(13:41):
difficult to reverse if you think about it. If you
are if I can call it the product of a
one child policy, you are the princess or the prince
in your family when you get married. If you're the girl,
will you want to pick up someone else's dirty socks?
And if you are the men, why do I want
(14:02):
to spend money buying your chanel bag when I can
spend it on my gain. So it is all about,
you know, I need to love myself because I was
brought up to love myself and everyone loved me. And
then it's very difficult in terms of the change that
type of thought process.
Speaker 2 (14:21):
In my view, you've noted a lot of barriers here
to increasing the birth rate and increasing the population. So
there's the societal issues, there's the kind of cultural norms, economics,
you know, the fact that you might not be increasing
(14:43):
your income the way you like, You might not be
able to afford a house. The property market is still
in the red in China and economic growth is set
to slow starting this year. So is there anything I
guess that the government could do, Whether it's a policy
or a systemic shift that would actually help to increase
(15:07):
birth in fertility rates, or do you see this more
as perhaps like a regional or just a global shift,
because it's of course not just China experiencing population decline
and this rapid decline fertility rates. You know, there's also
South Korea, but there's also places like Italy. Even in
the States there's been declining fertility for some years. So yeah,
(15:29):
I guess is there anything the government you could do
or is it maybe just a case of we need
to find a way to slow down the decline.
Speaker 3 (15:38):
I think there are still some room for the government
to maneuver. Given that they have in row the one
child policy to child policy. They can definitely make it
more strange for you to have children. I think that's
one way of forcing people, But I think that is extreme,
to be honest. I think the Chinese government is very
careful in terms of how to implement this, and my
(15:59):
view is that they will likely try to use incentives
rather than strict policy measure to say everyone must have
a child. I think incentive wise, it is one of
the key performance indicator for most of the provincial governments
to stimulate birth. So I think, you know, given that
is one of these KPIs, I do believe that the
(16:21):
provincial governments are likely to increase the intensity of these
type of incentives going forward, so healthcare, maternity benefits, as
well as protecting the family when they have children, so
from you know, workforce equality and so forth. I think
these are all measures that they can still do and
(16:43):
still lots of room to improve. But going forward, I
do agree with you. I think it's about, you know,
slowing down the rate of decline. If you look at globally,
it is natural for country once they developed a certain stage,
to start declining in terms of population. It is almost
like a natural way of working. Can they buck the trend?
(17:06):
I think it is a little bitrick key.
Speaker 1 (17:07):
So I know, you came up with a detailed model
forecasting China's population. How bad can it get over the
next few years? Give us some numbers.
Speaker 3 (17:16):
Sure, So, based on our model, it could drop by
almost fifty million people to one point three six billion
people by twenty thirty five. This is our base case
scenario where birth rate will continue to decline except for
the years of the dragon. So we actually factor in
the nuances of year of the Dragon, as well as
(17:38):
our view on the marriage ray divorce rate, as well
of death rate. So we do believe that this will
continue to decline going forward.
Speaker 1 (17:46):
Fifty million, that's roughly the size of is that the
South Korean population or is it any other numbers there?
Speaker 3 (17:53):
It is as big as.
Speaker 1 (17:55):
At one point three times the size.
Speaker 3 (17:57):
Of California one point three times.
Speaker 1 (18:00):
What's the implications for some of the companies and sectors
that you cover, especially for the consumer space. It's got
to be negative, right for some of them.
Speaker 3 (18:09):
Is negative, but we do see some positivity coming from
it as well. So let's start with the negative. The
easiest one is definitely the baby milk formula. We have
seen the decline in terms of the baby formula demand,
and that's just less mouths to feed and the competition
is intensifying. We're also seeing dairy products, you know, under
a bit of pressure in terms of the demand because
(18:30):
once again less people drinking milk and consuming the product,
so basically a lot of the mass consumer product, we're
seeing that kind of demand decline. Even for beer as well.
If we use Japan as a case study, beer demand
has been going down because the population has been declining.
So we're seeing those type of absolute number declining for
(18:52):
you know, and drives the volume. But what we also
see in terms of opportunity and that something maybe like
past because people are swapping out babies for pets, They're
still looking for companionship. Remember our topic of self love.
They need the companionship, they need the experiment. So people
are willing to spend on their pets instead of having kids.
(19:17):
And I think with the pet's economy is still in
the growth pace, so with the decline in population and
people getting older and lonier, I think people will seek
more companionship from that as well. Other areas of actual
opportunities of course, what we call the silver hair generation
traveling these older people now some of them are retired
(19:40):
already but living with good pension. So what are they doing.
They can still walk around, they're still healthy, they're living longer,
so they are traveling a lot more, and we're seeing
those types of segments being benefiting from this trend. The
other one, of course is vitamins and supplement as well.
People as they get older, they are more willing to
(20:02):
spend to enhance the health and well being. So something
like this is also a good area to look into.
Speaker 2 (20:09):
So on note, is it kind of a maybe a
positive thing then that people are living longer. I mean,
I know there's fewer people making purchases, but it sounds
like if you're living longer, you're going to be buying,
like you said, more vitamins, You're going to be traveling more.
You might be doing more house reunnos. I mean, if
you have the money, I guess yes.
Speaker 3 (20:29):
So I think the spending categories will change. The spending
will still be there, I think, but it's just what
they spend on. Right, So if you look at the
most basic stuff, say, for example, drinks, soft drink, what
are you going to drink when they get older, They're
going to drink less fuzzy stuff, less sugar stuff because
they're looking for healthier alternative. So now what we're seeing
(20:50):
is a proliferation of no sugar, less calorie teas. So
it's the categories that are changing. Alcoholic drink also lower
alcohol content because people are looking for healthy alternatives. So
it's about the shift in the categories rather than the
shift in the spending that's interesting.
Speaker 2 (21:09):
So it's not necessarily, you know, as catastrophic as it
might be in other parts of the economy, like I'm
thinking of the labor market or the fears of you know,
less ingenuity, less productivity. It sounds like, at least for spending,
it's not necessarily a bad news story.
Speaker 3 (21:27):
Yes, And I think a lot of the spending will
also go into healthcare and pharmaceutical as well. So as
people ages, they naturally require more healthcare and pharmaceutical spending
and all the related items as well, such as e
commerce healthcare where they can you know, go online and
then just purchase and get the things deliver to the door.
(21:48):
So I think it's the purchasing behavior that is changing
as well, so it's not all catastrophic. And if you
look at a lot of corporate and the companies, they
are changing already. They're starting to go into like the
less sugar, the more online driven, more you know, focus
on older people. You'll see even on the apps they
have the elderly version apps because the writings are bigger
(22:12):
and it's easier to navigate. So you have to adapt
to that type of dynamics. And I think the sooner
the corporate adapt to it, the better. What we have
seen in say, for example, dairy companies or INFANTMOE companies,
they are started to put more effort trying to push
for the elderly milk market. So instead of having infant milk,
(22:32):
we're having elderly milk.
Speaker 2 (22:34):
Oh, I've seen that actually.
Speaker 3 (22:36):
Correct, instead of baby diapers, you have elderly diapers. So
it's all about maybe the same product but for different
groups of audience.
Speaker 1 (22:46):
And is there any companies do you think that have
done this quite well and quite aggressively.
Speaker 3 (22:51):
I think it's still in an early stage at the moment,
to be honest. Most of the dairy company I've seen
they have already started that and pushing, but the elderly
milk part is still relatively small. I think they are
definitely pushing, but it takes some time.
Speaker 2 (23:08):
Yeah, it's sort of that milk infused with specific vitamins
and minerals.
Speaker 3 (23:14):
Correct for bones and joints.
Speaker 2 (23:16):
Yeah maybe, I mean that's probably targeted at me too.
Speaker 3 (23:21):
But I also think the trend is to start preserving
your health or live a healthier lifestyle earlier. So if
you see on social media likes so Hongshore and Daoing,
a lot of the youngsters are going into this herbal
tea and it's one of the one of the trend.
Instead of them buying a bubble tea, they're buying these
healthy herbal tea and there are chains that are starting
(23:44):
now to sell those. So it is definitely a trend
that is healthier alternative for healthier lifestyles.
Speaker 1 (23:51):
Yeah, there's definitely a silver lining. And we should also
say as well, a lower population is also positive for the.
Speaker 3 (23:56):
Environment, definitely less carbon footprint.
Speaker 1 (23:59):
Yeah, Ada, it's been an interesting discussion. Thank you for
coming on.
Speaker 3 (24:04):
Thank you very much for having me.
Speaker 1 (24:06):
You've been listening to Asia Centric from Bloomberg Intelligence. I'm
John Lee in Hong Kong and you can find me
on LinkedIn by searching John Lee from Bloomberg.
Speaker 2 (24:14):
Intelligence, and I'm cart to me Driva, also in Hong Kong.
You can find me on LinkedIn.
Speaker 1 (24:19):
Or on the terminal and you can learn more about
Bloomberg Intelligence by going into the terminal and typing in big.
This podcast was produced and edited by Clara Chen. Thank
you for listening and see you next time.
Hosts And Creators
John Lee
Tom Corbett
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