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China’s Decreasing Birth Rate: Less Of A Growth Restrictor Than Might Be Expected?

China’s Decreasing Birth Rate: Less Of A Growth Restrictor Than Might Be Expected?

China just released Census data from the work of 7 million census takers in late 2020. The major highlights of the data are two-fold: Firstly, the overall population growth rate reduced, although this was marginal – from 0.57% between 2000 to 2010 to 0.53% for the period from 2010 to 2020. This in itself is hardly news, because due to the long term one child per family policy which was only relatively recently rescinded, birth rates have been low. Which brings us to the second major finding – only 12 million babies were born in China in 2020, versus 18 million in 2016.

So, it looks clear from this data that China’s population maintains very modest growth primarily through increased life expectancy. Bearing in mind life expectancy in China was a shocking 45 years of age as recently as the 1960s, the country’s current life expectancy of 77 is expected to keep on rising. Based on projections we found this could be into the high 80s by the end of the 21st century.

China is not alone in seeing increased life expectancy and reduced births. This is a problem across many countries in the modern world. China though is not like any country. The meteoric rise of the economy and living standards has been a phenomenon like no other in history. With China poised to become the world’s biggest economy at some point in the not-too-distant future, anything which threatens China’s future economic growth is a threat to the global economy.

More specifically though for the toy business, a hefty drop in the number of children being born means less kids to play with toys. While this may seem on the face of it apocalyptic (it certainly would be in the USA or European toy markets), we have to remember that China’s toy market is still growing and maturing, and as living standards and disposable income continue to grow in China, the number of people who can afford to buy toys for children grows, as does the total spend per child in those more affluent families. Think of two graphs going in opposite trends – one moving down (birth rate), and one moving up (disposable income & spend per child). The net result is less catastrophic than the headline birth numbers might suggest.

The second perspective from a demographic point of view is that due to the ticking time bomb of ageing population, China’s government seems likely to need to more effectively incentivise Chinese people to have more children. While we haven’t seen evidence of this to date, it seems likely steps will have to be taken over the next decade to boost the birth rate and to support the economy and demographic balance of society.

One additional point that is important to understand is that the total number of births in China remains is still high versus other countries. While 12 million births in China is a big reduction, it still remains by far the second biggest number of births globally behind only India. To put this in context, for the period from 2015 to 2020, China had 4 times more total births versus the USA. With most international toy companies far from reaching market saturation in China, it seems likely that the total $ market value of China’s toy business will still grow over the next decade, albeit at a reduced rate due to the decreased birth rate.

We run a Consultancy business for toy & game companies. We work with major toy & game companies through to start ups and one person bands. For more information on how we help toy & game companies grow their distribution around the world: www.KidsBrandInsight.com/services

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