What Are the Implications of India Overtaking China as World's Most Populous Nation?

China and India are fighting over almost everything, status, borders, influence, and economy, but they are united by one dilemma, which is demography.

However, India overtook China for the first time this year to become the most populous country in the world, while Beijing announced a decline in its population last year for the first time since 1961.

The dramatic shift in the demographics of India and China will have significant implications for the two largest growing economies in the world, each with a population of more than 1.4 billion.

In a press conference held on January 16, 2023, Chinese Foreign Ministry Spokesperson Wang Wenbin, when asked about the new statistics, said that “China and India both have a large population and rich labor resources.”

“It is important for both countries to benefit wisely from the demographic dividend for development and rejuvenation and make greater contribution to the future of humanity,” he added,

Will population growth help India achieve progress and prosperity, or will it be an obstacle to it? Is the shrinking population of China a new indication of the worsening demographic crisis in it, with its great repercussions on the slowdown in its economy?

 

Rapid Growth

India will overtake China in terms of population in 2023, with China’s population declining for the first time in six decades, according to the latest demographic analysis of an international statistical organization.

The study, conducted by the World Population Review, an independent organization focused on population census, said India’s population now stands at 1.423 billion, compared to 1.411 billion in China.

The study, published on January 11, predicted that India’s population would grow steadily until 2050 to reach 1.688 billion people, compared to 1.317 billion for China.

The United Nations said in its estimates that more than half of the estimated increase in the world’s population between 2022 and 2050 will be in only eight countries: Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines, and Tanzania.

On its part, Axios revealed in its report on January 13, 2023, that “India is preparing to become the third largest economy in the world in 2028, overtaking Japan and Germany, according to S&P Global and Morgan Stanley.”

India, where half of the population is under the age of 30, is expected to be the world’s fastest-growing major economy in the coming years.

To make the most of the demographic dividend, Prime Minister Narendra Modi needs to create more jobs and ensure that India’s economy, which outperforms other major economies, continues to grow.

PM Modi should also provide jobs for the millions of people who enter the labor force each year, as the population moves away from jobs in the agricultural sector.

According to the Organization for Economic Co-operation and Development (OECD) data for 2021, the working-age population in India is more than 900 million, but this growth will become a challenge, and India’s inflation will be a burden if unemployment continues to grow in the country.

According to World Bank data for 2021, labor force participation in India and the number of active labor force and people looking for work is 46%, the lowest in Asia.

Meanwhile, India’s unemployment rate in December was 8.3%, according to the Center for Monitoring the Indian Economy (CMIE), an independent think tank in Mumbai.

Despite India’s rapid economic growth, some 800 million people still depend on free food rations from the government, which is the largest program of its kind in the world.

For now, India is self-sufficient in food production, and is the second-largest producer of rice, wheat, and sugar. It is also the biggest consumer of sugar while being the top importer of edible oils.

As a market, India is the second-largest consumer of gold and steel and the third-biggest buyer of crude oil. It is also home to the world’s third-largest domestic aviation market.

 

Sharp Decline

On the other hand, the National Statistics Bureau (NSB) in China revealed that the country’s population contracted in 2022 for the first time in more than six decades, which is a historical shift that is expected to mark the beginning of a long period of decline in population numbers.

The last time China’s population declined was in 1960 when the country faced the worst famine in its modern history due to Mao Zedong’s disastrous agricultural policy.

In a press release on January 17, 2023, the NSB stated that the population of China over the past year decreased by 850,000 people amid a sharp decline in the number of newborns.

According to what was reported by Bloomberg Agency, the official data on the total number of births in China for the year 2022 showed a record decrease to 9.56 million births, compared to about 10.6 million children born in 2021.

It is also likely that China recorded more deaths last year than the deaths recorded in 2021, which amounted to 10.1 million people, due to the spread of the Coronavirus.

The continuous decline in population growth in China comes despite the Chinese government’s abandonment, since 2015, of the policy of restricting births to Chinese families with one child.

Indeed, some regions have begun to encourage the population to increase births, and the authorities provide financial grants to families who have more children.

In 2021, China began allowing couples to have three children, which has yet to bear fruit in a country that relies on its workforce as an engine of economic growth.

The expected decline in China’s population comes much faster than previously expected, and threatens, according to analysts, the chances of China, the second largest economy in the world, in economic growth to exceed the size of the US economy, the largest economy in the world within years, as expected.

Recently, some sectors began to witness a decline in the growth of the labor force, with the saturation of internal migration from rural areas to industrial cities in China—these demographic changes led to clear social shifts in Chinese society, which also had economic consequences.

The Bloomberg report indicates that the labor force is already shrinking, long-term demand for homes will decline further, and that the government may struggle to cover the cost of an already underfunded national pension system.

Chinese researchers fear that their country is following the same path as Japan, with great economic growth, then high labor costs, and a decline in population, which has afflicted Japan with a chronic and continuous economic recession for three decades.

It is indicated that 62% of China’s population is of working age (those between the ages of 16 and 59, according to China’s classification), which is down from about 70% a decade ago, which highlights the challenges the country faces as its population ages.

 

Benefits and Harms

On the same issue, writer Abdullah Abdel Salam explained in a statement to Al-Estiklal that “what is good for one country may be harmful to another. China tried several years ago to encourage people to have children, but it failed to address its demographic decline. As for India, all its attempts to reduce its population growth did not work, and the issue became very complicated for it.”

“The decline in the number of Chinese is associated with the worst economic growth in half a century, as it reached only 3%, after it was above 10% for many years,” he added.

“With the increase in lifespan and the rise in the standard of living, the advantage that China used to enjoy, which is labor-intensive and cheap, will begin to disappear,” he said.

In the same context, Mr. Abdel Salam pointed out that “India has a different problem, as its population is increasing, and thus the number of young people who want to work increases, and this is a major advantage associated with its rapid economic growth.”

“But the problem is that this growth does not provide sufficient job opportunities, as there are currently 900 million Indians of working age, and they will increase to one billion in the coming years,” he added.

Mr. Abdel Salam noted that “Indian youth have completely stopped looking for work due to the absence of opportunities or low salaries, and the unemployment rate has reached 8.5%, according to independent estimates, while the government says it is 3.5%.”

 

A Struggle for Influence

As for the growing rivalry between Beijing and New Delhi, India succeeded during the year 2022 in adopting pragmatic policies that helped it avoid entering into a direct military confrontation with China, without appearing in the image of the broken and surrendering forces to Chinese hegemony over the Indo–Pacific region.

For example, India participates in the Quad, an informal grouping with Japan, Australia, and the United States that has been upgraded from a high-level security dialogue to a leaders-level summit in 2021 aimed at containing China’s influence in the Indo–Pacific region.

New Delhi has also refused to join the Regional Comprehensive Economic Partnership (RCEP), of which China is a member, despite it has agreed to engage in the Indo–Pacific Economic Framework for Prosperity (IPEF), launched by the United States, from which China is excluded.

During the year 2023, India will host two very important international events for the first time in its history, as stated by The Diplomat in its report on January 23, 2023.

The two events are: the G20 Summit and the Shanghai Cooperation Organisation (SCO), where India and China are considered founding and main members of these economic complexes.

Observers believe that, in view of the above, the two summits could represent an important opportunity to improve diplomatic relations between Beijing and New Delhi, especially with the need for economists to grow and get out of the impasse of recession.

However, bilateral political meetings will be a rarity due to the mistrust between the two countries, and India’s continued firm diplomatic stance against China.

Perhaps Chinese President Xi Jinping believes that the East is on the rise and the West is on the decline, but this view will be very difficult to sustain when people begin to view China as a society that is irreversibly waning.

This means that Xi Jinping may have a greater appetite for risks and thus surprise others, such as: India, as stated in an article published on the American 1945 website on January 18, 2023.

“As the Chinese President knows that India will overtake China by about a billion people by 1950,” the website noted.

Last month, China opened another front against India in Arunachal Pradesh with a large-scale ground incursion, and some Chinese intellectuals argue that Beijing must break New Delhi before it is too late.

Relations between India and China have witnessed very severe fluctuations during the past three years, as the Indian armed forces and the Chinese army have been in a state of confrontation in the Ladakh region since April 2020.