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Is China’s Population Decline a Luxury Disaster?

From Gemma A. Williams | October 2021

While less pressure on natural resources and the environment means a shrinking population may have its benefits, its full impact on luxury remains to be seen. China accounts for 35 percent of global spending and is on track to become the biggest global luxury market by 2025. The sector is unlikely to feel any hit in the immediate short term, but with fewer people to sell to and a growing army of sophisticated local names on the horizon, many brands’ days are surely numbered.

What Happened: According to new research, previously estimated rates of China’s demographic decline might have been severely miscalculated. In fact, the country’s population could halve within the next 45 years, warns a new study from Xian Jiaotong University. This number was based on the official birth rate of 1.3 children per woman last year (well below the figure that would safeguard the population of two per woman). China’s current population is over 1.4 billion, and the 2019 United Nations projection that the country would still have around 1.3 billion people by 2065 now looks to be incorrect. (...)

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What Happened: According to new research, previously estimated rates of China’s demographic decline might have been severely miscalculated. In fact, the country’s population could halve within the next 45 years, warns a new study from Xian Jiaotong University. This number was based on the official birth rate of 1.3 children per woman last year (well below the figure that would safeguard the population of two per woman). China’s current population is over 1.4 billion, and the 2019 United Nations projection that the country would still have around 1.3 billion people by 2065 now looks to be incorrect.

The Jing Take:  This population tail off was not unexpected, and this latest news has come amid efforts from Beijing to relax strict family planning policies by allowing couples to have more children. It has also introduced a series of campaigns to control property prices, reduce education costs, and increase the number of kindergartens. A recent clampdown on “non-medical” abortions was also announced, which likely dovetails with this issue.

What Happened: According to new research, previously estimated rates of China’s demographic decline might have been severely miscalculated. In fact, the country’s population could halve within the next 45 years, warns a new study from Xian Jiaotong University. This number was based on the official birth rate of 1.3 children per woman last year (well below the figure that would safeguard the population of two per woman). China’s current population is over 1.4 billion, and the 2019 United Nations projection that the country would still have around 1.3 billion people by 2065 now looks to be incorrect.

The Jing Take:  This population tail off was not unexpected, and this latest news has come amid efforts from Beijing to relax strict family planning policies by allowing couples to have more children. It has also introduced a series of campaigns to control property prices, reduce education costs, and increase the number of kindergartens. A recent clampdown on “non-medical” abortions was also announced, which likely dovetails with this issue.

However, there is resistance from China’s women, coming when their roles in Chinese society have been reassessed. There is unprecedented interest in the country’s version of the global #metoo movement and overthrowing outdated labels like “leftover women.”

Plus, according to new census data, China now has more seniors than young people for the first time, with the proportion of over-60s rising to over 18 percent (children make up about 17 percent of the population.) This news, therefore, will demand a radical rethink of everything from labor, health and education, technology, pensions policies, and care for the elderly.

While less pressure on natural resources and the environment means a shrinking population may have its benefits, its full impact on luxury remains to be seen. China accounts for 35 percent of global spending and is on track to become the biggest global luxury market by 2025. The sector is unlikely to feel any hit in the immediate short term, but with fewer people to sell to and a growing army of sophisticated local names on the horizon, many brands’ days are surely numbered.

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