Impact of Population Changes and Economic Growth in China and India 

By Dr Kalim Siddiqui 

Introduction 

China’s population peaked in 2022, earlier than expected. According to UN projections from 1999, China’s population was expected to reach 1.5 billion by the end of 2022. However, the actual population was 100 million less than predicted. This shortfall suggests that China’s working-age population may decline by 10% by 2035 and by nearly 30% by 2050. The country is experiencing both slower economic growth and a declining population, which could significantly affect its overall economic development. 

This study will explore the demographic transitions in both China and India and examine the implications of slower population growth by using a global economic model that incorporates full demographic behaviour, including measures of dependency – accounting for both the working-age population and those who are of working age but not employed. In this context, India’s dependency ratio is projected to decline more sharply than China’s. India’s higher initial fertility rate positively impacts GDP growth but weakens real per capita income growth. Additionally, the study will critically evaluate the ongoing debates surrounding the population and economic challenges facing both countries. 

The presentation will focus on key aspects of the theoretical relationship between population dynamics and economic growth. Over the past four decades, China has witnessed exceptional economic growth, coupled with significant demographic shifts. The country has experienced dramatic reductions in mortality and fertility rates, leading to one of the most rapid demographic transitions in world history. This transition has been largely shaped by China’s family planning policies, particularly the one-child policy, which has played a critical role in curbing population growth. 

India, on the other hand, recently surpassed China as the world’s most populous country, as reported by the United Nations in 2022. India’s population reached 1.4 billion in 2023, and its continued growth presents the potential for a “demographic dividend.” While China and other industrialized countries are facing declining numbers of young workers and increasing elderly populations due to rising life expectancy, India’s workforce remains young and expanding. (Siddiqui, 2021a) 

Population Trends in China and India 

China and India are the two most populous countries in the world, with India home to approximately 1.45 billion people and China to about 1.42 billion in 2024. Figure 1 illustrates the population growth trends of both countries since 1950 (also see Table 1a, along with projections for 2021. As the data indicates, before 2022, India’s population was lower than China’s. However, in 2022, India surpassed China to become the most populous country in the world. Projections suggest that the gap between their total populations will continue to widen in the coming years. 

Together, China and India account for about 35.17% of the global population and 60% of the population of Asia. While Asia’s population is projected to grow over the next decade, it will do so at a slower rate, as shown in Table 1b. Moreover, India’s population density is over three times higher than China’s, with 488 people per square km compared to 148 people per square km in China. 

India officially became the world’s most populous country in 2022, overtaking China. By 2023, China’s population began to decline. China’s fertility rate, at 1.2 births per woman in 2022, is among the lowest in the world. In contrast, India’s fertility rate is 2.0 births per woman, which is just below the replacement threshold of 2.1 births per woman. Currently, China accounts for 17.7% of the global population, while India holds a slightly larger share at 17.8%. Meanwhile, Africa is the fastest-growing region in the world, with an annual population growth rate of about 2.4%, while Europe is the only region experiencing population decline, shrinking at a rate of -0.17% per year.  

Table 1A: Population Estimates of China and India, 1950-2023 

Table 1B: Population Projections of China and India, 2024-2100 

Demographic Transition in China and India 

China and India adopted different strategies for navigating their demographic transitions toward longer life expectancy and smaller, nuclear families. The timing and intensity of these demographic changes have varied significantly between the two countries and even within their regions, depending on factors such as income, literacy rates, and broader socio-economic development. Key factors driving this transition include public investment in the health sector, improved nutrition (especially for reducing child mortality), increased education levels—particularly for girls and women, which often lead to declines in both mortality and fertility rates—urbanization, employment opportunities for women, and access to family planning. 

By 2022, China’s fertility rate had fallen to 1.2 births per woman, one of the lowest in the world. India’s fertility rate, at 2.0 births per woman, was just below the “replacement” threshold of 2.1 births per woman, the level required for long-term population stabilization. According to United Nations projections, India’s population is expected to peak around 2064 before gradually declining thereafter (UN, 2022). 

While many factors contributed to the decline in birth rates in both China and India, the relative impact of each remains debated (Bongaarts and Hodgson, 2022). In the second half of the 20th century, both governments sought to curb population growth by focusing on reducing fertility rates. For instance, China implemented specific policies, such as the “Later, Longer, Fewer” campaign of the 1970s, which promoted later marriages, longer intervals between births, and fewer children overall. The most notable of these policies was the “one-child” policy, enforced from 1980 to 2015, which imposed strict limits on family size, with very few exceptions. 

Interestingly, it was not until the 1950s that the populations of both China and India began to rise exponentially. China reached the 1-billion mark in 1980, while India hit the same milestone in 1997. 

In 1971, both countries had similar fertility levels, with an average of around six births per woman. However, China’s fertility rate dropped sharply to fewer than three births per woman by 1979, thanks to aggressive family planning policies. In contrast, India’s fertility decline was much more gradual, taking nearly two generations (about 35 years) to achieve the same reduction that China accomplished in just seven years, by 1979. 

Moreover, the Chinese government significantly increased investment in human capital and promoted a greater role for women in politics and social change. These efforts contributed to the sharp drop in China’s fertility rate during the 1970s, followed by more gradual declines over the next two decades. In contrast, the Indian government introduced a policy in the early 1950s aimed at discouraging large families and reducing population growth through its national family welfare programme. 

India’s demography is not uniform across the country. One third of predicted population growth over the next decade will come from just three states, namely Bihar, MP and UP, in the north of the country, which are some of India’s poorest and most agricultural states. Uttar Pradesh alone already has a population of about 235 million, bigger than Nigeria or Brazil. 

Meanwhile in states of India’s south, which has higher average incomes and better economic performance and also has far higher rates of literacy, population rates have already stabilised and have begun to fall. In the next decade, states in the southern states such as Kerala, Karnataka, and Tamil Nadu are likely to face huge challenges of rising an ageing population, and by 2025, one in five people in Kerala will be over 60. 

Under India’s federal structure, state governments had the flexibility to set their own policy priorities, leading to varied impacts across different regions. For example, states like Kerala, Goa, and Tamil Nadu, where governments focused on socio-economic development and women’s empowerment, saw sharp declines in fertility rates—falling below the replacement level two decades before the national average. On the other hand, states that invested less in education, particularly for girls and women, experienced slower fertility reductions. 

During the Emergency period (1974–77), the central government implemented mass sterilization campaigns, especially in North India, using coercive methods. India’s slower fertility decline, compared to China’s, can be attributed to several factors, including low spending on education, slower economic growth, and low per capita income between 1970 and 1985. 

Figure 1: Population of India and China between 1950 and 2100 

Currently, the average Indian woman is expected to have 2.0 children over her lifetime, a fertility rate higher than China’s (1.2) or the United States’ (1.6), but significantly lower than India’s fertility rate in 1992 (3.4) or 1950 (5.9). 

In rural areas of India, women have an average of 2.1 children, while women in urban areas have 1.6 children. Both figures are lower than they were 20 years ago, when rural women had 3.7 children on average, and urban women had 2.7 children. Furthermore, fertility rates vary significantly by state, ranging from a high of 2.98 in Bihar and 2.91 in Meghalaya to a low of 1.05 in Sikkim and 1.3 in Goa (see Figure 2). 

Figure 2: Population Growth Across Indian States Between 2002 and 2011

Figure 3: China and India Population Pyramids

It is often said that higher population growth could bring the prospect of a “demographic dividend.” However, to fully capitalize on a rising youth population, a country must invest in human capital, raise labour productivity, diversify its economy, and prioritize employment creation while protecting the environment. India has a young and growing workforce, while China and other industrialized countries are experiencing a decline in their young populations. With rising life expectancy, the number of elderly citizens is expanding. It is argued that China, with its shrinking youth and aging population, may struggle to sustain higher economic growth and surpass the GDP of the United States. 

China’s demographic situation was heavily shaped by the government’s strict “one-child” policy, implemented in the 1970s. Even after the policy was relaxed to allow two children per family in 2016, the long-term demographic impact remains irreversible. China is now facing a rapidly aging population, with over one-third of its citizens expected to be 65 years old or older by 2050. (See Figure 3) This aging population, combined with slowing economic growth, poses significant challenges. 

India, on the other hand, is projected to have nearly 100 million people aged 60-64 by 2100 (see Figure 3). India’s young population is growing, while China’s is declining. However, India’s large and expanding workforce also highlights significant challenges. While young people have great potential to drive economic growth, they must first gain access to quality education and employment. Currently, 65% of India’s population is under 35, and the country is experiencing high rates of digital adoption, especially in the IT sector, which is further accelerating economic growth. Despite this, employment creation has lagged behind, leading some economists to describe India’s growth as “jobless growth.” 

Several studies define the “demographic dividend” by focusing on declining dependency ratios, typically defined as the proportion of the population that is of working age (Bloom et al., 2003). However, in many countries, substantial numbers of “working-age” individuals are not employed, while some older individuals continue to work. A more accurate measure of the dependency ratio would compare the non-working population to the working population, which may differ significantly from the standard measure. 

Considering this, China’s demographic dividend has remained positive since the turn of the century, although it is projected that after 2030, total dependency will begin to rise. China’s aging population has become a major policy concern in recent years. According to UN projections (2008), the proportion of China’s population aged 60 and above is expected to nearly double, from 12% in 2010 to 23% in 2030. During this period, the increase in elderly dependency will outpace the decline in youth dependency, further complicating China’s demographic challenges. 

While India’s elderly population will rise from 7% to 12% between 2010 and 2030, overall dependency in the country will continue to be dominated by declines in youth dependency, signalling a more substantial demographic dividend. Not surprisingly, both India and China are following different population policy responses. China is now actively transitioning from its “one-child policy” to a “two-child policy,” while India continues to promote fertility decline through family planning and social initiatives. 

However, rising unemployment, especially among India’s youth, has become a critical issue. When Narendra Modi became Prime Minister in 2014, he promised to create 20 million jobs annually, but the government has fallen far short of this target. As a result, the competition for job openings is intense, with hundreds of thousands of applications for even a handful of positions. In addition, the public sector is cutting back on hiring, and many government positions remain unfilled. High unemployment rates, especially among young people, have led to increasing rates of suicide as job seekers struggle to find employment. 

India’s unemployment crisis is compounded by the lack of a social safety net, meaning that many face severe economic hardship and even starvation. Some argue that focusing on manufacturing is not a viable solution to India’s unemployment problem. This is not because manufacturing itself is ineffective, but because the nature of modern manufacturing has become highly capital-intensive. Even with significant capital investments, manufacturing may only generate modest employment growth. However, critics of this view argue that sustainable growth in other sectors, particularly services, depends on a strong manufacturing base to provide the necessary infrastructure. 

According to the United Nations, adults aged 65 and older made up only 7% of India’s population in 2023, compared to 14% in China and 18% in the United States. The proportion of elderly Indians is expected to remain below 20% until 2063, after which it will rise sharply, reaching nearly 30% by 2100. 

Women with more education and higher incomes tend to have fewer children and give birth later in life. For example, the median age at first birth is 24.9 among Indian women with 12 or more years of schooling, compared to 19.9 among women with no schooling. Similarly, Indian women in the highest wealth quintile have their first child at a median age of 23.2, while women in the lowest quintile do so at 20.3. 

When examining the historical trends of population growth in China and India during the 19th and early 20th centuries, the impact of European invasion, occupation, and wars becomes evident. These events significantly affected the economies of the two most populous countries, with incomes dramatically falling, leading to widespread famines and deaths (see Figure 4). (Siddiqui, 2020a) 

In the 19th century, British economic policies in India, particularly the push for free trade, contributed to skyrocketing food prices during poor harvests. (Siddiqui, 2019) Despite the presence of railways and roads for transportation, the colonial government failed to effectively distribute food to famine-stricken areas. (Siddiqui, 2022) The often-idealized portrayal of colonialism by its apologist’s conflicts with historical records, which reveal that colonial policies made famines more frequent and deadly. Economic historian Robert C. Allen (2009) emphasized that living conditions deteriorated during the 19th century, as British rule ‘drained’ India of its wealth and resources. This led to millions of deaths from famine. According to Allen, extreme poverty in India worsened under British rule, increasing from 23% in 1810 to more than 50% by the mid-20th century. Real wages also declined during the colonial period, reaching their lowest levels in the 19th century, while famines became more frequent and severe. (Allen, 2009) 

In 1800, India’s population was around 169 million, while China’s population was nearly double at 322 million. Researchers agree that the period from 1880 to 1920, the height of Britain’s colonial power, was particularly devastating for India. Comprehensive population censuses from 1882 indicate that the death rate rose sharply, from 37.2 deaths per 1,000 people in the 1880s to 44.2 in the 1910s. Life expectancy also declined, falling from 26.7 years to 21.9 years. Data on real wages show that by 1880, living standards in colonial India had significantly declined from earlier levels.  

Figure 4: Population of India and China, 1800 to 2100 

The question arises: how did British colonial rule in India, which lasted for two centuries, cause millions of deaths? The answer seems to lie in the systematic destruction of India’s manufacturing sector and exploitation of its resources. Before colonization, India was one of the world’s largest industrial producers, exporting high-quality textiles globally. (Siddiqui, 2023a) Historian Madhusree Mukerjee notes that the British colonial regime removed tariffs, allowing British goods to flood the Indian market. At the same time, the British imposed higher taxes and internal duties, preventing Indian producers from selling their textiles both domestically and internationally. 

Population censuses conducted during the colonial period reveal that India’s population remained nearly stagnant. (Siddiqui, 1995) One of the primary reasons for this was widespread famine. Famines, caused by war, inflation, crop failure, population imbalance, or misguided government policies, led to regional malnutrition, starvation, epidemics, and significantly increased mortality rates. (Siddiqui, 2023b) 

Economic historians have documented those tens of millions of Indians starved to death during several policy-induced famines in the late 19th century, as resources were siphoned off to Britain and its white settler colonies. Britain’s colonial policies are associated with the deaths of over 120 million Indians between 1770 and 1945. These famines, often considered genocidal, were caused by British exploitation rather than natural disasters. The Great Bengal Famine of 1770, one of the most devastating, claimed around 10 million lives and affected Bengal, Bihar, and Orissa, with around 30 million people impacted overall. (Siddiqui, 2020a) 

China, too, experienced European military aggression in the 19th century, which weakened the central government and plunged the country into prolonged civil strife, known as the “century of humiliation.” This period saw little population growth due to large-scale conflict and death. Britain, seeking to expand its commercial dominance, waged two Opium Wars against China. The First Opium War (1839–42) and the Second Opium War (1856–60), also known as the Anglo-French War in China, resulted in British and French victories that forced China into unfavourable treaties. (Siddiqui, 2020b) 

As a result, China ceded Hong Kong to Britain and opened several treaty ports to foreign trade. (Siddiqui, 2021b) The Chinese government also had to allow the increased sale of British-imported opium within China, an act that devastated the country’s population and economy, all under the guise of promoting free trade, with little regard for the catastrophic consequences for the Chinese people. (Siddiqui, 2018a) 

Conclusion 

India recently surpassed China to become the most populous country, according to data released by the United Nations (UN, 2022). This demographic shift is accompanied by significant changes in both countries, as improvements in income, consumption, and healthcare lead to an increasing elderly population. In 2023, adults aged 65 and older make up only 7% of India’s population, compared to 14% in China and 18% in the United States. The proportion of elderly Indians is expected to remain below 20% until 2063, after which it may sharply rise to nearly 30% by 2100. 

The potential for a “demographic dividend” arises from this higher population growth. (Siddiqui, 2021c) However, to capitalize on the increasing youth population, India must prioritize public investments in education and healthcare, enhance labour productivity, and diversify its economy. Employment creation, coupled with environmental protection, should be central goals for the Indian government as it navigates this demographic transition. 

While India boasts a growing young population, China faces a declining youth demographic amid an aging workforce. This presents unique challenges for both countries. Young people in India have tremendous potential to contribute to economic growth, but they require adequate education and job opportunities to do so. Despite recent economic advancements, employment generation remains low, a phenomenon some economists refer to as “jobless growth.” (Siddiqui, 2018b) 

Moreover, India’s infrastructure, although improved in recent years, still lags behind that of China. A significant portion of the Indian workforce is engaged in the informal sector, and only one in five Indian women participates in the formal labour force—one of the lowest rates in the world. Addressing these issues will be critical for India to harness its demographic potential and foster sustainable economic development. 

About the Author

Dr Kalim Siddiqui is an economist specialising in International Political Economy, Development Economics, International Trade, and International Economics. His work, which combines elements of international political economy and development economics, economic policy, economic history and international trade, often challenges prevailing orthodoxy about which policies promote overall development in less-developed countries. Kalim teaches international economics at the Department of Accounting, Finance and Economics, University of Huddersfield, UK. He has taught economics since 1989 at various universities in Norway and the UK. 

References 

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