China’s population peak is about more than just economics

Two weeks ago it was announced that China’s population had fallen for the first time in six decades. It is striking that much of the commentary since then has centered on concerns around the impact of this on global economic growth - not whether China’s population peaking is good or bad for China and the world. 

The UN projects that, by 2100 India’s population will be twice the size of China. By then, both will be past their demographic peak and they will be facing the many challenges that characterise countries that aim to grow their GDP while their population is shrinking. Unless our attitude towards the pursuit of constant economic growth changes.

This obsession with economic growth—a goal that is actually relatively recent, first gaining traction as part of the post-war Bretton Woods agreements—is revealing and it has attracted widespread criticism.

Ecological economists have persuasively demonstrated that infinite economic growth that puts ever-increasing pressure on natural resources is not possible on a finite planet. That this piece of good news for the people and planet is treated as bad news should make us all pause. It is as if our social and economic system are built to fit an economic theory, rather than our economic system being designed to meet the needs of people and our environment.

The idea that the primary economic goal is “growth” assumes that distributional concerns are the job of government, not of our economic systems, and limits the conversations we could have about how to build an economy that truly meets the needs of all people and keeps resource consumption within ecological boundaries. 

By making human and planetary wellbeing the goal of our economic system, new possibilities are opened up. We can ask: how do we ensure universal prosperity within safe limits of resource consumption? What can we learn from wellbeing economists, who argue that our economic system must be designed to meet people’s needs for housing, food, and decent work? 

With these questions in mind, we can build a system that meets those needs – like publicly owned housing to correct housing market failures, higher minimum wages to ensure that all work is decent work, and the introduction of capital and other taxes that ensure that society’s wealth is shared by using those taxes to fund public services that ensure inclusion.

We can look to the example of cities who are pioneering progressive economic models. A number of world cities - including Amsterdam, Brussels, Copenhagen, Berlin, Portland and Cambridge have adopted ‘Doughnut Economics’ principles, which dispense with GDP as the primary economic goal and instead aim for their populations to thrive within safe planetary boundaries. 

Cities have applied these principles to policy design; Brussels, for example, now uses multidimensional indicators that are adaptive over time and designed to reflect the relationships between people, the economy and environment. Amsterdam has set a target for reducing food waste by 50% by 2030, with the surplus being distributed to those who need it most, and is working to targets to reduce the use of new raw materials. 

Shenzhen is thought to be the first jurisdiction in the world to adopt a Gross Ecosystem Product (GEP) accounting system, which measures the contribution of natural resources and the environment supplied to human wellbeing in a region. Under the system, which is designed to incentivise officials to improve the environment, the city accounts GEP according to three categories - services that can be marketed, such as agriculture and fisheries, non-marketable services such as carbon sequestration by forests, and cultural and touristic benefits such as improving public health. Since adopting the system, the city has measured the lowest levels of PM2.5 concentration in the city’s history. 

The news that China’s population is beginning to fall provides an opportunity to reconsider how well our current economic system is serving us. Cities are modelling what an alternative economic future could look like.

What I’m reading
I’m listening to the first two episodes of Cities 1.5, the Centre’s new podcast - listen, and subscribe!

In the (good) climate news: In Oslo, greenhouse gas emissions are 30% lower than in 2009

And for fun, the second book in Mick Herron’s Slough House series: Dead Lions


Until next time,