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China is huge.

The kind of huge that's hard to wrap your head around.

Beginning in the 1950's, its population exploded, from an already respectable 500 million to almost three times that today.

which makes it bigger than all of North America, Australia, and Europe combined.

Its consistent economic growth has made it one of the world's great powers,

with enough military might to claim the strategically important South China Sea,

and enough influence to begin the most ambitious infrastructure project in history.

A $1 trillion dollar network of ports, pipelines, and railroads across 65 countries.

But none of this was inevitable.

While China rapidly and forcefully industrialized, it faced massive famine and housing shortages.

Its economy needed time to develop, and the world deeply feared overpopulation.

China's response was the famous One Child Policy, which limited ethnic Chinese families to a single child, with a few exceptions.

To enforce the law, women were forcefully sterilized and fined for having too many children.

The problem is: it worked.

Or, something did.

Historians doubt it prevented all 400 million births claimed by the government,

but China's total Fertility Rate, the average number of children a woman will have in her lifetime, has fallen all the way to 1.6, well below the 2.1 needed to maintain its size.

There simply aren't enough children, and in a few short years, China will begin to shrink.

The One Child Policy was repealed in 2015, but it won't make a significant difference,

because it only ever sped-up the unavoidable: As nations develop, they choose to have drastically fewer children.

China's problem isn't unique, about half the world lives in a country that is or soon will be in the same position, but it is uniquely big, and the timing, uniquely bad.

The story of China in the 21st century is just as much about demographics as it is GDP,

military power, the rule of Xi Jinping, all of which will be seriously tested by the coming demographic crisis.

To understand why it's such a threat, and whether something can be done, we need to look a little more closely.

As individuals, humans are unpredictable.

We don't know what someone will do, or say, or buy, because they don't know.

Impulse guides your decision to add guacamole just as it does what college you attend.

But, countries don't care about individuals, they care about groups.

And the beauty of demography is that groups are predictable.

Very.

Of course, nothing is certain, theories compete and estimates vary, but it's much easier

to guess how many 18-years-olds we'll have in 30 years and in general, what they'll

be doing than, say, the next three decades of foreign policy or culture.

No country has yet figured out how to manufacture 18 year olds, not even China, and that means population today is a good peek at population tomorrow.

When this information is combined with geopolitics or economics, it goes from mildly interesting to downright powerful.

Here's what we know about China:

Each of these lines is one of its age groups, with babies at the bottom, and elderly at the top.

First, are consumers.

From 18 to 45, we know people are spending - they're going to school, taking out loans, saving… not so much.

and despite what this group says about millennials, they're very important, because consumer

spending is one of the biggest contributors to economic growth.

Next, are the money makers.

These people have paid off their debt, now they're saving for retirement.

And even though they're a smaller share of the population, they generate most of its income.

In the U.S., for example, they alone pay half of all income tax.

That makes them, a government's best friend.

Finally, at age 65, people are done working, done saving, and, largely, done spending.

What's special about this group, is how quickly and how dramatically it begins:

In a single day, a retiree often goes from contributing the highest taxes of their lifetime,

to almost nothing, as they slowly collect pensions and social security.

For right now, let's ignore the total number of people.

China could be bigger like this, or smaller like this,

What's important is the balance between these different groups, and that's why this graphic is so useful.

It's called a Population Pyramid, because, for most of history, it has been.

A constant stream of babies at the bottom, and a small number of deaths with each subsequent year.

A good example is Niger, where the average woman has 6.5 children.

Mortality is very high, making the average age only 15.

But much of the world no longer looks like a pyramid.

In China, it's turning upside down.

As you can see, there are two big bulges in its population, here and here.

The first is currently in its peak spending years.

The second, right in the prime of its high-earning, high-tax-contributing years.

It's no wonder China is seeing massive economic growth.

But that's what makes a demographic crisis such an ugly one: it happens verrryyyy slowly, and then, all at once.

Remember, this huge groups of workers will soon, and quite suddenly retire, as they start waiting for the checks to arrive.

But the group responsible for writing those checks, or at least, funding them, is getting smaller and smaller.

The problem isn't just financial, A single child must now care for two parents and four grandparents.

The United Nations expects China's Dependency Ratio, the number of non-working compared

to working-age people, to increase at roughly the same rate as Japan's, whose population

began shrinking in 2011, and now sells more adult diapers than infant ones.

By 2050, China may have more retirees than all of Germany, Japan, France, and Britain.

Worse, the One Child Policy, combined with a cultural preference for males, has created a massive gender imbalance.

As a result, it's likely that by 2030, one-fourth of Chinese men in their late 30's will have never married.

At a minimum, an abundance of forgotten young men will cause some social anxiety.

Or possibly, as some experts suggest, serious conflict.

It sounds a lot like the plot of a movie.

Perhaps, “No Country for Young Men”

Of course, China is aware of the problem, But it's fighting an inevitable demographic transition.

In the beginning, For China, the early 20th century, children are abundant.

Because: you can only expect a few to survive, you don't have the education or tools for

family planning, and because the best way to grow tomatoes is to first grow children.

Seriously.

For any sleep-deprived parents watching, this will be a shock, but giving birth was once the ultimate productivity hack.

Before there were tractors, there were children.

And then, people stop dying.

It really only takes a few improvements to healthcare for rapid reductions in mortality.

And that's how the world grew from 1.6 to 6.1 billion people in one century.

That short window where fewer people are dying, but everyone's still having children.

But it is just a window, after mortality drops, fertility is right behind it.

As industrialization brings rural workers to find jobs in the city, Children become

less a utility and more a liability - the kind that screams, and cries, and generates student loan debt.

As the saying goes: the best contraceptive is economic development.

The fact that countries like China, the U.S., Italy, and Germany, have this problem, is an otherwise good sign.

Dangerously low fertility is actually a side-effect of many good things: increased education, opportunities for women, and healthcare.

It's a no-kidding first-world problem.

There are many ways to offset the damage, you can increase productivity, taxes, immigration and/or fertility,

But it's hard to find a solution that doesn't come with its own set of problems.

Many countries, for example, now offer incentives for having children.

One of the most generous is Sweden, where couples have the right to 480 days of paid maternity leave PER child.

The downside?

Employers are more hesitant to hire young women, who are far more likely to take those days off.

And it doesn't help that, even adjusted for inflation, the cost of raising a child has risen for decades.

Babies just can't compete with dogs.

China has already gone from issuing fines for second children to issuing checks, but people just don't seem to want them.

This paper predicts the new two-child policy will only increase China's population from 1.4 to 1.45 billion in 2029.

Because a person's ideal family size is largely determined by their own, two generations of Chinese now see one child as the norm.

Plus, young people are pressured to work longer and harder to keep up with the rising taxes needed to support the older population.

None of this means China can't come up with a solution,

In fact, it has a few things going for it:

As people move to the city, they'll become bigger contributors to the economy,

And today's young workers are far better educated than those they're replacing - 11 years of schooling compared to just 6.

There's also the bigger trend towards an automation-based economy which doesn't rely on a such a large number of workers.

But that too, has the potential for chaos.

And even if it does manage to increase fertility, remember that demographic changes are slow.

Children born today won't start contributing for at least 18 years.

Whatever the outcome, it'll define China's role in the 21st century.

The One-Child Policy will test China's national security… just as your One-Password Policy could threaten your security.

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