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Economy

US population time bomb muddles economic race with China

New census reveals headwinds from slowing immigration and aging

Pedestrians walk along Market Street in Philadelphia: the coronavirus pandemic is expected to exacerbate demographic woes in the U.S.   © AP

WASHINGTON -- The U.S. marked its slowest population growth since the Great Depression over the last decade, highlighting the demographic challenge the country will face in its rivalry with China as its citizens become older and less diverse.

The U.S. population increased to more than 331 million in 2020, growing 7.4% from 10 years earlier, for the lowest recorded rise since 1940, according to the data released by the Census Bureau on Monday. 

The U.S. slowdown comes at a time when its supremacy on the world stage is facing a serious challenge from China. The winner of this race is likely to be determined by their economic strength, which directly benefits from population growth. 

White Americans are expected to become a minority in the U.S. toward the middle of this century. Concern over shifting demographics was one of the driving forces that led to the election of former President Donald Trump in 2016. But fewer immigrants resulted in slower population growth and less diversity, which have historically been crucial to the competitiveness of the American economy.

Roughly 16% of the U.S. population is aged 65 or above, according to the United Nations. Though this is a smaller percentage than the almost 30% in Japan or the roughly 20% in many other advanced economies, the U.S. for the past decade or so has failed to reach replacement-level fertility -- the average number of children each woman needs to have throughout her lifetime to maintain current population levels.

Young workers have experienced disproportionate job loss due to the ongoing pandemic, which is only expected to squeeze U.S. birthrates and hamper sustained economic growth.

Demographics figure prominently in the rivalry between the U.S. and China. The digital economy has been a boon to China, whose population of 1.4 billion gives it a significant edge in generating and collecting data -- an increasingly valuable economic resource that can be used to improve artificial intelligence and other technologies.

But China is also aging rapidly as a side effect of its now-scrapped one-child policy. Its overall population is expected to start declining in the 2030s, while its working-age population has already begun to shrink.

As the population ages, consumer spending suffers. Cell phone shipments had declined for the fourth consecutive year in 2020, and new-car sales had fallen for three years in a row through that year.

University of Wisconsin estimates show China's population, currently at 1.4 billion, will fall to to 350 million to 450 million in 2100. If the number in facts falls to 350 million, the U.S. population could surpass that of China. 

Neither immigration in the U.S. or an aging and declining population in China are issues with immediate solutions. With both economies facing a slowdown in human input, they will need to bolster productivity to ensure success long-term.

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