Real estate, the silence of China’s northern cities and the hotness of its southern cities, seems unusually magical at this time. And all this, an important factor is the population.
We all know that the core of future urban competition can not be separated from the talent! The departure and stay of college students has also become an important reference indicator. The destination of these fledgling graduates also represents the attractiveness of the city to a certain extent, providing a strong backbone for urban development. Therefore, not only the second-tier city talent war is in full swing, but also the third, fourth, and even first-tier cities have joined the talent war, such as the recent Wuhan “One Million College Students Stay in Han” plan.
After the launch of this series of policies, some data show that the overall resident population growth rate in first- and second-tier cities has remained at 1.3% since 2016, and in 2019 it reached 1.7%.
Let’s take a look at the distribution of first- and second-tier cities where college students expect to be employed in the first quarter of 2020. The top 10 are: Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Hangzhou, Nanjing, Xi’an, Chongqing and Zhengzhou. Among these 10 cities, there are 5 southern cities. The last ranked cities such as Changchun, Hohhot and Dalian have no new industries and the growth rate of economic development is relatively slow, which cannot attract young people.
Then look at the viscosity cities for college graduates: high graduate viscosity, which means the increment of resident population is greater than the number of graduates, is higher in 7 cities, namely Shenzhen, Hangzhou, Guangzhou, Ningbo, Changsha, Chongqing and Xiamen.
No matter it is to grab or keep people, efficient graduates’ choices are more inclined to southern cities. Taking advantage of this wave of preference, the southern cities are more crazy to grab people, especially Hangzhou, Shenzhen, Guangzhou, Ningbo and other such cities, 2019 population size increment in the country’s top four, especially Ningbo, 2019 population increment of up to 340,000, reflected in real estate is the first 10 months of 2020 commodity residential transactions of about 14 million square, equal to last year’s one-year transaction size, a record historical record. In this wave of grabbing people, the northern cities also lost the aura of the protagonist, in the face of the southern cities fist heavy blow, the north again retreat!
In short, whether it is the south or the north, if China’s population can not keep up, now the decline is the economy of the north, is the northern property market, the future of the southern economy and property market will inevitably take the same path as the north. Now the south look at the north, just like the year the north look at the northeast, the reason is actually the same. Especially for the property market, the long-term look or population.
Recently, Minister of Civil Affairs Li Jiheng issued an article “Implementing a National Strategy to Actively Respond to Population Aging”, in which he argued that China’s current total fertility rate has broken the warning line, and that it is necessary to grasp the major trend changes in population development, formulate long-term planning, and implement a national strategy for balanced population development; to guide the fertility level to improve and stabilize it in an appropriate range, increase labor supply, and achieve coordination between population and economic society, resources and environment.
This means that China’s population policy is facing a historic turnaround. Three figures can summarize the disruptive changes that are currently taking place in China’s population.
First, official figures show that 14.65 million people were born in China in 2019, dropping below 15 million births, 580,000 fewer than in 2018, with a birth rate of 10.48 per 1,000 people, the lowest birth rate in nearly 20 years.
This means that China has in fact fallen into a “low fertility trap”, a number that is relatively low not only in developing countries but also in developed countries. The two-child policy has not changed the downward trend of the birth rate, and the effect of the two-child policy is diminishing. At the same time, China’s total fertility rate of 1.69 is also below the accepted replacement rate of 2.1. In addition, the number of women of childbearing age in China has declined by more than 40 million in the last decade.
Second, China’s labor force has declined for eight consecutive years since 2012 until 2019, and, not surprisingly, the trend of a declining labor force will not change this year. The number of people in the labor force has fallen by nearly 30 million.
Third, China’s aging is deepening. The number of people aged 60 and above as a proportion of the total population in China has rapidly increased from 8% in 1980 to 9.7% in 1990, 11.2% in 2000 and 13.5% in 2010, and by 2019, the number of people aged 60 and above in China will be about 254 million, accounting for 18.1% of the total population. It is expected that by the middle of this century, the population aged 60 and above will reach 487 million, accounting for about 35% of the total population, making China one of the oldest countries in the world.
These three sets of figures basically define the basic pattern of China’s population in the 14th Five-Year Plan.
First, the population will enter a historic downward cycle.
Second, China will need at least 15 more years to reach the level of developed countries, and by the end of the 14th Five-Year Plan, China’s aging will deepen even further. Aging before the rich becomes the most serious test for China’s economy in the next 30 years.
Third, the population decline, the decline in fertility rate and the aging before the rich will bring extremely serious challenges to China’s economic development and pensions.
First of all, it must be understood that a reversal of population often triggers a reversal of a country’s economic development trend.
After China’s GDP surpassed Japan’s in 2010, China’s economy began to enter an obvious deceleration cycle. The most fundamental reason is that the turning point of China’s labor force has come early, and in the absence of other competitive factors such as innovation, the comparative advantage of the manufacturing industry has been completely lost.
The root cause of Japan’s “Lost Thirty Years” is actually the population problem. Japan’s labor force began to decline in 2000 and the population began to decline in 2005, which led to an accelerated aging and economic stagnation. However, what is more serious than Japan is that Japan has become a high-income country that has completed urbanization after the turning point of the demographic dividend, and the future demographic dilemma facing China is much more serious than Japan.
Second, the demographic reversal will have a significant impact on industrial development.
In his book “Population Cliff”, American economist Harry Dent argues that China’s population will decline in 2025 and that the population decline will be the root cause of the accelerated bursting of China’s debt and real estate bubble. The key to China’s set of problems lies in population, in changing the trend of population decline across the board, and the failure to recognize this will be very scary.
Therefore, if China’s population problem is not solved, eventually not only will the economy accelerate its decline and fall into the middle-income trap, not to mention the property market, whether it is the decline in the birth population or the decline in the labor force and aging, are the most fundamental factors to pierce the Chinese real estate bubble.
Even if we liberalize births now, it may already be too late, not to mention that it is not yet!
So the ultimate killer, whether it’s China’s property market or China’s economy, is still China’s population cliff! The result of this we will soon see.
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