China’s low birth rate intensifies labour shortages, ageing dependency and economic drag

China’s persistently low birth rate is squeezing the labour force and swelling the dependency ratio, as an ageing population means fewer workers supporting more retirees — a potential drag on GDP growth and fiscal balance. Despite scrapping its one-child policy and introducing pro-natalist measures such as childcare subsidies, tax breaks and “love education” campaigns to promote marriage and childbearing, births remain far below replacement levels, leaving a shrinking labour pool and rising pension and healthcare burdens. These demographic headwinds risk undermining productivity and long-term economic dynamism.

China's plan to boost birth rates with condom tax and cheaper childcare - BBC News

1. Explain what is meant by a ‘rising dependency ratio’ and analyse why this is a particular concern for an emerging market economy, such as China.

2. Using a diagram, analyse how introducing a condom tax could help to increase China’s birth rate.

3. Discuss the likely success of the Chinese government’s policies aimed at increasing the birth rate.