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​​The Stats Guy: What does China’s flawed census mean for Australia? A warning most of all

The year is 1965, and official Chinese sources claim a population of around 750 million people. You read in the German news magazine Der Spiegel that various experts think the actual population is much lower – some say as low as 400 million people.

Sloppy local data collection, poorly trained staff, and a general lack of interest in correct data are listed as reasons for the faulty population data.

Six decades on and China is a vastly different place. Thriving local industries, globally renowned tech giants, a highly educated local elite, and modern technology make you doubt that such an embarrassing miscount could take place in China today.

*cough*

Well, history likes to repeat itself.

Research by Yi Fuxian, a demographer at the University of Wisconsin-Madison, shows that China has exaggerated its population count for three decades. The research compared alleged birth figures with subsequent compulsory primary school enrolments. Yi Fuxian suggests that only 1.28 billion instead of 1.41 billion people live in China.

China counting 130 million people that were never born, is like us noticing that the existence of Perth was but a feverish dream. While a ten per cent discount on your favourite yogurt isn’t all that much, missing the target in a census by ten per cent is a massive mishap.

There was a systemic element to the miscount. Local governments receive federal funding based on birth registrations. Makes sense, doesn’t it? If you have more people living in the region, you need more schools, infrastructure, and services. This system, unfortunately, incentivised local officials to round up numbers generously. A few more yuan from the federal coffers can’t hurt after all.

Some families reportedly purchased second birth certificates to receive more child-related payments – providing financial incentives to families to drive up low birth rates can be easily exploited.

Our Middle Kingdom market

All this means that the population miscount is almost exclusively geared towards the bottom end of the age pyramid. China probably counted its middle-aged to elderly population just fine while massively overestimating its young population.

Even the current projections by the UN Population Division (based on inflated numbers) have China half its population (767 million by 2100 compared to 1.4 billion today). We must expect China to shrink even faster, to face an even starker aging of the population and, ultimately, to see less economic growth.

Does that mean we should just forget about China? Absolutely not!

While China will probably never surpass the US as the global superpower, it will stay a regional giant. China will continue to urbanise, will continue to grow its middle class, and will continue to purchase what Australia has to sell.

China is a net importer of food and energy and, consequently, it is very dependent on a global trade system to feed its people and keep the lights on. A smaller China needs fewer calories and watts. This makes China less dependent on other countries. Geopolitical developments suggest a tightening of trade links between Russia and China.

A weakened, internationally isolated Russia is good news for China. Russia’s economy has absolutely nothing to offer except food and energy. If the West doesn’t buy that stuff from Russia, China gets a generous discount.

Wait, isn’t Russia selling the same stuff to China as Australia? Not exactly, but there is a huge overlap. China will need fewer Australian watts and calories. The market for Australian mining and agricultural products in China will shrink eventually. That doesn’t need to be bad news for Australia.

In 2021, 40 per cent or US$138 billion of our exported goods (service trade not included) went to China. Only 20 years earlier only six per cent of exported goods found their way to China. We are overly dependent on a single customer.

Australian export destinations; sourced from OEC

Australian export destinations; sourced from OEC

Australia must look to diversify trade now. We should learn from the mistakes of Germany.

Before the war in Ukraine, over half (55 per cent) of natural gas consumed in Germany was imported from Russia. For Germany, gas from Russia was cheap and reliable – until it wasn’t. While Germany eventually managed to get gas from elsewhere it did so at huge costs and had to scale back industrial output.

Australia should see the writing at the wall and look for other trading partners. The obvious choice here is always India (currently only six per cent of exported goods end up in India).

India has decades of population growth and potentially a century of urbanisation left in the tank. Its demographic profile is much more favourable than the one of China. While India is considered a food-secure nation (not dependent on imports), it needs external energy and mining products.

What’s the moral of the story? Firstly, we can well and truly be proud of the Australian Census. We have a very clear understanding of our population. Secondly, let’s not put all our eggs 40 per cent of our eggs into one basket.

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. Follow Simon on Twitter, Facebook, LinkedIn for daily data insights in short format.

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