China’s population fell for a second consecutive year in 2023, as a plunging birth rate and a wave of Covid-19 deaths, when strict lockdowns ended, accelerated a downturn that will have profound long-term effects on the economy's growth potential.

The National Bureau of Statistics said the total number of people in China dropped by 2.75 million to 1.409 billion in 2023, a faster decline than in 2022, which was the first since 1961 during the Great Famine of the Mao Zedong era.

China experienced a dramatic nationwide COVID surge early last year after three years of tight screening and quarantine measures kept the virus largely contained until authorities abruptly lifted curbs in December 2022.

The country’s birth rate has been plummeting for decades as a result of the one-child policy implemented from 1980 to 2015 and its rapid urbanisation during that period. As with earlier economic booms in Japan and South Korea, large populations moved from China's rural farms into cities, where having children is more expensive.

Further denting appetite for baby-making in 2023, youth unemployment hit record highs, wages for many white-collar workers fell, and a crisis in the property sector, where more than two-thirds of household wealth is stored, intensified.

The fresh data adds to concerns that the world’s No.2 economy’s growth prospects are diminishing due to fewer workers and consumers, while the rising costs of elderly care and retirement benefits put more strain on indebted local governments.

India surpassed China as the world’s most populous nation last year, according to estimates by the United Nations, fuelling more debate over the merits of relocating some China-based supply chains to other markets, especially as geopolitical tensions rise between Beijing and Washington.

Long-term, UN experts see China’s population shrinking by 109 million by 2050, more than triple the decline of their previous forecast in 2019.

China’s retirement-age population, aged 60 and over, is expected to increase to more than 400 million by 2035 - more than the entire population of the United States - from about 280 million people currently.

The state-run Chinese Academy of Sciences sees the pension system running out of money by 2035.

China’s birth rate last year was 6.39 births per 1,000 people, down from a rate of 6.77 births in 2022 and marking the lowest birth rate on record. Japan’s rate was 6.3 births per 1,000 people in 2022, while South Korea’s was 4.9.

China’s 2023 rate of 7.87 deaths per 1,000 people, was up from a rate of 7.37 deaths in 2022, making it the highest since 1974 during the Cultural Revolution.