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I don’t think has implications for your portfolio tomorrow, but it’s hard (short of global warming) to think of a trend that will be more important for your portfolio in the long run.

On Tuesday, January 17, China’s government announced that the country’s population shrank in 2022 for the first time in sixty years. Demographers have known the decline in China’s population was coming for a long time, but the actual event is sooner and steeper than most forecasts had indicated.

China’s population in 2022 fell by 850,000, with more deaths than births for the first time since the famines in the 1950s and early 1960s caused by Mao Zedong’s Great Leap Forward.

A shrinking population is also an aging population and one where the supply of young migrant workers from the countryside won’t be able to power the country’s growth. And China, which hasn’t built up a sufficient retirement system, will face some stark choices between increased spending on an aging society and investment in the country’s technology sector and in its military buildup.

Beijing has long recognized the trend, but many experts outside China say that the reforms, such as ending the one-child policy and providing rhetorical support for women who want to have more children, aren’t nearly enough.

“China’s proposed demographic reforms are drops in the bucket. They are swamped by the fact that China will lose 5 to 10 million working-age adults and gain 5 to 10 million senior citizens every year for the foreseeable future,” Michael Beckley, an associate professor at Tufts University and co-author of Danger Zone: The Coming Conflict with China, told the New York “You can’t compensate for that kind of demographic crunch simply by raising the retirement age.”