The Chinese economy has had a rough year with the Evergrande crisis and the COVID cases shutting down ports.
The demographic crisis in the world's second-biggest economy dwarfs any short-term issues.
It could have dire consequences for China in the coming decades, as the problem stands to endanger a key engine of global growth. It could cause inflation around the world.
China, the country with the most people in the world, could soon run out of workers.
According to the Bureau of Economic Statistics, China's birth rate hit a record low last year, with just 8.5 births per 1,000 people. That was the lowest since the data set began in 1978, and is likely the lowest since the 1940s.
China's one-child policy was abandoned in 2016 and is the root of the problem. The cost of raising children in China is becoming more expensive and women are more focused on their careers.
According to the World Bank, China's population has been falling for the last five years.
Big productivity increases could be used to compensate for the declining worker population, but that has slowed down in recent years.
Craig Botham, chief China economist at Pantheon Macroeconomics, gives it five to 10 years before demographic and productivity growth become a problem for China.
He told Insider that the growth rates we've had historically aren't coming back. It is downhill from here.
The world's economy gets cold when China sneezes.
China made up more than 17% of global gross domestic product in 2020 after expanding on average 10% a year since 1978, according to World Bank data. Its share of global trade was 15%.
Many countries need China's economy to stay strong because they are now closely intertwined with it.
China has invested more than $500 billion in construction projects around the world through the Belt and Road initiative. Money could be turned off if China slows down.
The impact may be less direct in developed economies.
"China's growth will have a negative impact on the economic development in Europe and the US," said a senior economist at Commerzbank in a recent note. That's not the only thing.
Zhou wrote that the consequences for inflation might be more important.
China is the modern factory of the world, and its cheap goods and low wages have helped keep global inflation low and stable over the last two decades.
Higher wages are a result of fewer workers. It would be good for employees in China. Zhou said it would probably bring back inflationary pressures. western politicians and central bankers don't want that.
It's far from a foregone conclusion that the Chinese economy will overtake the US, as many have predicted.
Japan has an aging population that has caused growth to slow to a crawl. China may still be able to escape the population trap, but it's over.
The question is whether the world catches an economic cold in the meantime.
The US is on the verge of an empire-ending catastrophe according to billionaire investor Ray Dalio. He's worried about how to invest his money.
