How East Asia’s Population Crunch Could Lead to Crisis

The fast-shifting demographic landscape of East Asia’s top economies is a slow-moving crisis, one analyst said at a talk hosted by U.S. think tank the Asia Society Policy Institute last week.

Others said the economic and social impact of the trends in South Korea and its developed neighbors, driven by plummeting birthrates and aging workforces, could be offset if governments tackle the root issues and embrace labor-saving solutions.

South Korea’s fertility rate is the lowest in the world at 0.72 births expected per woman during her lifetime despite over $200 billion in government funding in the past 16 years on initiatives to encourage child-rearing. Neighboring China (1.0), Japan (1.2), and Taiwan (0.85) also rank near the bottom of fertility rate tables.

A fertility rate of 2.1 is considered necessary to replace a population.

Dwindling workforce

Two decades from now, “you’re going to see (South Korea’s) population of the working age side drop by about 10 and a half million people,” Troy Stangarone, Director of the Hyundai Motors-Korea Foundation Center for Korean History and Public Policy at Wilson Center, said citing South Korean government statistics. “So that’s roughly one-third of the workforce will leave the workforce over the next two decades.”

This shrinking labor force “is going to pull down South Korea’s potential growth rate,” he said.

Stangarone cited statistics from the inter-governmental Organisation for Economic Co-operation and Development as projecting that given current trends the country’s GDP, which grew by 1.3 percent in 2023, could see growth rates as low as 0 percent by 2050.

Economic malaise in China, Japan, South Korea and Taiwan—all among the United States’ top 10 trade partners—is likely to have a knock-on effect on the American economy as well.

Stangarone characterized the demographic situation in East Asia as “not a crisis today. It’s a crisis over a long period of time.”

Shrinking military

Another realm likely to be impacted is national security. Decades-long tensions along its heavily militarized border with North Korea means Seoul boasts one of the world’s largest militaries.

Stangarone pointed out that South Korea strives to maintain an active duty force of about 500,000. Yet “in about 10 years, there just simply won’t be enough young males to take and maintain an army of that size,” he observed. “And that then has implications for how do you take and deal with different potential conflict situations.”

Taiwan and Japan, which are stepping up defense efforts amid the rising security threat from China, will also see their military ranks affected.

Andrew Oros, Professor of Political Science and International Studies at Washington College, pointed to the society-changing role technology could play in preparing super-aged societies for the future.

“We see that the most advanced militaries of the world are doing more and more through automation and using technology to place labor, which has nothing to do with demographic trends,” Oros said.

Cooperation between advanced militaries like Japan’s and friendly countries in the region with growing populations, such as the Philippines and Japan’s fellow QUAD member India, could see partners’ strengths complement each other.

Attitudes on marriage and children

The rising housing and living costs in cities and changing cultural attitudes among younger generations are major drivers behind the region’s falling fertility rates, which are highly correlated with marriage in the region.

A 2023 survey by South Korea’s Ministry of Gender Equality and Family published in May showed 38.5 percent of 13-24 year olds saw marriage as necessary, a drop of 12.5 points since 2017. Meanwhile, six in 10 between the ages of 13 and 24 said they did not feel it necessary to have children even if they get married.

Jennifer Sciubba, President and CEO of the nonprofit statistics firm Population Reference, stressed the decision to have a child can involve “a long, complicated list” of pros and cons.

She said cash bonuses and maternity leave are often insufficient in the region to make a difference.

“I think in all of these societies, including here in the U.S., women are being asked to have more babies, work more, and take care of older people,” she said. “Everyone needs to get together and realize that a policy in one area could actually affect a policy in another area.”

The South Korean embassy in the U.S. did not immediately respond to a written request for comment.