(Yicai Global) Jan. 17 -- China's population shrank for the first time in nearly 61 years in 2022, as births continued to fall, leading to a further aging of society and greater challenges for the country's pension system.

The population fell by 850,000 last year, according to figures released by the National Bureau of Statistics today. China had nearly 9.6 million newborns in 2022, with the birth rate falling 0.075 percentage point to 6.77 per 1,000 women. Some 10.4 million people died, with the natural population growth rate dropping to minus 0.6 per 1,000 people from 0.34 per 1,000.

Some experts had anticipated the contraction in population. Chen Wei, a professor at Renmin University’s population development studies center, said in an article earlier that in recent years, the accelerated change in people's concept of marriage, combined with the impact of the Covid-19 pandemic, had led to earlier negative population growth.

The share of the working population aged 16 to 59 to the total fell 0.5 percentage point to 62 percent last year, while that of people aged above 60 rose by almost 1 percentage point to 19.8 percent, the NBS data showed.

To cope with the impact of an aging society, China needs to strengthen the balance management of basic pension insurance, expand the coverage of corporate pensions, and introduce more incentives to encourage people to take out private pension insurance, Sun Yongyong, an associate professor at Central China Normal University’s school of public administration, told Yicai Global.

China has a pay-as-you-go pension insurance system. An aging population means that the number of pensioners is growing faster than the number of contributors to the pension system, increasing the burden on society.

China’s private pension scheme was launched last April. Private pensions, together with basic endowment insurance and company annuities, which are partly paid by employers, and occupational pensions, created for staff of government organizations, are the three pillars of the country's pension system.

Moreover, China is trying to slow the drop in the fertility rate through incentives. Local governments have been introducing policies to encourage births after the so-called three-child policy was fully implemented in 2021.

For example, Shenzhen, a tech hub in China’s southern Guangdong province, released a new policy earlier this month, offering as much as CNY37,500 (USD5,540) to couples to boost the city’s birthrate.

Editors: Dou Shicong, Futura Costaglione