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Population and Internal Migration Continued to Slow

Population growth continued to slow, settling at an average annual increase of 0.34 percent, so, in 2030, the total population is 1.44 billion. This modest growth, lower than in previous decades, resulted in part from latent demand from some couples to have larger families now that the one-child policy has been relaxed.

Other demographic trends have shifted modestly as well. Labor-force participation has increased from 76 percent in 2010 to 80 percent today, partly because of provisions in the retirement reforms that required higher retirement ages. The percentage of family households has declined slightly because marriages are delayed and young singles live apart from their birth families.

Two intertwined trends that accompanied the extraordinary growth in the 1990s and 2000s have continued: income inequality and urbanization. While economic growth continued at rates many countries would envy, income inequality continued to grow as well. China's income inequality was one of the highest in the world in the early 2010s (Xie and Zhou, 2014). As incomes of the lowest 40 percent of the population stagnated, mostly in the rural areas and smaller cities, and those of the middle class increased only slightly, those of the top 10 percent continued to pull further away. This pattern held true through about 2025; the flow of rural labor to the cities means that business owners have little incentive to raise wages by very much, and workers mostly lack any bargaining power. Even where wages have increased, the rising cost of living means that many workers are not seeing their standards of living increase. However, inequality peaked in 2025; since then, it has ameliorated to some extent.

Urbanization has also continued strongly in the past 15 years. From roughly half the population living in cities in the early 2010s, the proportion is now about 70 percent. Demand for urbanization had been kept artificially low through the 2000s via the hukou system, but China is now at an urbanization level similar to that of mature economies. Since the 2010s, the government has changed course to actively encourage the movement to cities because urban consumers are now the backbone of the economy.

In the 1990s and 2000s, urbanization meant a continued flow of people to eastern coastal cities, but this is no longer the case. The eastern region does remain China's economic driver because these provinces successfully transitioned to a more service-based economy and manufacturing moved westward. The labor pools in eastern cities are still substantially better educated and experienced, making it harder for other regions to develop or attract the firms that would create higher-paying jobs.

However, demand for continued internal migration to the east was not as high as anticipated because the central and western regions were able to absorb many of the less-skilled jobs as the eastern region moved "up the value chain" into a more service-based and higher-wage economy. Hukou reform also made it easier for individual job-seekers from the countryside to migrate to cities in the central and western regions. The share of population in the east did not change much from the mid-2010s, remaining steady at about 40 percent, and the share of economic output remained unchanged at about half.

Energy Use Is Growing, but Slowly

Oil prices are high, about USD 150 per barrel in 2030. Demand from other developing countries (particularly India) has pushed prices higher, similar to China's role in the world market in the 2000s. As noted later, NEVs have made some inroads, but gasoline-powered vehicles remain the primary private mode, so demand has remained high. As noted earlier, the climate regulations included specific gasoline taxes, so gas prices were higher for both reasons.

The percentage of China's domestic oil consumption supplied by imports has continued to rise very gradually, from 55 percent in 2013 to 60 percent by 2030. High prices have also spurred some additional domestic production, which has offset what might otherwise have been higher imports. Although there are multiple sources of demand, the restrictions that many cities impose on vehicle ownership and driving affect the relatively slow rate of growth in the oil import share. Such policies were once found only in the first-tier megacities, but, with consumer spending increasing, the demand for vehicles exploded in second- and third-tier cities, and even, by the late 2020s, fourth-tier cities. In addition, the high growth in the market for NEVs meant that oil consumption in the transportation section was growing at a slower rate than the number of total kilometers traveled was.

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