The Demographic Costs of a War Over Taiwan

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The Demographic Costs of a War Over Taiwan

China’s population is already shrinking. The further demographic consequences of a Taiwan invasion would be devastating.

The Demographic Costs of a War Over Taiwan

Taiwanese workers tend to their baby during a Labor Day rally in Taipei, Taiwan, May 1, 2018.

Credit: AP Photo/Chiang Ying-ying

Taiwan is now a geopolitical hotspot. Bloomberg Economics assesses the global economic impact of a war over Taiwan at $10 trillion – dwarfing the blow from the war in Ukraine or the COVID-19 pandemic. Some nations are trying economically and militarily to deter China from reunifying Taiwan by force. In fact, the best deterrent is to make China aware of the potentially unbearable demographic consequences of war.

Demographic Consequences of the Russia-Ukraine War

The loss of life in the Russia-Ukraine war goes beyond the hundreds of thousands of military and civilian deaths. There has also been a marked decrease in births in both countries.

After the collapse of the Soviet Union, Russia’s fertility rate fell from 1.89 births per woman in 1990 to 1.16 in 1999, which President Vladimir Putin has described as a “national crisis.” For decades, he has warned that Russia is on the path to extinction. In 2006, Putin declared the need to address population decline as “the highest national priority.” Thanks to the government’s generous anti-crisis measures and relatively friendly international relations, the Russian economy grew at an average annual rate of 5 percent from 2000 to 2013, and the fertility rate rose to 1.78 in 2015.

But Russia seized Crimea in 2014, incurring Western sanctions. As a result Russia’s economy grew at an average annual rate of only 0.7 percent during 2014-2022, and births dropped from 1.94 million in 2015 to 1.4 million in 2021. In Ukraine, the fertility rate fell from 1.51 in 2015 to 1.16 in 2021, due to the economic recession partly caused by the significant resources devoted to war preparedness.

Russia’s full-scale invasion of Ukraine in 2022 reduced births in Russia even more, to 1.26 million in 2023. In Ukraine, family separation and economic hardship led to a further decline in the fertility rate to 0.7 the same year. Had Russia and Ukraine stabilized their fertility rates at 2015 levels, there would have been 1.8 million and 600,000 more births, respectively, in 2016-2023 than actually occurred.

Russia’s geopolitical situation is worse than before the war, its economic outlook is grim, and its population will decline rapidly. Putin’s hopeful dream of national rejuvenation will eventually end in a nightmare.

Russia’s invasion has been a demographic catastrophe for Ukraine. The combination of out-migration, war casualties, and low fertility rate has reduced Ukraine’s population from 45.4 million in 2014 to 33-35 million today. The mass exodus of women and children will lead to a continued decline in post-war births. Labor shortages, aging, and disability will make post-war reconstruction very difficult, so the fertility rate will not recover much.

China and Taiwan Are Already in Demographic Trouble 

Taiwan’s average fertility rate was only 1.15 during 2000-2021, lower than Ukraine’s 1.33, and only 0.87 in 2022. Taiwan’s National Development Council projects that if the fertility rate stabilizes at 0.9, Taiwan’s population will shrink from 23 million in 2023 to 15 million in 2070.

On February 29, China’s National Bureau of Statistics released population figures for 2023, with only 9.02 million births and a fertility rate of only 1.0, far less than the official forecast of 15.5 million and the fewest births since 1762, when the total population was just 200 million. Last year, China officially acknowledged that its population shrank in 2022 for the first time in 60 years, nine years earlier than government projections had anticipated.

The implications of these datapoints are hard to overstate. This means that China’s demographic crisis is far worse than expected. As a result, all of China’s economic, foreign, and defense policies are based on faulty demographic data.

The median age in Taiwan and China rose from 23 and 22 in 1980 to 45 and 43 in 2024, respectively, and will further rise to 58 and 57 in 2050. Whereas China and Taiwan had five and four workers aged 20-64 supporting one senior citizen aged 65 and older in 2020, respectively, the ratio will continue to decline to 1.5 and 1.3 in 2050. Amid an aging population and shrinking workforce, Taiwan’s average annual economic growth rate declined from 9 percent in 1960-2000 to 3 percent in 2015-2023, and China’s dropped from 10 percent in 1980-2011 to 5 percent in 2020-2023. 

Taiwan Semiconductor Manufacturing Company Limited, a chip-making giant founded in 1987, produces around 90 percent of the world’s advanced chips, giving Taiwan a heavy weight in international geopolitics. But aging is causing a decline in Taiwan’s innovation capability, resulting in a diminishing presence in emerging global high-tech industries. Taiwan’s potential military service population of males aged 18-35 has decreased from 3.5 million in 1999 to 2.7 million in 2023 and will further decrease to 2 million in 2035 and 1.4 million in 2050. In other words, its demographic crisis suggests that Taiwan’s technological importance will rapidly decline, and its defense will become increasingly dependent on the United States, turning it from a strategic partner to a strategic drag.

Both mainland China and Taiwan are facing economic stagnation and are losing the demographic and economic bases of their long-standing rivalries. They need to focus on their respective demographic challenges.

Demographic Consequences of the Taiwan War

If China and Taiwan went to war, the demographic implications would be enormous – and unbearable. 

If there is a war in Taiwan, a large number of people will flee. If China fails to take Taiwan quickly, the two sides will fall into a long-term military confrontation. Taiwan will be exhausted from preparing for war; industrial chains and foreign investment will be withdrawn, resulting in economic recession and a plummeting birth rate. If Taiwan were to be taken by China, its political, economic, and demographic prospects would be even bleaker than those of Hong Kong.

The Chinese authorities may be proud of thwarting the anti-extradition protests in Hong Kong in 2019 and successfully implementing the national security law in 2020. However, they ignore the huge cost: weakening Hong Kong’s status as a financial center, destroying the bridge between China and the West, and not least the massive loss of population. In mid-2022, there were 180,000 fewer people aged 20-39 in Hong Kong than two years earlier. Political high-handedness and the zero-COVID policy jointly led to an economic recession, with births plummeting from 53,000 in 2019 to 33,000 in 2022, and the fertility rate dropping from 1.06 to 0.70.

Whether China wins a Taiwan war or not, it is bound to be sanctioned by the West, and its geopolitical environment will deteriorate, resulting in fewer exports, climbing unemployment, and plummeting fertility rates. All of China’s efforts to boost its fertility rate thus far have had little impact; nothing it could do would offset the further decline in fertility rate caused by a Taiwan war. Assuming that China can stabilize its fertility rate at 0.7, its population will fall to 1.01 billion in 2050 and 280 million in 2100, accounting for 11 percent and 3 percent of the world’s total population.

The consequences would not be limited to China and Taiwan, either. Russia’s invasion of Ukraine has led to soaring energy prices, economic slowdowns, and high inflation in Europe, thus reducing births. In 2023, there were 11 percent and 7 percent fewer births in Poland and Germany, respectively. With an economy 10 times larger than Russia’s, China is currently more than 140 economies’ main trading partner. A war in Taiwan would lead to a global recession, as well as a decline in fertility rates in many countries, especially South Korea and Japan.

The United States, with a fertility rate falling from 2.1 in 2007 to 1.6 in 2023, also faces an economic slowdown caused by aging, though not as severe as its allies, including Canada, the United Kingdom, Australia, New Zealand, the European Union, Japan, and South Korea. Their combined share of the global economy fell from 77 percent in 2003 to 56 percent in 2023, and that trend will continue. If a Taiwan war breaks out, it will hasten these trends, leading to global instability and even the collapse of the U.S.-led world order.

Time is not on the side of China or Taiwan, nor on the side of the United States. The three parties need to show sufficient wisdom and courage to achieve permanent peace across the Taiwan Strait – and avoid dropping off a demographic cliff.