It's hardly surprising that China's population growth would eventually slow greatly. However, in order not to jeopardize further economic development, Beijing now has to focus not only on continuing on the path from an industrial to a service sector economy but also on expanding technological innovation. Moreover, if China's economic policy takes into account the consumption needs not only of the young but also of the growing elderly population, its population may decline — but its economy is set for further growth.
The population decline in China risks numerous negative consequences for its economic growth, as the Chinese economic model remains reliant on a large supply of labor. This hardly-reversible demographic trend is likely to trigger not only higher prices due to increased labor costs but cause more problems with the underfunded national pension system. As a result, China may struggle to surpass the US economically in the foreseeable future, unless government policies to boost fertility produce results.
The fact that India is set to replace China as the world's most populous country could yield major global economic impacts since significant production capacity will be moved to the Subcontinent. Added to this is the West's geopolitically-motivated tilt toward New Delhi. Both developments may boost India's economic and political stance against China — with its economy potentially surpassing not only China's but also that of the US by the second half of the century.