In 2023, China’s population shrank for the second consecutive year, and the country reported a record-low birth rate resulting in a pattern that signalled the intensification of a demographic dilemma that is expected to have a big impact on the second-biggest economy in the world.

China’s National Bureau of Statistics (NBS) said on Wednesday that the nation had 6.39 births per 1,000 people, down from 6.77 a year earlier. Since 1949, when Communist China was founded, the birth rate has never been lower according to CNN.

In contrast to the 9.56 million babies born in 2022, there were about 9.02 million babies born. According to the statistics, the total population decreased by 2.08 million from the previous year to 1.409 billion in 2023.

“To be sure, last year’s sharp decline should be partly due to the lockdowns and most likely new births will rebound in 2024, although the structural down-trend remains unchanged,” said Larry Hu, chief China economist for Macquarie Group.

The nation’s population is changing at a time when its economy is faltering. China’s GDP increased by 5.2% last year, according to the NBS, above the government’s objective of about 5%.

Even though China’s economy increased by 3% in 2022, this expansion represents a major improvement over that year’s 3% growth rate, which is still one of the poorest showings in the nation’s history.

After the report was released on Wednesday, Chinese equities fell. By mid-afternoon, the Hong Kong Hang Seng Index had fallen 4.1%, approaching its lowest closing level since October 2022. The 300 main equities listed in Shanghai and Shenzhen make up the CSI300, which saw a 2.2% decline. 2023 was a terrible year for both indexes, falling by more than 10% apiece.