• China's population shrinkage is having a big effect on its economy.

• Marriage rates have halved over the last decade, with only 3.4 million couples marrying in the first half.

• Economists warn that an aging population could lead to sluggish growth and lower productivity.

China's population has been shrinking for the past two years, and the trend appears having a big impact on its economy, according to government data spanning the first half of 2024.

Chinese consumers are pulling back on spending, a possible consequence of an aging population saving up for retirement, according to a recent report from the research firm Rhodium Group.

Household savings have been rising over the last 11 years, the firm said, around the time China's working-age population peaked. Meanwhile, retail sales in the nation grew just 2% in June, well below the nation's pre-pandemic trend of 8% retail sales growth.

Romance seems to be another victim of a shrinking population. Marriage rates continue to tumble, with 3.4 million couples tying the knot from January through June of this year. That's half the number of couples who got married in the same timeframe a decade ago, according to data from China's Ministry of Civil Affairs.

Spending on romance looks to be particularly anemic. Diamond imports to China have slumped 28% over the first half of the year compared to the first half of 2023.

Jewellers appear to be selling down their existing inventory of diamonds rather than placing new orders, De Beers, the world's largest diamond producer, said in a note.

"In China, the ongoing economic challenges, particularly within the property market and low consumer confidence, have delayed the expected recovery from the sharp decline in 2023," the miner said of its financial results so far this year.

"Although demand in the US has been steady and India remains robust, consumers in China are buying substantially fewer luxury products. Retailers are very cautious as they restock, creating higher than normal levels of midstream inventory."

Waning sales and lower growth stemming from an aging population could be a reason investment in the country has stalled. Foreign direct investment in China dropped $15 billion over the last quarter, the second-biggest investment drop in the last quarter century, according to government data.

China's population, which is about 1.4 billion, declined for the second year in a row in 2023, with the nation losing over 2 million people as the death rate surpassed the birth rate. Its total population could halve by the end of the century, the United Nations projected in its latest World Population Prospects report, predicting that the nation could have just 770 million people in it by 2100.

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