Taipei | China's population fell last year for the third straight year, its government said Friday, pointing to further demographic challenges for the world's second most populous nation, which is now facing both an ageing population and an emerging shortage of working age people.

China's population stood at 1.408 billion at the end of 2004, a decline of 1.39 million from the previous year.

The figures announced by the government in Beijing follow trends worldwide, but especially in East Asia, where Japan, South Korea, Hong Kong and other nations have seen their birth rates plummet. China three years ago joined Japan and most of Eastern Europe among other nations whose population is falling.

The reasons are in many cases similar: Rising costs of living are causing young people to put off or rule out marriage and child birth while pursuing higher education and careers. While people are living longer, that's not enough to keep up with rate of new births.