Japan's population is shrinking at an accelerating pace, according to new census data released this week—and within days of the figures, the government announced significantly tougher rules for foreign nationals seeking to live in the country.

Foreigners account for just 3.4% of Japan's population, but their share has climbed to a record high and a political backlash has been building—even as the country confronts rapidly aging demographics and a pressing need for new workers to sustain economic growth.

The latest five-year population survey, released Tuesday, laid out how stark Japan's situation is. As of October 2025, the total population, including foreign residents, stood at 22.9 million, down 2.5% from five years earlier. The 2020 census recorded a decline of just 0.7%.

The count of Japanese nationals fell even more steeply, dropping 3.5% to 119.1 million, following a 1.4% decrease in the 2020 tally. Meanwhile, foreign residents surged 40% to a record 3.84 million, and permanent residents rose 17% to 947,125. Even with that influx, foreign arrivals are not offsetting the drop among Japanese nationals, leaving the overall population to fall at more than three times the pace recorded in the 2020 census.

Like other wealthy economies in Asia, Japan's birth rate has sat below the replacement level of 2.1 children per woman for decades, and the population has been in steady decline since around 2008. The country is also aging rapidly: the share of people aged 65 and older rose to 29.4% in 2025 from 28.5% in 2020. Adult diapers have been outselling baby diapers since 2011.

Policymakers are scrambling for ways to encourage people to have more children. Tokyo's metropolitan government, for example, launched a dating app to bring more couples together. The city also introduced a four-day workweek and partial leave policy for municipal workers to help parents balance childcare and work. So far, such measures have not reversed the trajectory, with this week's census showing the decline accelerating.

By contrast, policy toward foreigners has turned more hostile.

On Thursday, the Japanese government raised the fee for permanent residency to $1,271 from $64—a 2,000% jump that marks the largest fee increase in the country's history. The cost of a five-year residence permit climbed to $475 from $38.

Tokyo also imposed more detailed income requirements on permanent residents, who must now earn a minimum of $36,428 per year. And for the first time, applicants for permanent residency will be evaluated on their Japanese language skills as well as their grasp of Japanese rules and customs.

On top of that, the government can revoke permanent residency for failing to meet pension contribution obligations, failing to pay health insurance premiums and taxes, or violating immigration law or the penal code—grounds that extend to the 947,125 people who already hold the status.

The changes come as Prime Minister Sanae Takaichi has ushered in a more nationalist, right-wing stance. On the global stage, that has meant taking a harder line against rivals such as China and North Korea, while also bulking up Japan's military. Domestically, the pivot has translated into a crackdown on immigration—and even tourism—drawing criticism that Takaichi is encouraging xenophobia. In July, the government hiked some tourist visa prices by more than 400%.

In a post on X ahead of the government's new residency rules, Takaichi said many permanent residents could not maintain independent livelihoods. "The government recognizes that, with the increasing number of foreign residents, there are citizens who feel anxiety and a sense of unfairness, and is addressing this by making 'foreign policy' more 'orderly' so that both citizens and foreigners can live safely and securely," she wrote.

The tightening lands just as the census shows foreign residents to be the fastest-growing segment of an otherwise shrinking population—and the new income, language, and revocation rules will now set the terms for who stays.

This story was originally featured on Fortune.com.