(a) is slightly more common than (b). But both sound like English in a news report rather than being "conversational English". Also, in both examples it sounds like the babies are dying!
We could also say, (c) "The number of births in Japan is decreasing" or (d) "The birthrate in Japan is decreasing" but these would also sound like English in a news report. Out of these four, I think the last one is most common.
In conversational English we would say something more like, "The number of babies that people in Japan are having is decreasing"
By the way, both are correct:
"The number of babies that people are having in Japan is decreasing"
"The number of babies that people in Japan are having is decreasing"
"People in Japan are having fewer babies."
"People in Japan are having fewer and fewer babies."
I also want to emphasize that using "go down" is more conversational than using "decrease":
"The birthrate in Japan is going down." is more conversational than "The birthrate in Japan is decreasing." Two-word verbs are more conversational than one-word verbs that have the same meaning.
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