Two late for China

April 4, 2016

4 minute read

Two late for China

by Wang Feng, ProjectM

In October last year, China scrapped the one-child policy, one of the most draconian social engineering experiments of the 20^th century. No one, however, should expect a belated baby boom will realign the nation’s dramatically skewed age structure. The abandonment of the policy will have no significant effect on fertility, just as earlier policy tweaks failed to noticeably increase birth rates.

From the inception to demise, China only ever made two sets of adjustments to the policy. In the mid-1980s, responding to a backlash against enforced abortions and other abuses, the government allowed rural couples with only a girl to have a second child (to try for a son so farmers could pass on the family name) and, later on, couples who are both only children could have a second child.

In 2013, the rules were again changed to allow couples to have two children if just one parent was an only child. It was expected that this would add an additional three million births per year in the first couple of years. In 2014, the first year after its introduction, additional births increased by less than half a million.

Fertility is not a switchLike governments in developed nations, the Chinese are realizing fertility is not a switch that can be flicked on and off by executive decree. Unfortunately, the delay and indecision that occurred in phasing out the resented policy means that the consequences will reverberate through the Chinese demographic structure for the next 50 years.

The problem is that China is rapidly aging. Back in the 1960s, China’s population was growing at over 2.5% per year. In the 1970s, however, there was a social shift to later marriage, longer birth intervals and fewer births. Within the decade, population growth halved, dropping from 2.58% in 1970 to 1.16% in 1979.

In 1982, at the beginning of the three decades of astounding growth, over a third of citizens were aged under 15 years, and only 6.3% over age 60. During the boom years, China received economic impetus from the huge group of 1960s and 1970s babies who began working between 1980-2010.

Known as a “demographic dividend,” this period saw the working age population grow more rapidly than the population overall, which spurred economic growth. The benefits of such a dividend can last up to five decades and played a major role in the rise of Asian Tiger economies such as South Korea and Taiwan.

Counting the cost

In 2012, however, for the first time, the Chinese workforce shrunk by 3.45 million, according to the National Bureau of Statistics. Although small in comparison to the overall workforce (0.4 percent), this marks a new, wrenching phase for China as by 2020 its labor force will be declining significantly as more workers leave than enter.

Within 20 years, for every elderly person receiving benefits, there will be only two taxpaying workers, down from five now. This a challenge that advanced economies from Germany to Japan already struggle with, but those countries at least became rich before they became old.

The one child policy exacerbated China’s demographic woes and will go down in history as a textbook example of bad science combined with bad politics. What in hindsight is particularly perverse is that the policy was imposed after China had already achieved most of its modern fertility decline.

Yet, with the population at the end of the 1980s approaching the one billion mark, the government feared continual growth would affect the political goal of raising living standards, so the one-child policy was announced in September 1980. But population growth was (and still is) occurring not because of births, but because of falling mortality. The Chinese, like citizens of nations around the world, are simply living longer than previous generations.

The Chinese are realizing fertility is not a switch that can be flicked on and off by executive decree

Today, those aged 15 and under now comprise only 14% of the population, less than for those aged 60 and over. Over the last two decades, fertility has languished well below replacement level (2.1 children per couple) and in the last decade, has hovered around 1.5, which almost ranks China amongst some of the world’s least fertile countries, including Germany and Italy. In Shanghai, where most young couples could have had two children for many years, the 2010 census found a fertility level of 0.7, a third the replacement level!

The government is now scrambling to try to undo the disastrous, unintended consequences of population control, but lifting the policy is unlikely to make China a two-child nation. Modern China is an entirely different country economically, socially and demographically compared with 30 years ago.

Economic growth of historical proportions lifted hundreds of millions of people out of poverty and raised the standard of living for one-fifth of humanity. Over 50% of all Chinese people now live in urban areas, compared with about 20% in 1980. Education levels have also risen and the proportion of young women aged 25 to 29 who are unmarried has quadrupled to 22% — and over 30% in the cities. Surveys show that, as in much of the world, young people in China do not want to have many children.

Scrapping the one child policy is long overdue, but it will provide no solution to the great generational shift underway. Even as its spectacular rate of economic growth slows, aging is picking up pace. Within a decade, China’s population will likely start to shrink. In the following years, China will not only be missing young, able-bodied workers and tax-payers who could have funded better pension and health care systems for the elderly, but also sons and daughters who would have provided physical and emotional support for their elderly parents.

Wang Feng

Wang Feng is a widely-recognized expert on China’s social and demographic change. He is a professor at the University of California, Irvine, and at Fudan University in Shanghai, China. Between 2010 and 2013, he served as the director of the Brookings-Tsinghua Center for Public Policy in Beijing