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10 November 2015

Double dividend 

Like nearly all major industrialized nations, China is getting older. By mid-2020, the country’s population will annually include 10 million more elderly and 7 million fewer working adults. By 2050, fully one-quarter of all Chinese will be retirees.

China may be the world’s most-populous nation, with over 1.35 billion inhabitants, but the country nevertheless faces a growing demographic deficit. That fact spurred Communist Party leaders to announce in late October the end of 35 years of one-child policy.

Doubling the number of allowed children per family would appear, at first glance, to be a reasoned response to the challenge of a graying population. However, previous moves to liberalize state one-child policy – for specific populations and in limited areas of the country – have had only a minor impact on fertility rates.

In Guangzhou City, for example, 14,000 couples became eligible to have a second child in 2000. By 2009, only an additional 360 children had been born.

Why was the demographic change in Guangzhou so slight – and why won’t the overall abolishment of one-child policy produce a Chinese baby boom, at least in the shorter term?

Recent polls show that many couples who could have a second child feel that it is already too expensive to raise one child in China, let alone two.

Despite years of sustained economic expansion, average per capita incomes still barely top $6,600. And while consumer price inflation continues to slow, the cost of quality education, real estate and medical care remains out of reach for many parents of so-called “Little Emperors,” who have come to expect nothing but the best.

Just as importantly, multiple generations of Chinese have been raised with the ideal of a nuclear unit composed of father, mother and child. Changing those mindsets won’t happen overnight. As well, many of those couples that may now wish to have a second child have already been sterilized.

Taking a longer view, China still remains poised to overtake the United States as the world’s largest economy. Likewise, over the coming decades, the introduction of two-child policy will slowly but surely increase the size of the working-age population.

Meanwhile, many China watchers believe the recent announcement is the prelude to the abolishment of all birth restrictions – a 21st-century anachronism whose total cost to Chinese society cannot be measured in dollars.