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Why China needs to change the ‘One-Child’ policy now

optimized-one_child_policy_lost_children_of_cheng_du

By · August 26th, 2012


Research article on China’s one-child policy.

China’s ‘One-Child’ Policy was introduced in 1978 to alleviate the social, economic and environmental problems created from a baby boom in the 1960’s, such as overcrowding, strain on social services, strain on ecosystem and high unemployment from excess labour supply. However it has also created unintended consequences associated with imbalance in gender ratios and in population demographics. Over the past few years, the Chinese National Population and Planning Commission have hinted at the possibility of one day transitioning towards a Two-Child policy instead of abolishing the policy completely. Though officials have clearly stated the One-Child policy will remain untouched for at least another decade. With the growing threat of an ageing population, it’s almost certain changes to the policy will occur in one way shape or form; however the issue that remains is when?

Looking at the current population pyramid of China (Graph 1, Appendix), we can see that the One-Child policy has resulted in a high portion of the population in the 40-49 age group (born in the 1960’s) and 20-24 age group (born in mid 1980’s – 90’s) whom are most likely children to those born in the 60’s. Data from the US Census Bureau in Table 1 (Appendix) compares the proportion of people in the working age 15-64 category and people over 65 between 4 different countries in the current 2012 period and 2050, shows that China is among the countries with the highest working population at the moment at 74% compared to the US of 66%. However between now and 2050 the Bureau predicts that China will see its working age population plunge by 14% and the elderly age group will soar by 18%  assuming the One-Child policy is not relaxed. A comparison between the population pyramids of Japan 2012 and the projected of China in 2050 (Graph 3, Appendix) will show a frightening mirror image to where China is headed if the policy isn’t changed, what’s also alarming is that during that time China’s workforce will also drop by 200 million people.

Due to the non-existent pension in China, it’s the norm for the younger generation to take care of the elderly members in the family. This can play a contributing factor to a potential problem if they decide to leave the One-Child policy untouched for another 10 years. The problem is due to the income associated with different age groups, in general people in their 30’s typically have higher earning power and are more productive than those early into their career in their 20’s. In 2050 the largest age group would be 60-64 years old whom are currently in the 2nd largest age group 20-24 years old. People born between now and the next few years will be in their 30’s by 2050 thus rebalancing the workforce, whereas people in the next decade will be in their 20’s by 2050. If the government had delayed the changes in policy by 10 years, it effectively puts the majority of the elderly burden on those in their 20’s when earnings power aren’t typically strong. But if the government acted now, the burden would be distributed more evenly among the workforce and it also alleviates the major slowdown in economic activity and productivity caused by a huge gap in the workforce, as there would now be a substantially higher number of people in the 30’s age group.

In the short run, changing the One-Child policy now does carry some costs and benefits. One major benefit would be a transition towards consumption driven economic growth rather than government spending on construction. However China has had a constant struggle with inflation and overcrowding, such a change in the One-Child policy could undermine the objectives of current macroeconomic policies. It can also undermine the original objectives it set out to achieve and risk recreating the social, economic and environmental problems rampant in the 1970’s. But given the severe consequences of the rapidly ageing population ahead, the Chinese government needs to act now as this problem cannot be fixed if they wait around any longer.

Appendix

Graph 1:

 

 

 

 

 

 

 

 

 

 

Table 1:

2012USAAustraliaChinaJapan
% 15-6466%67.7%74%62.6%
% 65+14%14.2%9%23.9%

 

2050    
% 15-6460%61.6%60%49.1%
% 65+21%22.6%27%40.1%

 

Graph 2:

Source: US Census Bureau: http://www.census.gov/population/international/data/idb/region.php

 


Henry Lin

By Henry Lin

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

  • sida

    Did you perhaps consider that China is entering into a phase of “two-child policy”?

    the one-child policy was set up as, if both the parents are from a one-child background then they will be allowed to have two children.

    a one child family was very rare 20-30 years ago. However, this has completely changed now. The new generation can all have two children.

  • Henry Lin

    Hello sida, thnx for commenting.
    yes, there are a couple of exceptions in the system (e.g rural areas, first child had a disability etc) to have a 2nd child, but this doesn’t offset the overbalance in the demographics.

    From my knowledge of this topic, the government hasn’t yet relaxed the policy to 2 per family, nowadays is still ‘illegal’ for the majority of families living in the cities to have 2, people usually pay fines, give birth in HongKong or overseas and any other loopholes.

    im aware they are considering transitioning into ‘two-child’ but have said it could be implemented later rather than now (which is what im trying to argue).

    If you have a link to confirm they have actually changed the policy, it would be great.

    Thanks

  • MattM

    You probably should mention that:
    a) China’s population is still growing at 8 million a year even with this policy.
    b) modern workforces are shrinking largely through automation – modern agriculture doesn’t need a large workforce and with the 9 billion a month China gets from the US in interest, they should be able to take care of people as they grow older.
    c) China ideally needs to head to a stable population within carrying capacity of their land.

    Perhaps the bigger concern should be that China already have significant issues feeding their numbers more due to ecological constraints and as such have been on huge land grabs globally. They also have significant issues with water quality and have ruined a lot of what was once reasonable farmland.

    Studies I’ve read suggest that countries far more easily handle ageing demographics and shrinking populations than the economic mindset would have us believe – Japan for instance. While their population is shrinking, their quality of life is on the up.

    So, I think we have more to fear if countries continue to refuse to manage their populations responsibly. Our population growth is anything but natural – as such, we need to recognise that with this comes the responsibility of ensuring our populations don’t grow too big. At least China did something.

    Stable populations work better and are the only viable reality. Populations that rely on endless population growth are doomed and take their ecological health with them – this is reaching endemic proportions now. I wouldn’t be surprised if WW3 happens in my life time.

  • sida

    Please refer to the below wikipedia link

    After Henan loosened the requirement, the majority of provinces and cities[31]now permit two “only child” parents to have two children.

    http://en.wikipedia.org/wiki/One-child_policy

    :)

  • sida

    “people usually pay fines, give birth in HongKong or overseas and any other loopholes.”

    this is the old days where majority of people were from non-one child background, therefore they weren’t legally allowed to have two children

    addtionally, people tried to have kids in hong kong nowadays, not because they have two kids but because children born in hong kong gain automatic permanent resident status

    http://behindthewall.nbcnews.com/_news/2012/02/13/10394026-birth-rights-battle-china-vs-hong-kong?lite

  • Henry Lin

    To sida: that rule is sort of the ‘exemption’ as i was talking about, but it sort of works out that people born from the 80’s onward most likely single children of the baby boomers can have 2 children (but it this effect hasn’t come into effect yet as most are not of age to have families at the moment, good point anyways). the born in hong kong resident status is a factor, but recently hong kong has restricted this sort of activity (therefore closing this loophole).

    To MattM: some good points, i guess it is uncertain how employment would look like once automation becomes more advanced (even in developed nations), whether or not there will be job growth in other sectors (e.g nowadays we have an IT department in almost all businesses even though computers whiped out alot of the automated tasks, although this isnt complete 1 to 1 offset in jobs but you get the point)
    whether or not china is going to finance there elderly with that 9 billion interest warchest is questionable.

    My article did mention china will have a further overcrowding issue, however provided no suggestions or any analysis on what it means, as i was writing according to a word limit. i guess its a discussion for another day, alternatively you could start a discussion in the forums, and i would be happy to debate it there :)

    kind regards, Henry

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