International Herald Tribune
How Asians can have more babies
Friday, May 18, 2007

KYOTO: Rising Asia seldom thinks it has anything to learn from Old Europe. There is widespread assumption that a high savings rate is virtuous and that family values are still more important than individual ones.

But the reality is very different. East Asia now has the world's worst demographics. Modernization, urbanization and industrialization have seen a collapse in birth rates far more sudden than in the West, and there is scant sign that the few modest measures Asians have taken to reverse the decline have had any significant effect.

Nor is there much willingness to look at Europe to learn how to stem or reverse the trend.

Japan, with a fertility rate stuck at 1.3 births per woman, is on track to lose half its population by 2105. Other places are even worse off. Hong Kong, at 0.9 births per woman, is at the bottom of the world fertility league. Singapore, Taiwan and South Korea all have rates marginally lower than Japan, or the worst performers in southern Europe.

China, in a tribute to the triumph of party dogma over facts of life, is continuing to pursue its "One Child" policy, despite a fertility rate of only 1.7 and in the face of a sex imbalance that has produced close to 10 percent more boys than girls in the 5-to-14 age group. Where that imbalance leads is anyone's guess.

Even abolition of the One Child policy would probably do little to raise fertility because urbanization works in the opposite direction - China's major cities now have fertility rates almost as low as those of its more advanced neighbors.

In some countries, notably Japan and Korea, the low birth rate may be partly attributable to rising job opportunities and earning power for women.

But that is not the case in Taiwan, Singapore or Hong Kong, where women have excellent work opportunities and access to low-paid domestic help from Southeast Asia.

There is a reluctance to marry, particularly among the better educated women, as well as a preference for few, if any, children.

High property prices (in Hong Kong) and high forced-savings rates (at least in Singapore) may also be a factor in some places but cannot account for the general trend in the region.

Meanwhile, fewer old people are being looked after by their families, a trend that can only get worse as life expectancy rises and birth rates fall.

So what is different in the West?

In America's case the answer is obvious - immigration. Immigrants not only add to the population, they tend to have more children. The fertility rate for Hispanics, for example, is 2.9, while that for the established ethnic groups is no higher than the European average.

But Europe shows huge differences, with the highest rates being in Scandinavian countries; France, where rates are close to replacement levels, and Britain and Netherlands not far behind.

The most obvious feature of these countries, and the Nordic ones in particular, is very high levels of welfare support for children, child and maternal health, and generous parental leave - for fathers as well as mothers. All these countries also have very high rates of female workforce participation and gender income equality.

Finally, and most shocking to the Asian values brigade, all these countries have high rates of births outside wedlock, even though abortion is readily available. In East Asia, abortion is a massive industry with abortions greatly exceed births, and children born to unmarried women is a rarity.

The European example shows that state spending on child support, crèches and other such programs is money well spent to ensure that there will be a younger generation large enough to support the economy and pay the pensions of the old.

That is a lesson that East Asia has yet to learn. Investment in children through government spending may provide a much better return than accumulating vast fiscal surpluses to be invested in low yielding foreign assets or unnecessary infrastructure.

There is a dumb arrogance in East Asia's approach to excess savings and its inability to face up to the reasons for its abysmal fertility rates. The two are linked. That must change if the whole region is not to be a geriatric poorhouse.