Too Late End to One Child Policy

WSJ March 18 2013


The news out of China's legislature is that Beijing appears to be moving toward officially ending its infamous one-child policy. That's good for women, who may no longer face forced abortions and related cruelties. But this policy change, although welcome, will not profoundly ease the demographic challenge China faces from declining birth rates.

The National People's Congress on March 10 proposed moving population policy to the National Development and Reform Commission. This body will take a broader view of the country's economic needs than China's soon-to-be-irrelevant family planning commission, which often seemed oblivious to population shifts after the one-child policy launched in 1979. Today, a nation whose fertility rate was once deemed too high has one that is unsustainably low.

However, there are many reasons why formally ending the one-child policy will have limited impact on China's birth rate. The first is simply that the policy has always been implemented unevenly. It has generated plenty of genuine horror stories, but its impact on the overall fertility rate has probably not been as great as imagined.

Chinese fertility has declined steadily from around 6 births per woman of fertile age in 1950 to around 1.6 today. However, the fertility rate was already declining drastically before the one-child policy was introduced in 1979. It fell from about 5.0 in 1970 to 3.0 a decade later, partly due to the disruption of the Cultural Revolution. China's fertility trend over the past 60 years has been almost identical to that of Thailand, which never used coercion and instead simply made contraception cheaply available.

Apart from coercion, the big difference between fertility in China and Thailand is China's gender imbalance. This imbalance has been 12% to 15% above international norms for nearly two decades.

Many families faced with pressure to have only one child opted to abort female fetuses. But cultural norms also play a role. South Korea and parts of India, for instance, also show gender imbalances that are in no way linked to government policies. In China, ending the one-child policy should significantly reduce, but not eliminate, the gender imbalance.

However, the existing gender imbalance in the 0-24 age cohort will make it hard for China to sustain, let alone raise, its fertility rate in the medium term. There will simply be too few women of child-bearing age. In today's 15-24 age group, there are around 100 million men but only 84 million women.

Several trends suggest that these women will aim to have fewer children, not more. Take urbanization. Regardless of the one-child policy, fertility rates in China's urban areas are already lower than in rural ones, in part because of cities' higher cost of living. The hukou household registration system further discourages urban fertility by depriving tens of millions of migrant workers access to social services that could ease the financial burden of child-rearing.

China also has one of the highest female workforce participation rates in the world, and the relative position of urban women is rising thanks to education and increased economic sophistication. Persuading them have children and sacrifice their careers is becoming more difficult.

Under these circumstances it is quite possible that China's urban fertility rate will fall to the low rates, from 1.0 to 1.3, that today are seen in Hong Kong, Taiwan, Singapore and South Korea. Shanghai has had almost a decade of allowing many exceptions to the one-child rule, but its fertility rate is 0.7, the lowest in the world among major cities.

If there's consolation here for China, it's that fertility decline has come later than elsewhere in East Asia. Beijing has time to achieve future population stabilization and avoid the population decline that's already happening in Japan and soon to come in South Korea and Taiwan. But officials will have to do a lot more than simply end the one-child policy or exhort citizens to have more children.

China will need dramatic reductions in the direct and opportunity costs of raising bigger families. That suggests providing free day care and kindergarten alongside free primary schooling. Doing so would enable more women to combine motherhood with careers, not to mention raise education standards. Another requirement is to legislate greater job security for pregnant women and new mothers, so that they do not feel forced to choose between work and family.

Governments the world over must acknowledge that direct support for the non-working young up to age 15 is just as important as support for those past working age. As it is, systems are set to be over-burdened with pensions for people capable of working to age 70 or beyond, while young families get much less support. Governments are beginning to wake up to looming pension burdens, but far less attention is given to addressing the shortage of babies needed to sustain a workforce that can pay for future pensions.

Above all, China needs a change of thinking so that children are viewed as an investment in a future workforce that can support its parents, whether directly or through pension and tax systems. Tax incentives need to be more heavily biased in favor of children rather than, say, real estate.

At present, children are viewed as a cost at both family and state level. Household savings rates are high in China, as in most of urban Asia, but are often skewed towards property investment. What China must realize is that such saving has limited value, both for families and society, if it comes at the cost of a second child and hence China's ability to reproduce.




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