Scrapping the one-child policy won't solve China's problems

While a loosening of the current repressive restriction of a basic human right should be welcomed, it will not prove to be an economic panacea

PUBLISHED : Thursday, 08 August, 2013, 12:00am
UPDATED : Monday, 02 November, 2015, 4:11pm

In the coming months, Beijing is set to relax its one-child policy.

On Monday, Xinhua reported that officials are "still deliberating" whether to allow more couples to have two babies.

But most observers expect the authorities to loosen the current rules next year, moving to a two-child policy a couple of years after.

Reaction to the news in international media and markets was uniformly upbeat.

London's Daily Telegraph said the loosening is needed "to avert an ageing crunch as the workforce goes into sharp decline", while The Wall Street Journal predicted "it will put the economy on a better footing for decades to come".

On the Hong Kong stock exchange, baby plays leapt in value. Over the last week, nappy-maker Prince Frog has risen 6 per cent, baby food company Biostime is up 15 per cent, and pram manufacturer Goodbaby has jumped 20 per cent.

In reality, the one-child policy has already been relaxed. Today it is more of a 1.5-child policy

Clearly analysts and investors expect a baby boom. But although relaxing family planning restrictions could trigger an appreciable rise in fertility, the effect will be temporary. Not even scrapping birth control policies altogether would be able to reverse the long-term decline in China's birth rate or in the size of its working-age population. In reality, the one-child policy has already been relaxed. Today it is more of a 1.5-child policy. Although the exact rules differ from province to province, for years now, rural families have been allowed to have a second child if the first is a girl. So are urban couples if both come from one-child families themselves.

No doubt this loosening was introduced with good intentions, but who ever dreamt up the idea obviously didn't think things through.

Because of it, families today either have one boy, or one boy and one girl. Few have one girl, and none two girls. The result is a grotesque imbalance of the sexes, which last year saw 117 boys born for every 100 girls in the countryside and 138 boys for every 100 girls in urban areas.

This distortion, and the social tensions it threatens, is the main reason why Beijing now needs to ease its family planning policy. Nevertheless, most analysts see a relaxation as necessary to prevent a decline in China's labour force and redress rapid population ageing.

At best, however, the effects will be limited. According to Clint Laurent, founder of specialist research house Global Demographics, any loosening will be gradual to ensure neither maternity wards nor education facilities are overwhelmed.

He expects a move to a two-child policy over the next five years that will lift the annual birth rate from 13 million this year to almost 16 million in 2018.

But that increase won't do anything to halt the long-term decline in births, because the age profile of China's current population means the number of women of child-bearing age is destined to fall by a third over the next 20 years, regardless of any new policy initiatives from Beijing (see the first chart).

As a result, moving to a two-child policy will only delay the peak in China's population by some five years from 2019 to 2025, before it goes into long-term decline (see the second chart).

Nor will relaxing the rules do much to boost China's workforce and alleviate the strain of supporting a growing population of the elderly.

In the near term, it will cause workforce numbers to fall as more women take time off to have babies.

And in the longer run it will lead to an increase, not a decrease, in the dependency ratio, as working-age couples find themselves supporting an extra child, as well as four retired parents of their own.

For all that, any move to loosen the current rules should be applauded. The present policy is deeply repressive and a monstrous infringement of the most basic human freedoms.

Just don't expect a relaxation to solve China's economic problems.