China's one-child policy must be changed before it's too late
Andrew Leung says the consequences of an ageing population for China's development will be too serious to countenance, and the outdated one-child policy must be changed before it's too late
Thanks to longer life expectancy and the one-child policy, for well over a decade China's fertility rate has remained below replacement levels. According to the US National Institute on Ageing, the number of elderly aged 65 and above in China will grow from 110 million in 2011 to 330 million by 2050. The ratio of retirees to income earners will increase and, by the middle of this century, there could be 100 million Chinese over the age of 80.
An ageing demography usually accompanies economic growth, because a rising middle class tends to value family quality more than size. Demographics in most Asian emerging markets are showing a long-term greying profile, varying only in degree. The working-age populations of South Korea, Taiwan, Hong Kong, Singapore and Thailand are all predicted to contract within the next 10 years.
On the mainland, the so-called 4-2-1 phenomenon is common, whereby two sets of grandparents and two parents dote on an only child. When the child grows up, he or she, and spouse, will be culturally obliged to share the support for up to a dozen parents and grandparents.
Admittedly, China's working-age population is not yet falling in absolute terms. China's dependency ratio (the number of non-workers as a percentage of those who work) is still relatively low. This "demographic dividend" has been driving China's breakneck economic growth.
Very soon, however, this dividend will turn into a deficit. According to Zhongwei Zhao and Fei Guo, in Transition and Challenge: China's Population at the Beginning of the 21st Century, China's working-age population (those aged 15-64) is expected to rise to "slightly more than one billion in 2015. Then it will gradually decline to 966 million in 2030 and 845 million in 2050."
The negative stereotype of the only child has long been debunked by many scholars. Contrary to popular belief, there is no evidence to suggest that he or she is prone to becoming a domineering social misfit. On the contrary, he or she is more likely to achieve academic and career excellence because of better parental care and higher expectations.
However, China's ageing demographics due to the one-child policy have critical economic and socio-political implications.
First, the policy has resulted in an acute gender imbalance due to a cultural preference for boys. According to the National Bureau of Statistics, by 2020 there will be 24 million more men than women of marriageable age in China. This has caused social problems, including sex crimes, trafficking of women and, for many men, difficulty finding a spouse.
What is more, many of the millions of migrant workers often leave their offspring with their elderly parents back at home. This has resulted in a generation of "left-behind children", now estimated to number 60 million. The upbringing and psychological well-being of this only-child generation are bound to suffer.
Second, the resulting ageing demographics exacerbate the so-called Lewisian turning point, where a shrinking low-wage workforce results in increased wages all round, making outsourced manufacturing to China increasingly less competitive. According to a report in The Economist, there is the beginning of a movement of "reshoring", in which outsourced productions in China and elsewhere are moved back to the US, now made possible by new technologies like robotics and 3D printing.
Third, an ageing population would be bad news for innovation and raising productivity. These are essential ingredients if China is to overcome the middle- income trap, where many developing countries stall in productivity and economic growth within a range of per-capita incomes of US$3,000 to US$8,000.
There were indications that the one-child policy might be due for modification, if not abolition. Last October, the government-backed China Development Research Foundation recommended that two children per family be allowed by 2015 and that all birth restrictions be lifted by 2020. And, according to report in the China Daily, population planning officials and research institutes have provided assessment reports and action plans for a policy change.
The announcement of a formal change may yet take time, however. While the agencies overseeing China's population policy were recently revamped, the policy will remain unchanged for now, the central government has said.
China's population is expected to continue to grow until it stabilises at around 1.45 billion by 2030, according to a United Nations projection, when it will equal that of India, and will then be overtaken by India.
Far more important than total population are the dependency ratio and the size and quality of the labour force. China had 7.8 working-age adults for each elderly person in 2010. According to the United Nations, this ratio will fall to 3.8 by 2030 and to 2.4 by 2050. This means that the average burden borne by each worker will more than triple.
Furthermore, the costs of public pension coverage even at the current relatively low rate are expected to increase from 3 per cent now to 10 per cent of gross domestic product by 2030, and to 15 per cent of GDP by 2050.
A dwindling and ageing population will place an increasingly heavy burden of elderly care on a smaller workforce as well as sap the latter's dynamism to take the economy to the next level.
China's stated aim is to build "a modern, harmonious, and creative high-income society" by 2030.
In view of the long lead time of demographic momentum, unless the one-child policy is changed in good time, China will be doomed to growing old in an "ageing trap", while President Xi Jinping's "China dream" may recede from the nation's reach.
Andrew K. P. Leung is an international and independent China specialist based in Hong Kong