Children play at a playground inside a shopping complex in Shanghai on June 1. Photo: Reuters
The View
by Hao Zhou
The View
by Hao Zhou

Can China boost its birth rate with education and housing reforms?

  • Two measures announced by the Ministry of Education indicate that the government is trying to address the reasons young couples are reluctant to have more children
  • But given the complexity of the related issues, tackling the demographic crisis will not be straightforward
It will be interesting to see how two measures recently announced by the Ministry of Education affect China’s birth rate. The first is to create a new department, dubbed the Off-Campus Education and Training Department, tasked with overseeing the private tutoring market. The other is a notice for schools to run after-school classes that end at least half an hour after most parents finish work.
While both measures are related to education, Chinese authorities have a more far-reaching target – to encourage young couples to have more babies to help China better cope with the demographic challenges looming on the horizon.
While the government has announced a “ three-child policy”, which allows one couple to have up to three children, and is reportedly considering completely lifting birth restrictions by 2025, one prevailing opinion is that changing the birth control policy is unlikely to reverse the demographic trends in the world’s second-largest economy.

With living standards improving, members of the younger generation are focused on their careers and are reluctant to have more babies. This is not unique to China. However, there are other obstacles that deter young couples in China from having more children.

In particular, the cost of education and housing has become increasingly expensive and unaffordable for many, placing a heavy burden on young families. For example, private tuition has become quite common in Chinese cities. Parents normally send their children to different private tuition classes on weekends, which can lead to both parents and their children feeling frustrated.


China expands two-child policy to three

China expands two-child policy to three
The private tuition industry has been widely seen as a promising business in China as Chinese parents are very generous with tuition payments and often want to sign up for more classes to better equip their children for the future. As a result, while public education is free before high school, Chinese parents still feel mounting pressure over the cost of their children’s education.
In addition, the sustained, rapid rise in housing prices in major cities has made it almost impossible for middle-income families to afford a larger flat. In recent years, the chase for “school district housing” has further increased the cost of raising children.

Certainly, parents want to provide their children with the best education; however, if a couple wants to buy a flat that allows them to apply to a decent school, they must pay a ridiculous premium compared to a “normal” flat.

The Chinese government has already realised that easing the birth control policy alone will not help alleviate the country’s demographic challenges. Hence, the recent policy initiatives have targeted reducing education costs to encourage more births. The government is reportedly looking to implement a ban on online and offline tutoring services on weekends and certain holidays.

In the meantime, the government has extended the school day for students in a bid to help parents struggling to cope with work and family life. The move is aimed at easing the burden of parenting, the Ministry of Education said.


How much does it cost to raise a child in China?

How much does it cost to raise a child in China?
In addition, the government has imposed a new property price limit system in a few main cities. For example, the government has set a price guidance for new flats when property developers purchase the land. The general practice is that the price of new flats is lower than second-hand housing in similar districts.
The government intends to use this policy to manage market expectations that housing prices will remain stable in the next few years. Therefore, young couples may feel somewhat more comfortable about having more children, which naturally requires a bigger living space.

Four ways China’s economy can rise to the population challenge

Long working hours is another issue. For example, employees at tech companies often cite the “996” work culture to describe their life – starting work at 9am, leaving at 9pm and working six days a week. While Chinese companies have benefited from their dedicated staff, the whole country is paying a long-term cost as young people are reluctant to have children because of their heavy workload and long working hours.

Some large tech companies have reportedly reduced their working hours and implemented a more flexible system. Somewhat surprisingly, some staff members did not welcome the changes as they feared they would get paid less once working hours were reduced.

In the end, it all seems to come down to money. China’s economic reforms were meant to help people become rich; however, the whole society is also suffering the side effects of economic development. In the meantime, the intense competition among young people has made it difficult for them to consider pursuing work-life balance before they are sufficiently wealthy.

To cope with the problem of an ageing population, one proposed policy is to raise the retirement age. While the government has hinted at this approach, it is unclear how this policy would be implemented. In fact, many elderly people are still working after retirement as they help to look after their grandchildren.

All told, the Chinese government has made real efforts to tackle the country’s looming demographic challenges. However, as these challenges are related to many complicated issues, the birth policy is not as straightforward a solution as it looks.

Hao Zhou is senior emerging markets economist at Commerzbank