A mother carries her child at the West Kowloon Art Park on October 25. This year’s policy address included several measures aimed at raising the city’s birth rate, including a cash payment for each child born. Photo: Jelly Tse
Opinion
Inside Out
by David Dodwell
Inside Out
by David Dodwell
Why John Lee’s baby bonus is fool’s gold for Hong Kong
Immigration rather than birth rates drives Hong Kong’s population, and the government should look to migrant flows for solutions to our demographic woes
Besides, the one-off cash handout misses many of the underlying factors driving Hongkongers not to have children
Chief Executive John Lee Ka-chiu prides himself in being “result-oriented”, and the 171-point development blueprint elaborated in last week’s policy address provides a massive list of initiatives on which results will be expected. One initiative in particular should be quick and easy to measure: his one-off, HK$20,000 (US$2,500) cash handout for every child born between now and October 2026.
But behind the clear commitment to child-bearing mothers, questions arise over his government’s strategic aim and whether a HK$20,000 handout is in any credible way the best way of achieving it. I presume Lee’s strategic intent is to reverse long-standing demographic change.
In our rapidly ageing society, he fears the challenging burden that will be borne by a shrinking working-age population and hopes we can persuade women to have babies in much larger numbers. For example, the year to mid-2023 saw just 32,600 babies born in Hong Kong but more than 54,000 deaths. Our population is shrinking even as the cost of supporting our retired elderly is rising sharply.
But Lee is misdescribing our problem and prescribing an inappropriate and ineffective solution. First, Hong Kong’s population problem has never been – and will never be – driven by birth rates.
Second, the demographic imbalance only exists if you assume Hong Kong is regarded as a self-contained economy rather than an integral part of the Greater Bay Area.
Third, a HK$20,000 handout misses by a mile the real reasons Hong Kong couples are in large numbers opting not to have and raise children.
On the first issue, I recall a fascinating 1975 article by Saw Swee-Hock in Singapore and Chiu Wing Kin at the University of Hong Kong, tracking Hong Kong’s population from 1841: “The course and components of population growth in the past 130 years or so have been influenced by the ebb and flow of people in response to conditions on the mainland.”
What was true then is equally true 48 years later. Hong Kong’s population today is the product of three massive migratory movements: a large influx of people between 1945 and 1951 as a civil war raged in China; a second influx between 1978 and 1980 at the end of the Cultural Revolution; and a third influx that began in earnest under China’s 150-person-a-day “one-way permit scheme”, which allowed “family reunions” mainly between Hong Kong husbands and mainland wives.
According to a research paper published by the Legislative Council Secretariat in 2020, more than a million mainlanders have arrived in Hong Kong under the scheme from 1997 to 2018, accounting for about 13 per cent of the population then. They were mainly uneducated, poor and living in public rental housing. They accounted for about one third of local marriages, and between 2006 and 2012 mainland women accounted for between 40 and 46 per cent of all children born in Hong Kong.
Even in the past three years, it has been migrant flows that drive Hong Kong’s demographic challenges. And if it is migrant flows that have been driving Hong Kong’s demographics, then it should be as part of the Greater Bay Area that our demographic challenges should be analysed.
People visit a shopping complex in Shenzhen’s Baoan district on August 6. If it is migrant flows that have been driving Hong Kong’s demographics, then it should be as part of the Greater Bay Area that our demographic challenges should be analysed. Photo: Dickson Lee
If even a small proportion of the mainland women who have arrived in Hong Kong over the past two decades decide to retire back in the Greater Bay Area, then a modest uptick in Hong Kong’s local birth rate will be wholly inconsequential. We might still have a demographic problem, but it is shaped by forces that have nothing to do with delivering a few more local babies.
This takes us to the third point – the HK$20,000 handout to new mothers misses the underlying causes of Hong Kong’s low birth rate and will have no impact on incentivising an uptick. In an infographic in the Post back in July 2016, Lau Ka-kuen and Dan Bland took three groups – high net worth families, middle-class families and lower-income families – and compared the cost of raising a child to the age of 21.
In short, the rich families on average spend about HK$14.2 million getting their child through to university graduation, a middle-class family spends about HK$7 million and a lower-income family spends about HK$2.6 million. Most local couples know the numbers.
One-off payments are insufficient. As newly married Michelle Lee said, such sweeteners “will not help me with a responsibility that I will have for the rest of my life”.
03:05
Hong Kong halves buyer’s stamp duty for non-residents as part of measures to boost economy
Hong Kong halves buyer’s stamp duty for non-residents as part of measures to boost economy
Neither will they address the challenge of raising a family in an average-sized 480 sq ft Hong Kong flat. In comparison, the average-sized home in Singapore is about 800 sq ft, 720 sq ft in Shanghai and 760 sq ft in Shenzhen. If Lee is serious about incentivising bigger families, he will start by making a decent-sized home affordable for the average Hong Kong family.
I offer one final thought on this inept plan. If we take last year’s 32,600 babies as a benchmark, then just keeping the birth rate at the current level is going to cost an annual HK$652 million. If by some miracle this incentive doubled the coming year’s birth rate, producing an additional 32,600 new babies, this would cost HK$1.30 billion.
This is in a context where migrant fluxes could reach more than 100,000 a year. If our “result-oriented” chief executive is truly serious about tackling our demographic challenges, he will look at migration flows. His HK$20,000 handout is spitting in the wind, and he knows that as well as I do.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades
