Sunday, June 20

China’s New Three-Child Policy Won’t Fix Its Economy, But It Could Change Lives | Stuart Gietel-Basten

TO A number of amazing things have happened in the country recently with the world’s most famous population policies. First, the Chinese census in May showed that the country was aging rapidly, that its overall population growth was slower in generations, and that its fertility rate had plummeted to 1.3 children per woman, an even higher level. lower than Japan, a country already in a state of population decline and very fast aging.

Of course, we have known this for many years. A more notable development was the media reaction to the census data. China’s apparent demographic tribulations were narrated as an existential threat to the country’s economic and geopolitical future. This caused commentators inside and outside of China to panic that it was experiencing a “demographic crisis.” Then came the suggestion from a high-profile former McKinsey consultant that the solution was “Do everything possible for pro-birth policies” adopting a “carrot and stick” approach, which included limiting access to better education to couples with two children, coercive ideas that possibly show a disrespect for human dignity.

In late May, the government announced that the two-child policy would be further adjusted to allow all Chinese couples to have three children. In some ways, this was not surprising. After the census results were announced, speculation about scrapping all restrictions on birth control, as they appeared to be inconsistent with widespread concerns about aging and population stagnation.

Most observers (myself included) do not believe that the switch to a three-child policy will have a significant impact on the age of China’s population or the size of its workforce. The survey data suggests that only a relatively small number of people actually want to have a third child. Like people in other parts of East Asia, parents (and prospective parents) in China are very concerned about the costs of raising children (especially after-school education), access to decent and affordable child care , the impact on women’s careers, etc. Without other support, such as high-quality, affordable child care, it is difficult to see how the policy will directly stimulate a visible change in overall fertility rates.

The announcement is just the latest in a series of adjustments to family planning policy that have been made piecemeal over the past three decades. Of course, this raises the question of why China maintains restrictions. Abandoning the birth restriction policy entirely would be a notable U-turn that would be perceived as an implicit statement about the wisdom and efficacy of China’s original one-child policy. More practically, completely restructure the family planning program across the country and redeploy to local family planning officials who remain it is a huge administrative task that requires time and tact.

What is almost comical, however, is the idea expressed by many observers that having more babies will solve China’s demographic challenges in the short term. Let’s not forget that babies are not going to work. In today’s world, newborns are unlikely to enter the workforce until after 2040. Since the urban pension fund alone is projected by the Chinese Academy of Social Sciences To become insolvent in the early 2030s, babies hardly seem to be the most useful solution. Increase in retirement age is an easy (albeit unpopular) fix, but one that will only have a limited impact, and may even have unintended consequences, such as reduced childcare provided by grandparents, which, ironically, could put further pressure on the low on fertility rates.

More comprehensive changes will be needed to face the new demographic reality of low fertility, rapid population aging, and slow population growth (or even decline). China will have to continue adjusting to the seismic shift of the decades-long era of renkou hongli, or “demographic dividend,” when cheap labor was abundant and both the youngest and the oldest non-active population were small relative to the workforce.

Realizing the potential of an increasingly skilled and mature population, China could reap a rencai hongli, or “talent dividend,” which maintains both productivity growth and healthy and successful aging. You can also learn from the mistakes of other aging countries and build increasingly resilient social and economic institutions to help older people. Together, such changes can put China on a sustainable path to respond to the challenges of an aging population and, eventually, decline.

However, this does not mean that the change to a three-child policy is not important. Reports Working-class couples with excess births who are fined or collected “social support” fees that they struggled to pay have long been common. In some localities, these social support fees were used to prop up local government budgets which, in turn, led to an overzealous implementation, a practice far from unique to China. Many families have lost their income as a result of out-of-quota births. The new three-child policy will inevitably reduce parents’ exposure to the risk of arbitrary or capricious sanctions, benefiting everyone.

Any change in the population policies of the most populous country in the world is sure to be a big problem. But we must never forget that populations are made up of people. More importantly, for people, the new policy means that more people have more options than ever before in deciding how many children they have. The change will inevitably allow thousands of families to have three children of their own free will. While these numbers may not make a big impression on a spreadsheet, the impact of the policy change on such households should not be underestimated.

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