China takes brakes off but 'grey tsunami' still looms
January 10, 2014 00:00 By Joseph Chamie YaleGlobal New
The one-child policy lifted living standards but set a hard-to-reverse trend of demographic decline
In an attempt to avoid a near-certain future of rapid ageing, shrinking labour force and critical gender imbalance, China has adjusted its one-child policy. The decision demonstrates that, irrespective of a nation’s political system, governments cannot avoid demography’s juggernaut consequences. This mid-course correction in population policy will have marginal effect as China is ageing at a much faster pace than occurred in other countries. This, along with a shrinking workforce and critical gender imbalance, will increasingly tax the government.
The new policy will permit couples to have two children if either the husband or wife is an only child. Under the previous policy, two children were allowed for ethnic minorities, rural families whose firstborn is a daughter, and couples with both spouses as only children.
China launched its one-child policy in the late 1970s because it feared that its rapidly growing population placed an untenable burden on economic growth and improving standards of living. At the start of the 1970s, China’s fertility rate was above five children per couple and its population was growing at more than 2 per cent per year, adding more than 20 million Chinese annually. If the demographic growth of the 1970s had persisted, China would perhaps have added 400 million people more to its current population of 1.39 billion.
As a result of rapid declines in birth and death rates over the past four decades, China’s life expectancy at birth has increased by more than 10 years to 75 years. With steep declines in fertility and increasing longevity, China’s population has aged rapidly over the past 40 years, with the median age nearly doubling from 19 to 35 years. The one-child policy also accelerated the decline in the proportion of China’s children, falling precipitously from 40 per cent in 1970 to 18 per cent today.
In contrast, the working-age population aged 15 to 64 years jumped from 56 to 73 per cent, higher than the 62 per cent average for more developed countries. The extraordinary age-structure transformation allowed China to benefit from the demographic dividend, a short-term productive advantage due to a large labour force relative to small numbers of dependent young and old. China’s potential support ratio, or working-age persons per retiree, is high, but has dropped from 14 to eight working-age persons per retiree – versus three per retiree in Germany, Italy and Japan and five per retiree in Australia, Canada and the United States.
Also, before the one-child policy, China’s sex ratio at birth averaged around 107 boys for every 100 girls. Ten years after the policy’s adoption, the ratio reached 115 boys for 100 girls and may exceed 125 in some provinces, reflecting the strong preference for sons, especially in rural farming areas. China’s unusually high sex ratio at birth indicates extensive use of sex-selective abortion. The number of young males unable to find brides is estimated at more than 25 million.
The critical factor determining China’s future population is the level of fertility. If China’s current fertility of about 1.6 births per woman were to remain constant, its population would peak at 1.44 billion in a dozen years and then begin declining, reaching a population of 1.33 billion by mid-century and 868 million by the century’s end.
In addition, maintaining current fertility levels would reduce the proportions of children and the working-age population and nearly triple the proportion of elderly to 25 per cent. As a result, China’s current potential support ratio of 8.3 working-age persons per retiree would fall to 2.5 persons per retiree by mid-century. China’s fertility could also decline further, perhaps approaching low levels of Germany, Hong Kong, Italy and Japan. Further reduction in Chinese fertility to 1.3 births per woman – the low variant – would accelerate population decline, shrinking labour force and ageing, with China’s population peaking at 1.40 billion by this decade’s end, then declining to 600 million by 2100. In 50 years, one-third of the population would be elderly and the potential support ratio would fall to an unprecedented 1.6 working-age persons per retiree.
Estimates by Chinese officials, however, suggest the relaxation in policy may lead to an increase of up to 2 million births per year, possibly a 10 per cent increase – increasing the fertility rate from 1.6 births per woman to about 1.8. With such a rise in fertility, China’s population would peak at 1.45 billion in 2030 and then decline to around 1 billion by the century’s close. Again, the population would continue ageing, the elderly accounting for one-quarter of the population by 2050, and the potential support ratio falling to 2.6 working-age persons per retiree. If China decided to further relax to a “two-child policy”, the number of additional births might reach 5 million annually, with the fertility rate perhaps rising to replacement level. Under the instant replacement scenario, China’s future population does not decline, but stabilises around 1.6 billion by mid-century. The Chinese population, however, would still age, with the proportion elderly increasing to a fifth and the potential support ratio falling to three working-age persons per retiree.
If China ended the one-child policy altogether, future fertility could, although improbable, exceed the replacement level. For example, if Chinese fertility increased to a quarter-child above replacement, the high variant, China’s population by the close of the century would be nearly 1.8 billion. China’s population would not attain stabilisation, but would continue growing at about 0.5 per cent per year, an annual addition of 8 million Chinese.
In addition to increasing fertility, the relaxation of the one-child policy may improve China’s gender imbalance at least at birth. With more couples allowed to have a second child, the effects of the son preference on the sex ratio at birth should, in principle, be reduced. Also with the changing role and status of women in China, attitudes toward raising daughters are becoming more favourable. China may follow the pattern experienced in South Korea, where high sex ratios at birth declined to normal levels. Even if this does occur, the overall Chinese gender imbalance would remain for many decades.
No doubt uncertainty exists about the precise demographic impact of the most recent relaxation of China’s one-child policy.
Even if China were to experience a baby “boomlet”, the country would continue to age, its labour force shrink and its gender imbalance persist for generations. Also, while a rise in the birth rate would increase the demands for housing, education, food, care and related services, at least two decades would pass before the boomlet babies entered the workforce and paid taxes. Moreover, the favourable demographic dividend of many workers and few elderly that benefited China’s economy since 1980 is coming to an end. Soon the numbers of working-age Chinese per retiree will fall to levels of more developed countries. Although China had hoped otherwise, increasingly it appears the population will become old before it is rich.
Finally, irrespective of China’s decisions to relax its one-child policy, fertility is not likely to increase markedly in the foreseeable future. Major forces pointing to continuation of low Chinese fertility include increasing urbanisation, smaller and costly housing, expanding higher education and career opportunities for women, high financial costs and time pressures for child-rearing, and changing attitudes and lifestyles. China may soon discover, as many countries have concluded, raising low fertility rates is more challenging than reducing high fertility.
Joseph Chamie is a former director of the UN Population Division.