Chinese Media Foreshadows End of Family Planning Policies

China’s state-run media was keenly interested in a Monday column from Bloomberg News reporting that Beijing is thinking about scrapping its 40-year-old family planning policy and allowing Chinese citizens to have as many children as they want.

According to Bloomberg, China’s State Council – roughly equivalent to a presidential cabinet – is researching the repercussions of lifting the restrictions on family size and could announce the end of birth limits as early as the fourth quarter of 2018.

One of the sources for the report said China’s leadership “wants to reduce the pace of aging in China’s population and remove a source of international criticism.”

In other words, China is embarrassed by international criticism of its authoritarian policies. Also, as a subsequent Bloomberg op-ed put it, “China doesn’t want to become the next Japan.”

Japan is coping with a demographic collapse unlike anything seen in the modern era, and possibly in all of human history. The situation has produced social oddities like childless couples buying robot babies, plus policy nightmares about a dwindling workforce unable to sustain the economy or provide for the elderly.

China’s demographics are not in such dire shape, but the population is aging and the working population is contracting, which are obstacles to the bold economic agenda Beijing has sketched out. As Daniel Moss explained for Bloomberg News:

China’s economy has evolved too far to be carried by cheap manufacturing. The nation’s share of the global textile and clothing industry, for example, is waning, and wages are increasing, as reported by the South China Morning Post. (Westerners can check the labels next time they’re shopping for clothes: many will say they were made in Vietnam, Pakistan or Indonesia.) China’s graying and diminishing workforce is part of what’s driving this. It’s also driving Beijing’s investment in fields like robotics and new-energy vehicles — a new model for the nation’s shrinking workforce.

While China tries to alleviate its demographic crunch, the aging society means a pension shortfall. Contributions from Chinese workers no longer cover retiree benefits, forcing the state to plug that gap. That adds urgency to Beijing’s efforts to rein in burgeoning corporate debt, given the government will need to fund its own deficits. That may also partly explain why China is keen for foreigners to step up their participation, ever so gradually, in the country’s bond markets. China’s capital markets, as I have written, are small relative to, say, the U.S. when you consider the size of China’s overall economy. China will need to develop those, too.

The Chinese market is so confident that population controls will be removed that stocks for companies that make maternity equipment and child care products soared on Tuesday. In fact, according to Bloomberg’s sources, the only real holdup in the State Council is concern that lifting the current restrictions on family size will not do enough to reverse the fertility nose-dive created by decades of harsh controls. When the one-child policy was relaxed to two children in 2015, birth rates only ticked up slightly, and then actually declined last year.

China’s government-run Global Times cited the Bloomberg report on Tuesday and noted the bureaucracy has already begun renaming its birth control agencies and removing references to “family planning” from reports. As demographer Huang Wenzheng put it, “Population will no longer be regarded as a burden but as precious human resources.”

Huang acknowledged that renaming a few agencies and letting people know they won’t go to prison for having three kids won’t be enough to reverse the decline:

Fewer Chinese families nowadays are willing to have three or more children. People in the cities already regard one child as enough, he said. Rural families are also increasingly falling in line with this thinking, he noted.

China’s population is expected to dwindle by as much as 800,000 a year in the next decade, Xinhua reported.

China must offer policies that promote more births, Huang said, such as reducing income tax for high-income families, subsidies for low-income families and free nursery and kindergarten care for newborns.

Another Global Times piece saluted the one-child policy as a roaring success – just think of all the environmental damage avoided! – but admitted it is tough to dominate the future of the world without lots of young people:

The old view holds that population is a burden, and when resources are limited, controlling the population will help reduce the pressure on resources, employment and economic development. China’s family planning policy, introduced in the late 1970s, is estimated to have prevented some 400 million births, reducing pressure on resources and the environment. After decades of rapid development, China has transitioned from a closed planned economy to an open market economy, in which further development is increasingly driven by innovation.

People, especially young people, are a source of creativity. It’s believed more people will create more opportunities and inspire more exuberant creativity.

Nowadays talent is being highly sought after by Chinese cities with an eye for further development. This indicates the idea that population, especially talent, as a resource has been widely accepted by local governments and society.  

A huge population not only provides a bigger pool of human capital, but also creates demand and spurs greater consumption. The sheer size of China, a huge country with a population of over 1.3 billion, is one of China’s core advantages.

“The potential of China’s development lies in giving full play to the advantage of the population, improving the quality of the people and promoting mass production and mass consumption. Chinese policymakers have been fully aware of this,” the editorial concluded with confidence.

The key problem lies in demographer Huang’s comment about upwardly mobile Chinese concluding that one child is plenty. Many other industrialized nations are having the same demographic problem, often because people are marrying later in life, so they have less time to cultivate large families.

This is problematic because population growth requires a large number of couples to have three children or more. China’s added challenge its that its people have been taught for generations to believe that large families are an unacceptable burden to the state and Mother Earth. That kind of social engineering is so difficult to reverse that Beijing might fear the embarrassment of announcing fully liberalized family policies without any great increase in the fertility rate.