A medical worker cares for a newborn baby lying inside an incubator at Jingzhou Maternity and Child Health Hospital on the eve of Chinese New Year, the year of the ox, on February 11 from 2021 in Jingzhou, Hubei Province, China.
Huang Zhigang | Visual China Group | Getty Images
BEIJING – Chinese policy on the only child for decades has gained renewed attention in recent weeks, after authorities gave mixed signals about whether they were closer to abolishing the limits on the number of children they may have.
Authorities have backtracked on the one-child political controversy in recent years to allow people to have two children. But economists say other changes are needed to boost growth as births fall and China’s population ages rapidly.
“There are two ways to approach it. One way is to relax birth control, something (that) will help on the sidelines, but even if they completely relax control (it’s) probably hard to reverse the trend,” he said. dir Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“The other way to deal with it, from an economic policy perspective, is to make the industry more dependent on other sectors,” he said.
The Chinese economy has relied heavily on industries such as manufacturing that require large amounts of cheap labor. But rising wages make Chinese factories less attractive, while workers will need superior skills to help the country become more innovative.
The biggest problem for China is that an aging population is fueling an existing issue: slower growth in labor productivity, said Alicia Garcia-Herrero, chief economist at Natixis in Asia-Pacific. It is looking to see if China will grow more in capital-intensive sectors, which is more based on investment in automation.
Births will fall by 15% in 2020
China introduced its one-child policy in the late 1970s in an effort to curb population growth. According to official figures, the country had doubled in size, from more than 500 million people in the 1940s to more than a billion in the 1980s.
Over the next 40 years, the population grew by only 40%, to 1.4 billion, more than four times that of the US today.
I don’t think the relaxation of birth policy can have a big economic impact because the slow population growth has not been due to policy restriction, not in the last 20 years.
Dan Wang |
chief economist, Hang Seng China.
Similar to other major economies, the high costs of housing and education in China have deterred people from having children in recent years.
Despite a change in 2016 that allowed families to have two children, births fell for the fourth year in a row in 2020 and fell 15% to 10 million, according to the analysis of a public safety report.
“Overall, I don’t think the relaxation of the birth policy can have a big economic impact because the slow population growth has not been due to the restriction of the policy, not in the last 20 years,” Dan said. Wang, Shanghai. -Economist in chief at Hang Seng China.
He said that, based on the experience of other countries, the most effective policy for a country the size of China would be to accommodate more migrants, but that would be an unlikely change in the short term.
Other options that policymakers are already pursuing are raising the retirement age, raising the skills of the existing workforce with more education, and using more machines and artificial intelligence to replace human workers, Wang said.
Policy change is only a matter of time
The one-child policy gained attention last month when the National Health Commission released a statement authorizing the investigation into the economic benefits of removing birth restrictions in the Northeast region. The three-province area, known as Dongbei, has struggled economically and has the lowest birth rates in the country.
Two days later, the commission issued another statement saying the news was not a test for the total repeal of family planning policy, despite the numerous online speculations in question.
But removing the limits is likely only a matter of time, according to economists interviewed by CNBC.
Yi Fuxian, a one-child policy critic and author of the book “Great Country with an Empty Nest,” said he expects a decision by the end of the year, after China publishes census results once every ten years . April.
Challenges of the aging of the Chinese population
The Chinese government has also said that implementing a strategy to respond to the aging population will be a priority for its next five-year plan, which will be officially approved at a parliamentary session starting this week.
Meanwhile, generations born before the implementation of the one-child policy in the 1980s are becoming an important segment. In the next ten years, 123.9 million more people will fall into the age category of 55 or older, the largest demographic increase among all age ranges, according to Morgan Stanley.
This demographic change will create its own economic demands, said Liu Xiangdong, deputy director of the economic research department of the China-based Center for International Economic Exchange in Beijing.
Liu said more workers will be needed to care for the elderly, while retiree communities and other infrastructure adapted to a larger population will have greater demand.