China's demographic future
- By Dan Steinbock
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E-mail China.org.cn, November 3, 2015
Toward a new policy
In early 2013, I argued that Chinese population trends were at a crossroads. A year before, the working-age population (15-59 years) registered a decline, dropping by 3.5 million to 937 million. I believed that China needs a new demographic future because the realization of population policy shifts takes years and China's economic growth is becoming reliant on human capital.
The first policy change came in November 2013, when China relaxed its one-child policy. Now families could have two children if one parent was an only child. In practice, the revision applied primarily to urban couples, since there were few rural one-child families.
Nevertheless, while 11 million couples in China were allowed to have a second child, barely one million couples applied to have a second child in 2014; less than half the expected figure of 2 million per year. Only half of eligible couples wished to have two children, mostly because of the costs associated with the second child.
That led the government to abolish the one-child policy in October 2015, allowing all families to have two children. The new objective is to cope with an aging population and "to improve the balanced development of population."
More reforms needed
Population growth rate in China peaked at 2.8 percent in the mid-1960s. By 1981, it had been halved to 1.4 percent and today it is close to 0.4 percent. In the process, median age has almost doubled from 22 years to almost 36 years. To cope with such trends, much more is still needed.
· China could consider "pro-natalist" policies that support human reproduction with incentives (a one-time baby bonus, child benefit payments or tax reductions, paid maternity and paternity leave, etc).
· China can promote pro-growth policies by raising the retirement age, increasing the share of the working force and accelerating retraining.
· China could contain cruel traditional cultural norms, such as son-preference bias, which continue to prevail, while casting a dark shadow over the realization of women's true potential.
· While the return of high-skilled Chinese Diaspora is already promoted, along with green card schemes to foreign talent, China could accelerate more comprehensive skill-based immigration.
Like many other economies, China needs fewer old people, more women and young people. What makes China different is not the kind of demographic challenges it has to cope with, but their magnitude - which is a legacy of the one-child policy.
Unlike most countries, however, China's government has a more consequential role in the economy. Beijing could seize that role and push bold policy experiments as long as they emulate the wishes of the Chinese people and long-term growth prospects.
The author is a columnist with China.org.cn. For more information please visit: http://www.jhzsvip.com/opinion/DanSteinbock.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
