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The impacts of China's 4 decade long one child policy on the economy


China, with the largest population in the world of 1,407,098,834 has now begun the attempt to reduce the impacts that the one-child policy has brought.


From 1980, China's Government implemented legislation restricting families to one child in order to prevent the rapid and unsustainable population growth it was witnessing. Although there were exceptions to the law, for example, rural families may have two children if the first was a girl, strict fines and penalties for those who broke the rules were in place.


Although the measures were seen as draconian and a violation of human rights, China's fear of overpopulation was valid. When the population expands rapidly, the growth and development of resources available cannot keep up. This results in shortages. Furthermore, the high level of consumption often contributes to ecological degradation and a much higher risk of large scale disasters like pandemics.


Recently, in 2015, China changed the restrictions to a 2 child limit, and in 2021 raised it to a 3 child limit.


These moves were in response to the ageing work population caused by the limitations.

There is a growing imbalance between working age and elderly people. This is known as the dependency ratio.

In the years to come, welfare systems may be overloaded as the number of elderly retired people that are dependent on them is too large.


Furthermore, the disparity in ages may dampen economic growth. Although these impacts are difficult to measure, estimates imply that 10% growth in the population aged 60 and older decreases growth in GDP per capita by 5.5% (Maestas, Mullen, and Powell 2016, 5).

This is because, when the population becomes older, there is less input into the economy of new ideas and technology (Maestas, Mullen, and Powell 2016, 7). Economic output decreases, thus causing a dampening of economic growth.


Even with the lifting of population restrictions, many families are still reluctant to have any children. This has resulted in 5 years of consecutive decline in the number of births (Mistreanu 2022). Last year, China's birth rate dropped to a record low of 7.52 per 1,000 people. For reference, the Uk has a birth rate of 11.4 births per 1,000 people (“UK Birth Rate 1950-2022 | MacroTrends”, n.d.).


China's population is estimated to start shrinking in 2022, but many experts say this seismic turning point has already occurred.


In an attempt to begin the increase in China's population, the Government has been trying to boost birth rates through subsidies and bonuses. Beijing has been corralling local administrations and businesses to encourage families with incentives ranging from baby bonuses to discounted mortgages. Dabeinong Group, an agricultural technology company has even begun offering new mothers leave for up to 12 months (the Government currently gives 98 days).


China's most recent and extreme policy is banning private tutoring of core school subjects that has grown around its public education system. This will have a huge impact on the currently large industry as, in 2016, at least 75% of students were tutored outside of school (Dangor and Forbes 2021). The policy intends to reduce inequality within education and lessen a key source of financial stress that comes with having children.


However, these attempts by the Government fail to combat the social and cultural issues that have a limiting factor on birth rates. Many women feel that there is little reward from having children when taking into account the additional child care and housework that is often expected of them.


Young women are even deliberately avoiding marriage as they feel that, in China, “it's just suicidal”. With there being ‘such a terrible environment and social setting’ for marriage in China, young women feel that marriage is ‘taking a huge risk, and entering a gambling game that you are very unlikely to win’.


Therefore, if China wishes to turn the tide on population decline and falling economic growth, the cultural issues ingrained in Chinese society from Chen Yun's one-child policy in the 80's must be reversed.

 

Written by Charlotte Hurst



References

Bish, Joe. 2020. “Overpopulation: Cause and Effect.” Population Media Centre. https://info.populationmedia.org/blog/overpopulation-cause-and-effect.

Dangor, Graison, and Forbes. 2021. “Forbes: China Bans For-Profit Tutoring In Reforms Aimed At Boosting The Birth Rate.” China Bans For-Profit Tutoring In Reforms Aimed At Boosting The Birth Rate. https://www.forbes.com/sites/graisondangor/2021/07/24/china-bans-for-profit-tutoring-in-reforms-aimed-at-boosting-the-birth-rate/?sh=27c57eb353a5.

Maestas, Nicole, Kathleen J. Mullen, and David Powell. 2016. The Effect of Population Aging on Economic Growth, the Labour Force and Productivity. N.p.: RAND Labour and population.

Mistreanu, Simina. 2022. “As Chinese shun parenthood, firms dangle bonuses, loans and leave.” Al Jazeera. https://www.aljazeera.com/economy/2022/1/26/as-chinese-shun-parenthood-firms-dangle-bonuses-loans-and-leave.

“Three-child policy.” 2021. Wikipedia. https://en.wikipedia.org/wiki/Three-child_policy.

“UK Birth Rate 1950-2022 | MacroTrends.” n.d. Macrotrends. Accessed January 26, 2022. https://www.macrotrends.net/countries/GBR/united-kingdom/birth-rate.

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