Be Careful What You Wish For – China’s Population Policies

It is well known that China has long faced ‘over-population’ and that the government has instituted policies to curb population growth; the most famous of which has been the ‘one-child’ rule instituted in 1979. While this policy has accomplished its specific purpose of lowering the current population by an estimated 400 million people, it has also brought many unforeseen complications. China is now faced with an aging population and an unbalanced gender ratio – problems which have serious long-term economic and social implications.

The negative effects of an aging population will be two-fold – First, as the workforce shrinks due to retirement, economic growth will be curbed. Secondly, the growth in China’s dependency ratio (the # of people too unable to work/# of people of working age) could cripple China’s (already limited) social service programs.

Many economists attribute China’s unmatched population growth to its seemingly limitless supply of labor. As the Chinese workforce ages, it will be increasingly difficult for China to sustain the level of economic growth that it is currently achieving; growth tends to slow as a country’s population ages

Currently, only city dwellers are covered under China’s pension laws. Meanwhile, rural elderly must depend on children for support, it’s one of the reasons that these families are allowed to have more than one child. It is estimated that by 2050 the dependency ratio in China will be .70; this means every 10 Chinese workers will have to support 7 people who cannot work.

Because most Chinese families, especially in rural areas, see females as liabilities – many are aborted before birth. Government statistics show that currently, there are 117 boys born for every 100 girls in China (well above average for industrialized nations.) Obviously, this is going to make it harder for men to find women to marry as time moves on. The frustration that this causes could lead to great civil unrest; it could also lead to population migration, as men feel the need to find marriageable females in other cities or countries.

China has only recently taken notice of the problems and begun to institute change; however, the government refuses to scrap the ‘one-child’ program. Even if it does ease the policy, it would not have much affect, as children can be too large a burden for the typical Chinese family to handle. Some of the fixes that China is implementing include offering subsidies to families that have female offspring, offering subsidies to rural families that have more than one child, educating the population about the benefits of having female children, and becoming aggressive in seeking returns on pension fund management.

China is facing quite a paradox – the population growth that drives their economic growth is also overpopulating their cities. They cannot avoid this problem, their population has to peak at some point and their economic growth (at least that attributed to labor) will slow. They can counter this effect by focusing on technology and capital expenditures that will provide an infrastructure for growth that will not rely so heavily on labor. As far as the gender ratio is concerned, the government must convince the citizenry that females are not a liability especially as the Chinese economy continues to modernize. Instilling faith that the subsidies will be consistent and reliable for the long-term will also help the Chinese people change their perception.

Submitted By Felipe Hernandez

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11 Responses to Be Careful What You Wish For – China’s Population Policies

  1. Chris Carr says:

    Good post. This is a significant social, political and economic issue in China.

    As I understand it, the “one child” policy was actually enforced pretty strenuously in rural areas, where a heavy tax was placed on families that had a second child. Bearing the cost of paying that same tax in urban areas was economically more feasible. The purpose of “one child” policy was to slow population growth to a level that might be sustainable given the national natural and industrial resource base.

    The male bias is largely due to the lack of a pension/retirement system. Traditionally Chinese women became part of their husband’s family, and during old age it is that familiy that takes care of the “grandparents”. So, imagine the social strain when you can only have one child without a significant financial penalty, and if that child is a little girl, you have no prospects for an extended family who will care for you during old age, and no “retirement” plan or social safety net.

    Some of this is being thrown into the wind with urbanization, and with migration of many young people to the coastal areas where there are a lot more opportunities. This extended family dislocation may be at least as big a social problem as is the comparative shortage of women as marriage partners during the next 10-20 years.

    Here in the US we are going to face some issues that are related to the Chinese problem with retirement and pensions. Our society is somewhat unique in the way that both health insurance and retirement pensions have often been linked to employment. Now we see that health care during retirement is harder to secure, and that prior agreements on health care benefits and retirement plans are being jettisoned.

    But here is the important point that I would like you all to think about — will economic success in the future go to those nations (USA, China, or others) that are most effective in sorting this out?

  2. James Sun says:

    I’m assuming the author got most of the info from http://www.slate.com/id/2137680/ – in which case, I think a comparison between China’s population struggle with the US Social Security reform is necessary. The article talks only about cheap labor, and mentions the billions of dollars of FDI – yet, it does not acknowledge that the FDI is in place to improve technology and efficiency.

    My point is that yes, China’s population issues are a cause for concern, but I think it will cause more social unrest than economic. Many articles have already talked about Vietnam and other countries as being better than China for cheap human labor. One would hope that with all the money from foreign investments being poured into China that it would increase per capita GDP, and the standard of living would improve for Chinese citizens.

    I believe Dr. Carr and Dr. Wu talked about the male/female gender ratio unbalance before, and I think that is a bigger concern for the Chinese government.

  3. Patrick McGuire says:

    This reminds me of an article I read the other day about China’s recent “one-dog” policy crackdown. In addition to the one-child policy, China is now limiting dog ownership in the cities to just one small dog–large dogs are banned.

    They are doing this under the guise of limiting rabies but there is also clearly an aim of limiting overcrowding. As Felipe pointed out, having such a large population may be contributing greatly to China’s rise as a manufacturing power but now China encounters challenges in maintaining the resources necessary to support that population. Another article posted on here pointed out that development is encroaching on the 6% arable land the country has availabsuch a large population could be a benefit for the Chinese economy but it comes with consequences. China is now struggling with the balance between increasing productive population andle to feed the population. Increased population brings along increase in pets (and the diseases they can carry), pollution, traffic, and other strains on resources that China is now trying to control. All these problems fall under the greater category of sustainability.

    Coming off Professor Carr’s question, the US also faces these strains and is trying to strike the balance between productivity and sustainability. On the other hand, China comes at the problem with the attitude that the US had a headstart in using resources without regard for the consequences. They feel it would be unfair for them to now have to try to catch up without the same ability. China now faces the difficult question of whether to let its economy run unhindered or to work toward the same balance the US now seeks. I think this will be a determining factor in whether China or the US will achieve stronger economic gains. In the long-run, I think sustainability is an inevtiable battle (both politically and economically) and China will be on the tail-end if they choose to overlook it for short-term gain.

  4. Katie Hofman says:

    I find the conversation about the “one-child” rule interesting because it forces me to think about my own personal views and the implications of those views. Feeling, as I do, that there are more than enough people in the world, at first glance the “one-child” rule makes sense in a country that was faced with more citizens than natural and economic resources could support. Almost 30 years later, though, the long-term costs to the plan are becoming realized. The lack of balance in age groups/labor forces will have a lasting effect on China, especially as it pushes to becoming a front runner in the global economy.

    I also wonder what the psychological impact will be and how to address it. When only allowed one child, does a family choose the first one they are naturally given, or do they abort in hopes of having their one child be a boy. I am referring to Dr. Carr’s statement that boys provide more long-term financial security for a family. It is too simplistic to pass judgement on a family who chooses to have their one child be a boy, at the expense of a female’s life. “There, but by the grace of God, go I.” What would any of us do? If we lived our whole lives in a poor, rural area of China, and we know we are only allowed one child and that a girl could lead to more financial hardship than we can afford, what would we do?

    What can China do, then, to change the circumstances for those in rural Chinese communities? One answer, as Felipe mentioned, is to provide extra subsidies for those who have girls. There is also the option of increased educational programs on ways to save and support oneself without the reliance on children (though this would also entail changing an embedded cultural tradition). It may also happen, though, that the Chinese people would regulate the population on their own if the “one-child” rule was lifted, and, simultaneously, jobs were created that provided wages that could support a family with money left over to save for the future. In the United States, when children were needed for labor, financial support and future security there were more children in each family. As those reliances on children diminished, so did family size.

    My final point is that, I don’t know that it is the country that figures out how to take care of its aging citizen population that will rise to the top. Instead, I think it is the nation that provides for its citizens in a way that the citizens feel a loyalty to maintain the country’s economy and push it forward that will succeed. One cannot start to think outside of oneself, until basic needs for food, shelter and security are met. It is the nation that can secure those basic needs for the majority of its citizens that will see its citizens working for the betterment of that nation.

  5. Stacey Westenberger says:

    Although China’s population has proved to be a positive factor in its race to economic power through labor force, ironically it’s an adversity in its sustainable development. At first glance, it was viewing China’s population as a problem, which brought about the ‘one child’ rule. There are many social and ethical issues to discuss regarding the ‘one child’ rule, but also many economic concerns this rule has created. Focusing on the economic issues, as Patrick stated, the greater issue is sustainability. Looking at economic sustainability, the decreasing labor force will require technological advances to allow for the lack of physical workers. Just as the developed countries have migrated from human labor force to a more mechanized version facilitating less work force and more capital investment, I would assume China would take a similar path. As eluded to in the “China Rises” video, the history lesson, and IP theft lecture, China does not plan to remain a human capital economic power. China’s goal would be to learn first the process of making the products, and then through education and expertise become the inventor of the product. While mastering the production process, the Chinese are simultaneously learning western business practice, strategically staking their position in the economy. As seen in their emphasis on education and learning, China is not trying to produce more workers, but producing “knowledge” workers. They want to own Chinese businesses that do international work rather than work for foreign companies in China. Looking at their goals for the future, strategically combined with the declining work force could help alleviate one part of China’s population problem. However, issues with social program and uneven population distribution will still need to be innovatively addressed. Judging from the same situation the US is currently facing, China will be unable to look to the west for positive advice.

  6. Erik says:

    Here’s an interesting article (leads to the NYTimes – you may need a subscription: http://tinyurl.com/vkymu) about a curious side effect to the population issues in China. We’ve seen or heard about the one-child rule causing the male/female balance to be tilted towards the male since the male can traditionally yield a stronger retirement plan for the parents. Read this article and you will see where this historical trend is turned upside down and daughters can be worth more to their family – unfortunately it only applies to deceased females.

    One important takeaway from this article is what we see as a recurring theme in this blog and from the speakers we have heard from so far in our preparation – “American” cultures and “Chinese” cultures can be vastly different – but it doesn’t make one or the other correct. What we may consider gruesome may be normal and vice versa.

  7. Chris Carr says:

    Great article! I bet the anthropoligists love this kind of human behavior.

  8. Steve Feng says:

    I think the ‘one child’ policy is steadily becoming out of date. The most current literature is split. On one hand, critics argue that this ‘one child’ policy is being strictly enforced, while other critics suggest the ‘one child’ policy is past history. There is no doubt that this policy willl be detrimental to the social order. Most children will no have siblings, aunts, or uncles. What will all these single men do? History suggests that military departments have increased as a result of high male to female ratios. If these trends continue, China will evolve with different social order. There are many different implications, and many have been addressed.
    With respect to the discussion of the increasing ratio of retired workers and workers in China and US, this will be a challenging issue for both countries. Clearly, the baby boomers and people retiring at age 55 will be a struggle for our nation. For the government, we may have serious problems. Trends suggest social security will not last for our generation. I think that both China and US are in trouble. Although both nations are extremely hard working, these social and economic issues will not be recoverable. Unless some president substantially changes policy, social security will continue to be a problem. Although we have seen GM come out a slump after the media announced that their pensions to employee ratio was high.

  9. Steve Feng says:

    I think the ‘one child’ policy is steadily becoming out of date. The most current literature is split. On one hand, critics argue that this ‘one child’ policy is being strictly enforced, while other critics suggest the ‘one child’ policy is past history. There is no doubt that this policy will be detrimental to the social order. Most children will no have siblings, aunts, or uncles. What will all these single men do? History suggests that military departments have increased as a result of high male to female ratios. If these trends continue, China will evolve with different social order. There are many different implications, and many have been addressed.
    With respect to the discussion of the increasing ratio of retired workers and workers in China and US, this will be a challenging issue for both countries. Clearly, the baby boomers and people retiring at age 55 will be a struggle for our nation. For the government, we may have serious problems. Trends suggest social security will not last for our generation. I think that both China and US are in trouble. Although both nations are extremely hard working, these social and economic issues will not be recoverable. Unless some president substantially changes policy, social security will continue to be a problem. Although we have seen GM come out a slump after the media announced that their pensions to employee ratio was high.

  10. coorie says:

    why china’s economic growth move faster?
    can you give m three point about it?

  11. Chris Carr says:

    Coorie — Thanks for checking in. I don’t understand what you are asking. Please try again.

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