A recent Reuters article discusses rumors floating around that China may finally end the One-Child Policy that has been implemented for over 30 years. The rumors apparently started when President Hu Jintao was quoted as saying “maintain a low birth rate,” alluding to a possible easing of child restrictions.
Economists have been arguing for years that the one-child policy has thwarted economic growth and been the source of social problems. They expect the policy has been the reason for high savings rates among individuals and forecast a sharp decline in the labor force beginning in 2025. The policy is also to blame for a drastically skewed gender ratio, a primary attributor to social instability.
Fortunately, however, there are plans to begin ‘pilot’ programs that would gradually ease the policy in several regions.
I found what Tian Xueyuan said about the policy to be particularly interesting. He said, “It’s a special policy with a time limit, specifically, to control the births of one generation…” If that was the goal of the policy, then the goal has already been achieved. I also thought the part about how the cost of raising a child is so high, that even if people had the option they still would only have maybe 2 children. There seems to be little need for the policy now, especially when considering the economic and social problems it causes. As mentioned in the original post, adults are saving more money for retirement, meaning less money is being spent in the economy. Similarly, the working age population fell for the first time ever. That is only going to get worse as more older people retire than younger ones come of age. The social problems are important too. Due to the fact that most chinese families prefer boys, the ratio of boys to girls is getting progressively more skewed towards boys. This will cause social unrest once these boys reach the age to get married. There simply won’t be enough females available. Another social issue is abortion. The article mentions that a pregnant women was forced to abort her 7-month old child.
We need to ask why a woman targets a specific number of children, and hence why the desired number may shift over time. On the benefit side are the parental instinct (and other psychological aspects), social benefits (if any!), child labor, and a form of savings-cum-investment for old age. On the cost side would be education and marriage [the latter for farm households], other out-of-pocket expenses, and the opportunity cost of a mother’s time. With the decline of agriculture (and compulsory education) child labor is now [comparatively] unimportant, and the growth of financial markets provides alternatives to investing in children while migration makes children less reliable. On the cost side, education is expensive, and women’s opportunities are vastly greater. Other out-of-pocket costs may or may not have risen (though it’s risen in absolute terms, food as a share of income is likely down) but my sense is qualitatively they are less important. So the net is a sharp drop in the targeted number of children, such that averaged across the population the one-child policy is likely not a binding constraint, though it will be for some individual households.
The policy is also leaky — enforced in some places, not in others — and has lots of exceptions (farm households with a daughter can have a second child, recognized minorities can have multiple children, and now families where both parents are only children can have a second child).
We’ll look at the “demographic dividend” (or rather, the two dividends) later this term. We’ll argue that in the short run (40 years or so) a drop in fertility has distinct benefits for a society.
I agree with the professor’s opinion on the factors for one-child policy. Just another observation based on my personal understanding of China: In China, (almost) regardless of whether a person is from the country side or big cities, as a young man, his parents need to provide housing for marriage. Thus, especially for population living in relatively large cities, with the price increase of housing, it has become a pain for the man’s family to support housing when the son gets married. With the one child policy, it might be easier, but think about having 3 sons (and don’t forget, Chinese views guys as more precious than girls since they are the major work force in agriculture), how can a family from large cities support not only education but also real estate for all of them? Thus, even though it’s considering a loss of human rights and many people don’t agree logically, in reality, families would rather have one child to support. It would be interesting to see whether there will be a child boom after the government gets rid of the policy.