Revenue from Population Control in China

Published on Author Kit

Shangrila market children [one of the prof's favorite pictures]Chinese family planning laws aim to control population growth with rules that limit couples to 1 child. Certain exceptions are made but such occurrences are rare. Punishment of the laws are enforced via fine. As it turns out, the population control fines have become a notable source of revenue for the provincial governments.

Wu Youshui, a lawyer from the Zhejiang Province, sent letters to 31 provincial governments requesting information on their 2012 family planning fines. Youshui received information back from 19 provinces and the figures are startling. The 19 provinces reported nearly $2.7 billion in revenue from family planning fines.

The family planning laws are intended to control population growth and help keep the economy strong. What is startling is that the laws have turned into quite a lucrative market and are helping the economy in a completely different way. These fines are an important source of income for the governments in the provinces.

Despite being useful for financials reasons, the family planning laws are under scrutiny for several reasons. First, scholars and policy advisers believe government officials are tweaking the numbers and keeping them lower than they actually are. Additionally, economists believe that the birth rate is now too low which will have a negative impact moving forward. The working class is beginning to dwindle in population and without a strong class structure to pick up their slack, China could have new problems.

We have focused a lot of our time in class on Labor and Kapital and the implications of too low a birth rate will be interesting for China.

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3 Responses to Revenue from Population Control in China

  1. Using law to limit population growth is a very controversial topic. The $2.7 billion figure is very startling, and it really is interesting that it has become one of the governments best ways to get money. On top of that, I wonder how many families have more than one child and do not report it. Unplanned births happen all the time, so these types of laws would put even more stress on abortion laws. If a family already has a child and the mother gets pregnant again, then they have a serious problem on their hands. I would like to know if the $2.7 billion figure is so large because of the sheer volume of Chinese families with more than one child, or if the fines are just very pricey. Regardless, population growth is going to be a serious issue for our planet’s future, so it is good to look at how other countries are handling it and what the repercussions are.

  2. Yes, the fines suggest lots of families have extra children. It would be neat if we know how many “extra” children to back out the average level of fines (or, equivalently, the average fine to calculate how many children).

    We’ve not had readings on this (at least yet) but the rule is more like a 1.8 child law as there are many, many exceptions – rural families with a daughter, all ethnic minorities, couples who are both only children.

    Per all of our discussion about decentralization, enforcement also varies widely. I’ve looked for but not yet found anything on the 2010 Census on how many 10 year olds there are versus 1 year olds in the last Census – in 2000 the number was significantly different, though not enough to put Chinese fertility above the “magic” 2.1 level needed for each woman on average to give birth to another woman.

    Finally, I note ex post that this provides a foil for doing an initial discussion of demographic issues in class.

  3. If the one child policy is relaxed further by year end or early 2014 as some sources such as CNBC have reported, I wonder where the government will turn to replace the revenue? Bank of America Merrill Lynch has estimated relaxing the policy would lead to an additional 9.5 million births a year.

    I think the $2.7 billion figure indicates that extra children are sometimes a luxury good or status symbol, if a person can be referred to in such brusque terms. Obviously in certain situations their labor could be as valuable as a fine, but those who could afford it probably don’t need their child’s labor.
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