China’s Two-Child Policy

(Bloomberg) -- Please have another baby. That’s China new message for couples after decades of limiting families to just one child. Why the turnabout? China’s aging. By 2040, projections show that 24 percent of the population will be aged 65 or older, a slightly higher rate than in the U.S. and more than twice India’s share. This threatens an economic boom that’s been built on a vast labor supply. And there may not be enough able-bodied people to take care of all those seniors. So in 2016, China changed its rules to allow as many as two children. But many couples weren’t convinced that two were better than one. So China may remove the limits altogether. 

The Situation

China’s State Council is now weighing whether to end family-size rules. There are growing concerns among policy makers that drastic action may be needed to face a quickly graying society. The nation’s population will peak at roughly 1.45 billion by 2030 and then hover around 1.4 billion until the middle of the century. The International Monetary Fund says that the number of people in their prime working years — ages 15 to 59 — could fall by 170 million in the three decades from now. The aging workforce may already be chipping into gains in productivity, with the increase in China’s output per hours worked at its lowest level since 1999. The lifting of the one-child rule worked at first. The number of newborns in 2016 was 18.5 million, a jump of more than 2 million compared with 2015, though the average number of births per woman over a lifetime, 1.7, was still below the 2.1 needed to maintain a steady population. In 2017, births fell to 17.2 million; China has not released enough data to be able to calculate lifetime births to women for that year. 

China’s Two-Child Policy

The Background

After the creation of the People’s Republic of China in 1949, the government trained tens of thousands of “barefoot doctors” to bring health care to poor and rural areas. The mortality rate plummeted and the population growth rate rose from 16 per thousand in 1949 to 25 per thousand just five years later. This prompted the first attempts to encourage family planning in 1953. Still, total population expanded to over 800 million in the late 1960s. By the 1970s, China was facing food and housing shortages. In 1979, its leader, Deng Xiaoping, decided to limit most couples to just one child. (There were exceptions for rural farmers and certain situations, like when a first child was handicapped.) It worked: The annual population growth rate averaged just 0.6 percent. But to enforce the rules, Human Rights Watch says, China forced women to have abortions. Children born outside the state plan weren’t allowed to have their hukou — a government registration needed to go to school, buy train tickets or find a job. The one-child years left social scars. The traditional preference among Chinese parents for sons caused many parents to abort female fetuses, and the male-to-female ratio reached 120-to-100 in some provinces. The imbalance empowered single women to reject men without money, leaving a generation of single men called “bare branches” because they can’t add to their family trees. In remote rural areas, some men have even bought wives from human traffickers. In early 2018, authorities rescued 17 Vietnamese women and arrested a gang of 60 traffickers who had been selling women in China. The sex ratio for births has been dropping in recent years, though the 2016 figure, 115 boys for every 100 girls, was still above the natural rate of 105 to 100.

China’s Two-Child Policy

The Argument

It could be difficult to persuade Chinese couples to have more children. High living costs, long work hours and surging child-care expenses mean that many couples feel that they can only afford to have one child — or none. A survey by Zhaopin.com, a job recruitment site, found that 33 percent of women had their pay cut after giving birth and 36 percent were demoted. While scrapping the cap altogether to allow more than two children would drive faster fertility improvements, in smaller cities, where couples have been more willing to have second children after the policy change, hospitals and pediatricians have been overwhelmed by the baby boom. Officials might need to build up medical services and schools and work out new tax breaks for families before lifting all family-size limits. Immigration isn’t likely to be an answer, as China has strict limits on foreign workers. Businesses aren’t waiting for the reinforcements. Labor shortages have pushed manufacturers in the Pearl River Delta, China’s export powerhouse across the border from Hong Kong, to invest in automation and robots.

The Reference Shelf

  • National Geographic explained how the one-child policy changed China in charts.
  • Bloomberg News spoke with China’s top demographer, who said the government should allow three or more children.
  • Bloomberg examined China’s widening pension gap.
  • China’s not alone — this Bloomberg QuickTake explains how Japan is handling its aging population.

©2018 Bloomberg L.P.

With assistance from Editorial Board