Two-child pol­icy to bal­ance de­mo­graph­ics

5

China Daily (Canada) - - ACROSS CANADA -

The de­ci­sion of the just con­cluded Fifth Plenum of the 18th Com­mu­nist Party of China Cen­tral Com­mit­tee to al­low all cou­ples to have two chil­dren is a his­toric move aimed at tack­ling the chal­lenge of the fast aging pop­u­la­tion that will have a far-reach­ing im­pact on Chi­nese so­ci­ety.

The change in the fam­ily plan­ning pol­icy, ir­re­spec­tive of the con­tro­versy over its tim­ing, will in the long run boost eco­nomic growth. The two-child pol­icy will, first of all, largely neu­tral­ize the prob­lems of China’s de­mo­graphic struc­ture. Over the past three decades, the coun­try’s de­mo­graphic div­i­dend, or a pop­u­la­tion struc­ture with abun­dant la­bor force and a small pop­u­la­tion of aged peo­ple and chil­dren, had been an im­por­tant fac­tor that fa­cil­i­tated the eco­nomic mir­a­cle.

The per­cent­age of China’s work­ing-age pop­u­la­tion started to fall in 2010, while the de­pen­dency ra­tio, or the ra­tio of non-work­ing-age pop­u­la­tion to the work­ing-age pop­u­la­tion, be­gan ris­ing in 2011.

The de­mo­graphic div­i­dend fac­tor be­came fur­ther com­pounded be­cause of China’s low birth rate of 1.18, much lower than that in many Western and East Asian coun­tries. At present, the nat­u­ral growth rate of China’s pop­u­la­tion is about 1.4 per­cent, lower than the pop­u­la­tion re­place­ment rate. As a re­sult, the sup­ply of la­bor force has been de­clin­ing and the pro­por­tion of the aging pop­u­la­tion has been rapidly ris­ing. As such, China would have faced un­prece­dented pres­sure of car­ing for its in­creas­ing num­ber of se­nior cit­i­zens by 2050 had the fam­ily plan­ning pol­icy not been eased.

Also, in the short term, the twochild pol­icy will sig­nif­i­cantly boost the de­vel­op­ment of the ser­vice sec­tor, which, in turn, will guide in­vest­ments to more ef­fi­cient and prof­itable ar­eas. Be­sides, the pol­i­cy­may raise the per­cent­age of new­borns, who in the long run will in­crease the de­mand for and con­sump­tion of hous­ing units by a huge ex­tent.

As the new­borns grow up, their fam­i­lies will spend more on food, cloth­ing, ed­u­ca­tion, med­i­cal care as well as en­ter­tain­ment, and thus boost do­mes­tic con­sump­tion, which is what pol­i­cy­mak­ers want.

More­over, if more cou­ples have two chil­dren, they will help main­tain a cer­tain per­cent­age of young pop­u­la­tion. Only with enough young peo­ple can Chi­nese so­ci­ety truly en­ter a pe­riod of in­no­va­tion, get enough ta­lented in­di­vid­u­als and cre­ate a mar­ket de­mand big enough to avoid fall­ing into the mid­dle-in­come trap.

The two-child pol­icy will serve China’s short-term and long-term in­ter­ests both. As China faces the pres­sure of eco­nomic slow­down in the pe­riod of “newnor­mal”, it has many pol­icy choices. But many of them could hurt China’s long-term eco­nomic in­ter­ests.

There­fore, the author­i­ties should draft the de­tails to im­ple­ment the two-child pol­icy as early as pos­si­ble. More sup­port­ive poli­cies, like pro­vid­ing tax and ed­u­ca­tion in­cen­tives for fam­i­lies with two chil­dren, are needed so that young cou­ples can be en­cour­aged to have a sec­ond child.

The author is a pro­fes­sor on ur­ban-ru­ral de­vel­op­ment at Shang­hai Academy.

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