Will the two-child policy save China from its demographic destiny?

The lukewarm response to the change in policy suggests Beijing may have significantly overestimated people’s desire to have a second child.

In 2040, the world’s second largest population after India will be Chinese pensioners, numbering 400 million people, about the same size as the populations of the US, Britain and Australia combined. 

The proportion of people aged 60 or above will increase from one seventh of China's population to about one quarter within the next two decades. This will significantly increase the dependency ratio of the country as the proportion of working age people declines.

In 2012, China’s labour force declined for the first time in the country’s history, and the number of working age people shrank by 3.45 million people.  It is estimated that the number of working age people will decline by as many as eight million people a year from 2023 onwards as the country becomes increasingly grey.  (Is a labour shortage looming in China?, February 21.)

While the Chinese population is becoming older, the country’s women are not giving birth to enough babies to rejuvenate the population. China has one of the lowest birth rates in the world. In 2011, the birth rate was only 1.04 and it was just 1.18 the year before, according to data from the National Bureau of Statistics.

The birth rate in China is less than half of the world’s average and significantly below the fertility replacement rate of 2.2, which the country needs to maintain its current level of population. Models tells us if the current trend persists, China’s population could shrink by as much as one third between 2030 and 2070.

One of the main, if not principal, culprits for China’s dangerous demographic decline is the country’s notorious one-child policy. The country’s fertility rate been declining since the 1970s, when the policy was first introduced.

The one-child policy has left the country with the so-called '4,2,1' population structure, four grandparents, two parents and one child since the 1990s, leading to fewer workers and a lower fertility rate.

Having realised China’s dire demographic situation, Beijing decided to significantly scale back the one-child policy in November last year. Is it too late to reverse the damaging trend, and do people actually want to have more than one child?

Under the new policy, there are between 15 million and 20 million young people in China who are eligible to have a second child and of those people, between 50 and 60 per cent want to have a second child, according to a survey conducted by China’s Family Planning Commission.

Leading Chinese demographers, such as Cai Fang from the Chinese Academy of Social Sciences, predict the policy change will lead to a significant improvement in the country’s terribly low fertility rate. Cai believes the birth rate will bounce back to 2.4 if the change in one-child policy is implemented immediately. Even a gradual implementation would lead to a much healthier figure of 1.8, according to his interview with Caixin.

However, the reality on the ground is much less optimistic than what scholars are predicting. For example, Zhejiang province has a population of 54 million people, with a birth rate of 1.02, and it is one of the first local governments to scale back the draconian one-child policy.

If Cai’s prediction is right, there should be 360,000 new babies born in the province this year. However, only 27,549 eligible couples applied for approvals to have a second child by March 31, according to Caixin. In Jiangxi, a province of 45 million people, only 3,477 eligible couples applied to have another baby, according to Jiangxi Daily

In Sichuan, the country’s most populous province, with more than 80 million inhabitants, 28,464 couples applied and only 5,530 of the applications were approved. In Chongqing, a mega-city in the southwest, only 6,780 couples applied, and 4,431 received approval.

In Beijing, Shanghai and Tianjin, three of the largest, most affluent cities in China, with the lowest fertility rates, only 2,300, 1,730 and 3,985 couples lodged their applications with the family planning authorities, according to a detailed investigative report by Caixin.

The lukewarm response to the change in policy shows that the government has significantly overestimated peoples' willingness to bear more children. The early data is particularly concerning given that people are expecting more couples to apply for permission to have more children in the first few months after the change in policy.

Preliminary results show that the change in the one-child policy will not result in a significant improvement in China’s dire demographic challenge. It looks like Beijing’s change of heart is too little, too late. China’s highly effective family planning policy is starting to look more and more like a case of winning the battle, but perhaps losing the war.