China’s headline “change” to the one-child policy, which began to be implemented in 1979, is unlikely to fix the demographic problem now upon it, which spells bad news for the Australian economy.
It’s a self-created demographic time bomb that means China will get old — like Japan and Europe before it, but unlike those places this will happen before it gets rich — and the repercussions are potentially frightening. And as China’s economy goes, so to a disturbing extent does Australia’s these days.
The official explanation of the long-awaited change, laid out in the ruling Communist Party’s 13th Five Year Plan (so much for all that recent market forces hype) is that China needs to boost its workforce. That’s true enough, but it won’t help anytime soon.
China’s fertility rate is low, about 1.4 children per woman versus the natural replacement rate (to keep the population stable) of about 2.1. China’s working-age population began declining in 2011, its Statistics Bureau has said.
China’s own government’s demographers have been arguing in favour of lifting the policy for many years, and the change is long overdue. But the country’s demographics are set for the next 15-20 years, which is why the change has widely been greeted with the comment “too little, too late”.
China’s population is projected to peak around 2026 and will be overtaken by India by 2022, according to the United Nations.
In fact, an upsurge in infants being born in the next decade will only increase the burden on a working population that is peaking this year or thereabouts.
This will start to produce a drag on the economy — there will be fewer working-age people to buy goods and services, and wages will be forced up as labour becomes more scarce.
The pool of cheap labour that has been available to underpin China’s manufacturing sector both for exports and domestic consumption will continue to shrink, accelerating the shift of factories moving to countries where labour is both cheaper and the demographics more sustainable — such as Indonesia, Vietnam, India, Bangladesh and Myanmar. The Chinese government will be forced to bolster its flimsy social security system, and such programs do not come cost-free.
But, in truth, an increasing number of Chinese couples were already eligible for an extra child.
The main exceptions were for people from one of the country’s 53 recognised ethnic minorities. Like the notorious yellow and pink stars Nazi Germany used to identify the other in Hitler’s regime, all Chinese people must carry their ethnicity on their identity cards. The payback for being permitted a larger family can be lifelong discrimination in the job market.
But the biggest group of exceptions was the fastest-growing — those couples where at least one parent was an only child.
The reason for this was clear: in a society where the state had removed the social safety net — the once-guaranteed lifetime support from the Communist state known as the “iron rice bowl” — older people were fast running out of family members to support them. A couple composed of two sibling-less children had four parents to look after. The only child of two sibling-less children would potentially have four grandparents and two parents to care for.
But for all this, the Communist Party is still demanding control over women’s bodies. Women could still be forced to have often-dangerous late-term abortions — particularly in rural areas — but for a third, not a second pregnancy.
State-determined family “planning” has also, without doubt, led to an increase in voluntary abortions as parents seek to have boys. Many of these procedures, particularly in rural areas, have been carried out in what Australian would describe as “backyard“ conditions that lead to infertility, disease and death.
The subsidiary effect of this has had wide-ranging consequences, with the prospect of about 20 million Chinese men unable to be matched with a woman of similar age. This has led to a range of consequences, including suicide, substance abuse and a well-documented roaring trade in human trafficking of young women from south-east Asia. Some are voluntarily sold by their poor peasant families, others the victim of kidnapping to be sold across the Chinese border as slave brides.
Quite apart from this is the societal effect of two generations of people raised as “little emperors” or “little empresses”, spoiled and imbued with a sense of entitlement. The repercussions of this are as yet a great unknown.
But the overriding irony is that now that two children are “permitted”, most couple don’t seem to want the extra one — at least not in the big cities, where life has become very expensive and the extra child option was been trialled over the last year. So far, statistics show that only 12% of eligible couples have taken up the offer, although some argue that lifting the state-allowed number of children could prove more popular in provincial areas.
In places like Beijing and Shanghai these days, a night out with dinner in a swanky restaurant and drinks in a cocktail bar comes with a bill that would not look out of place in Melbourne or Sydney.
Even public education is costly and includes various entry fees to get into better schools, and the lack of any universal healthcare system beyond rudimentary care means any hospital visits that include major operations can cause financial distress. Regular families that desire further education at better universities or offshore struggle to pay for one child.
Finally, there is the massive bureaucratic infrastructure that the one-child policy has created, replete with its own income source from the corrupt administration of the policy.
The move from a one-child policy, one of the great injustices visited upon by the Chinese people by its unelected government, to a two-child policy might appeared to herald changes in the country, but it is, largely, a chimera. And it is certainly too late.