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Thursday, May 13, 2021
An Objective Take on China's Three-Child Policy
ANBOUND

On 31 May 2021, the Chinese government announced that married couple are now allowed to have up to three children, along with additional measures to support the new policy. In light of its increasing elderly population the strategy aims to improve the country's heavily skewed demographics, whilst striking a balance in the department of manpower.

China's attempts to relax its one-child policy began a decade ago with married couples finally allowed to have two children by October 2015. In regard to the country's sudden introduction of the three-child policy, ANBOUND researchers believe that China is shifting its stance on restrictive population policy to a more liberal one.

The question is, why is China, a country of 1.4 billion in population, making drastic changes to its demographic policy? Besides, the country's population issue has been long time coming now. Not too long ago, the Data of the Seventh National Population Census even revealed China's struggles in balacing its population numbers. Here are two noteworthy aspects.

One, China's population growth rate is still declining, which hampers the country's efforts to lever its reproduction rate. As of 1 November 2020, the Seventh National reported a total population of 14,41.78 million in Mainland China, an increase of 72.06 million from 2010 (based on the data from the Sixth National Population Census), a 5.38% increase, and an average annual growth rate of 0.53%. This is a decrease of 0.04 percentage points from the average annual growth rate of 0.57% in 2000 to 2010. Statistics show that China's population has continued to maintain a slow growth trend in the past decade. Therefore, China's population is expected to experience negative growth in the near future.

Two, China is rapidly aging, and the challenges are getting harder. Compared to 2010, data from the Seventh National Population Census shows that the proportion of people aged 0-14, 15-59, 60 and above in China has increased by 1.35 percentage points, dropped by 6.79 percentage points, and increased by 5.44 percentage points in 2020 respectively. Additionally, those aged 60 and over account for 18.7% (approximately 264 million people), and the population aged 65 and over will account for 13.5% (approximately 190 million people) in 2020. The increase of China's elderly population coupled with the decrease in its working-age population places its demographic structure in a sticky situation.

To address those issues, the Chinese government has listed three goals for the three-child policy, namely to improve the population structure, to cope with the aging population, and to maintain a balance in manpower. That said, the performance from its predecessor leaves the three-child policy much to be desired. Data from the National Bureau of Statistics shows that the number of births in Mainland China in 2016 and 2017 was 17.86 million and 17.23 million respectively, was higher than the average annual birth rate of 16.44 million during the 12th Five-Year Plan period. While the National Bureau of Statistics believes that the two-child policy has significant effects. That said, such view is not comprehensive, even misleading. The population may have increased in 2016 and 2017, and witnessed a superimposed effect following the two-child policy, but the number of births per year has dropped rapidly as the effects of the policy waned. In 2018, 2019, and 2020, the number of births in Mainland China was 15.23 million, 14.65 million, and 12 million, respectively, showing a clear downward trend.

Source: National Bureau of Statistics of China, Graphic: ANBOUND

Objectively speaking, the decline in the number of births fertility rate does not indicate that the policy is a failure. In fact, a continuous decline in fertility rates is common following the improvement of economic standards and the increase of urbanization worldwide. In the latest paper that was published in the Lancet on the birth and death rates in 195 countries around the world by Professor Stein Emil Vollset et al. of the University of Washington, the team noted that the global fertility rate will continue to decline. Their data shows that the global fertility rate has fallen to 2.4 in 2017, and they predict that the number will fall below 1.7 by 2100. The report also foresees that China's population will be halved to 732 million by 2100, coming in third behind India and Algeria.

The decline in fertility rates is frequently analyzed through the lenses of the economy, much like the increase in housing costs, living costs, support costs, education costs, and medical costs brought about by urbanization would inhibit people's desire to have more children. For instance, young adults who are living in Chinese cities with expensive livings costs are deterred from having more children. However, economic factors are only one of the reasons that affect fertility rates, and population problem is fundamentally a social issue that cannot be analyzed from an economic perspective alone. Urbanization, economic development and social changes may have changed the way people think about family planning, which in turn contributes to the decline in fertility. For example, women are more valued in workplace following an increase in their education levels, causing many to have fewer children in an effort to focus on self-improvement and quality of life instead. Furthermore, better contraceptive methods have also led to a decline in fertility. In many ways, the decline in the fertility rate is a sign of social progress. The fertility rate in developed countries is generally low, which is a stark difference from developing countries, making it a problem of fertility and social progress at its core.

A view that is very popular in China, that is, raising the fertility rate as a tool and means of using fertility rate to develop China's economy, stimulate consumption and economic growth should be abandoned. We believe that such view is not only outdated, but affects the country negatively too. No doubt the decline in population has negatively impacted the country's economy, an issue that has been discussed by ANBOUND as early as 1999. That said, population decline is inevitable as the economy prospers. There are various reasons families are reluctant to have more children now, and it is common issue in many countries. In fact, people in other developed countries enjoy further reproductive rights and financial stimulus measures more so than China, and yet still the declining fertility rates in these countries have not been successfully reversed.

Final analysis conclusion:

China is implementing the three-child policy to cope with a rapidly aging society by adjusting its demographic structure and attempting to maintain its manpower advantage. While the policy is vital in propelling the country's economy forward, the decline in fertility rates is a problem that is hard to reverse judging by the development practice in various countries, where along with the rise of economic prosperity and urbanization, the decline in the fertility rate is a global trend. This is China's policy department needs to pay special attention to.

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