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Revamping population policy
2004-08-03
China Business Weekly
The Chinese Government must revise the country's long-standing population policy, even though the so-called "one-child policy" has benefited the nation's economic growth over the past 30 years.
The one-child policy, although not formally written into law, is based on three main principles: Advocating the benefits of delaying marriages and delaying child bearing; promoting the concept of fewer, healthier births; and encouraging couples to have just one child. The policy, however, does not mean all families have just one child.
Between 1978 and 1997, the sharp decline in China's fertility rate contributed an extra 1.3-2 per cent to the country's annual GDP (gross domestic product) growth.
Meanwhile, the population policy helped boost labour productivity in China by 0.76-1.5 per cent annually.
Those figures are contained in a research report released by the National Population and Family Planning Commission of China in 2000.
The Chinese Government implemented the one-child policy in the mid-1970s.
Over the past 30 years, China has been -- guided by the policy -- transforming itself from a country with high population growth into a nation with comparatively low population growth and a low fertility rate.
However, some negative effects of the country's population policy have gradually become visible, and the government is considering overhauling the policy -- in the near future.
China's population will decline soon after it peaks -- between 2035 and 2045 -- at around 1.55 billion,experts predict.
The negative growth rate of China's population will continue for about 40 years, then the fertility rate will rebound slightly, experts predict.
As a result, future generations, while enjoying greater living space compared with previous generations, will have to shoulder the financial burden of supporting China's fast-growing senior population.
This daunting scenario will become reality if China's policy-makers continue overlooking the problem.
The issue was first raised in April, during a conference -- entitled "Preparing for China's Ageing Challenge: The Demographics and Economics of Retirement Policy in the 21st Century" -- in Beijing.
The elderly will account for about 15 per cent of China's population by 2015, and will compose 24 per cent of the population by 2030. By 2040, China will have 397 million elderly citizens, or more than the combined population of France, Germany, Italy, the United Kingdom and Japan.
In the article "China's Time Bomb: The Most Populous Nation Faces a Population Crisis," published on May 30 in The New York Times, experts estimated, by 2030, the over-60 citizens will make up 25 per cent of China's population; by 2050, 30 per cent.
Some might argue, as many countries are suffering from similar ageing-related problems, the issue in China is simply part of a global phenomenon and, therefore, doesn't warrant special attention.
Such views are not entirely unfounded. Over the next 30 years, many countries will feel a significant threat -- due to their ageing populations -- to their economic growth.
Indeed, in May, several key cabinet members in Japan -- including Yasuo Fukuda, chief cabinet secretary and a key official in Prime Minister Junichiro Koizumi's administration -- resigned. They admitted they had failed to contribute to Japan's mandatory, but costly, pension system.
Nobel laureate Lawrence R. Klein once said Japan's economy benefited considerably, in the 1950s and 1960s, from the population's slow growth rate. However, he added, it suffered substantially from the population's ageing problem in the 1980s and 1990s.
The fast-ageing population has weighed on the Japanese economy, and partially caused the nation to lose its competitive edge, Klein said.
China's economy is less developed now than Japan's 10 years ago, before the Japanese economy collapsed into a decade-long recession. Ergo, if China's population ages before its economy enjoys real prosperity, the outcome could be disastrous.
The commonly suggested solution for China's ageing population is to strengthen the country's pension system. But even if China is able, soon, to establish a nationwide pension system, the problem will remain.
Based on other nations' experiences, a country must become rich before it can operate its pension system smoothly and support its fast-growing elderly population. Otherwise, the system will be plagued by crises.
What, then, are some of the consequences an ageing China will face?
The current one-child policy will substantially weaken China's defence system, as the population is ageing and fewer people will be qualified to serve in the armed forces.
China will likely continue to have a large youth population, compared with many other countries, but under the one-child family structure, the pool of youth will become the most important, and irreplaceable, pillar of the country's economy.
Valerie M. Hudson and Andrea M. den Boer, in their recently published book "Bare Branches: The Security Implications of Asia's Surplus Male Population," suggested, under the one-child family structure, many Chinese hope to have a male baby.
The authors suggested, since the late 1970s, many Chinese families have chosen to know the gender of their unborn babies, with the help of ultrasound technology, so they could decide to abort female fetuses.
The authors also suggest the higher male-to-female ratio in China is a direct result of families deliberately selecting the gender of the fetuses, which they attributed, at least in part, to China's one-child policy.
But even if the Chinese Government decides to adjust its population policy, the changes will likely be moderate.
Human resources play a critical role in determining a nation's economic success. In North America, human resources contribute about 76 per cent to the region's wealth, indicates a report by the World Bank.
In Europe, it was 74 per cent; East Asia, 77 per cent.
Various Chinese surveys indicate the country's new generation, including rural residents, prefer to have just one child.
As China's economy continues growing rapidly, and the population's educational level increases, fewer couples will be willing to have more than two children.
Therefore, now is the best time for the Chinese Government to readjust the one-child policy, rather than delaying it to a point that families choose not to have a child, or just one child, even if they are permitted to have more.
甅DNM?tagline>Gao Huiqing is an economist with the State Information Centre's Department of Strategy and Development.
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