China's One-Child Change Doesn't Avert Demographic Collapse

By Gordon G. Chang

On Friday, China’s Communist Party announced what the Wall Street Journal termed “the most significant adjustment in a policy that has defined Chinese family life for more than three decades.” 

Soon, a couple in China will be permitted to have two children if either parent is an only child. 

Previously, both parents had to be only children. 

Because of numerous exemptions for rural residents—they are already permitted two children if the first-born is a girl, for instance—the change will mainly affect urban dwellers.
Analysts believe the relaxation of the one-child policy will result in a substantial increase in births. 

Zhai Zhenwu of Renmin University estimates 15 to 20 million people will become eligible to have a second child and 50% to 60% of them will be interested in doing so. 

Wang Feng of the University of California at Irvine predicts the change will result in one to two million extra births a year.
So color American business happy. 

“More children will mean more dairy products and as those children age, meat consumption will rise,” said Dan Kowalski of CoBank, a Colorado-based lender to agribusinesses.
And Kimberly-Clark KMB -0.41%, the maker of Huggies diapers, cannot be too upset with the development. 

Yet we should take our cue from its chief executive, Tom Falk, who thinks most of his company’s growth from China will come from increased usage of diapers during the day instead of the arrival of second children.
He has every reason to be cautious. 

State media reported that Wang Pei’an, deputy director of the National Health and Family Planning Commission, downplayed the announced change, even denying it was a “relaxation” of the existing policy. 

“China’s population will not grow substantially in the short term,” he promised.
Wang’s correct about population growth, but he was wrong when he predicted that China’s population will stabilize soon. 

Beijing has projected that the number of people will begin to drop sometime around 2033, but now it looks like the turnaround will occur as soon as this decade. 

Senior official Liu Mingkang, speaking at the Asia Global Dialogue in Hong Kong in May of last year, said the peak would occur in 2020, which means it will, in all probability, be reached a year or two before then.
The acceleration of adverse population trends is also evident in the workforce. 

The number of working age Chinese fell in 2010 according to the country’s leading demographers and in 2012 according to the National Bureau of Statistics. 

Both dates are well before the 2016 prediction Beijing’s officials made just a few years ago.
There is no mystery why China is on the verge of accelerated demographic decline. 

Its total fertility rate (TFR) — essentially the number of births per female — is low. 

Some of the country’s better-known demographers think it is around 1.4. 

The emerging consensus outside China puts the TFR between 1.5 and 1.6. State media endorses the higher figure. 

In any event, it’s clear the country is well below the replacement rate of 2.1.
The problem of a low TFR is compounded by the growing scarcity of females. 

China’s one-child policy has, along with other factors, contributed to the world’s most skewed sex ratio at birth, 117.7 boys for every 100 girls last year according to official sources (most societies do not exceed 107 to 100). 

As a result, there are perhaps as many as 25.4 million excess males in the under-15 cohort and maybe 51.5 million overall. 

The low number of births per female plus the scarcity of women of child-bearing age sets the stage for a demographic crisis.
China, not long ago, had one of the best population profiles of any nation. 

The one-child policy, coming after Mao’s extraordinary push to promote births, created China’s “demographic dividend,” an extraordinary bulge in the workforce.
Now, however, China is aging fast, and the economy is beginning to feel the effects. 

For instance, wage increases far exceeding productivity gains—partially the result of a shrinking workforce—are rocking the stagnant manufacturing sector. 

Moreover, the “age wave” will hit. 

Soon, one worker will have to support two parents and four grandparents, a phenomenon known as the “inverted pyramid.” 

No wonder many Chinese demographers will say, at least in private, that all birth restrictions should have been scrapped years ago.
The relaxation in the policy announced Friday is of course a step in the right direction, but it will undoubtedly be inadequate. 

For one thing, permission for second children will not be forthcoming for a while. 

According to a demographer who drafted the change, the relaxation will be introduced in phases with first implementation in provinces with low birthrates, such as those in the eastern part of the country. 

Wang Pei’an, the National Health and Family Planning Commission official, has a slightly different take, announcing that implementation will be decided by provincial governments, not Beijing.
Moreover, the change, even once it has been made fully effective, is unlikely to significantly increase the number of births. 

Many parents who have wanted a second child have already gone ahead, by either electing to pay fines or by employing various stratagems such as going abroad for births or by hiding additional offspring from authorities. 

Moreover, many newly eligible parents will not opt for a second child. 

Some, affected by decades of indoctrination, don’t want more children, and others simply cannot afford them. 

And today many women are rejecting Chinese social norms and not getting married.
China’s future demography has now been set for at least a generation. 

Population-boosting policies rarely work, but when they do it takes decades for them to have a noticeable effect. 

What Beijing officials are doing now is both too little and too late.