Demographics are going to debilitate China

Many Americans seem fixated on the threat of China as an emerging world power. But they ignore the fact that China’s long-term prognosis is not good.

There’s no question that China has achieved unprecedented economic success, but decisions on population growth made in the 1970s are going to come back to haunt the country. That was when the government set a goal of limiting most families to one child in order to deal with  huge and rapidly growing population.

The policy was formalized on September 25, 1980 in a public letter published by the Central Committee of the Chinese Community Party, calling upon all families in China to adhere to the one-child policy.

But however well intended, the policy has had significant unintended consequences that will burden China for years to come and threaten its political and economic power: too sharp a drop in birth rates and too many old people.

In 1979, Liang Zhongtang, a Chinese economist and demographer, insisted that the one-child policy would be a “terrible tragedy” that would turn China into a “breathless, lifeless society without a future,” but he was ignored.

 

OneChildPoster

The rigorous enforcement of the policy quickly got ugly, with a particularly devastating impact on female babies, as families favored having male children.

NPR reported on the consequences of the one-child policy in China’s Rudong County in Jiangsu province.

The county launched a family planning pilot program in the 1960s. “Having a second child wasn’t allowed, so we had to work on (pregnant women) and persuade them to have an abortion,” Chen Jieru, the Communist Party secretary of a village at the time, told NPR.

The result? The policy, in combination with an exodus of young people to cities for better opportunities, left the county’s young population shriveled while the elderly population has exploded.

The increasing number of the elderly is soon going to be a problem across China. There are now five workers to each retiree, but in a little more than 20 years that is projected to shift to 1.6 workers to every one retiree. “It spells shrunken tax coffers, reduced consumer spending and all-around diminished productivity,” said Mei Fong in her recently issued book, “One Child – the story of China’s most radical experiment.”

A senior Chinese economist, Liu Mingkang, speaking at the Asia Global Dialogue in 2012, said China’s population growth will end as soon as 2020 when its population will peak at 1.6 billion.

Youhua Chen, a demographer at China’s Nanjing University, gained some notoriety by warning about a sharp drop ahead for China’s population. The decline will be accompanied by soaring health care and pension costs, and collapsing real estate markets, he warned.

Prof. Chen has predicted that China’s population will peak at about 1.4 billion and then fall precipitously to 500 million. His graph is below.

GraphImage

Title: Figure 1   Estimated China Population Growth 1950-2100   (Black line): Low (Plan, Program, Prospects…)   (Pink line): Medium (Plan, Program, Prospects…)   (Blue line):  High (Plan, Program, Prospects)   Graph courtesy of Mei Fong, Fellow, New America

If Prof. Chen is right, this means lots of problems.

“These problems will compromise economic development, strain social harmony, and place the traditional Chinese family structure under severe pressure; in fact, they could shake Chinese civilization to its very foundations,” said Nicholas Eberstadt, Henry Wendt Scholar in Political Economy with the American Enterprise Institute.

China has recently loosened the one-child restrictions, but it hasn’t resulted in a baby boom. So the prediction still holds that sometime in the next 7 years, India may overtake China as the world’s most populous state, and India will keep growing while China declines.

“When you see a country’s population decline, the country will definitely degrade into a second-rate one,” said Yao Yang, an economist with Peking University’s China Center for Economic Research.

 

 

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