Opinion Piece “China’s One-Child Economic Disaster”
Recent WSJ subscription article on China and it trying to reverse its one-child per couple policy. Evidently the policy is leaving the country with a growing elderly population with no younger replacements to follow. It will now implement subsidies to encourage larger families to reverse the demographic decline of its own design. The Communist Party owns this one for a successful policy in reversing population growth.
Wall Street Journal Editorial Board
Chinese Finance Minister Lan Foan disappointed investors in a press conference last Saturday that offered few details about a fiscal stimulus for the sputtering economy. We’ll discuss the merits of such a plan when details emerge, but meanwhile a startling line caught our eye concerning the consequences of the country’s former one-child policy.
Mr. Foan said in particular the package “will respond to the changing situation of China’s population development” (according to a translation prepared by state media journalist Fred Gao). This is consistent with a Reuters report that Beijing is considering a monthly subsidy of around 800 yuan per child for a family’s second and third children.
What a stunning reversal. For decades Beijing enforced a one-child policy that was ghastly in the way only an authoritarian regime can achieve. The human cost was incalculable, particularly on Chinese parents subject to forced abortions or sterilizations. The social consequences have been catastrophic as sex-selective abortions skewed the population in favor of males and successive generations of Chinese have grown up without siblings, aunts or uncles.
Communist Party leaders will never admit to any of that, but even they recognize the policy has been an economic disaster. Intended to prevent the population from expanding beyond what a developing economy could support, the effect has been nearer the opposite. China’s aging and soon-to-be shrinking population is now an impediment to economic growth.
President Xi Jinping abandoned the one-child policy in 2016, and in 2021 the Party allowed parents to have up to three children. Apparently this isn’t having the desired effect, so now Beijing may attempt natalist subsidies. The problem for Beijing is that these subsidies haven’t worked anywhere they’ve been tried.
Prosperity has reduced child-bearing across the developed world, but democracies let nature and individual choice take their course. China’s Communist Party chose brutal coercion, with damaging consequences that are likely to persist for the foreseeable future. Chalk up another defeat for central planning—and for Western intellectuals who wished we could be more like China.
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If the issue is having adequate Labor to replace present workers, child-bearing replacement would have a lengthy timetable to build a labor force. However, labor content has been reduced to a smaller portion of products than what it used to be. Immigration would speed the process up sooner. Not sure how receptive China would be.
The US faces a similar issue with a 1.6 ratio. More people would like to immigrate to the US than they would to China.
Bill,
Have enjoyed reading your blog as a fellow Aesclepian (sp?). One comment – immigration to China, while not impossible is probably not desired as it is my understanding that the dominant ethnic group is Han chinese and there is some desire to keep it that way, as opposed to our more diverse and inclusive society. Additionally, there does not seem to be a labor shortage in China from their reported youth unemployment statistics which I believe are higher than desired and are internally of concern from a social stability standpoint; but I am not a china expert so I might be wrong on any of these points.
More importantly regarding us here in the US, while immigration is certainly a way to solve labor shortages and address the declining fertility ratio, one must consider that immigration is a choice of the immigrant – what happens if they decide to stop coming? Perhaps a bit more attention to the reasons why our fertility ratio is so low should be paid (and why raising children in the US is such an unpleasant experience, most people decide to opt out – hence the sub 2.0 fertility ratio) so that in such a circumstance where immigration to the US is no longer desired, we don’t have to wait 18 years for the next crop of working adults.
Enjoy the blog. Best.
drsxr:
I do not believe China is worried about the present. It is the future they look to and how to adjust the ratio of old to young. Today is no Labor shortage. In future years there will be such. You cannot age babies. There may be unemployment now, It will change as time goes by. Everything has its time and labor shortage is not to far away in that timeline. Automation can only do so much. You still need input of direct labor.
I believe I was in a Walmart in China or I remember it as such when it could be a different name-brand store. at each counter/table was one young Chinese woman waiting to help a prospective buyer. Another Chinese City I have been too which slipped my mind and a host of others around Shanghai. I believe it was Shenzhen where this store was located. A fairly modern city with acres of new and potential stores in a mall that had no occupancy then. A brand-new ghost town mall. Mall built to keep people working.
As we passed row upon row of new and empty apartment buildings. Our Chinese guide who worked for our company said “New apartments most Chinese could no afford to live in. And here again it is make work projects. Much of the Chinese economy is based on this.
This does not mean all is such. I have walked through some industrial showings or fairs where manufacturers were displaying their CNC machines. Why do such if it eliminates Labor and the same could be archived through multiple manual stations?
The US population will increase again as more people immigrate to the US and are allowed entry. It will make for bringing manufacturing back to the US. There is a cost save to such. There is also a safety factor where the US does not have to depend on a supply of surgical masks the next healthcare crisis. Maybe a low percentage of cheap labor should not be considered as a deciding factor?
The population will decrease again as immigration levels off and the ethnic groups meld into the population.
My three are doing well and each has the ability to do better. So life is good.
That goes to your point. Then that is today and what about tomorrow.