China wakes up to baby blues

China Australia Journalist Exchange Fellows Shane Wright writes for The West Australian

Spotting babies in Chongqing is a beautiful but difficult pastime. This city, one of China’s fastest growing in economic and population terms, is expanding but not on the back of a baby boom.

Walking its bustling streets, one of the most obvious missing pieces is young children.

It is a microcosm of China — a country rapidly running out of babies.

And it’s an issue finally addressed by the Chinese Communist Party at its most recent Plenum when it effectively dumped the near 40-year one-child policy.

Instead, a couple will be able to have two children if either parent is from a single child family.

The front pages of the Chinese press displayed the importance to the country’s collective psyche of the decision. Many featured the change, taking comment from approved experts who welcomed it as a major boost to the country.

But this is a nation of nearly 1.4 billion people, I hear you say. How can it be running out of children?

This is a story of terrible social policy, the consequences of which were not properly thought through when forced upon the people by its ruling elite in the mid-1970s.

There are two issues at play when it comes to the one-child policy and its repercussions on China.

The first is the real issue of de-population.

Between 1950 and 1980, China’s population almost doubled to reach one billion.

The advent of the one-child policy brought population growth to a shuddering halt. And now it is about to start going backwards.

In 1990 the nation’s birth rate was 2.11 per cent. By 2000 it had fallen to 1.4 per cent. The latest recorded rate was 1.21 per cent.

At the same time the death rate is on the increase. It bottomed at 0.64 per cent in 2003 but is now at 0.72 per cent.

By comparison, Australia’s death rate continues to fall while the birth rate is much closer to the natural replacement level (2.1 per cent).

Factor in Australia’s immigration program and you have a country whose population is increasing.

So sudden is this drop in birth rate that China’s total population is expected to peak short of 1.4 billion before 2020.

A decade later, based on current trends, that population will have fallen to fewer than 1.2 billion on its way to less than one billion by about 2055. Some projections suggest China’s population could fall below 600 million by 2090.

And even if women across China started having a second child, they would not be through education until the mid-2030s at the earliest.

This issue feeds into the second issue: the country’s worsening age structure.

China has gone from a nation young by international standards to one that now has a median age of almost 35. It is almost the same in Australia.

But the absence of children replacing older Chinese means the country is ageing rapidly.

China’s median age is forecast to reach 53.4 by 2050, slightly older than Japan and much higher than countries such as the US (about 40) and Britain (almost 43).

It simply means there are fewer and fewer people of working age to supply the taxes and the incomes to build the infrastructure and supply the services desperately needed by the entire population.

Then you have to factor in the absence of a Chinese social safety net and how parents and grandparents are traditionally looked after by their children.

Bank of America-Merrill Lynch economists Ting Lu and Xiaojia Zhi put the situation this way.

“Traditionally, Chinese families largely rely on their children for their living after retirement, ” they said.

“However, after a 30-year enforcement of the one-child policy, every only-child will need to support two parents and four grandparents and that is obviously too much of a burden.”

It was perhaps not surprising that while dumping the one-child policy, the Government also announced it would study an increase in the retirement age to be rolled out “at an appropriate time”.

There’s also the added issue of the sexual make-up of the country.

The one-child policy encouraged parents to abort female foetuses (a combination of traditional predisposition to boys and the economic imperative of having a “breadwinner” to look after the parents in old age).

A “normal” society produces about 105 boys for every 100 girls.

China is producing closer to 122 baby boys for every 100 baby girls.

Latest estimates suggest there will be about 35 million more men than women in China by the end of this decade.

So the reasons for the change in policy are clear.

But don’t get too excited that the situation is going to turn around any time soon.

ANZ China chief economist Li-Gang Liu estimates that the change in policy will “only” deliver an extra 9 million to 15 million people over the next decade or so.

The reason that there will be such a relatively muted response to this immense change in policy is related to why women in Western nations now have fewer children.

Improving education and dramatically better quality of life mean women simply aren’t enamoured by the idea of having four, five or six babies.

And, as I’ve driven around Shanghai and Chongqing for the past week, it’s obvious that the squeeze of humanity that is these large cities doesn’t leave a lot of space.

Relatively small apartments simply aren’t built with the idea of three or four children plus two parents in mind.

There has been a rally on markets and genuine excitement among analysts about the economic changes announced by the Communist Party under its new leadership.

But, as usual, there’s too much focus on the very short term and not nearly enough on the medium to longer term.

And this issue that is China’s demographic time bomb is ticking.

It is of vital importance to China and of critical economic importance to countries such as Australia that rely on continued Sino-driven demand for our natural resources.

The world needs to see more happy babies in major Chinese cities for many years to come.