How One-Child Policy Would Affect the Chinese Economy - Research Paper Example

? How "one child policy" would affect Chinese economy? Introduction China has formally declared in 1979 it’s one-child policy. Due to the fear that surplus population growth would destabilise its modernisation initiates, in the early 1980, this policy was meticulously engaged by Chinese’s government. However, due to increasing concerns of rural unstableness, liberal relaxations of Chinese rural policies were announced between 1984 and 1989. Under one-child policy, a couple from urban area can have only one -child whereas a couple from rural area may have two kids if the first kid is a girl. In 1989, the official slogan was that a “one-son or two-child” policy, and it was in force in all most all regions of China. Thus, under this changed policy initiates, couples with a daughter were bestowed with the privilege to have a second child that too after a gap of 7 years. China’s entire birth planning initiative and one-child policy was perused on the available processes and structures linked with a centrally planned economy. (US Congress Joint Economic Committee 1992:252). Population control and economic development are the two major concerns for developing nations. China’s response to this issue was the open-door policy and the reform and the one-child policy. Two miracles have been produced by China in these areas. Both, demographic and economic changes have been undergone by China in recent years. Further, China has shifted from the centralised economy to a market- based economy. China, in the last twenty years, has become as one of the fast-growing and most energetic economies of the world, and this is regarded to be first miracle. Further, China’s one-child policy has applied the brake to explosive growth of Chinese’s population and also there has been a remarkable decline in fertility rates, which is well bellow –replacement stages and this has been regarded as second miracle of China.( Wong & Liu 2007:333). In reality, the declines in population growth, the slow-down in fertility rates and transformation in age structure have been main features economic achievement of China. The main aim of this research study is to study the association between China’s economic growth and its demographic evolution. In the background of both future and contemporary changes in China’s age structure, this research paper will also scrutinize and evaluate on the role of transformation in populations age structure in impacting China’s prospects for economic growth in the ensuing decades. This research paper will endeavour to elucidate the future, and the current confronts China witnesses and suggests policies to cope with them to maintain economic growth in the globe’s most populace nation. (Wong & Liu 2007:334). One Chid Policy and China’s Economic Development History of Chinese One -Child Policy During 1978-79, there had been reformulation of China’s population policy by the post –Mao’s leadership. The population issue witnessed in the late 1970s was footed on the demographic reality that in between 1949 and 1970, China had concluded its demographic evolution from high to low mortality and fertility rates. Before the introduction of one -child policy , the China’s population strategy of the 1970s had resulted in a shark fall in aggregate fertility rates to 2.72 in 1978 from 5.81 in 1970.Despite the fact of low fertility rates , due to demographic momentum , it was foreseen that population increase would prolong for many years to come. Demographic momentums connotes that a population will prolong to increase long after replacement level fertility has been accomplished, as young age structure of the total population will generate groups in the childbearing ages for many more years to come. The research survey by Tien (1981) that was conducted in the late 1970 showed that about 39 % of population of China was in the age group of 15 and above , while 65% of the population was aged 30 and below , born after 1949 . Calculations showed that on the basis of this age structure that if every woman gave birth to two kids, the population would prolong to increase over a seventy-two- year period. (Milwertz 1997:53). Song Jian was a ballistic missile expert but at the close of the year 1980, he founded a theory of population control in Chinese science and political circle. Song constructed his population theory, mainly from the “Limits of Growth “a book published by the Club of Rome Publication, which is based on the 1972 Malthusian work that suggested that there can be a catastrophe if population and resources were not matched. Based on the hints available from the book “The Limits of the Growth” and with his own models and computation that demanded for a sea change in China’s population policy, and he vehemently presented his population theory to the top and mighty top communist’s leaders in Beijing. Backed with his wisdom of cybernetics, Song drafted a theory of a bidirectional restriction to the aggregate fertility rate. Song’s theory compelled the Chinese leader to establish the government’s family planning strategy namely one- child policy for one couple. Hence, Sang can be called as the father of the China’s one -child policy. The implementation of the one-child policy was explicated by the number of the women in the childbearing age and the demographic realities of the young age structure that would register an increase at the start of the 1980s, and by what was quoted as new vista on the outcome of economic development of population growth and by an elucidation of population theories. (Milwertz 1997:53). As per Hua (1979), in 1978, the top Chinese communist party meeting discussed about the introduction of a new developmental plan highlighting the Four Modernisations. The above meeting can be considered as the transition point announcing the changeover from the earlier population policy of the 1970s to the one-child family policy. The CCP Chairman Hua Guofeng officially announced in June 1979 the China’s changed population policy and expressed that achieving a sharp decline in the population growth rate was of “tactical significance “to the advancement of the Four Modernisations programmes where attaining economic growth was regarded as one of the Modernisations. (Milwertz 1997:53). China’s new population policy was thus footed on the assumption that continuous population growth would destabilise the development of the Four Modernisations programmes of China as any additional population would need further capital that could otherwise be employed for investment purpose. (Milwertz 1997:54). As Zhongguo (1991), since 1949, China’s population figures have increased sharply. At the start of this century, the population of China remained at 400 million. Over the next five decades up to 1949, there was an explosion of population by about 100 million to 559 million. Then, within two decades, from 1949, there was an increase of about 300 million in China’s population thereby attaining 800 million by the start of the 1970s- 820 million in 1970 and 842 million in 1971. As per 1982 census, China’s population remained at an aggregate of 1,008 million. In 1990 census, the China’s population remained at 1,133 million thereby mirroring an increase at the rate of 12.45% equivalent to an average growth rate of 1.48 %( Milwertz 1997:54). Graph 1 Source: UN 2009 From the graph 1 , we can understand that in the past six decades , the population of China rose to 1.35 billion from just over 0.5 billion and is estimated to attain the pinnacle in 2030 at about 1.5 billon. (Banister et al 2010:4). As per estimates made by Song Jian and Yu Jianyuan in 1991, if the current fertility trend continues, then China’s population figure is expected to reach 1.3 billion by close of this century, 1.5 billion by 2020 and 1.7 billion by 2050 and population growth trend could never be arrested. The demographic population policy target which was set in 1979 through one -child policy intended to restrict the population figures within 1.2 billion and to attain zero population growth by the year 2000. (Milwertz1997:55). As per Zhonggong zhonguang (1991), the China’s population policy was reconfirmed with accomplishment of the target being regarded as strategically significant to safeguard the materialisation of strategic objectives of the China’s modernisation construction. Thus, implementation of arrest of growth in population policy was given a top priority which is equal to the economic construction work. (Milwertz1997:55). The most troubling social policy of modern era is China’s one-child-per couple policy. One -child policy was mainly launched to speed up China’s switch over to modern, wealthy global power. With the Chinese reality, the one -child policy was out of touch, particularly in the rural areas, where at the minimum two kids (which include at least one male child) were regarded as a must to survival of a family. On a vast scale, the one -child policy induced human trauma and social suffering on a larger scale which was carried out by the Chinese government in defiance of political and cultural reason. The one -child policy was regarded as a harsh policy in the rural China whereas in urban China, there have been large beneficiaries from the policy. (Greenhalg 2010:1). The relationship between peasantry and the ruling Chinese party were strained due to its coercive implementation of the policy which had actually injured the Chinese women’s reproductive health, and exacerbates violence and discrimination against infant girls. In late 1990s, one- child policy resulted in the reduction in fertility rates but had largely kindled population aging and gravely impacted the country’s sex structure thereby destabilising China’s continued global uprise and prosperity. Understanding the significance of one -child policy for its economic growth, China has now embedded the one -child policy into its national law. (Greenhalg 2010:2). As per Naughton (2007), one- child policy has been regarded as a boon to the urban people in China as parents do not expect their kids to safeguard them in their old age as urban Chinese working units offer advantages for children day-care, housing and many other fringe benefits particularly to one-child family that are not only attractive but also helpful to the Chinese urban families. (Putten2010:5). As per White (1994), in the early stages of one -child policy, the implementation of policy was harsh as it stipulated compulsory sterilizations for couples who had two kids and in the childbearing –age group. The one -child policy can be said as the most controversial policy which had been often deliberated for both outside, and inside China but its legitimacy was again reaffirmed in 2007 by the Chinese government. There are various anxieties about one- child policy, particularly about the exploitation against girls and women , for instance, forced abortion and sterilisations , the abortion of baby girls , the impact on gender equalities , earlier ageing of the populations , enhanced impact on human trafficking, etc. (Putten 2010:5). The association between economic development and population growth remains as a subject matter of never- ending debate among demographers and economists. According to Ehrlich (1968), population skeptics” who attributes their roots to Thomas Malthus, has argued that rapid, uncontrolled population growth and high fertility rates have a pessimistic effect on economic development of a country. These skeptics are of the view that disproportionate population growth is a peril to natural resources and food supplies. They argued that Chinese’s government has to spend a lot for family -planning programs and policies in the 1960s. (Wong & Liu 2007:334). Opposing the above view, population optimists are of the view that excess population is a boon to a country as excess population can kindly economic growth by offering abundant intellectual capital and human resources and thereby enhancing the market size. As per Kuznets (1960), countries with large population can reap the benefits of economies of scale are better placed to expand, seize and to spread the enhanced flow of knowledge they obtain. It seems that the both sided arguments to be valid as the association between economic growth and demographic transition appears to be rather confusing. (Wong & Liu 2007:335). One another argument by “population neutralism” disputes that population explosion, as a diverse factor, from other factor, has no effect on economic performance. This stand is corroborated by a sizable number of economic studies and encourages a thorough improvement the population aspect. However, now economists are least bothered about correlation between economic growth and population size but give more significance to the age structure of the nation’s populace. There is clear cut evidence that the consumption pattern and production capabilities appear to be intimately pursue the life cycle of individuals as significant changes were found across age clusters from old age and adulthood to childhood. As each age group in a population acts variedly, transformation in age structure can poignantly impact the performance of economy of a nation. (Wong & Liu 2007:335). A high consumption / production ratio is characterized by the adulthood and the number of available adults for the workforce as opposed to the remaining portion of the population which symbolises a crucial element of economic prospective. Countries with a high percentage of old or young dependants appear to allocate a high quantum of resources to these groups, frequently restricting economic growth. Divergently, countries with large segment of the population which has attained the prime ages for working and saving may benefit from an improvement to income growth originating from the larger share of the working-age populace , which results in the abridged spending on dependents with the enhanced accumulation of capital. As per Bloom et al (2002), the above trend is known as the “demographic dividend.” (Wong & Liu 2007:335). When birth rates are low and due to demographic transition, demographic dividend emanates and the elderly populace is yet to be proliferated, which stimulates transformations in the age structure and enhances the pie of the population devoted to productive sectors. The “ demographic dividend “ has been known in various names as Vallin (2002) calls it as “ demographic golden age,” , Birsall and Sinding (2001) calls it as “ window of opportunity “ or “ demographic opportunities,” , Williamson (2001) calls it as “ demographic bonus” and Fargues (2001) calls it the “ demographic opportunity.” (Wong & Liu 2007:336). As per Vu Baochang et al (2007), the Chinese population policy of one-child is based on the offer of economic rewards or incentives for one-child families and economic punishments (disincentives) for larger families. Moreover, the one-child family was formulated by Chinese central government whereas it was administered at the local level, and its implementation varied from place to place. As per Poston, Chang and Dan (2006), in China, the Han majorities group were under tremendous pressure to adhere with the one-child policy than minority group members, who encompass just 10% of the Chinese population. As per Mosher (1983), one -child policy in China would compel a couple to abandon or kill a new-born female kid, thereby adhering to their one- child quota for the birth of a boy. (Weeks 2011:248). Recent research shows that China’s one -child policy is an utter failure as its industries are facing acute short of cheap labours to manufacture low margin goods like toys, clothes and furniture. It is alleged that the bye product of China’s one- child policy is that a sharp decline in the youth workers who are predominantly unskilled labours which is the mainstay of China’s mainland manufacturing units. As per UN projections, China is at a tilting point. It is estimated that the number of youths in the age group between 15 and 24 is expected to decline by 62 million, which is more than twenty –seven percent to 164 million people , in the ensuing one-and-half decade through 2025. Due to youth unskilled labour shortage, China’s economic growth may fall from 2016 to 2020 as low-cost manufacturers may be pushed out of business and flow of investments may vanish. (Hamlin 2011). Aging Population and Economic Growth As per UN estimation, the aged population of the world which is in the age of 60 or the above the age of 60 is expected to reach 2 billion around 2050. If the percentage of aged population is predominantly higher, then it would jeopardise the possible impacts on economic development and on the capability of nations to offer support for their aged populations. As the aged population is regarded to be a burden for any society as economic development would be rather lethargic and the quite smaller working-age legions of the future will be saddled with the necessity to care for and to defray for the support of the aged population. (Banister et al. 2010: i). The economic burden due to aged population is more realistic for China’s economy as just above 30% of China’s population consists of aged people of 60 or above. The reasons for preponderance of aging population in China are due to increased life expectancy, a lesser fertility rate and the collective outcome of changes in the past in both the death and birth rates. China’s one -child policy can be regarded as the real culprit as it has brought down the fertility rate. 30% or more older population for China is really an obstacle for its economic advancement, as the younger generation is saddled with additional responsibility to feed them and also government responsibility to offer them medical and other social benefits. (Banister et al. 2010: i). China has to take positive steps to mitigate the economic issues arising out of preponderance of aging population by stimulating higher savings, to enhance the retirement age, to offer employment opportunities for those caring for children , to increase the participation of women in the nations’ labour force and to offer more incentives for education. (Banister et al. 2010: i). Chinese’s government present initiatives to stimulate economic growth, especially in the non-coastal regions may also be significant in shunning any economic issues shooting from population aging factor. If China attains success by mobilising the working population from the interior provinces to be more productive, the China’s economy will derive maximum benefits, and regional Chinese’s economies will also be better placed to offer more care to the elderly population. (Banister et al. 2010: iii). Barrister et al (2010) is of the view that in contrast to the breakneck pace of economic growth from 1978 till today, China’s economic development is anticipated to decline slowly in the near future, and one of the reasons for the same is that its 30% aged population .However, it is to be noted that population aging alone could not remain as a significant economic issue for China. (Banister et al. 2010: iii). In a research paper published by OECD , it was found that the population aging is probable to result in fiscal issues to governments as there will be more retirees anticipating financial aid from the government, whereas there will be fewer workers to defray payments to the governments.(Cotis 2003). In general parlance, it is not obvious whether population aging does have poignant negative economic impacts, but the topic is of anxiety to many nations, including China. Graph 2 Source: UN 2009 From the graph 2, we can understand that due to trends in longevity and fertility, the aged percentage of China’s populace has been steadily growing and those ages of 60 and above are likely to shape a fast increasing share of the population. The population ages of + 80 and +60 is likely to reach 101 million and 440 million respectively by the year 2050. (Banister et al 2010:6). Graph 3 Source: UN 2009 From the graph 3, we can understand that starting in the late 1970s, impelled by the falling fertility rate, the percentage of the working –age between 15 and 64 to non-working –age population increased fastly due to initiatives in the late 1970s. By 2050, it is predicted to decline nearly to its 1980 level (Banister et al 2010:6). In China, the percentage of non-working age to working- age individuals is now at its pinnacle and in the coming decades, it is likely to decline. At the same juncture, the percentage of the population in the age group of 60 + is likely to soar fastly, to about 31% in 2050 from just 12% as of now. It is reasonable that these transformations in demography will likely be to phase down the economic growth in China in the coming years. (Banister et al 2010:8). One -child policy of Chinese’s government can be said to be a fundamental deviation from Marxian philosophy. Despite its communist background, as early as 1953, the Chinese government introduced initiatives to control population by slackening rules regarding abortion and contraception. As per Takun (1960:704), Chairman Mao was of the view that issue of increased population can be resolved by an increase in production. As per Muhua (1979:724), by introduction of one -child policy, under Marxism, the law of production requires not only a premeditated production of products but also the envisaged reproduction of human beings. As per Teitelbaum and Winter (1988), Mao had considered population as an asset but Marxist government in China rather turned down the Marxist -Leninist origins and espousing one of the most striking, coercive and aggressive government programs ever introduced in China to minimise the fertility through Malthusian solutions namely restraint on marriages, the neo-Malthusian solution thereby employing contraception and the employment of abortion, which was advocated by Leninist. (Weeks 2011:87). China’s one -child policy is woven on the principle of linking consumer needs with economic growth with the stable population. On one side, the manufacturing activities of all the products should be able to fulfil the requirements of consumers and the society and on another side, growth of population has to cope with the level of development of a state economy. This can be termed to be the China’s socialist twirl on the famous population theories like Malthus population theory that associate the quality of life with that of China’s population. (Wheeler 2003). As per Liu Zheng , any increase in the national income is restrictive in nature, and the increasing populations is likely to suck up the majority of the new growth , thereby leaving nothing for build up or national savings. As such, Chinese will be in a position not to save for their ensuing future. Moreover, any advantages that accrue in national income of China will be absorbed by the new population instead of augmenting the standard of living of the China’s present population. It is to be noted that ever increasing population in China may result in inferior standard of living as all products, food and services have to be apportioned amongst ever increasing population. An ever increasing population may also cast its weight on the education as it will throw much strain on schools. All of these theories were considered by Chinese’s government at the juncture of introduction of one- child policy and prolong to be chiefly adopted and held even today. (Wheeler 2003). For China, the one side policy is not perused to have a restriction on population explosion or to have a strong government but about the accomplishment of prosperity, global power status and modernity. Greemhalgh was of the opinion that one -child policy was introduced on two grounds; China’s over population was disrupting their initiatives for attaining economic prosperous, and the only solution to the China’s population crisis is the one- child policy. (Wheeler 2003). Richard Robinson was of the view that two frameworks have dictated the popular and the scientific deliberations of population growth - the Demographic transition theory and the Malthusian / Neo Malthusian outlook. As per Malthusian outlook, the population explosion destabilises the globe with poverty, starvation, social unrest, environmental destruction and many other causes and hence, China was of the opinion that their overpopulation is a concern for the economic development. Demographic theory of population postulates that population in poor nations will stabilise if they peruse economic development programmes that transpire them into modern world. Hence, while demographic transition theorists advocate that lowered fertility will result from economic development whereas the Malthusians advocate that economic development happens due to lowered fertility. (Wheeler 2003). Is One -Child Policy is an essential for Population Control? This question now started to haunt the minds China’s policy makers’ .Supporters of the one -child policy initially supported it as an urgent population control mechanism initiated during the 1960s, expecting the high quantum of babies from the baby boomers. Supporters are of the view that without one -child policy, the Chinese population would not be enjoying the present low level of fertility rate, else the fertility rate would have been higher than expected. However , opponents have pointed out that in China , due to one- child policy , fertility levels have declined by more than half of what had been in the 1970s , to just 2.7% in 1979 from that of 5.8 kids per women in 1970 as the policy prohibit the couples to have a second kid. The steep fall in population rate was associated with Chinese’s government policy namely “late marriage, fewer births, longer birth intervals.” The far-reaching transformations its social values and in the economic policy of China may have been more significant in the 1990s than that of strict population policy in encouraging the fertility downfall. Further, escalating income and new economic openings motivated aspiring Chinese’s youths to focus their energy away from childbearing and marriage. This is evidenced from the fact that the age at the first marriage among women, for example, increased to 24 from that of 22 in the 1990s. This offers a clear corroboration that transforming demographic preferences not impacted by the Chinese one -child policy. China’s one -child policy had other negative social outcomes thereby resulting in enhanced female infants, a lopsided sex ratio among young kids and infants, enhanced child mortality rates and the annihilation of the birth reporting process to government. Conclusion China’s one -child policy is woven on the principle of linking consumer needs with economic growth with the stable population. Barrister et al (2010) is of the view that in contrast to the breakneck pace of economic growth from 1978 till today, China’s economic development is anticipated to decline slowly in the near future, and one of the reasons for the same is that its 30% aged population .However, it is to be noted that population aging alone could not remain as a significant economic issue for China. (Banister et al. 2010: iii). However, now economists are least bothered about correlation between economic growth and population size but give more significance to the age structure of the nation’s populace. Due to youth unskilled labour shortage, China’s economic growth may fall from 2016 to 2020 as low-cost manufacturers may be pushed out of business and flow of investments may vanish. (Hamlin 2011). 30% or more older population for China is really an obstacle for its economic advancement, as the younger generation is saddled with additional responsibility to feed them and also government responsibility to offer them medical and other social benefits. (Banister et al. 2010: i). China has to take positive steps to mitigate the economic issues arising out of preponderance of aging population by stimulating higher savings, to enhance the retirement age, to offer employment opportunities for those caring for children, to increase the participation of women in the nations’ labour force and to offer more incentives for education. (Banister et al. 2010: i). In China, the percentage of non-working age to working- age individuals is now at its pinnacle and in the coming decades, it is likely to decline. At the same juncture, the percentage of the population in the age group of 60 + is likely to soar fastly, to about 31% in 2050 from just 12% as of now. It is reasonable that these transformations in demography will likely be to phase down the economic growth in China in the coming years. (Banister et al 2010:8). Despite the fact that the China’s one- child policy was introduced twenty-five years ago, the policy has resulted in not only downsizing the Chinese population to the lowest figure but also resulted to fantastic economic growth in the last two decades. However, the policy is having its darker side also as it has been witnessed that there is a surge in proportion of aged people with the insufficient family or government support, enhanced female infant, a highly disproportionate number of male kids due to sex selective abortion, enhanced child mortality rates and the crumpling of a reliable government managed birth reporting process. Currently, as China is mulling over the future of the one -child policy, critics vehemently advocate that there should be changes that permits Chinese couples to have two kids as it may not pave to unrestricted population explosion. However, it could help to cater the desires of Chinese couples and it would shun deteriorated social and demographic outcomes which is already apparent. Desired change in the one- child policy will also facilitate Chinese government from overburdening political and financial costs of implementing an unloved policy. (Feng 2005). List of References Cotis, JP. (2003). Population Ageing: Facing the Challenge. [online] available from [accessed on 8 December 2011) Feng, W. (2005). Can China Afford to Continue its One-Child Policy? [online] available from [accessed on 8 December 2011] Hamlin, K. (2011). Low-Margin Businesses are Suffering from a Shrinking Labor Pool and Rising Costs. [online] available from [accessed 8 December 2011] Milwertz CN. (1997). Accepting Population Control: Urban Chinese Women and the One-Child Family. New York: Routledge Taylor and Francis Group Putten, JCvd. (2010). Moral Issues and Concerns about China’s One-Child Policy: A Cosmopolitan. New York: GRIN Verlag Susan Greenhalg. (2010). Just One Child: Science and Policy in Deng’s China. California: University of California Press United States .Congress .Joint Committee. (1992). China’s Economic Dilemmas in the 1990s: the Problems of Reforms. New York: ME Sharpe Weeks JR. (2011). Population: An Introduction to Concepts and Issues. New York: Cengage Learning. Wheeler 2003. Women and China’s One-Child Policy. [online] available from [accessed on 8 December 2011] Wong, J & Liu, W. (2007). China’s Surging Economy: Adjusting for more Balanced Development. London: World Scientific. Read More