China's choice: Baby boom or
bust By Antoaneta Bezlova
BEIJING - Fixated on maintaining the
country's high-powered economic growth, Chinese
policymakers have been soliciting opinions from
economists about how to avoid future labor
shortages by relaxing and even scrapping the rigid
one-child policy.
But the effort has
generated a debate over a 25-year-old
family-planning policy that was once considered
sacrosanct. Population
experts have clashed with
economists about what path China - a nation of 1.3
billion with scarce farmland and water supplies -
should take to maintain a healthy economic growth
and delay the arrival of a graying society without
creating another population explosion.
China's one-child policy, which the
government started implementing in 1979, is widely
unpopular inside the country. In the West, it has
been criticized for being prone to abuses, with
local officials using coercion and forced
abortions to enforce their state-mandated
family-planning quotas.
But despite
popular hostility, the government credits the
policy for controlling growth of China's already
huge population and says it would have at least
300 million more people today if it were not for
the measure.
The government's confidence,
however, has been dented by a series of studies in
recent years, and demographic evidence suggesting
that because of the low birth rates China is
growing old too early and too fast.
Fears
have risen that a rapid increase in aged people
will put a strain on the working-age population
and slacken economic growth. As China's
baby-boomers born before 1979 start retiring,
there will be fewer young people of working age to
take their places and fuel the country's economic
powerhouse.
"For 20 years China benefited
from its 'demographic dividend', but now we
anticipate that around 2015, this dividend [will]
turn into deficit," said Cai Fang from the
Population and Labor Economic Research Institute
under the Chinese Academy of Social Sciences.
Cai's research credits the surge in the
number of working-age people, or what he calls the
"demographic dividend", with contributing to 24%
of the economy's growth between 1978 and 1998. But
Cai predicts China will see the growth of its
working-age population coming to a halt around
2013 and might begin experiencing labor-force
shortages.
"We are currently witnessing
the transformation of China into an unprecedented
aging nation," Li Keping of the National Social
Security Fund Executive Council told a recent
meeting on family-planning policy where various
population and economic experts gathered. "What is
unique about China's case is that the aging
process is happening before the country has grown
rich, and it is happening too fast."
Chinese economic planners estimate the
country will reach its well-off threshold, or what
in Chinese is termed xiaokang (comfortable
living), in 2020. But a national census conducted
in 2000 concluded that China had already crossed
into the phase of a rapidly graying nation.
In 2000, people aged 60 or older composed
10% of the population and their numbers were
growing by 3% a year. The demographic state of
China that year fit nicely with the United Nations
definition of an aging society - a country or a
region where people aged 60 or older make up 10%
of the overall population.
What is more,
the numbers in China are rising fast. Chinese
demographers predict that if current population
trends persist, by 2035 people aged 65 and older
will make up 20% of the population.
China's national wealth, however, will not
be a match to shoulder the burden of a rapidly
graying nation. In 2030, China's annual per capita
income will be about US$11,000 measured in current
prices, according to a study by Goldman Sachs
Group in Hong Kong. This would compare with almost
$36,000 of annual per capita income last year in
Japan - another rapidly aging Asian society.
With fewer workers supporting growing
numbers of elderly, the strain on the severely
underfunded social pension system is expected to
grow. The pension system currently only covers
urban Chinese, not rural dwellers who make up the
majority of the population.
Even so, the
World Bank estimates that only 160 million urban
people, or less than 15% of China's working-age
population at the moment, are covered by the
social-security net.
Feeling insecure
about their retirement age, Chinese people are
saving at rates that economists fear might in the
future starve the economy of investment and
consumption spending. From 1990 until 2001, the
World Bank says, China ranked No 1 in the world in
terms of family savings.
But while
economists and population experts agree that a
rigid implementation of the one-child policy is
becoming economically counterproductive, they seem
to differ on what to do about it.
The
economic lobby, led by prominent economists such
as Lin Yifu and Hu Angang, insist the policy
should be steadily and substantially relaxed to
ease labor shortages.
"If not, then China,
one of whose economic advantages is
labor-intensive industries, is bound to lose
because of the lack of workers," Lin, a professor
of economics at Peking University, told the
meeting on family-planning policy held at the same
university.
Hu, a researcher on economic
policies at Thsinghua University, warned that if
the current one-child rule remains in place, then
by 2050 India will have 200 million more people of
working age than China, positioning the latter at
a disadvantage with one of its major economic
competitors.
But population experts
counter that the one-child policy is no longer as
harsh as it used to be. In fact, they say, about
30% of the population currently are allowed to
have two children. Many rural couples may have a
second child, especially if their first is a girl;
in the cities a husband and wife who each are the
products of single-children families also may have
two children.
Some demographers have even
accused the economic view of China's population
trends as being shortsighted, given the country's
lack of land and water resources.
"Economists only consider the developments
over the next 20 or 30 years," Renmin University
population expert Wu Cangping said. "But
demographers have to take a longer view and think
about the next two or three generations. If we
allow the birth rates to go up now, then 60 years
from now we would be faced with another baby
boom."
